Elizabeth Warren's FANGs

Elizabeth Warren might not be the front runner among the 5,423 Democrats running for President, but she is ahead of the pack on putting out specific and bold policy ideas. She has a plan for universal child care, a wealth tax, and even reforming how much workers get a say in big business. Her latest plan is getting a lot of attention because it would go after one of the fasted growing sectors of the American economy. Warren wants to break up big tech companies like Facebook, Amazon, Netflix, and Google. (aka FANG, yes that is for real what some are calling it). She even threw Apple in there for good measure. This is just another example of big government trying to solve a problem that doesn’t actually exist.

Warren originally gained notoriety when she put forward the plan to create the Consumer Financial Protection Bureau (CFPB), which was eventually established under the Obama administration. She was a Harvard law professor at the time, but would eventually win a Senate seat in the state of Massachusetts. The CFPB was supposed to be an agency that protected consumers from bad business practices, but eventually grew into an agency that always treated consumers as victims even when they really weren’t. This is just another example of how the fix can sometimes just create more problems.

Now Warren is taking a similar approach when it comes to Big Tech, making the argument that the companies are too big and too close to being monopolies. The argument is that their “bigness” is bad for the economy because it limits competition and hurts small businesses. Of course she never talks about how these companies actually HELP many small businesses in this country. Think about how many small businesses are able to reach a larger customer base because they can sell their products on Amazon. Think about how many small businesses are able to advertise to more people because of Google and Facebook. Think about how many small businesses use Apple computers or phones in their stores, restaurants, offices, homes etc. Just because a business is “big” doesn’t necessarily mean they hurt small business growth in this country.

The other thing I hear all the time is no one can compete with the companies directly. Retail can’t compete with Amazon, other social media sites can’t compete with Facebook, other video streaming platforms can’t compete with Netflix, etc. I remember hearing this same argument in the 90s with Microsoft and in the 2000s with Walmart. It wasn’t true then and it’s not true now. Walmart was once seen as too big but recently had to change their business model to compete with Amazon and Target. Microsoft eventually would have to compete with Apple and Google. And of course MySpace eventually lost out because of competition from Facebook. Just because those companies dominate the market share now doesn’t mean they always will in the future. For example Netflix is going to be facing more competition with other streaming outlets, including one being put out by Disney. Competition is still alive and well in American business.

If you want to look at what actually limits competition in the marketplace all you have to do is look at the federal government. Even when government intervention is done with the best intentions, it often has the opposite effect. One only has to look at the Dodd-Frank Bill that regulated banks. In an attempt to protect banking in the country it actually made it harder for smaller banks to compete with the larger ones. This is one reason many smaller banks did not survive in the past decade.

I’m not saying these big tech companies always act ethically. If Warren really wanted to make sure these companies had to compete, she should really go after the big government policies that help those companies dominate the market. This was pointed out recently in a Washington Examiner editorial.

“Here’s our compromise proposal: Before we resort to breaking up big tech, how about we just stop propping up big tech? Before cracking down on Amazon, Facebook, and Google, let’s kill the public policies that rig the game in the favor of Amazon, Facebook, and Google.

For example, a House committee last week passed a bill to set minimum wage at $15 an hour. Amazon, which recently agreed to pay its workers $15 an hour, is lobbying for this law in order to break its competitors who lack Amazon's volume and cannot operate on its tight margins. If you worry that Amazon is becoming too powerful, stop outlawing its smaller competitors by supporting the wage law that will outlaw its competitors' business model.

In fact, all regulations and taxes that add to the cost of operating a brick-and-mortar store help Amazon by shutting down mom and pop businesses or preventing them from starting. Warren ought to examine the federal regulations that cripple Main Street, and try to alleviate that burden wherever possible, before resorting to the extremely invasive but occasionally necessary measure of breaking up a lawfully built company.”

They summed up the point well. Before we go about pushing more big government intervention in the economy, how about we get rid of the corporate welfare policies that help those big techs beat out the competition. This is something we should all agree on, but I’m not holding my breath that Warren is going to want to take this approach any time soon.

(Photo credit: Getty Images)

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