Sanjukta Paul & why your next smartphone could be made from dog turds

Sanjukta Paul writes in Prospect Magazine-

• If a group of independent truck drivers forms an association to jointly bargain their prices, that combination is a cartel: automatically illegal, perhaps criminal. But if the same truck drivers go to work for a company that charges customers for their services on a single price schedule, there is no antitrust violation, even though this arrangement suppresses price competition precisely to the same extent. What is illegal outside a corporation is legal within it.

In America, organised crime got into the Trade Union business. The Teamsters were notoriously corrupt and mafia ridden. The name of Jimmy Hoffa, was a Teamsters leader who disappeared- presumably bumped off by the mob- was known across the world as I recall from when I was a schoolboy in New Delhi.

Because of this criminalization, under Jimmy Carter the deregulation of the Trucking industry began. In the Eighties, the Teamsters lost market share to independent contractors- who, by law, can't be unionized and thus are protected from that particular extortion racket- but, more recently, they are buffaloing the independents with law suits.

Paul is pretending that the Law, as opposed to the Teamsters' use of the Law to gain market share, discriminates against drivers but, the fact is, a group of independent truck drivers can form a partnership or incorporate as a limited company and then work as employees of that company. However, they can't, on that basis, engage in 'exclusionary conduct' any more than any other company.
Alternatively, the drivers could form an Association to facilitate tendering for contracts on a joint basis such that their independent status is preserved with respect to 'ABC' type tests- i.e. administrative due diligence is not required regarding matters such as mandatory breaks, meal-times etc. This is not 'horizontal' restraint provided its primary purpose is not to suppress competition. In particular, such an Association would not be allowed to prohibit members from 'poaching' each others' clients through price or quality competition.
Independent contractors can form a union and engage in collective bargaining. However such a union would have less legal protection than an employee union

 a unit of independent contractors is not subject to the same privileges and protections as a regular union bargaining unit.  For example, an employer is not under the same obligation to bargain with a union regarding contract terms for an independent contractor that it is to bargain over issues affecting its regular employees.  Also, an independent contractor who went on strike would not be protected from employer reprisals under the National Labor Relations Act.        

Being an independent contractor rather than an employee has both advantages and disadvantages. If a company is pretending its workers are independent so as to increase its profits and shuffle out of its legal obligations to its workers, it is probably in the interests of the workers to go to court and gain recognition as employees. They may also find it advantageous to form a union and engage in collective bargaining.

What genuinely independent contractors- who work for more than one company- can't do is to behave like a labor union without actually being employees. Either they are independent, in which case they escape onerous provisions relating to the treatment of employees, or they are employees and can't offer to give up things like mandatory meal breaks etc in return for higher remuneration.

Ironically, it is Teamster initiated law suits which are causing independent truckers to lose sleep. Consider the recent Supreme Court ruling against compulsory arbitration in independent trucker contracts. The Teamsters, now run by Jimmy Hoffa's son, welcome it because it makes such people more like employees whom they can unionize. But this lowers the attraction of employing independent contractors which is why the American Trucking Association is disappointed by the result.

What is or isn't legal is decided by a court. This means someone has to spend money to bring a law suit.  If it is the Teamsters who are doing so for their own reasons, then it is they who are the enemies of the independent trucker. Indeed, some owner operators have considered suing the Teamsters for colluding with Port authorities to their detriment. By contrast, the Government isn't going to persecute a bunch of truck drivers who aren't doing anything criminal- e.g. beating up rivals. On the other hand, both the Government and the Teamsters gets more money up front- in the shape of taxes or union dues- by turning the independent trucker into a wage slave. The bigger companies gain by squeezing out the small outfits. New technology means they can monitor employees more closely and 'de-skill' the job so that it is pushed firmly down from the 'middle class' economic status it used to command.

However, in this sinister conspiracy, it is the Teamsters who are making the running. Hoffa's son was close to Obama and is now close to Trump. Plus ça change, plus c'est la même chose!

• If a group of small suppliers gets together to jointly bargain with Amazon for a better deal, that too is an illegal cartel. But if Amazon contracts with them and charges the same price for their goods, there is nothing illegal about it.

This is nonsense. A group of suppliers can incorporate as a marketing firm and bargain with whomsoever they like. What  a bunch of guys can't do is to say to 'we and we alone will supply you with such and such product. You can't buy from anyone else.'

Similarly Amazon can't say 'we alone control the supply of such and such product. You can only buy it at the price we quote.' If there is any evidence that Amazon is engaged in 'exclusionary conduct' so as to monopolize a product, it can and should be penalized severely by the law.

• If drivers for Uber join in an association to demand higher pay, the competition authorities currently assume that their joint action is illegal. But Uber itself has evaded antitrust scrutiny even though it fixes the prices that customers pay for the drivers’ services.

If drivers say to Uber or anybody else- 'you can only employ us' that is illegal. But it would be equally illegal for Uber to say to its drivers that they can't work for its competitors.

What drivers can do is to refuse to work for less than a certain amount. But everybody has that right. Similarly Uber can stipulate a price. That is everybody's right. What is per se illegal is to restrict competition, absent any 'efficiency enhancing integration' to support a given price arrived at either monopolistically or collusively by a cartel.

Is there a double standard here? Why can you set your own price but not set the price of others? Why can you choose to buy or sell something but not choose what other people can buy or sell? How come you are allowed to touch your own genitals but can't touch the genitals of strangers?

Is this not a bizarre definition of freedom? Consistency requires that if you are allowed to scratch your bollocks, then everybody should be allowed to scratch your bollocks. It is a complete travesty of the fundamental notion of Liberty to say that you are at liberty to wipe your own arse but rich people are not compelled to come and wipe your arse for you even though you are lazy and genuinely desire to see Billionaires like Bill Gates get their hands dirty for a change.

It is a fact that rich people can pay people to wipe their arses for them. Indigent
people don't have this liberty.

Paul shows how the law- which keeps poor people poor by making it illegal for them to rob and kill rich people- also prevents them getting rich by setting up big corporations.

Antitrust law today defines a variety of worker and producer associations as cartels and assumes that they lack “productive efficiencies”—yet it automatically imputes these efficiencies to business firms that dominate markets. Consequently, the law grants economic coordination rights to firms that it denies to other forms of association. In addition, when firms seek to merge with one another, the law permits them to prove that the merger will have social and economic benefits or even assumes those benefits. That opportunity to demonstrate advantages, however, is denied to an otherwise similar economic association of individual or small producers, service providers, or firms.

Thus if I and my neighbors decide to produce smartphones and we notify the shops in the area that they should only buy smartphones from us, the law will consider us to be acting illegally. The authorities won't listen to our explanation that we could easily produce far better smartphones by using dog turds- which abound in our vicinity- and that they will eventually be much cheaper than those produced by big corporations.

This is clearly unfair. There is no reason to believe that a big firm like Apple has 'productive efficiencies' just because it employs lots of smart people and owns expensive machines. It is a fact that stupid people like me- who pick up dog turds for a living- get paid far less than Apple employees. Thus, it stands to reason, we can produce a cheaper product. Also, we have the skills to differentiate premium dog turds from the run of the mill variety. Thus our smartphones will be better than Apple's because we will be using only the finest dog turds. It is we who have productive efficiencies, not Apple or Samsung! Yet when I ring up the local smartphone stores and tell them they must sell only  our phones or else, they threaten to call the police! It is in this way that Neo-liberalism grinds down the faces of the poor using anti-Trust law as its obedient handmaiden.

Antitrust authorities have come to favor top-down corporate organization without being required to demonstrate its advantages empirically, much less to defend the political and moral choice that preference represents.

Quite true! They just assume Apple and Samsung make good smartphones. They don't bother to investigate my claim that the best smartphones can be made by superannuated dog-walkers out of the choicest poops they have scooped.

Maybe some top-down command relationships are cost-minimizing; maybe they are not. Maybe other sorts of economic organization, more democratically and equitably organized, can be cost-minimizing in similar ways while also supplying other social and economic benefits.

You too could have a smartphone made out of dog-turds if only Apple and Samsung and so on are excluded from the market. Won't that be super cool?