Missing the Story: A Longtime Reporter and Author Says Journalists Are Largely Ignoring the Way New Laws and Regulations Are Enriching Big Business at the Expense of Consumers
Johnston, David Cay, American Journalism Review
Journalists are missing one of the biggest stories in America: the saga of how new laws and regulations are promoting monopolies, duopolies and oligopolies, to the massive detriment of consumers.
Telling this story doesn't require serious investigative skills or sophisticated computer-assisted reporting. All you have to do is cover the nuts and bolts. Many of the most important changes are made at regulatory agencies, which generally receive scant coverage even though their decisions affect prices, the quality of goods and services, and taxes.
Consider these developments:
* Lawmakers in Alabama, California, Florida, Texas and Wisconsin passed laws revoking the right of every American to have landline telephone service, a right that has been in place for 100 years, while other states now restrict it.
* After a business professor testified that "the stupidest things" AT&T and Verizon could do would be to "start jacking up local service" prices if California lifted price caps, the caps were removed--and the companies promptly raised prices as much as 600 percent.
* New Jersey lawmakers required Verizon to wire 70 cities with fiber optic lines but did not require it to provide service, so people who wanted to negotiate where holes would be punched in their walls are out of luck.
* Asserting that competitive markets would make electricity cheaper, New York legislators authorized Energy Supply Companies, or ESCOs, to pitch consumers. But they did not require benchmarking, so people cannot determine if they are saving money or shelling out more.
* Electric utilities in 25 states pocketed about $30 billion that customers prepaid for corporate income taxes that government will never collect.
* A 1980 law to promote railroad competition resulted in 37 big lines consolidated into six under rules that let them charge higher monopoly prices, even when two rails run parallel for a thousand miles.
All of these stories went unreported or got only spotty and superficial coverage. What coverage there was often incorrectly characterized these changes as benefits to consumers rather than a shift in government policy that favored companies over their customers.
These new laws and administrative rules are just part of the much larger story about fundamental changes to the rules of commerce, some of which date back thousands of years, that are remaking the American economy.
These new rules, promoted by some of the biggest companies in America and their trade associations, thwart the competitive market.
These and other episodes involving anti-competitive rules are the subject of my latest book, "The Fine Print," which I wrote because of my concern--indeed, alarm--that a wholesale remaking of the rules of commerce is underway in America, and my peers are missing it or, in some cases, misreporting it.
To be sure, reporting on the trend toward "deregulation" has been common since the late 1970s.
"Deregulation" is a misnomer because, literally, no such thing exists in commerce, as I teach my law and graduate business students at Syracuse University.
Everything in business is regulated in some fashion, and has been since long before the first nearly full set of laws we have, Hammurabi's Code from almost 38 centuries ago. That ancient law covered everything from building codes and social insurance to techniques for weighing defenses against embezzlement and other financial crimes.
To appreciate how pervasive regulation is in our society, consider baseball, an enjoyable activity but hardly of life-or-death importance. Major League Baseball, as well as Little League, regulate how many stitches are on the ball.
Deregulation typically means reregulation under new rules that favor business interests.
Regulations can, and should, change as knowledge, technology and other conditions change. …