Emerging from a Pandemic Economy
Angela Schwesnedl works on transitioning Moon Palace Books from curbside pickup back to in-store browsing. (photo by Sarah Whiting)
In a virtual town hall on June 8 with U.S. Senator Amy Klobuchar, independent business owners around the country discussed how to take action to support survival of small businesses. The pandemic economy actually boosted the bottom line of many mega-corporations. Amazon, for example, earned $26.9 billion in the 12 months of the pandemic peak, starting March 31, 2020. That is more than Amazon’s profits from 2017 through 2019, which totaled about $24.7 billion.
One of the women at the town hall was Minneapolis bookstore owner Angela Schwesnedl, co-founder of Moon Palace Books. Amazon was squeezing independent bookstores even before the pandemic, she noted. With the drop in bookstore traffic during the pandemic and the desire to keep employees and community safe, Moon Palace had to cut a large number of its full- and part-time employees. Amazon, on the other hand, continued to ramp up operations “without taking care or responsibility if its employees got sick,” she said.
Schwesnedl added, “Amazon is no longer just a platform to sell products. They track and collect data about buying habits. This past year, [small businesses] all lost so much, how can we justify Amazon coming out so far ahead?”
Moon Palace became known for its community-minded approach during the 2020 racial justice protests. The store is a block away from the 3rd Precinct, whose police officers were responsible for the death of George Floyd. The owners had already been feeding people who became unhoused during the pandemic. After the uprisings started, the bookstore owners expanded to donate food to protestors.
The Predatory Nature of Monopolies
In the town hall on corporate power, Klobuchar detailed the key reasons we need a movement to support antitrust laws.
Where there is limited competition, there is abuse of market power. Small Business Rising is a pandemic-inspired campaign of U.S. independent business networks — including MetroIBA in the Twin Cities — that supports more than 150,000 entrepreneurial ventures. The campaign notes that large buyers like Walmart can control access to popular products. Community pharmacies — and prices for drugs like insulin — are impacted when large drugstore chains influence insurance reimbursement prices. Monopolies also have a lot of money to lobby for favorable governmental policies and fight antitrust lawsuits.
As Klobuchar said in the town hall, “Every product from cat food to caskets is largely made by a few manufacturers.” That is called a monopsomy, she says, when there is essentially one market buyer, who then controls everything from pricing to distribution access.
She quoted a leaked email from Facebook’s Mark Zuckerberg, who wrote, “We would rather buy [out] than compete.”
Creative Community-based Models
Businesses led by women and Black, Indigenous, and people of color (BIPOC) are typically underfunded by banks, venture capitalists, and other financial sources.
Katie Sterns, Saint Paul founder of You Betcha Box, creates gourmet gift boxes curated from Minnesota food makers. “The only way we get economic parity,” she says, “is when we [consumers] support the small businesses in our own backyards.”
The company’s Women Makers and BIPOC Makers boxes, for example, include stories about its local producers and are designed to help them find new customers. Sterns says half of her food producers reported that the 2020 sales received from the gift box company brought in half of their revenue during the pandemic. Several of them think they would have gone out of business without it.
Sterns started the company in 2017 after recognizing that local corporations give gourmet gifts to clients and employees using products from large, national companies but could instead choose gift boxes with curated local products.
Butter Bakery Café is a Minneapolis-based business that is in partnership with Beacon Interfaith Housing Collaborative. The space above the café shelters youth who are at risk of being unhoused and serves as a mentoring workplace.
Owner Dan Swenson-Klatt says the relationships with customers were missed during the pandemic “when interactions were limited to handing takeout bags into waiting cars. A year later, I am so grateful for the many neighbors who accepted takeout as an option and gave generously to assure we would be here when they could once again sit down with us.”
Local financial planner Joan Gilles notes that 22 percent of small businesses in the country closed permanently during the pandemic. “Research also shows that minority-owned businesses suffered the greatest losses, and 25 percent of female-led businesses closed.”
She says some of her entrepreneurial clients “made miraculous transformations and innovated their way through. Some were super busy and successful during the pandemic — mostly remote, service-oriented businesses. Others just tried to hang on.”
History of Bigness
Klobuchar is author of the new book “Antitrust: Taking on Monopoly Power From the Gilded Age to the Digital Age.” She brought up the statement by Supreme Court justice Thurgood Marshall, who said in 1972: “Antitrust laws in general, and the Sherman Act in particular … are as important to the preservation of economic freedom and our free enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. The freedom guaranteed [to] each and every business, no matter how small, is the freedom to compete — to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster.”
In 1934, Supreme Court justice Louis Brandeis wrote in “The Curse of Bigness” that oil, rubber, steel, tobacco, sugar, and railroads were among the institutional coalitions that “rigged bids, defrauded patentees, crushed labor movements, and could sway prices in any direction regardless of supply or demand.”
He sought to break up large companies as a matter of democratic justice. “It is the relatively small man who pre-eminently needs the aid and solicitous care of industry and government,” Brandeis wrote.
According to a 2010 essay in Orion magazine, large corporations were reduced by the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, and the development of the Federal Trade Commission (FTC). The Orion essay notes that today we have let corporations grow to outrageous size. “Bigness worship permeates every layer of the culture. It is racked into our brains with every turn of the advertising screw.”
Today’s federal court justices are conservative about antitrust, Klobuchar says. “Competition is supposed to be our strength,” she explained at the town hall. “We want that disruption. Breakup [of large monopolies] has to be on the table.”
Klobuchar says that the appointment of Lina Kahn to the Federal Trade Commission (FTC) would be impactful. Kahn is a legal scholar at Columbia Law School who specializes in antitrust and competition law. On March 22, President Biden nominated Kahn to be a commissioner, but she is still awaiting Senate confirmation.
Klobuchar sees this post-pandemic time as poised to reboot the antitrust movement in the U.S. “We can’t use duct tape and band-aids anymore to take on the biggest companies of the world,” says Klobuchar.
There is a Competition and Antitrust Law Enforcement Reform Act proposal that would increase funds for agencies that deal with antitrust, such as the FTC. The Reform Act has bipartisan support. Klobuchar was hopeful, at the time this story went to print, that it would pass in Congress. Having a strong FTC will enable better enforcement.
Klobuchar believes the shift needs to put the burden on large corporations to prove their conduct is not hurting competition, rather than expecting the government to prove that it is.
Labor Laws
The town hall also conveyed why labor laws are impacted by the power of mega-corporations. When there are only a few large companies, employees have fewer choices about where to work. That enables wages to be kept low — and impacts the ability of independent businesses to bring in the revenue needed to provide stronger wages.
Klobuchar’s grandfather was a miner in the Teamsters Union by the age of 15, and her mother was in the teacher’s union. She says this taught her how bargaining power in the hands of employees can improve salaries. “Big employers can make it harder for employees to organize and refuse to participate in good faith around collective bargaining.”
Passing new anti-monopoly laws is starting to be seen as a priority for federal and state policymakers. New York State is considering pioneering antitrust legislation — the Twenty- First Century Antitrust Act — that would give small business owners the opportunity to compete fairly with dominant corporations.
The “Corporate Power” town hall was co-hosted by Small Business Rising and Athena for All, which is a coalition of local and national organizations representing working people, small business owners, people of color, and immigrants. Athena describes on its website: “We are coming together to create an economy where everyone can thrive, defend our climate, safeguard our communities from surveillance, and expand our democracy. We need everyone to devise these solutions.
As Klobuchar attempts to help build a mass movement again, she suggests, “It is time to put the trust back in antitrust.”
