Thread by @doctorow

The labor movement has a complicated relationship with monopolism. For a long time, economists (both right and left) documented the "large firm premium" - the higher wages that workers at big companies got as a share of the companies' high profits.

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Concentrated industries can be easier to bargain with, since a strike at a dominant company can effectively shut down the whole industry, bringing all the firms around in one go. By contrast, strikes against small firms have few systemic effects.

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But there's definitely a limit to this dynamic: once industries become sufficiently concentrated, they can skip the large firm wage premium and instead mobilize their monopoly profits to crush unions. That's been underway since the Reagan years.

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In his newsletter, @BrandonMagner offers a good example of how this works, through the Caterpillar-UAW 1990s labor dispute, in which Caterpillar - riding high on its monopolization of its market - refused the contract the UAW signed with John Deere.

brandonmagner.substack.com/p/labor-law-an…

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Caterpillar's monopoly gave it essentially unlimited funds to fight UAW: they could shift production overseas, mothball or divert local production, made it clear that the UAW's only future with Caterpillar was to take whatever crumbs Caterpillar offered them.

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Magner gives another example: the Teamsters' bid to organize Overnite Transportation, a historically rabid anti-union trucking shop that was purchased by the unionized Union Pacific company as part of a monopolistic aquisition spree.

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Despite overwhelming early support by Overnite drivers for unionization drives, signing up 25% of the terminals in short order, the company's profits were so large that they could spend bottomlessly to delay subsequent votes.

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A brutal three-year strike followed, ending with the Teamsters' surrender. They even gave up on terminals that had voted to join the union. Overnite - like Caterpillar - was too big to beat.

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To these examples of how the large firm premium becomes a large firm penalty, I want to add the changes in how the creative guilds in Hollywood lost ground to the studios through monopolization.

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The entertainment guilds are a legacy of the New Deal and its revitalization of labor consciousness. Whereas today, independent contractors who seek to form guilds are often punished as "anti-competitive cartels," in the 30s, this was par for the course for many workers.

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For decades, guilds bargained as a group, dividing and conquering the studios. The writers, directors, actors, and other guilds would go to the weakest studio and bargain a (very good) contract for all of them. Then, they'd take this deal to the next studio, and the next.

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But in 1982, the fractious and fractured Alliance of Motion Picture and Television Producers (the cartel that represented the studios) unified and - emboldened by Reagan's slaughter of the Air Traffic Controllers' union - pushed back hard.

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They flipped the negotiations on their head. Today, its the studios who negotiate as a body, and they pick off the guilds one at a time, starting with the weakest, wringing concessions, and then demanding the same from the rest.

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Consolidation in the studios made this cartel possible, and kicked off more consolidation (today there are four major studios).

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The worse things were, the worse they got. The consolidated studio system conspired with the consolidated talent agencies to accept far lower sums for creatives in exchange for bribes ("packaging fees") to the agencies.

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Today, the Writers Guild is nearing (a bloody, hard-fought) victory with the agencies, nearly two years (!) after every guild member fired their agents over this conflict-of-interest.

pluralistic.net/2020/08/06/no-…

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But at the very same moment, the monopolistic studios - which have been allowed to acquire or create their own distribution channels and other elements of vertical monopolies - are squeezing talent even harder.

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To take just one example: now that Disney exclusively distributes its catalog through Disney Plus, there are no more licensing fees of the sort that Disney would get from second-run movie houses, streaming services and TV networks.

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But creatives' deals give them a share of these fees, and since they no longer exist, creatives' are frozen out of the revenues from in-house streaming platforms. Disney gets 100% of the revenue from back-catalog on D+, and needn't share any of it with creatives.

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Not just Disney: all the studios are creating their own streaming platforms, and so this is replicating across the field. The lesson is clear: the large-firm premium is dead. A fair deal for labor will not emerge from monopolized industries.

eof/