"While not a household name today, Wright Patman was a legend in his time. His congressional career spanned 46 years, from 1929 to 1976. In that near-half-century of service, Patman would wage constant war against monopoly power. As a young man, at the height of the Depression, he challenged Herbert Hoover’s refusal to grant impoverished veterans’ accelerated war pensions. He successfully drove the immensely wealthy Treasury Secretary Andrew Mellon from office over the issue. Patman’s legislation to help veterans recoup their bonuses, the Bonus Bill—and the fight with Mellon over it—prompted a massive protest by World War I veterans in Washington, D.C., known as “the Bonus Army,” which helped shape the politics of the Depression.

In 1936, he authored the Robinson-Patman Act, a pricing and antitrust law that prohibited price discrimination and manipulation, and that finally constrained the A&P chain store—the Walmart of its day—from gobbling up the retail industry. He would go on to write the Bank Secrecy Act, which stops money-laundering; defend Glass-Steagall, which separates banks from securities dealers; write the Employment Act of 1946, which created the Council of Economic Advisors; and initiate the first investigation into the Nixon administration over Watergate.

In the late 1930s, the Federal Reserve Board refused to admit it was a government institution. So Patman convinced the District of Columbia’s government to threaten foreclosure of all Federal Reserve Board property; the Board quickly produced evidence that it was indeed part of the federal government.

Brandeis did for many New Dealers what he did for Patman, drafting legislation and essentially formalizing the populist social sentiment of the late 19th century into a rigorous set of legally actionable ideas. This philosophy then guided the 20th-century Democratic Party. Brandeis’s basic contention, built up over a lifetime of lawyering from the Gilded Age onward, was that big business and democracy were rivals.

This use of legal tools to constrain big business and protect democracy is known as anti-monopoly or pro-competition policy. This tension stretched back to colonial times and the nation’s founding. The British East India Company was a chartered corporation organized to monopolize the tea business for its corporate owners and the Crown—which spurred the Boston Tea Party. Alexander Hamilton’s financial architecture concentrated power and wealth—which prompted the founding of the Democratic Party along more Jeffersonian lines, promoting private small-land ownership. J.P. Morgan’s and John D. Rockefeller’s encroaching industrial monopolies were part of the Gilded Age elite that extorted farmers with sky-high interest rates, crushed workers seeking decent working conditions and good pay, and threatened small-business independence—which sparked a populist uprising of farmers, and, in parallel, sparked protest from miners and workers confronting newfound industrial behemoths.

In the 20th century, Woodrow Wilson authored the Federal Trade Commission Act, the Federal Reserve Act, and the anti-merger Clayton Act, and, just before World War I intervened, he put Brandeis on the Supreme Court. Franklin Delano Roosevelt completed what Wilson could not, restructuring the banking system and launching antitrust investigations into “housing, construction, tire, newsprint, steel, potash, sulphur, retail, fertilizer, tobacco, shoe, and various agricultural industries.” Modern liberals tend to confuse a broad social-welfare state and redistribution of resources in the form of tax-and-spend policies with the New Deal. In fact, the central tenet of New Deal competition policy was not big or small government; it was distrust of concentrations of power and conflicts of interest in the economy.

New Dealers understood this not as regulation, but decentralization, a shrinking of the financial sector to prevent conflicts of interest. In the commercial sphere, Patman had a trust-busting agenda, not a big-government one.

Concentrated private economic power was “a public trust,” with public obligations, and the continued “enjoyment of that power by any individual or group must depend upon the fulfillment of that trust.” The titans of the day were not businessmen but “princes of property,” and they had to accept responsibility for their power or be restrained by democratic forces.

In 1947, Patman even commissioned experts to publish a book titled Fascism in Action, noting that fascism as a political system was the combination of extreme nationalism and monopoly power, a “dictatorship of big business.”

The Securities and Exchange Commission was created, the stock exchanges were regulated, the big banks were broken up, the giant utility holding companies were broken up, farmers gained government support for stable agricultural prices free from speculation, and the chain stores were restrained by laws that blocked them from using predatory pricing to undermine local competition.

On the right, a finance-friendly school of libertarian intellectuals known as the Chicago School targeted Brandeisian competition policy. Michael Jensen, a Milton Friedman-influenced financial economist, argued that “our form of political democracy” threatened the large corporation. Government rules, labor power, and antitrust policies were scaring businessmen into not investing. This type of thinking became known as the “capital shortage” argument: A lack of investment capital caused a lack of goods and services and, thus, inflation. Inflation then destroyed more capital, worsening the shortage. The corporation, to Jensen, was property—not FDR’s public trust—and inhibiting the use of that property by shareholder owners was the reason for economic malaise.

Another Chicago School libertarian, George Stigler, argued a theory of regulatory capture. It wasn’t Wall Street or corporate corruption that broke America’s transportation system, he said, it was the incompetence of New Deal regulators themselves, acting in the interests of the industries they were supposed to be regulating. The answer was to shield the corporation from inept regulators and deregulate. Essentially, Jensen and Stigler offered a restoration of the pre-FDR view of property rights.

For younger Democrats, the key vector for these ideas was an economist named Lester Thurow, who organized the ideas of Galbraith, Stigler, Friedman, Bork, and Jensen into one progressive-sounding package. In an influential book, The Zero-Sum Society, Thurow proposed that all government and business activities were simply zero-sum contests over resources and incomes, ignoring the arguments of New Dealers that concentration was a political problem and led to tyranny. In his analysis, anti-monopoly policy, especially in the face of corporate problems was anachronistic and harmful.

With key intellectuals in the Democratic Party increasingly agreeing with Republican thought leaders on the virtues of corporate concentration, the political economic debate changed drastically. Henceforth, the economic leadership of the two parties would increasingly argue not over whether concentrations of wealth were threats to democracy or to the economy, but over whether concentrations of wealth would be centrally directed through the public sector or managed through the private sector—a big-government redistributionist party versus a small-government libertarian party. Democrats and Republicans disagreed on the purpose of concentrated power, but everyone agreed on its inevitability. By the late 1970s, the populist Brandeisian anti-monopoly tradition—protecting communities by breaking up concentrations of power—had been air-brushed out of the debate. And in doing so, America’s fundamental political vision transformed: from protecting citizen sovereignty to maximizing consumer welfare.

Democrats and Republicans still fought. Neoliberals, while agreeing with Reagan Republicans on a basic view that the structure of corporate America should be as depoliticized and as shielded from voters as possible, still vehemently opposed Ronald Reagan on environmental policy, foreign policy, and taxes. But the very idea of competition policy, of inserting democracy into the economy, made no sense to them. Previously, voters had expected politicians to do something about everything from the price of milk to mortgage rates. Now, neoliberals expressed public power through financial markets. As libertarian and future Fed Chairman Alan Greenspan had written a decade before, “The ultimate regulator of competition in a free economy is the capital market.”

When Reagan came into office, one of his most extreme acts was to eliminate the New Deal anti-monopoly framework. He continued Carter’s deregulation of finance, but Reagan also stopped a major antitrust case against IBM and adopted Bork’s view of antitrust as policy. The result was a massive merger boom and massive concentration in the private sector.

Clinton stripped antitrust out of the Democratic platform; it was the first time a reference to monopoly power was not in the platform since 1880. Globalization, deregulation, and balanced budgets would animate Clinton’s political economy, with high-tech and finance leading the way.

At the end of his presidency, Clinton explained his success. He praised Greenspan’s stewardship of the Federal Reserve. He said that the key to noninflationary growth was ensuring that workers did not demand raises beyond the rate of productivity, while unleashing businesses to pursue the most profitable lines of investment through deregulation and globalization. He implicitly touted the theory of capital shortage: Inflation resulted from overregulation and deficits, which took money out of the hands of businesses. Putting money and power back into the hands of businesses with deregulation and a balanced budget led to low interest rates, massive corporate profits, productivity growth, and broad prosperity.

From telecommunications to media to oil to banking to trade, Clinton administration officials—believing that technology and market forces alone would disrupt monopolies—ended up massively concentrating power in the corporate sector. They did this through active policy, repealing Glass-Steagall, expanding trade through NAFTA, and welcoming China’s entrance into the global-trading order via the World Trade Organization.

And in response to the end of the Cold War, the administration restructured the defense industry, shrinking the number of prime defense contractors from 107 to five. The new defense-industrial base, now concentrated in the hands of a few executives, stopped subsidizing key industries. The electronics industry was soon offshored. Clinton’s “Third Way” went global, as political leaders abroad copied the Clinton model of success.

Despite this prosperity, in 2000, the American people didn’t reward the Democrats with majorities in Congress or an Oval Office victory. In particular, the rural parts of the country in the South, which had been a traditional area of Democratic strength up until the 1970s, were strongly opposed to this new Democratic Party. And white working-class people, whom Dutton had dismissed, did not perceive the benefits of the “greatest economy ever.” They also began to die. Starting in 1998 and continuing to this day, the mortality rate among white Americans, specifically those without a high school-degree, has been on the rise—leaving them scared and alienated.

Old problems also reemerged. Financial crises unseen since the 1920s began breaking out across the world, from Mexico to East Asia, prompted by “hot-money” flows. Deflation, rather than inflation, and a capital glut, rather than a capital shortage, started to concern policymakers.

The gains of the 1990s, it turns out, were not structural, but illusory. Early in Bush’s term, the stock-market bubble burst and wages collapsed. A few years later, a global banking crisis, induced by a financial sector that had steadily gained power for 40 years, erupted. Concentration of power in the private sector, it turned out, had its downsides.

For most Americans, the institutions that touch their lives are unreachable. Americans get broadband through Comcast, their internet through Google, their seeds and chemicals through Monsanto. They sell their grain through Cargill and buy everything from books to lawnmowers through Amazon. Open markets are gone, replaced by a handful of corporate giants.

Americans feel a lack of control: They are at the mercy of distant forces, their livelihoods dependent on the arbitrary whims of power. Patman once attacked chain stores as un-American, saying, “We, the American people, want no part of monopolistic dictatorship in … American business.” Having yielded to monopolies in business, the nation must now face the un-American threat to democracy Patman warned they would sow."

https://www.theatlantic.com/politics/archive/2016/10/how-democrats-killed-their-populist-soul/504710/