Mentions — December 11, 2012, 2:44 pm

Paul Krugman on Barry C. Lynn and the Effect of Monopolies on Labor

“I realized that to move, I’d need the approval of some grand poobah.”

In his column in yesterday’s New York Times, “Robots and Robber Barons,” Paul Krugman looked at two forces that are harming American workers: technology and unregulated monopoly power.

Krugman cites Barry C. Lynn’s work at the New American Foundation in explaining the latter:

What about robber barons? We don’t talk much about monopoly power these days; antitrust enforcement largely collapsed during the Reagan years and has never really recovered. Yet Barry Lynn and Phillip Longman of the New America Foundation argue, persuasively in my view, that increasing business concentration could be an important factor in stagnating demand for labor, as corporations use their growing monopoly power to raise prices without passing the gains on to their employees.

Lynn’s February 2012 cover story, “Killing the Competition,” looked at the effects of monopoly power on workers in the technology, farming, and publishing sectors, as well a number of other industries:

[T]ake the advertising executive who recently told me about her decision to ditch her career and become a teacher. Over the course of a decade, this executive steadily accumulated responsibility as she moved from Wunderman to Omnicom to Young & Rubicam, confident she was destined for a corner office. Then, a couple of years ago, she hit a wall. “Every place I wanted to work was already owned by WPP,” she said, referring to the British giant that controls Y&R and many other firms. “And I realized that to move, I’d need the approval of some grand poobah.”

Again we encounter the familiar story. Well into the 1980s, power on Madison Avenue was dispersed among more than a dozen large agencies and scores of vibrant smaller firms. But over the past thirty years, four sprawling holding companies—WPP, Interpublic, Omnicom, and Publicis—swallowed up almost the entire industry. WPP alone controls more than 300 ad agencies, including such once iconic shops as the Grey Group, Ogilvy & Mather, and Hill & Knowlton. And the four giants vigorously shore up this power with strict non-compete employment contracts.

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