Depth report

　　

Oprah Winfrey, America’s best sensationalist, looks set to be the Democratic Party’s dream candidate to defeat Donald Trump in 2020. As an African American, she talks to all interest groups and speaks out about various political issues surrounding identity, from "Me too" (too I) to "Black Lives Matter" (Black Lives Matter).

    Oprah has an empire of television, film and magazines, but as the most popular all-round female media star in the United States for decades, she has also spoken to the middle class. Oprah, like our current president, is a global brand. This is the problem. We live in a superstar economy in which top figures, companies and even geographic regions control disproportionately huge power, wealth and attention.

    Since the late 1990s, we have witnessed the rise of superstar companies. According to the McKinsey Global Institute (McKinsey Global Institute), since then, the profit share of the three major industries of technology, finance, healthcare, and medicine has almost tripled, accounting for about 45% of the total profits of US companies ( Concentration is also increasing, although the concentration of these industries in other rich countries is relatively low).

    However, in the United States, this situation is increasingly not limited to intellectual property-intensive industries, but throughout the entire economic field. A recent Brookings Institution article explained that the concentration of wealth and influence in more than 75% of industries in the United States has increased over the past 20 years. If you compare these figures with the post-World War II period, where the U.S. economy grew most strongly, you will find a striking contrast. In 1954, the 60 largest US companies accounted for less than 20% of the US gross domestic product (GDP). Today, the top 20 US companies account for more than 20% of US GDP.

    Why is this happening? One of the reasons is, of course, global competition. Global competition has brought greater pressure to American companies, forcing them to break the post-war situation of more balanced resource allocation among employees, companies and local communities. Another reason is the change in anti-monopoly law. It is no accident that the monopoly regulatory reforms advocated by Federal Judge Robert Bork spread when foreign competition intensified in the 1980s. Burke firmly believes that as long as the prices of consumer goods fall, there will be no competition issues. This thinking makes the US authorities no longer control corporate concentration as they did during the “Gilded Age” at the end of the 19th century and after World War II.

    However, today's largest and most powerful industry operates in a very different way from previous industries. Their products are often cheap or free, so the price of consumer goods should not be a measure of competition. Network effects make it seem that companies that can quickly grab the largest market share can dominate the industry overnight (for example, Amazon accounted for 44% of U.S. e-commerce sales in 2017). Their huge capital reserves allow them to quickly buy out potential competitors. American agrochemical company Monsanto has acquired more than 30 companies in the past decade; commercial software maker Oracle has acquired more than 80 companies, and Google has acquired more than 120. Almost all other industries-from food and beverage, banking, packaged goods, to the media-have merged to gain the necessary volume to fight against the tech giants. Obviously, the widely reported number of American start-ups and the sharp decline in entrepreneurial enthusiasm has a lot to do with the concentration of power in a few greedy companies.

    The superstar companies are surrounded by a group of superstar investors and superstar employees. Of particular note is the rise of tax "pass-through" entities. Under Trump's tax plan, these companies have received more special tax incentives. The tax transfer entity is an enterprise that is taxed at the personal income tax rate of the individual owner. The profits of these companies accounted for 50% of the total profits of American companies (twice the proportion in 1980), and mainly represented practitioners in intellectual property-intensive fields, such as technology, law, and finance. These people accounted for about 40% of the increase in income inequality recorded by scholars such as Thomas Piketty.

    It is not surprising that the aggregation of these economic forces has led to the concentration of regional power. A 2016 report by the Economic Innovation Group showed that 75% of more than 3,000 companies in the United States accounted for 50% of all new jobs. This is a snowball trend. As the most talented millennials are attracted to a few cities, housing prices are pushed up, and it is even more difficult for anyone who does not belong to a superstar club to gain an advantage in the socio-economic food chain.

    This is why, even though I like Oprah very much, and even though I have the upper hand in her emotions compared to our current president, I still have reservations about letting her be in the White House. Democrats have spent a lot of time worrying about the concentration of power over race and gender. But at the risk of sounding like a Marxist, I have to point out that the real action is class. I hope that our next president is someone who is deeply concerned about the interpretation and deconstruction of the superstar economy. The superstar economy is stifling a more shared and sustainable economic recovery. I just don't believe that a billionaire with a background in media can take on this important task.