The American Prospect, December 4, 2019
Bloomberg News raised some eyebrows in the media world last week when reports leaked that it won’t investigate former New York mayor and Wall Street darling Michael Bloomberg as he (groan) runs for president. The news outlet also decided to refrain from investigating any other Democrats running, to maintain a level playing field, and added that the opinion page would publish no outside op-eds on the election as long as its owner remained a candidate.
Bloomberg the website is named after Bloomberg the candidate and founder, and while the editorial decision is certainly polarizing, it also represents a commitment to avoid even the appearance of a conflict of interest. But where does that commitment stop? Apparently, as soon as the topic is a bit more complicated than the literal name of the company.
While Bloomberg News might not be investigating or opining on Bloomberg the candidate, it has no problem publishing dubious and flimsy arguments when they come from the pen of anyone else in the Democratic Party’s Wall Street wing. Case in point: a Monday morning column from Peter Orszag titled “What If Companies Get Big Because They’re Better?”
Orszag represents everything wrong with Wall Street’s friendliness to the Democratic Party. After running the Congressional Budget Office, he became director of the powerful Office of Management and Budget under Obama. As unemployment hovered just under 8 percent in November 2009, Orszag decried deficit spending as “serious and ultimately unsustainable.” Obama’s hesitance about deficit spending in the middle of economic catastrophe—precisely the time when the government should be spending—is remembered as a betrayal of the people, one of the decisions that made Democrats seem aloof and callous to average voters. Orszag also helped focus the Affordable Care Act on cost-cutting, rather than the more humane, worthy, and politically resonant goal of increased access for vulnerable Americans.
Orszag eventually left the White House for a job at Citigroup—a great look for a crisis-era official—and is now the CEO of financial advisory at the boutique merger advisory bank Lazard. But he also enjoys a regular column in Bloomberg’s opinion section. It already bodes poorly for a business publication to give regular op-ed space to a top executive at one of the firms it covers. But when that executive uses his soapbox to spread misleading ideas from murky sources, one has to question Bloomberg’s editorial priorities.
In “What If Companies Get Big Because They’re Better?” Orszag trumpets a new paper on labor compensation as evidence that America does not, in fact, have a monopoly problem. Instead, Orszag argues, the researchers’ “exhaustive empirical work” shows that a few superstar firms are crushing the competition thanks to superior productivity—more patents filed, and more units produced per worker. “The evidence … buttresses the view that superstar firms are thriving because they are simply more productive than other firms, not because they have been given a special break by regulators,” Orszag writes.
There are many flaws to this argument on the merits. The biggest is that productivity in the U.S. overall has slowed to a crawl in recent years, which should end the discussion right there. More productive firms, of course, can also be beneficiaries of lax antitrust enforcement, and labor productivity gains were actually higher back when antitrust was more vigorously enforced. But there’s another unexamined factor to Orszag’s piece.
Look at who paid for the research Orszag relies upon. In tiny text in a footnote, one finds disclosure that funding for the paper was provided by, among others, Accenture LLC, the IBM Global Universities Programs, the MIT Initiative on the Digital Economy, and Schmidt Futures.
Accenture is a professional services company that does plenty of consulting work on mergers and acquisitions—its website brags that it “supported some of the largest and most complex mergers and divestitures in history.” Orszag’s own firm Lazard calls itself “one of the world’s leading advisors on mergers, acquisitions, and related strategic matters.” IBM offers “M&A Accelerator” management software. The MIT Initiative on the Digital Economy has received a multimillion-dollar grant from Google and Walmart. Schmidt Futures is a project of ex-Google CEO Eric Schmidt, which coyly states that it “bets early on exceptional people making the world better.” And of course Google was built not on productivity advances but savvy acquisitions permitted by lax regulators. Venture capital as philanthropy: only in Silicon Valley.
These are not independent funders merely curious about the rise of corporate concentration. Each has a strong vested interest in maintaining the current anything-goes regulatory environment toward mega-mergers. Orszag’s firm, too, wants to keep the M&A field unperturbed, so a column from their swanky Obama alumnus in one of the most respected business sites around certainly helps the cause, especially if it touts the notion that M&A should not be discouraged, and that bigger firms merely reflect the natural order of things.
Never mind that Orszag’s argument falls apart as soon as you recognize that even if a firm with monopolistic power is nominally productive, it can both be behaving illegally under law and be bad for society. The point is to have a headline written by a prestigious man with a prestigious legacy.
Bloomberg’s many talented reporters would have smelled something fishy about Orszag’s argument had he pitched it to them as a quote for a story. But when an Obama alum who hangs out in C-suites wants to write a column, editors bend over backwards to accommodate him—even when that means attaching their publication’s name to a bad argument written to help the bottom line of the company the ex-Obama official now leads. This is not unique to Bloomberg: The New York Times has taken blows from academics, leftist journalists, and my colleague Dean Baker, among others, for uncritically publishing scaremongering columns by Steven Rattner just because he worked for Obama, and Wall Street. To bring events full circle, Rattner in fact manages the money of … Michael Bloomberg.
To the extent that this op-ed diminishes the anti-monopoly arguments of Elizabeth Warren and Bernie Sanders and burnishes the credentials of their challengers—Michael Bloomberg, for example—it also serves as an in-kind donation to the Wall Street faction of the Democratic Party. In other words, while barring discussion of Bloomberg on the op-ed pages, Bloomberg News has no problem laundering arguments that will help him in his campaign.
Call it a knock-on effect from the mainstream media’s long love affair with Obama himself. If someone tied to that technocratic ideal of a White House is talking, editors want to give them a megaphone. For all of the elite press’s hand-wringing after the 2016 election about losing touch with the common man, and a growing epiphany about their strong bias toward centrism, the nation’s opinion editors still don’t seem to realize they have a moral and professional obligation to think critically about what powerful people want to say on their websites. Memo to all: If the public doesn’t trust you, it’s not because you wrote too few profiles of white dudes in diners. It’s because you’re willing to publish nonsense, so long as the right suit says it.
Max Moran is a Research Assistant at the Revolving Door Project at the Center for Economic and Policy Research.