Recent editorials of statewide and national interest from New York’s newspapers:

Visa Is Doing What Big American Companies Do to ‘Protect This Business’

The New York Times

Dec. 2

Visa dominates the lucrative business of processing debit card transactions. Merchants must choose between paying the financial services company’s fees or foregoing sales to the millions of Americans who carry cards emblazoned with Visa’s logo.

A San Francisco technology start-up named Plaid threatened that dominance. The company planned to debut a rival service next year that would charge half as much as Visa.

So Visa did what big American companies have learned to do: It agreed to buy the smaller company, pledging a king’s ransom to eliminate the threat of competition.

Last month, the Justice Department sued to block the deal as a violation of antitrust law. The intervention is necessary to protect the interests of merchants and consumers, and the health of the broader economy. The federal government has been far too permissive in allowing large companies to swallow potential rivals, particularly in the rapidly evolving technology sector.

The Justice Department has destroyed its credibility over the past four years by prioritizing President Trump’s interests over the national interest. Antitrust enforcement is no exception. The department has pursued cases against the president’s enemies, notably investigating an agreement among four auto companies to voluntarily reduce emissions, and it has declined to pursue cases against the president’s friends, allowing T-Mobile to acquire Sprint. But in pursuing the case against Visa, the department is ending the Trump era on a relatively high note, setting an example the Biden administration ought to emulate.

Debit cards, which have soared in popularity in recent decades, allow customers to make purchases by authorizing withdrawals from their bank accounts. Visa operates a system that connects the buyer’s bank and the merchant’s bank. For this service, the merchant pays a fee to Visa and to the bank that issued the card. Other companies offer a similar service, but Visa is the dominant player. It processed about 70 percent of the online debit transactions in the United States last year, a business that produced about $2 billion in profits.

Plaid is not one of Visa’s competitors — yet. The start-up provides the plumbing that lets apps like Venmo, a cash transfer service, or Robinhood, a stock trading platform, access users’ bank accounts. Visa’s dominance rests on its exclusive relationships with the banks that issue debit cards, but Plaid now has relationships with most of the same banks.

Last year, Visa made a small, exploratory investment in Plaid. A few months later, according to the government’s complaint, one of Plaid’s co-founders called Visa to say that the company was for sale, and the price was about $5 billion. Why would Visa pay so much for a company with revenues of $100 million last year? According to the government’s complaint, Plaid made clear that it was planning to get into Visa’s business. The smaller company told Visa that it was preparing to launch a new system for processing online debit payments, with fees of about 50 percent of Visa’s.

One Visa executive described Plaid’s potential as a “volcano” with “just the tip showing above the water,” according to the complaint. Visa estimated it could lose a quarter of its online debit business by 2024. The company’s chief executive said buying Plaid was an “insurance policy.” He told investors, “we must always do what it takes to protect this business.”

Visa says that it’s paying for Plaid’s current business, which is growing fast, that the government’s complaint takes quotes and facts out of context and that it’s ridiculous to portray Plaid as a dangerous rival when it hasn’t even introduced a rival product. “Visa’s business faces intense competition from a variety of players — but Plaid is not one of them,” the company said in a statement.

Both Plaid’s investors and Visa’s investors stand to benefit from the proposed deal. Visa is willing to pay $5.3 billion because it stands to lose even more money if Plaid emerges as a viable competitor. Plaid, in turn, might eventually be able to earn more than $5.3 billion, but that would take time and effort. Its investors have decided they’d rather get paid upfront.

The problem is that everyone else loses. Visa’s profits come directly from merchants who accept its debit cards, and indirectly from the customers who use debit cards. The Justice Department estimates merchants must pay 39 cents to accept a $60 payment from a Visa debit card. Some portion of that fee is passed on to customers in the form of higher prices.

Visa, of course, could embrace the new technology and cut its prices. But research shows that corporate concentration generally slows the pace of innovation, for the obvious reason that companies don’t try as hard when they aren’t living in fear of competition. As the economist John Hicks observed in 1935, “The best of all monopoly profits is a quiet life.”

The International Monetary Fund estimated last year that increased corporate concentration since 2000 had dampened investment sufficiently to reduce economic output by 1 percent in the average advanced economy. It said more concentration could increase the damage.

Concentration can even be bad for the workers at dominant companies: It holds down wages by limiting the number of rivals that might pay for the worker’s expertise.

Big companies exert big political power, rewriting laws to serve their own purposes.

Over the past four decades, the federal government has maintained a permissive attitude toward corporate concentration. There are now four big airlines, three big mobile telephone companies, two big beer companies. Four firms dominate sales of farm seeds. Three make most of the light bulbs. Two make the vast majority of disposable diapers.

A handful of technology companies have emerged as the Goliaths of the online economy.

The big companies, and their defenders in Washington, argue that they still operate under the discipline of market forces. Google, for example, is fond of declaring that if someone should succeed in making a better search engine, customers are free to use it. But the technology companies, in particular, have learned to prevent competition by snapping up nascent rivals. In addition to the name-brand mergers, like Google’s acquisition of YouTube or Facebook’s purchases of Instagram and WhatsApp, the big tech companies have purchased dozens of small companies that might have grown into viable competitors. In October, an investigation by the House Judiciary Committee concluded that Facebook, in particular, had pursued an “acquire, copy, or kill” strategy for dealing with potential competitors.

In the Visa case, the government is drawing an important line in the sand by arguing that Visa should not be allowed to acquire a potential rival. Before the evisceration of antitrust enforcement in the 1980s, this was widely accepted as a valid reason for blocking a merger.

It is time to restore that principle as part a broader reinvigoration of antitrust enforcement.



Virus vaccines are close


Dec. 2

A COVID-19 vaccine is on its way.

In just two weeks, the first 170,000 New Yorkers may start receiving the Pfizer vaccine.

That’s an enormous step out of this hell, one that merits a healthy dose of optimism and hope.

But to get this right, federal regulators, scientists and experts must still conduct thorough, independent reviews, and make some difficult choices. And Americans must be able to trust those assessments, have confidence in the decisions, and maintain some patience.

The British government’s approval of the Pfizer vaccine Wednesday is another piece of good news. Yet some in the Trump administration are reportedly upset the United States wasn’t first. White House chief of staff Mark Meadows has met with Food and Drug Administration commissioner Dr. Stephen Hahn two days in a row, reportedly pressing him to move even faster.

But the FDA is already on a fast track toward its own emergency authorization. FDA officials will meet Dec. 10 to discuss the Pfizer vaccine, and Dec. 17 for the Moderna vaccine, in sessions open to the public, complete with data and other materials. That public review process is important, not only for the federal approval itself, but also to gain public trust and allow states like New York to satisfy their own questions.

Even assuming the FDA does approve the vaccine’s emergency use next week, and New York has access to it by Dec. 15, as Gov. Andrew M. Cuomo said Wednesday, the wait won’t be over for most of us. A Centers for Disease Control and Prevention advisory group rightly voted Tuesday to give priority to long-term care facilities’ residents and staff, and to health care workers.

Those recommendations make sense. Residents and staff of long-term care facilities account for about 40% of all COVID-19 deaths. Here in New York, we’ve lost thousands of our parents, grandparents, aunts, uncles and friends. Helping the most vulnerable populations first and those who take care of them is critical to ending this tragic chapter.

But that means it’s going to be months before a broad swath of New Yorkers has access to one of the vaccines, and even longer before they reach children. So, herd immunity — the concept of vaccinating enough residents to protect the entire population — is still a ways away. For the foreseeable future, the broader spread of the pandemic is likely to continue, especially if people continue to flout restrictions and rules.

But while we wait, we have the ability to slow that spread ourselves — if we hunker down, stay home, wear masks and cancel the parties, gatherings and outings. Meanwhile, state officials have a lot to do to make sure they can distribute the vaccines to all corners of the state, keep track of who gets what, and convince New Yorkers of all ages that the Pfizer and Moderna vaccines, each of which requires two doses weeks apart, are safe and effective.

The vaccine is coming. We just have to wait a little while longer — and stay safe while we do.



Coronavirus Needs To Change Way Governments, And Schools Are Run

The Post Journal

Dec. 2

This has been the year from hell. Due to something not even on our radar in late 2019, our nation, state and communities have been compromised.

Some may have expected some type of economic slowdown, but no one could have foreseen one of the most bizarre and volatile times of our life. As a number of shops have closed — or gone to limited hours — due to the coronavirus, others have have fluorished, especially the big-box or Internet distribution giants.

Here at home, we have seen some businesses go and others bravely open their doors. For everyone who is in the private sector, there are no guarantees. In fact, there are some worried another New York state shutdown could be looming.

Which is why how our governments and school districts are operating is a major cause for concern. Each budget year, residents are conditioned to hear just how tight and bare bones spending plans can be.

This year, we heard the same — while noting spending increases for many municipalities and local schools. It’s almost as though those who serve do not want to believe the economy is as fragile as it really is.

Comptroller Thomas DiNapoli, on a monthly basis, offers a grim picture. In his most recent report, the state official noted sales tax receipts down by $3 billion for October. “Revenues are down and New York continues to withhold billions of dollars in spending due to the fiscal impact of the coronavirus pandemic,” DiNapoli said. “Caution is needed because rising infection rates may force more shutdowns and even greater economic damage. Washington must respond with more economic stimulus, including real relief for state and local governments.”

Area officials are almost too giddy that the county sales-tax revenue is nearly the same as last year. That being said, if New York is suffering — we will too.

Budgets put together this year — in the midst of a pandemic — did nothing to slow spending. In fact, many plans raise taxes on already hard hit residents.

If elected officials thought this year was challenging, they obviously have not thought about 2021 or 2022. The virus has changed our life. It needs also change the way we run our governments and school districts.



Take care of jobless, eviction measures first

The Auburn Citizen

Nov. 29

It’s a remarkable reality that in the midst of the worst economic collapse this country has seen since the Great Depression, Congress has failed to act since early spring in a comprehensive way to help Americans survive financially.

The politicization of COVID-19, which was caused by the failed leadership of President Donald Trump, effectively paralyzed any efforts by moderate Republicans to work with Democrats to get a big package done. That inaction is continuing now, despite President-elect Joe Biden’s victory over Trump, chiefly because the current president is obsessed with falsely claiming he actually won despite any concrete evidence to the contrary.

It seems clear there’s virtually not chance at getting a comprehensive relief package before the start of Biden’s presidency.

What can happen, though, is the extension of a few measures vital to working-class American citizens who are facing financial disaster at the end of the year. Expiring on Dec. 26 are the Federal Pandemic Unemployment Compensation program and Pandemic Unemployment Assistance programs, both still badly needed as the resurgence of the virus threatens more job losses. There are estimates of more than 1 million New York state residents being cut off from help if these programs lapse.

Federals and state moratoriums on evictions are also set to expire a few days later, further compounding the potential crisis.

While leaders in Congress and the White House seem no where close to finding common ground on big-ticket issues such as state and local government assistance, there appears to be an opening to get some of the expiring programs extended through the federal spending legislation that must be approved and signed into law to avoid a government shutdown next month.

We urge the New York delegation, including U.S. Rep. John Katko, to become vocal and persistent advocates for getting this interim step done without any drama.

It’s by no means a long-term solution to the much bigger pandemic-related challenges, but it’s vital for millions of Americans trying to weather this unprecedented crisis.



Need to understand racial disparity in COVID deaths

The Adirondack Daily Enterprise

Dec. 2

Racial minorities have been hit far harder than white Americans by COVID-19. Throughout the epidemic, that has been a constant.

But why? Theories abound. One is that African-Americans, whose average incomes are lower than those for whites, do not benefit from as high a quality of health care.

Obviously, that speculation needs to be explored — but it is not satisfactory as a stand-alone explanation for the disparity.

Black and Native American people have suffered much more than whites. Statistics from the Centers for Disease Control and Prevention indicate that, proportionately, Black people are infected by COVID-19 2.6 times more often than white people. Their hospitalization rate is 4.7 times as high and their death rate is more than twice that for whites.

Native Americans infected by the virus are hospitalized 5.3 times as frequently as whites. They perish 1.4 times as often.

Reaction to the numbers has been spotty. As The Associated Press reports, Black clergy leaders and the United Way of New York City are partnering to provide more resources to the minority community in that urban area. Better testing and contact tracing are among goals.

New York City is highly unusual in that regard, however. In most areas, there are no specialized initiatives aimed at safeguarding minorities against COVID-19.

While the New York campaign has common-sense appeal, there is much about how the coronavirus affects human beings of all skin colors that we do not know. Why are minorities hit harder? What can we do about that?

It is entirely possible that new pandemics will invade the United States. But we know COVID-19 behaves differently than many other viruses. So what guarantee is there that if safeguards against this disease are developed for minorities, they will be effective against another epidemic?

None. Still, the research needs to be a priority for the simple reason that COVID-19 will continue to be a widespread threat for months — and that what we learn about it may provide information critical in battling other diseases in the future.