In The Curse of Bigness, Columbia law professor Tim Wu argues that if the Gilded Age taught us anything, it’s that corporate consolidation leads to inequality, suffering, and, sometimes, fascism. Wu, a former candidate for lieutenant governor of New York, writes that we’ve reverted to the economic structures of a over century ago “as if trapped in a bad movie sequel.” Today fewer, larger companies dominate the economy. Since 1997, US public markets have lost more than half of their publicly traded firms, and oligopolies control industries like finance, communications, airlines, and pharmaceuticals. In the United States, the top 1 percent has amassed 38.6 percent of the national wealth.
But the era of the great monopolists also offers us the antidote: robust antitrust laws. Wu wants to recover the political courage to go after concentrated private power, and his book draws lessons from the likes of Louis Brandeis and Theodore Roosevelt. To understand the danger we’re in, he argues that we must look back at the last period of great inequality and relearn how we made it out.
Wu sat down with The Nation’s Christopher Shay and discussed the connections between corporate concentration, democracy, and living a fulfilling life.
Christopher Shay: Why should we be so concerned with corporate concentration?
Tim Wu: It’s at the root of so many problems. In a concentrated industry, you don’t have to raise wages, and you find ways to give your shareholders a lot of money. It’s a major factor in inequality, but then if you say, “OK, how are we going to get rid of inequality?” Maybe raise the minimum wage? Maybe change the tax code? Whatever your answer, you’re then faced with the fact that corporate concentration affects politics as well. Concentrated industries lobby better, so all the measures you’re interested in run into a wall.
CS: In your book, you talk about the way corporate consolidation can pave the way for fascism. Could you expand on that more?
TW: The failures of economic policy to serve the general public are what have most obviously led to totalitarianism, nationalism, and fascism. Let me try to spell out how I think that happens: In step one, you allow enormous concentration of corporate wealth and power as we did in the late 19th century, and as we have in the early 21st century. This leads to a great divide between rich and poor, much material suffering, the mistreatment of workers, and, in turn, to demands that someone do something. So someone comes to power; takes on enemies foreign and domestic, including big business; and promises bread for the workers, a return to greatness, and, above all, to relieve this economic suffering.
The story of fascism, however, is one where the strong leader is actually allied with the great monopolists so long as they obey him. The most terrifying prospect is the danger of a political union between private and public power, and we’re failing to heed that lesson in this century. Right now we’re experimenting with approaches that led in very dark directions in the 20th century.
CS: It’s also easy to imagine someone like Trump using trust-busting powers to go after enemies. How do you make sure the trust-busting power of the government isn’t wielded in a political way?
TW: That’s always a challenge. Any time you call for more government power against industry, it can be misused. In this country you need an independent Justice Department and an independent Federal Trade Commission that sees as its mandate the enforcement of the Sherman Act and the breaking up of monopolies.
There is the danger that you refer to, but I also wouldn’t take it too far. I wouldn’t try to divorce politics entirely. If someone runs for office and says, “I’m going to break up the big monopolies,” and that person does it, that’s called democracy. It’s what Woodrow Wilson did, it’s what [Theodore] Roosevelt did. They ran saying they would break up the monopolies, and they did it. We can’t pretend that’s devoid of political content.
CS: Is breaking up these massive companies enough? If you split off Instagram from Facebook, you still have Facebook the social network being used to spread disinformation. How will breaking up these companies engender enough competition to prevent these companies from being a threat to our democracies?
TW: It’s probably not enough, but it’s a start. Breaking up a couple of companies is not the solution to all social ills. But at the foundation of a lot of our challenges is this lodestone of concentrated corporate power. If you spend any time in DC, you see its effects. It’s like a gravitational field—a black hole—that warps everything towards its will.
CS: To what extent do we need to simply apply the trust-busting techniques of the 20th century and to what extent do we need new tools for new companies?
TW: We need both. If we could recover the courage of Woodrow Wilson, Theodore Roosevelt, and Louis Brandeis, that would be a major undertaking. It takes courage to say, “Listen, we’re going to break you into 36 pieces”—not vaguely insist on some conditions that you’re going to ignore. Courage is not a new invention.
In terms of what we need that’s new, I think we need adaptation. One reason the antitrust laws have failed over the last 20 years, particularly in regards to merger control, is that we’ve failed to understand current business models. Agencies have gotten themselves tied in knots over business models that purport to be free. We have to at least retool or re-understand some of these business models.
But the baseline thing I stress in this book is political courage—a kind that would make Congress actually stand up for a powerful anti-concentration agenda and fight even when the opponents are strong. We have a tendency in the United States for law enforcement to pick on weak targets. Instead, the full strength of government needs to tame those that are almost as powerful as the government itself. It comes back to this question: What is government for? I believe that it is to serve as a countervailing force to private power. But now, as opposed to countervailing, it has become a co-conspirator.
CS: You talked about Teddy Roosevelt, but in order for him to unleash his trust-busting era, he needed a 5-4 Supreme Court decision in his advantage. If we want to tame private power, what can we do with our current conservative Supreme Court?
TW: The only precedent for this current Supreme Court is the court of the 1920s in terms of its facilitation of an economic libertarian program. But there are a few things future presidents could do. They need to start appointing judges who believe in the antitrust law and are not trapped by the Chicago thinking of the ’60s, ’70s, and ’80s.
I think even this judiciary will listen to Congress when it speaks clearly, so it’s important that Congress re-pass some of the main antitrust laws, and essentially reassert that it meant what it said in the past: That we believe in an anti-monopoly agenda. I think the judiciary would face a crisis if it attempts to nullify laws reaffirming the intent of Congress, which has always been anti-monopoly.
CS: You say one of your goals in this book is to resurrect the tenants of a “Brandeisian economic vision.” Could you spell out what you mean by that?
TW: I think Louis Brandeis has been done a disservice. He’s remembered as a great [Supreme Court] justice. But forgotten is the fact that his life passion was economic policy and that he had an incredibly compelling vision of the role of the economy and what it means to be a citizen. Brandeis believed that private forces could be as enslaving and encumbering as the government. He was opposed to both oppressive government and oppressive industry. He thought that in order to have a good life that you needed to have a certain amount of freedom from economic and political forces.
These days when people think about the economy, they mostly think about their own self-enrichment. But Brandeis thought that we needed a structure that was suitable to human development, to becoming the best person you could be. So, he, for example, believed very strongly that people needed stable jobs with ample time off. He put a lot into this idea of citizenship, and we’ve lost a lot of that. We’re very materialist about the economy. We don’t think about its spiritual dimensions. We don’t really think about what it would mean to structure an economy that makes people happy. Brandeis had a positive economic program for making that happen, and part of it was a powerful de-concentration agenda—a war on the trusts and the monopolies.
Monopolies were the opposite of what he wanted. They put all the freedom in one man or one woman. He was worried that employees became almost serf-like in their relationship with these great and unaccountable private powers. Now we live in an era where private industry is so much more powerful than any of us individually. Some people work today in conditions that are so horrific and so draining that they really are in a state of serfdom, and somehow we tolerate this. We tolerate this by saying, “Well, that’s the maximization of profit”—as if that’s some kind of constitutional goal. This republic was supposed to be for its citizens, not for these fictional creations that have started to take over. I’m not worried about conquest by robots—we’ve already been conquered by inhuman creatures.
The Brandeisian vision points us back toward putting humanity at the center of our concerns. That seems simple, but when you look at how we’ve deviated from it, it’s really quite shocking.
CS: After Brandeis, there was Teddy Roosevelt and the trust-busting movement, and that went on for decades. Why did that change?
TW: Beginning in the late 1970s and gaining its full speed by the 1980s, there arose a contending ideology to the Brandeisian ideology. This ideology is most associated with Robert Bork and the so-called Chicago School of antitrust, and it essentially took monopolists as misunderstood. Instead of oppressive creatures, they were gentle giants. They rarely, if ever, did anything anticompetitive.
Now, antitrust had never been left-right thing before. Nixon, believe it or not, started the case against AT&T. This movement is obviously popular with big business, and through this relentless pressure, just case by case, antitrust fell. A lot of academic work ate away at the antitrust line until by 2004 the Supreme Court is no longer condemning monopoly. It’s celebrating it in its antitrust opinions. [Justice Antonin] Scalia in a case said that it is monopoly that drives business and lures people into taking risks. In that case, Verizon was destroying one of those entrepreneurs who actually took the risk. Brandeisian antitrust has been an enfeebled shadow of its former self and has particularly failed when comes to a big tech.
CS: So Europe has taken the lead in some antitrust-law enforcement. Is that a model we should follow?
TW: What we could learn from Europe is that they have had the courage to bring a lot more cases than the United States. They haven’t backed down, but they also haven’t had an appetite for breakups, which is the American tradition. Europe has a stronger taste for regulatory approaches, which sometimes can be good. You bring the company to heel, and you impose a series of regulatory regimes. I’m not categorically opposed to that, but the real problem lies in excessive size and concentration, and so I am personally more dedicated to a break-up mentality.
CS: This book and your work is part of this budding progressive movement, a neo-Brandeisian movement. [Republican Senator from Utah] Orrin Hatch called it #HipsterAntiTrust. Where is this movement now, and where do you see it going?
TW: It has taken off in the last couple of years. I think it’s an unsurprising response to a four-decade-long experiment, which has failed. You don’t need to be a genius to look at the American cable industry and the airlines and say, “What the hell happened here?”
I think the movement has three sides. One is more political: More and more senators and members of the House Representatives think that things have gone too far and want to know what’s happened to the antitrust law that they passed. The last time they amended the law in 1950, they gave clear instructions that they wanted this law enforced and that there was a potential problem with excessive concentration in United States. It has a populist side, too. People like Bernie Sanders campaigned on a strong trust-busting mandate, particularly in finance. And there’s an academic side, which is asking hard questions about the arguments that have led us to abandon the antitrust laws and whether we, in this technocratic process, abandoned the soul and spirit of what these laws were meant for.
CS: How do you know what companies should be broken up? Would you support the automatic breakup of a company if it reached say 70 percent domination of an industry?
TW: I don’t think everything should be fully automatic. There are a number of signs that a monopoly should be broken up. One is a merger pattern. Some companies—and Facebook is an example of this—have managed to build themselves by suppression, by buying up their rivals. I’m of the belief that many of those mergers were illegal to begin with, but the path to undoing this is undoing the company.
Second, and this is closer to the automatic breakup you refer to, you should have a law that investigates persistent monopolies—ones that have had been there for 20 years and have been resistant to competition and just see whether we’d be better served by a breakup, even if we don’t have evidence of long-standing abuse.
The third category is the old category of the abusive monopolists—the company that destroys everyone in their path. We need to take a hard look at who falls into that category.
CS: Which companies would you prioritize? Who would you go after first?
TW: The industries that are clearly suffering extreme concentration are finance, the airline industry, the cable industry and related media industries, and the pharmaceutical industry. I think those would be the main priorities for almost anyone. And, actually, in the Obama administration, in which I worked, we knew this, but we played around the edges.
Here’s an example where we structurally failed. Everyone is familiar with the fact that over the last 10 years, the pharmaceutical industry has been jacking up its prices in a matter that is unethical, shocking to the conscience, and indefensible. The combined powers of law and consumer protection have done absolutely nothing. A big pharma company will spin off a drug to some smaller company, which only exists to jack the price. I would guess at least 90 percent of Americans would say we should crack down on these practices, but in a supposedly democratic government, no one has been able to do anything.
CS: You don’t really go into great depth about it in your book, but you seem skeptical of allowing the government to nationalize large industries.
TW: I don’t really get into it in my book, because I wanted to defend one front at a time. But let me be more precise on my position.
I’m not a believer in nationalization approaches where the government becomes a sole provider in an area, but I’m not against public options. The government provides public education. It provides libraries. It doesn’t mean it occupies the field, and no one else can sell a book or offer schooling. I believe that government should get involved in a lot more areas than it does.
There’s a whole new generation of approaches where it’s clear that industry has failed and what they actually need is competition from government. Right-leaning libertarians can’t get their heads around this—mainly because they assume that industry never fails, for some unknown reason. There are all kinds of industries where the entry of government in a competitive manner would be terrific.
CS: You’re a lawyer, you’ve been involved in politics, why did you choose to write a history book and not focus on some of these more contemporary issues that you’ve been speaking about?
TW: We have a very powerful and rich tradition in the United States of fighting monopoly. We invented the trusts, and we were the first to decisively dismantle them. And I feel like we’ve forgotten ourselves. Maybe it’s my personality, but I believe the country should self-examine and bring back its best versions of itself. I believe, like Louis Brandeis, that all of life and all of politics is an experiment, and if we don’t spend time rigorously examining the results, we’ll be much stupider as a society.
CS: Considering our president and our courts, your book isn’t without optimism. There is an idealism in the book. Where does that come from?
TW: Maybe it comes from campaigning with Zephyr Teachout.
CS: She just joined our editorial board!
TW: Zephyr always said if we’re going to convince people to embrace a progressive vision, it can’t be depressing. We have to give people something to live for. It’s within our grasp as humanity to build something magnificent—to create a society where people live fulfilling lives and have a sense of economic security and political involvement. It’s very easy to become dour, but I do strongly believe that we can do better.