- Paperback: 154 pages
- Publisher: Columbia Global Reports (November 13, 2018)
- Language: English
- ISBN-10: 0999745468
- ISBN-13: 978-0999745465
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- Amazon Best Sellers Rank: #16,530 in Books (See Top 100 in Books)
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The Curse of Bigness: Antitrust in the New Gilded Age Paperback – November 13, 2018
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"As Tim Wu argues in The Curse of Bigness, global economic concentration is now at levels unseen in more than a century -- since the early days of industrial capitalism. A policy advocate and law professor at Columbia University, Wu offers a vital diagnosis: America has abandoned its rich tradition of anti-monopoly, or antitrust, law. And while the very term 'antitrust' may strike many as dreadfully dry, Wu manages to make this brisk and impressively readable overview of the subject vivid and compelling." -- The Washington Post
"It's a big idea for a little book, but Wu knows how to keep everything concise and contained. The Curse of Bigness moves nimbly through the thicket, embracing the boons of being small." -- Jennifer Szalai, The New York Times
"Sweeping in scope, The Curse of Bigness is probably the best popular account of the history of American antitrust law and policy. It captures the stakes in the battle for antitrust―and it cuts to the heart of one of the central questions of our time: Can democracy survive?"--The New Republic
"Tim Wu's short and sharp new book, The Curse of Bigness, is an excellent primer for anyone who wants to understand why corporate wealth and power have grown so concentrated in the past four decades, and why that might be a problem for democracy." -- Rana Foroohar, Financial Times
"Mr. Wu writes with elegance, conviction, knowledge -- and certitude." -- Richard A. Epstein, The Wall Street Journal
"Tim Wu, in his book The Curse of Bigness, which is a cool 160 pages and politely holds the reader’s hand through about 200 years of American economic policy and practice, argues that the time is now, 'to control economic structure before it controls us.'" -- VOX
"Tim Wu has pulled off an incredible feat―he’s written a short, compelling book on antitrust....Wu skillfully avoids economic and legal rabbit holes, keeping the book laser-focused on his thesis: that antitrust enforcement must be restored 'as a check on power as necessary in a functioning democracy before it's too late.' Persuasive and brilliantly written, the book is especially timely given the rise of trillion-dollar tech companies." -- Publishers Weekly
"A brief diagnosis of our monopolized moment and an eloquent articulation of principles that Wu believes can lead us into an era of shared prosperity, economic and political independence, and, in the words of Brandeis, 'the right to live, and not merely to exist.'”--The American Conservative
"Several books have been written about monopoly over the past few years, and several more are still to come. But none are as succinct and pointed as The Curse of Bigness: Antitrust In The New Gilded Age, the new book from Tim Wu, the Columbia University law professor and former Federal Trade Commission advisor perhaps best known for coining the phrase “net neutrality." - Global Competition Review
"The Curse of Bigness is a useful guide to the evils of privatized scale... A revitalization of aggressive trustbusting is as radical a proposal as could be taken seriously in the short term, and Wu charts a clear path to temporarily forestall the social ills of an oligarchic private tech industry."―Dissent Magazine
800-CEO-Reads Editor's Choice for November 2018
About the Author
Tim Wu is a policy advocate, a professor at Columbia Law School and a contributing opinion writer for The New York Times. He is best known for coining the phrase "net neutrality." He worked on competition policy in the Obama White House and the Federal Trade Commission, served as senior enforcement counsel at the New York Office of the Attorney General, and worked at the Supreme Court for Justice Stephen Breyer. His previous books are The Master Switch: The Rise and Fall of Information Empires and The Attention Merchants: The Epic Scramble to Get Inside our Heads.
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Wu, a Columbia Law professor and sometime (unsuccessful) reformist Democratic candidate for Lieutenant Governor of New York, writes mostly on the intersection of technology and social organization. His most recent earlier book, "The Attention Merchants," focused on the downsides of advertising in the modern world, especially as mediated by the Lords of Tech. That book offered measured, practical ways to address the problems identified, which seems to be a Wu specialty. This book focuses on economic concentration through its legal treatment, under antitrust law, for the past one hundred and thirty years.
The Curse of Bigness is a short and punchy work; Wu is an outstanding writer. Woven throughout a history of antitrust are Wu’s own insights and opinions, which he caps with specific and well-thought out solutions. The core argument of this book is that for the past several decades, antitrust law has become effectively neutered, administered not at all in the manner its original nineteenth-century drafters intended. Instead antitrust law has, lately, refused entirely to recognize the extremely pernicious societal effects of economic concentration, even though it was designed by Congress to address precisely those effects. For my money, Wu is right on target, and, just as importantly, he provides building blocks for the political realignment in which social conservatives are aligning with economic liberals against the neoliberal/corporatist elite.
Wu begins with the pre-antitrust era, when men such as J. P. Morgan and John D. Rockefeller created massive enterprises as the United States industrialized, using grit along with bribes and coercion to build their concerns. These men, who created various giant trusts (a legal device for holding companies), thought that monopoly is awesome and competition is ruinous, for both business and society. Instead, they could and should be relied upon to innovate, lower prices, and generally benefit everyone, along with themselves. (As the author notes, today Peter Thiel pushes this same line, which has worked very well for him.) Wu analyzes this as a form of Social Darwinism, closely tied to eugenics (Rockefeller gave millions to sterilize the “unfit”). “The weak, the small, and the old-fashioned [businesses] were all being swept away. . . . For some, this purge displaced not just old ways and inefficient businesses, but Christianity as well, with its regard for the disadvantaged and insistence on humility before God.” Modern conservatives have too often failed to appreciate the long-term effects of worship of monopoly and consequent economic concentration, and that the logical end of this, Ayn Rand’s Objectivism, is a very, very bad prescription for a flourishing humanity, whatever its theoretical appeal.
One hundred and thirty years ago, though, Congress was not the do-nothing group of shambling cretins it is now; it was filled with, or at least led by, serious men who took their responsibility of governing seriously. Thus, in 1890, due to concerns about these and many other trusts, which collectively dominated all relevant industry, we got the Sherman Act, which to this day on its face absolutely outlaws all actions “in restraint of trade,” as well as any monopoly or attempts to monopolize. You ask, then, why are restraints of trade and monopolies all around us? Don’t worry—Tim Wu has arrived to tell you why, clearly and succinctly.
Before we get there, though, Wu takes a detour to lay the groundwork for his preferred philosophical position. While this is a book about what the law is, it is just as much about what the law should be. Wu’s avatar is Louis Brandeis, who served on the Supreme Court from 1916 to 1939. Brandeis grew up in Louisville, when flyover country mattered. He became a business lawyer for some decades, and observed first-hand the growth of the trusts at the end of the nineteenth century and the beginning of the twentieth, unhampered by the Sherman Act, which was treated as merely hortatory. Brandeis saw the trusts destroy small businesses, corrupt politics, and not in fact offer the efficiencies and benefits they claimed.
I’ve never really had much use for Brandeis; his association with the destructive Progressive movement and his use of so-called social science to decide strictly legal questions, thereby involving judges as ideological advocates in a legislative role and paving the road to the modern disastrous “living Constitution,” always left a bad taste in my mouth. But Wu makes a good case that Brandeis’s philosophy as it relates to economic concentration, totally aside from constitutional law, is both unanswerable and necessary for today. Like Theodore Roosevelt, Brandeis is someone whom today’s conservatives should at least partially embrace, rejecting country club Republicans who prostitute themselves, cheaply, to the neoliberal elite. “If [Brandeis] had a unifying principle, politically and economically, it is . . . that concentrated power is dangerous, that institutions should be built to human scale, and society should pursue human ends. Every institution, public and private, runs the risks of taking on a life of its own, putting its own interests above those of the humans it was supposedly created to serve.” It should most definitely not be the role of judges to impose their own values against the expressed will of the legislature, but as Wu notes, Brandeis’s philosophy here was, more or less, the original legislative theory behind the Sherman Act and subsequent laws.
Using Brandeis as his foundation, Wu is explicit about what he wants to build. “This book aspires to resurrect and try to renovate the lost tenets of the Brandeisian economic vision. It envisions a vigorous, healthy economy, a skepticism of the self-serving rhetoric projecting the romance of big business or the inevitability of monopoly, and, above all, a sensitivity to human ends.” As presented by Wu, Brandeis was profoundly conservative, or would be today, if placed next to today’s Left: “For him, the very purpose of life was the building of good character and the development of self. The ‘ideal’ of democracy, he once said, should be ‘the development of the individual for his own and the common good.’ ” Not for Brandeis the modern progressive goal of ever-more emancipation from unchosen bonds, of autonomic individualism enforced and empowered by the government. His goal was not gaining everyone more atomized freedom, as the Left pushes today; it was offering freedom in the Aristotelian sense, what was until recently the universal sense in the West, the freedom to choose rightly. To make that choice possible, everyone had to have, Wu summarizes, “sufficient liberties and adequate support to live meaningful, fulfilling lives.” Neither the government nor private enterprise should “stifle opportunities for thriving and life.” Economic concentration, monopoly, was the origin of much such stifling, because it allowed big, impersonal, impervious businesses to dictate to both workers and consumers.
I quibble with Wu in that, without discussion, several times he casually equates this set of goals with democracy. Democracy may be a goal, in that one could argue (though neither Wu nor, in his telling, Brandeis, does so argue) that democracy enhances the first-order goals of “sufficient liberties and adequate support to live meaningful, fulfilling lives.” At most, though, that makes democracy a second-order goal, and there is little evidence that modern democracy is necessary to achieve the first-order goal. Still, Wu makes a good case that economic concentration, in any society, threatens the first-order goal, which is the point of the book.
Brandeis wasn’t the one who resuscitated the moribund Sherman Act, though. He just acts as Wu’s philosophical lodestar. It was Theodore Roosevelt who did that, seeing trusts as corrupting America and failing to curb them as leading to social unrest and even Communism. The problem Roosevelt identified was that the private power trusts represented (even though, as he pointed out, they were “creatures of the State”) was easily transmuted into massive political power. Roosevelt’s intuitive observation was later given heft by Mancur Olson’s mid-century work in public choice theory, which compellingly demonstrated that motivated small groups with money could achieve disproportionately favorable governmental results through the magic of collective inaction. This effect is exacerbated by concentration; an industry with only a few players, even if they are bona fide competitors, can easily coordinate actions for the benefit of all of them to extract rents from the rest of society, where a less-concentrated industry would be unable to herd enough cats to achieve the same goal. The losers are the great majority of people, who have neither the money nor the individual incentive to organize in opposition—so, in Roosevelt’s and Wu’s thinking, that’s where the government comes in.
In 1902, Roosevelt attacked J. P. Morgan’s railroad trust, an action upheld in the Supreme Court’s Northern Securities decision. Then, starting in 1906, he broke up Rockefeller’s Standard Oil, again supported by the Supreme Court, which began putting together the outlines of a legal standard, not found in the ultra-broad language of the Sherman Act, that held that only “unreasonable” restraints of trade or monopoly were illegal. What is unreasonable, therefore, became the interpretive key to antitrust law in the following hundred years. Roosevelt himself later, when out of power, turned to corporatism, where it is held that giant companies are good, and competition bad, if the companies work hand-in-glove with the government (hello, Mussolini!), but in his earlier years worked tirelessly to ensure competition and smallness at the expense of bigness, and he is thus the prototype of what Wu thinks should be the proper executive approach to antitrust law.
Wu uses the Standard Oil case to frame what he thinks is the core question in antitrust law: is monopoly, or more broadly economic concentration, merely evidence of efficiency, spreading benefits for all? Or is it a form of anti-majoritarian and anti-human flourishing power, where monopolistic producers use their economic, and other, power, to keep out new entrants and reduce innovation and consumer choice, while deforming the political process in myriad ways, even if sometimes they also reduce consumer prices? Here Wu offers a range of often-forgotten basic economics, including that diseconomies of scale are just as real as economies of scale, so bigger is not necessarily better, and that the agency problem (the separation of ownership and control) frequently means decisions are made to build empires for management rather than in the best interest of stockholders, much less consumers. Size is closely correlated with crony capitalism and rent seeking at the expense of workers and the broader community—just look at Jeffrey Immelt and General Electric under the Obama administration, for example (not an example Wu gives). But Standard Oil, in fact, in the form of its constituent parts, boomed after its breakup, suggesting that monopoly did not even offer the company economic benefits. Wu also name-checks my favorite economist, Luigi Zingales, for these same points. Zingales is another person I think an essential player in the realignment of some conservatives and some liberals against their neoliberal/Chamber of Commerce enemies (and who also, together with his “Capitalisn’t” podcast partner Kate Waldock, recently discussed the Brandeisian antitrust revival).
Moving back to history, in the 1930s, as fascist-style central planning reached its peak under Franklin Roosevelt, antitrust action suffered a “near-death experience,” but rebounded soon enough, in part as a fresh reaction against economic concentration, which became seen as a key element of the Nazi and Soviet systems (including the rise to power of the Nazis—though the idea that the prime mover of Nazism or fascism was economic concentration is obviously silly now, it was compelling then). Concentrated economic power was now seen as un-American, and, more importantly, as risking an American turn away from democracy. Smaller businesses were seen as the iron bulwark of the American way of life, and so aggressive antitrust enforcement, including breakups of monopolies, continued through the 1950s and 1960s. During this time, though, law professors from the University of Chicago, originally led by Aaron Director and then brought to full flower by Robert Bork, created, by Wu’s account out of whole cloth, a new idea—that the real purpose of Congress in passing the Sherman Act and subsequent antitrust laws was not addressing the societal harms of economic concentration, but rather only demonstrable consumer harm. And that only in the form of increased prices, not any other, less direct, harm.
Bork, at one point the high priest of originalism, the school of Constitutional interpretation holding that the original understanding of the Constitution by its ratifiers was the only acceptable lens through which to decide Constitutional questions (which antitrust is not), based his argument on a very strained reading of legislative history (or so Wu tells us). He combined this with the powerful sales pitch that focusing on lower prices for consumers provided an objective, standard measuring stick that courts could use to decide antitrust questions, instead of vague and varied feelings about the social impact of economic concentration, which judges could use to simply impose their own politically desirable result. It was the desire for judicial restraint (not the same thing as originalism, though sometimes they go together) that really sold what Bork was offering. The net result, after Bork’s reinterpretation swept through first the academy, then the courts, was to return antitrust to its pre-Theodore Roosevelt days.
As Wu points out, Bork ignored possible costs imposed on consumers other than mere higher price, such as stifling of innovation. The classic example there was AT&T, after the breakup of which telecommunications innovation flourished, but the point is obvious—why innovate, if you are collecting monopoly profits? Bork also ignored “virtues of competition stressed by Hayek, like the virtues of decentralization and the avoidance of central planning.” AT&T was the prototypical aggressive and open monopolist, gladly engaging in collusion, “the jealous God of telecommunications, brooking no rivals, accepting no sharing, and swallowing any children with even the remotest chance of unseating Kronos.” The success of its breakup disproved Bork—but, ironically, it was around the time of its breakup that Bork’s view became dominant.
Finally, Wu turns to what he calls the Tech Trusts, and I call the Lords of Tech. He does not like them. Like other authors, such as Franklin Foer and Niall Ferguson, he distrusts, and more importantly sees evil in, all of Amazon, Facebook, Google, and so on. After a brief efflorescence of freedom in cyberspace, a false dawn in which fools (not including me) thought the rules of economics had changed forever, what always happens happened again: a handful of giant companies concentrated in their hands all economic power in the relevant portions of the new Internet economy, using all the usual tools of coercion, economies of scale, and crony capitalism, along with a few new ones. So, for example, Facebook bought all its competitors that might threaten it, such as Instagram, and the antitrust regulators swallowed the laughable claim that they were not competitors at all. Listing this parade of horribles, as well as intimating that possible future combinations of such economic power with government could lead to even worse things (a point he has expanded on in interviews talking about this book), Wu concludes, “If there is a sector more ripe for the reinvigoration of the big case [breakup] tradition, I do not know it.”
What Wu wants most of all is a return to aggressive breakups of any concentration of economic power, with a near-conclusive presumption that any long-term monopoly, say existing for longer than ten years, be broken up by government action. (He only touches lightly on the definition of monopoly, which revolves around how one defines the relevant market, but that is a relatively easily overcome hurdle.) Wu points out that since the decline of antitrust to near-total irrelevancy in the past twenty years, numerous critical industries have become very substantially more concentrated: airlines, cable, pharmaceuticals, beer, and even telecommunications, with AT&T reborn without government objection (though in a substantially changed technological environment, where the old AT&T monopolies are gone forever).
So, wrapping it up, he offers a “Neo-Brandeisian Agenda.” First, aggressive prior review of mergers, which now is perfunctory (and as I know from my own experience as an M&A lawyer, mostly an excuse for the government to charge juicy transactions taxes masquerading as fees). Second, transparency in mergers, which as an administrative process is mostly kept from public view by law. Third, and fourth, and most important, resurrecting “big cases,” followed by a presumption in favor of breaking up companies. This would involve bringing suit against them under existing laws (Wu does not call for any major new laws), with the claims being not consumer harm through higher prices, but the mere existence of restraint of trade and monopoly, or of any behavior that does not protect competition, for which the punishment should be corporate death, or at least corporate amputation. Wu notes that the idea that breakups can’t be done is laughable—again, something I know from personal experience, having helped put together many companies together in my time, it’s very clear that the external appearance of an efficient, welded monolith is a fantasy for any big company, or any big organization, and breaking them up would cause almost no real trauma. He also points out that court-ordered breakups are self-executing, rather than, as with consent decrees, requiring constant ongoing supervision for compliance. Fifth, Wu recommends what he calls “market investigations,” already done in Europe, which scrutinize any existing market concentration and recommend whether it should be attacked, either for bad behavior or because it has ensorcelled itself from competitive attack.
[Review finishes as first comment.]
Wu rightly cites and admires Louis Brandeis as a key figure in this legal and political battle to redress the balance of power. He explains and justifies the reasons why the Antitrust laws were intended to address the large problem of suppression of competition and not just the narrow issue of "consumer welfare".
This is a very relevant and timely book given the development towards ever greater concentration of economic power in very few companies in the modern world.
Great histories of Brandeis and Robert Bork, btw.
Taking action against the "malefactors of great wealth"
Defenders of tax cuts for the rich and corporate welfare will no doubt howl in protest at Wu's thesis. But it's difficult to see how they could logically refute his argument or disprove it on historical grounds. In The Curse of Bigness, Wu traces the history of antitrust from the passage of the Sherman Act in 1890 to the present. He argues that once Theodore Roosevelt ascended to the White House and launched the antitrust movement with an attack on the Northern Securities Company, public sentiment shifted decisively in favor of taking action against what the President called "the malefactors of great wealth."
Roosevelt saw antitrust not just as an economic policy but as a political necessity. Monopolists ("the trusts") wielded such power that they were able to dictate policy decisions to Congress. Thus, democracy was in peril since the trusts were able to lord it over the economy. Supreme Court Justice Louis Brandeis called it the "Curse of Bigness." And Wu cites Brandeis' writing as central to the thinking that dominated US antitrust policy until the 1970s.
Brandeis once said, "The 'right to life' guaranteed by our Constitution" should be understood as "the right to live, and not merely to exist. In order to live men must have the opportunity of developing their faculties; and they must live under conditions in which their faculties may develop naturally and healthily." Clearly, this is a conviction not shared by the leadership of today's Republican Party.
Break up big corporations to restore democracy?
It wasn't until the 1970s that a legal attack on antitrust led by Robert Bork began pushing against the antimonopoly sentiment that had prevailed since the turn of the century. Bork's crusade, abetted by increasingly sympathetic judges, yielded a series of landmark decisions in Federal courts. In the decades that followed, these cases undermined the ability of the Justice Department to take action against monopolistic corporations. His argument rested on what can only be a willful misreading of the Sherman Act. Bork insisted the only justification for an antitrust prosecution was if monopolists were charging higher prices and thus harming consumers. He rejected any argument that antitrust action could rest on anything but the narrowest economic grounds. And Bork prevailed. When George W. Bush entered the White House, antitrust had become effectively a dead letter.
"[D]uring the Bush years," Wu observes, "the anti-monopoly provisions of the Sherman Act went into a deep freeze from which they have never really recovered . . . [T]he Bush Justice Department proceeded to bring a grand total of zero anti-monopoly antitrust cases over a period of eight years, and did not block any major mergers." Antitrust action resumed under Barack Obama and would have continued in earnest under Hillary Clinton. And Donald Trump claims to be taking antitrust "very seriously."
Two big antitrust actions in the 1980s and 90s
It's true, as Wu makes abundantly clear, that two major antitrust prosecutions took place in the 1980s and 1990s. Under Ronald Reagan, the Justice Department sued to break up AT&T, then the largest private company in the world. But the case never went to court, as AT&T eventually consented to the breakup. Then, in the Bill Clinton era, Microsoft came under the microscope. The case was still in court in 2000 when George W. Bush was elected by the Supreme Court's Bush v. Gore decision. Bush's Justice Department essentially dropped the case, settling for what have since been viewed as cosmetic changes.
The problem doesn't lie just with the tech industry
These days, most of the little talk in the air about antitrust involves the tech industry: Apple, Amazon, Google, and Facebook. These companies all certainly deserve close attention, and most if not all of them could easily become targets under a more rigorous interpretation of antitrust law. But Wu argues forcefully that the "Curse of Bigness" has infected much more than the tech industry. For example, look at the market share for the major firms in the oil, pharmaceutical, and chemical industries. And consider this: the stock market has been shrinking for the past two decades. "The market is half the size of its mid-1990s peak," according to the New York Times. Anyone who so much as glances at the news about mergers and acquisitions knows perfectly well that the American corporate sector has been consolidating for decades.
Wu concedes that "antitrust alone will not cure the curse of bigness or eliminate the excesses of private power. But it strikes at the root, and getting the engines of the law restarted is an important part of dealing with a problem that has reached Constitutional dimensions." To that end, Wu lays out "A Neo-Brandeisian Agenda" in the conclusion to The Curse of Bigness. However, the actions he advocates will clearly have to await a political realignment in Washington, DC.
About the author
Tim Yu has taught antitrust, copyright, the media industries, and communications law at Columbia Law School since 2006. He is a contributing opinion writer for the New York Times. The Curse of Bigness is his fourth book.