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The Myth of Capitalism: Monopolies and the Death of Competition Hardcover – Illustrated, November 29, 2018
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Financial Times Best Books of 2018: Economics
“I think the book is too hard on some companies and CEOs. There is no way I could endorse the book.”
-Anonymous, billionaire hedge fund manager
"’Capitalism without competition is not capitalism,’ writes Jonathan Tepper in The Myth of Capitalism. He is right. After decades when most economists dismissed antitrust actions as superfluous so long as consumers were not the victims of price-gouging, we are slowly waking up to the reality that monopoly capitalism is back -- and it can be harmful even if its core products (as in the case of Google and Facebook) are free. But it's not just Big Tech that's killing competition. As Tepper shows in this engagingly written polemic, there's also excessive concentration in air travel, banking, beef, beer, health insurance, Internet access, and even the funeral industry. If you want to understand the real cause of rising inequality, discard Piketty and read Tepper instead. This is a tract for the times with a rare bipartisan appeal. “
-Niall Ferguson, Milbank Family Senior Fellow, the Hoover Institution, Stanford, and author of The Ascent of Money
"Tepper and Hearn have written an impressive and important book, documenting via their own research and that of many scholars, the very substantial increase in concentration on the supply side of US industry, leading to a decline in competition and a substantial shift in market and political power away from consumers and labor and toward the owners of capital. The consequences extend to rising inequality, slowing productivity growth, and shifts in the pattern of regulation in favor of corporations. Pieces of these growth patterns have been described before. But this book uniquely pulls it altogether. One hopes that it will have the impact that it clearly deserves."
-Michael Spence, Economics professor at Stern School of Business NYU, Nobel Prize in Economics (2001)
“What’s wrong with American capitalism today? Why is it so good for the elite, and so bad for everyone else? Is inequality the problem? Tepper and Hearn make the case that inequality is the symptom, not the disease. The problem is too little competition, not too much. They provide an immensely readable and persuasive account, superbly well-informed by a mass of recent data and research.”
-Sir Angus Deaton, Princeton University, Nobel Prize in Economics (2015)
“A broad-ranging and deeply-researched analysis of the inexorable growth of monopolies and oligopolies over the past four decades. Tepper makes a compelling case that the government’s failure to rein in tech titans and other corporate behemoths is at the root of perhaps the most troubling macroeconomic trends of our time, including rising inequality and slowing productivity. Clear and highly accessible, the book takes no prisoners, arguing that monopolists’ funding and sloppy thinking has corrupted every aspect of the system, from politicians to regulators to academics.”
-Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University, author of the bestselling book This Time is Different
"Slowing growth and rising inequality have become a toxic combination in western economies, notably including the US. This combination now threatens the survival of liberal democracy itself. Why has this happened? Some blame an excess of free-market capitalism. In this well-researched and clearly-written book, the authors demonstrate that the precise opposite is the case. What has emerged over the past forty years is not free-market capitalism, but a predatory form of monopoly capitalism. Capitalists will, alas, always prefer monopoly. Only the state can restore the competition we need, but it will do so only under the direction of an informed public. This, then, is a truly important book. Read, learn and act."
-Martin Wolf, Chief Economics Commentator, Financial Times
“Tepper and Hearn make a compelling case that the United States economy is straying increasingly far from capitalism, a process that is having deleterious consequences for both productivity growth and inequality. The villain in their story is the growth of monopolies and oligopolies, abetted in many cases by government policies that either turned a blind eye to increasing concentration or actively abetted it by creating rules to entrench incumbents. Their case is animated by passion but delivered in a detailed, analytical and factual manner that is still enjoyable to read. More importantly, it is not an excuse for despair but a specific set of policy recommendations for action.”
-Jason Furman, Harvard Kennedy School, Chairman of the Council of Economic Advisers (2013-17)
“Whatever happened to antitrust? In the US, it has for many years been effectively dormant as a tool to limit monopoly and monopsony power. Internet shopping isn’t much help to a firm buying an input made by only one supplier, nor a consumer choosing between different brands all made by the same giant company, and workers can’t easily switch to new locations and employers. The indisputable trend of rising concentration in American industry may be a major factor in the trend fall in labor’s share of national income. This engagingly written book concludes with a powerful set of proposals to reverse the trend and make the capitalist market economy function as it should. Important – a must read.”
-Richard Portes CBE, Professor of Economics, London Business School, Founder and Honorary President, Centre for Economic Policy Research
"In a compelling and deeply researched polemic, Tepper and Hearn describe a market that is broken. Increasingly, instead of delivering the benefits of competition to all, it is driving monopoly profits to the few. Regulatory and policy capitulation in the face of market concentration has put a dead weight on productivity and fostered inequality not just in the United States but globally. Their call to free markets from private monopolists and oligopolists should unite both left and right the world over."
-Charles Kenny, Senior Fellow, The Center for Global Development, Author of Getting Better
“This is an extremely important, timely and well researched book. Jonathan Tepper is himself a successful entrepreneur and he knows what “good” capitalism looks like. The current system, suborned by market abuse, corporatism, cronyism and regulatory capture and resulting in increasing inequality and anger amongst the wider population is badly in need of reform. If it is not reformed by people who believe in markets it will be reformed by people who don’t and that would be bad news for everyone. Jonathan Tepper understands this well and I recommend his book to every member of the US Congress.”
-Sir Paul Marshall, Chairman of Marshall Wace Hedge Fund Group
“Tepper and Hearn point out that, if current trends are left unchecked, the light at the end of the tunnel is a train driven by monopolists and oligopolists that a privileged few can afford a ticket on. This narrative of monopoly profits translating into lobbying and influence-peddling affects all of us in the price of drugs, airplane tickets, cable bills, banks, and even smartphones. The Myth of Capitalism should be required reading by regulators, students, and anyone with a stake in America's future.”
-J. Kyle Bass, Chief Investment Officer, Hayman Capital Management
“If you care about the future of American capitalism, you should read The Myth of Capitalism. Every member of Congress ― heck every voter ― should read this to know how our economy has changed and how monopolies and oligopolies are shaping our lives.“
–John Mauldin, co-author with Jonathan Tepper of best sellers Endgame and Code Red
“Whether you toe a Schumpeterian line, that capitalism is and must remain a Darwinian survival game between gargantuan monopolies and upstarts, or are terrified that the empire of monopolies all around us is destroying the foundations of democracy, Jonathan Tepper’s new book is an essential source of empirical evidence regarding the power and reach of monopolies in modern society.”
-Yanis Varoufakis, former Greek Finance Minister, DiEM25 co-founder, Professor of Economics, University of Athens
"As we face concerns about the power of companies like Amazon, Facebook, and Google, we would be wise to arm ourselves with a knowledge of history. This breezy, readable account of the theory and practice of monopoly, duopoly, and oligopoly provides a solid foundation for the argument that many of the ills of today's economy can be traced to the concentration of power in fewer and fewer large firms."
-Tim O'Reilly, founder and CEO of O'Reilly Media
“A sweeping and thought-provoking treatise on the past, present and future of competition. The forces at play in fairness, inequality, consolidation and dispersion shape the great game as it shapes us from markets to geopolitics.”
-Josh Wolfe, Founding Partner & Managing Director, Lux Capital
“We are barreling towards an economy with few lords and millions of serfs. Tepper’s The Myth of Capitalism fiercely articulates the raw, hard truth behind the monopolistic behaviors of today’s corporations driving inequality, endangering the consumer, and eroding what American Capitalism used to mean.”
-Scott Galloway, Professor of Marketing and Serial Entrepreneur
"A takedown of what we now call 'capitalism' - by and for people who are true believers in it. Tepper and Hearn have written a love letter for a (free market) romance, scorned. As a person who has the word ‘capitalist’ in his job title, I believe we need to reverse the many-decades trend of falling entrepreneurship if we want to provide more opportunity for more people and better products and services for all of us. This book may give you a way to rekindle your love for markets, by proposing fixes for all the ways they've broken us."
-Roy Bahat, Venture capitalist, head of Bloomberg Beta
“Tepper and Hearn’s sharp analysis reveals fresh insights into the realities, contradictions and myths of modern capitalism. They also propose a number of compelling policy measures to improve competition that will resonate right across the political spectrum, and across societies. This book deserves the attention of policymakers and global citizens with a deep interest in how to reform our economic system―for the many, not the few.”
-Kevin Rudd, 26th Prime Minister of Australia and President, Asia Society Policy Institute
“Jonathan Tepper and Denise Hearn have stated, 'While many books have been written on capitalism and inequality, the left and right don't even read the same books. Researchers have analyzed book purchases, and there is almost no political or economic books that both sides pick up and read.' They hope that The Myth of Capitalism will bridge the divide and find common ground between the left and right. I strongly endorse that goal. At a time of extraordinary partisanship in the U.S. Congress and legislative bodies all over our country, the need for some common grounds of public policy is imperative to create new jobs, new industries, new standards of economic and political freedom, and new leaders who will provide a more stable base for American and world peace and justice. I salute the wisdom and vigor with which the authors have supplied thoughtful critiques of past economic policies and excellent prescriptions for the future."
-Senator Richard Lugar (retired)
"This is a brilliant, clear work of political economy in the classical sense: a rigorous analysis of how government action benefited monopolistic firms, which have used their profits to procure even more governmental favors, which in turn entrench their position at the top of the economic food chain. Even more importantly, Tepper connects his expertise to our everyday experience. If you have ever been strong-armed by an airline, ignored by a cable company, or cheated by a bank, you'll see the roots of your misfortune in the dynamics of lax antitrust enforcement and absentee regulators so capably chronicled here. This book should be required reading in introductory economics courses, to understand the true nature of the contemporary economy."
-Frank Pasquale, Professor of Law, University of Maryland
“If you want to start a business in America today, or just want to know what's gone wrong with our country, The Myth of Capitalism is a great place to start. Tepper and Hearn provide a highly readable and very useful guide to America's monopoly problem, and to the many great and growing harms of economic concentration. Inequality, political disfunction, the choking off of opportunity, the rise of too-big-to-fail, the book shows how all stem largely or mainly from monopolization. Best of all, the authors make clear this concentration is not the inevitable result of any natural force within capitalism, but of political decisions that we can begin to reverse today.”
-Barry C. Lynn, director of Open Markets Institute, author of Cornered: The New Monopoly Capitalism and the Economics of Destruction
“A deeply insightful analysis of the rapidly creeping tentacles of the corporatocracy and the devastating impacts of a predatory form of capitalism. By discouraging competition, empowering the very few ― the very rich oligarchs ― and demolishing the very resources upon which it depends, predatory capitalism has created a failed global economic system, a Death Economy. This book helps us understand the importance of replacing it with a system that is itself a renewable resource, a Life Economy.”
-John Perkins, former chief economist and author of New York Times best-selling books including Confessions of an Economic Hitman and The Secret History of the American Empire
From the Inside Flap
Praise for The Myth of Capitalism
"'Capitalism without competition is not capitalism, ' writes Jonathan Tepper in The Myth of Capitalism. He is right. After decades when most economists dismissed antitrust actions as superfluous so long as consumers were not the victims of price-gouging, we are slowly waking up to the reality that monopoly capitalism is back -- and it can be harmful even if its core products (as in the case of Google and Facebook) are free. But it's not just Big Tech that's killing competition. As Tepper shows in this engagingly written polemic, there's also excessive concentration in air travel, banking, beef, beer, health insurance, Internet access, and even the funeral industry. If you want to understand the real cause of rising inequality, discard Piketty and read Tepper instead. This is a tract for the times with a rare bipartisan appeal."
--Niall Ferguson, Milbank Family Senior Fellow, the Hoover Institution, Stanford, and author of The Ascent of Money
"Tepper and Hearn have written an impressive and important book, documenting via their own research and that of many scholars, the very substantial increase in concentration on the supply side of US industry, leading to a decline in competition and a substantial shift in market and political power away from consumers and labor and toward the owners of capital. The consequences extend to rising inequality, slowing productivity growth, and shifts in the pattern of regulation in favor of corporations. Pieces of these growth patterns have been described before. But this book uniquely pulls it all together. One hopes that it will have the impact that it clearly deserves."
--Michael Spence, Economics professor at Stern School of Business NYU, Nobel Prize in Economics (2001)
"What's wrong with American capitalism today? Why is it so good for the elite, and so bad for everyone else? Is inequality the problem? Tepper and Hearn make the case that inequality is the symptom, not the disease. The problem is too little competition, not too much. They provide an immensely readable and persuasive account, superbly well-informed by a mass of recent data and research."
--Sir Angus Deaton, Princeton University, Nobel Prize in Economics (2015)
"A broad-ranging and deeply-researched analysis of the inexorable growth of monopolies and oligopolies over the past four decades. Tepper makes a compelling case that the government's failure to reign in tech titans and other corporate behemoths is at the root of perhaps the most troubling macroeconomic trends of our time, including rising inequality and slowing productivity. Clear and highly accessible, the book takes no prisoners, arguing that monopolists' funding and sloppy thinking has corrupted every aspect of the system, from politicians to regulators to academics."
--Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University, author of the bestselling book, This Time is Different
- Publisher : Wiley; 1st edition (November 29, 2018)
- Language : English
- Hardcover : 320 pages
- ISBN-10 : 1119548195
- ISBN-13 : 978-1119548195
- Item Weight : 1.28 pounds
- Dimensions : 6.2 x 0.8 x 9.1 inches
- Best Sellers Rank: #241,284 in Books (See Top 100 in Books)
- Customer Reviews:
Top reviews from the United States
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For three important reasons, this is not the book that tells it.
First, it’s poorly written: no editor’s been within a mile of it; the authors repeat entire paragraphs verbatim! (example: second paragraph of p. 98 and first paragraph of p. 118) If that is because they’ve strung together a bunch of articles they wrote earlier, they have a duty to tell us that upfront and a duty to do some editing, so I don’t read about the airlines six times. Seriously!
Second, anything I know intimately that’s covered in here is sloppy. Gensler gets thrown under the bus (chart, p. 190) as an ex-Goldman guy, when he did stellar work at the CFTC. The coverage of Germany in the thirties would make Adam Tooze freak out. And some of the biggest total monopolies (such as chewing gum and styrofoam cups) go unmentioned. How can I trust the bits I’m learning about for the first time?
Third, monopoly does not happen just like that. While I agree wholeheartedly with the authors that market power is 100% what elected Trump (even if his voters don’t realize it), and therefore that monopoly and oligopoly are the biggest enemy of our polity, the author does not seem to understand that specific laws made it possible and therefore those are the laws we need to repeal.
But perhaps that’s the problem. When they’re not writing books, the authors, wait for it, advise hedge funds. Unlikely then that they’d mention, dunno, the carried interest exemption eh? So they don’t . Their list of things to fix is almost as pathetic as their fixation with economics and economists… At least they don’t blame the Russians, that’s nice.
So I’m very sad to report that this isn’t the book I was hoping it would be. In the meantime, I can re-read Barry Lynn’s “Cornered,” which at least motivates the problem much better from a political standpoint and, of course, I can re-read the absolute daddy of angry, unreadable, unedited books, the one and (thank God) only “Great Deformation,” where between paeans to Eisenhower and a scarily misguided indictment of government, David Stockman forensically lays out the tools he used when he attempted to create his own private car parts monopoly prior to the 2008 crisis. He calls it “corporate equity withdrawal” and it’s all explained between pages 404 and 576, where he sets up the threefold source of our problem, namely:
1. The tax deductibility of the cost of servicing debt
2. The lower tax rate on passive income
3. The Fed ‘s “dual mandate” having been hijacked to protect risky asset holders via low rates
Credit where credit is due, the authors of “The Myth of Capitalism” do add to this, actually: the fact that three indexers essentially control the board on all listed US entities certainly must tilt the playing field both toward distributions and toward monopoly-creating mergers, and away from investment in people, R&D, plant and equipment.
At least three of these four things are different now than they were forty years ago, and that’s what we need to break. By the time you’re breaking monopolies, it’s far too late. It’s as futile as the taxes Piketty proposes (and the authors correctly pan.)
Meantime, I’m still waiting for a sober, non-repeating, thorough book that deals with the issues in a level-headed, methodical, analytical way and proposes real solutions, as opposed to “buy more copies of this book for your friends.”
“So what’s with the three stars, then, Athan?”
Big points for daring to criticise the big tech behemoths, nobody dares do that anymore!
The chapter on the power of the tech giants was brilliant. I have not seen the issues surrounding these companies more eloquently and succinctly written about. Anyone who has read the Four by Scott Galloway will find this chapter compelling.
I had only one minor disappointment with the book. I was disappointed that Tepper and Hearn did not go more into their thinking about the investment implications surrounding the monopolization of the American economy. For instance, one interesting potential implication that may be made from some of the book’s findings is that a good part of the recent secular bull-market & merger boom has been built on increased corporate profit margins associated with lax anti-trust enforcement (with both beginning soon after Reagan's election). Understanding the importance of this relationship may be useful for investors to consider if anti-trust enforcement gains more attention (which it looks to be among 2020 Democratic contestants). Just as lax-enforcement has been a key driver of a secular bull market, perhaps renewed anti-trust enforcement may be a driver of a future secular bear market (and a resultant decline in inequality)?
All told the books is worth the time and the money.
Top reviews from other countries
They lay out a compelling case that the increasing creep of monopolisation is the underlying cause for many of the economic and political ills we see today, most notably from rising inequality and declining economic mobility. They explain how this extreme concentration came to be prevalent, both in the industries we all know treat us like monopolies (think of the last time you called your cable provider), to ones that are perhaps less obvious (beer, despite myriad brands, is essentially a duopoly). And they illustrate how the dual forces of economics (stock markets demanding ever-higher margins) and politics (election funding and a revolving door to higher paid private sector jobs) continue to pressurise further monopolisation. Finally, it brings us to the present day, where the frustrations from lower wages, higher costs, and decreased choice boil over into populist anger.
Tepper and Hearn also lay out some useful thoughts on how to fix the system, though they all boil down to a simple point - capitalism, when allowed to operate freely, encourages wealth creation and economic justice - a rare non-partisan but rather common sense conclusion.
The book is written simply. Many of the illustrations are anecdotes which we can all see and relate to, to illustrate points which are then backed up by data. I found it easy going and read it in two sittings. For anyone who has (or claims to have) read Piketty, this book comes a refreshing counterpoint, as in a stroke it is both easier to read and more incisive on the problems underlying weak growth and rising inequality.
Highly recommended to anybody who cares about politics, economics, growth, or justice.
Reviewed in the United Kingdom on January 8, 2019
Tepper and Hearn pull no punches in making the case that US antitrust has utterly failed since Reagan with a fascinating look back at the historical context of how antitrust policy has waxed and waned throughout the 20th century and the consequent impact thereof. The links between monopoly/oligopoly and totalitarianism are particularly thought-provoking.
At a time when policymakers everywhere can't seem to pin down why there is so much discontent across much of the Western world, Tepper leaves you with a sense that a more active approach to antitrust could have led to very different outcomes.
I read this in a couple of sittings. Absolute page-turner.
This is what Tepper and Hearn do in the Myth of Capitalism - a book that is a pleasure to read but at the same time a thorough research across oligopolies across the US and the world, in many sectors of the economy. The authors explain with compelling evidence how capitalism has turned into a game of pie-sharing across a few corporates, which have squeezed profits from consumers and wages from workers to maximise profits, at the same time lobbying the government to stay out of their business. Few authors have exposed this evidence, which is undeniable: think of airlines, beverages, toothpaste products, and Amazon itself - all these sectors are monopolies or oligopolies, where consumers have only the illusion of choice.