Subsidiary And Free Enterprise

Subsidiarity is the Catholic social doctrine which recommends that whenever we face a problem, other things equal, the most decentralized institution we have at our disposal should be the one mobilized to solve it.

For example, if it is a choice between the national and the state government as to which should be brought to bear to address a challenge, and there are no other considerations, then we should rely on the latter, not the former. Similarly, we should favor in this regard the city over the state government, the borough rather than the city, the town instead of the borough, and the neighborhood association vis-à-vis the town.

Let us allow a major advocate of this doctrine to put it into his own words.

According to Pope Pius XI, in his 1931 encyclical Quadragesimo Anno: “Just as it is gravely wrong to take from individuals what they can accomplish by their own initiative and industry and give it to the community, so also it is an injustice and at the same time a grave evil and disturbance of right order to assign to a greater and higher association what lesser and subordinate organizations can do. For every social activity ought of its very nature to furnish help to the members of the body social, and never destroy and absorb them.” (emphasis added)

There are strong parallels between subsidiarity and the free enterprise system. We cannot of course equate the two, but the analogy is strong. Decision-makers such as entrepreneurs, business owners, workers, are subsidiary to government. If there is any clash between them, it is the state that prevails. The government taxes firms, not the other way around. Capitalists are regulated by public servants, not vice versa.

What is the case for preferring free enterprise to government other than subsidiarity? The market consists of nothing but voluntary trade, buying, selling, renting, lending, borrowing. In each and every case, assuming no anti market fraud, both participants necessarily gain at least ex antel and in the overwhelming number of cases, ex post, too. Consumers, under free enterprise, can exercise their dollar vote several times per day; but in the political system, even under full democracy, they can enter the ballot box only once ever several years.

Moreover, the people are constrained with a package deal in the latter case, but not the former; they cannot pick and choose policies except for referendums, as they can in the market. Thus, consumers have far more control over businesses than do voters over politicians.

The empirical evidence attesting to the benefits of the free market system vis-à-vis political regulation is overwhelming; there are several almost controlled experiments that demonstrate that: East and West Germany, North and South Korea, for example. The poorest countries tend to rely on socialism; the wealthiest, on capitalism.

Given the strong parallels between capitalism and subsidiarity, one would expect that advocates of the latter would look positively on the former. They are not quite as alike as the two proverbial “peas in a pod” but the resemblance is strong. But this expectation is erroneous. Supporters of subsidiarity are bitter opponents of the free enterprise system.

Consider the following:

“…all products and profits, save only enough to repair and renew capital, belong by very right to the workers….The easy gains that a market unrestricted by any law opens to everybody attracts large numbers to buying and selling goods, and they, their one aim being to make quick profits with the least expenditure of work, raise or lower prices by their uncontrolled business dealings so rapidly according to their own caprice and greed that they nullify the wisest forecasts of producers ” (Pope Pius XI, also in his 1931 encyclical, Quadragesimo Anno)

Continues this author: “… the right ordering of economic life cannot be left to a free competition of forces. For from this source, as from a poisoned spring, have originated and spread all the errors of individualist economic teaching. Destroying through forgetfulness or ignorance the social and moral character of economic life, it held that economic life must be considered and treated as altogether free from and independent of public authority, because in the market, i.e., in the free struggle of competitors, it would have a principle of self direction which governs it much more perfectly than would the intervention of any created intellect. But free competition, while justified and certainly useful provided it is kept within certain limits, clearly cannot direct economic life – a truth which the outcome of the application in practice of the tenets of this evil individualistic spirit has more than sufficiently demonstrated. Therefore, it is most necessary that economic life be again subjected to and governed by a true and effective directing principle.”

How are we to account for this bifurcation? It might well be that this devotee of Catholic social thought suffers from a hate capitalism syndrome, so deeply embedded that no amount of evidence, nor considerations of logic, can overcome it. He wants to support subsidiarity, which means allowing markets to run the economy. But he finds economic freedom objectionable. He wants to have his cake, subsidiarity and hence laissez faire capitalism, and eat it too, support government control of the economy. He does not see the tension in this position, not to say logical contradiction.

The middle name of “free enterprise” is practically “subsidiarity.” No, “free subsidiarity enterprise” does not roll off the tongue all that easily, but that is only, perhaps, because we are not used to it. From a substantive point of view, it is just about a tautology.

If they want to be coherent, the proponents of Catholic social thought are logically obligated to favor capitalism, not condemn it. I’m not going to hold my breath until that happy day comes around. On the other hand, miracles sometimes occur!

Walter E. Block is Harold E. Wirth Endowed Chair and Professor of Economics, College of Business, Loyola University New Orleans, and senior fellow at the Mises Institute. He earned his PhD in economics at Columbia University in 1972. He has taught at Rutgers, SUNY Stony Brook, Baruch CUNY, Holy Cross and the University of Central Arkansas. He is the author of more than 600 refereed articles in professional journals, two dozen books, and thousands of op eds (including the New York Times, the Wall Street Journal and numerous others). He lectures widely on college campuses, delivers seminars around the world and appears regularly on television and radio shows. He is the Schlarbaum Laureate, Mises Institute, 2011; and has won the Loyola University Research Award (2005, 2008) and the Mises Institute’s Rothbard Medal of Freedom, 2005; and the Dux Academicus award, Loyola University, 2007. Prof. Block counts among his friends Ron Paul and Murray Rothbard. He was converted to libertarianism by Ayn Rand. Block is old enough to have played chess with Friedrich Hayek and once met Ludwig von Mises, and shook his hand. Block has never washed that hand since. So, if you shake his hand (it’s pretty dirty, but what the heck) you channel Mises.

The image shows, “Vegetable Market in Venice,” By Camillo Bortoluzzi, painted in 1894.

Privatize The Highways

There were problems with highway closures at both ends of Canada. The crisis is over for now, but perhaps we can learn something from this difficulty. Indeed, it will occur again.

Things were so bad in Newfoundland that military troops had to be brought in to engage in blizzard cleanup. Part of this effort was devoted to road clearance.

What is going on at the other end of Canada? A few days ago, there were highway closures in relatively balmy British Columbia. In the Lower Mainland parts of Highway One were covered with sheets of black ice. There were more accidents than you can shake a stick at, particularly in the section of this major roadway between Chilliwack and Abbotsford, B.C.

What was the word from the B.C. Ministry of Transportation? There were lots of excuses, good ones, but gridlock, slowdowns, jack-knifed trucks and fender benders were the order of the day.

According to Ministry of Transportation South Coast regional director Ashok Bhatti: “We are using calcium chloride and a combination of techniques, but it has been challenging … We are hitting it with everything we’ve got.”

He continued: Work has been done overnight, but to no avail. With temperatures below -15C and winds that blow salt and sand off the road, no solution was in the offing.

In the event, safety and transportation were restored when the temperatures rose, and, thanks to the rain, the ice, snow and slush were swept away.

Notice what is missing here? There was no vestige of competition. The presumption of the Ministry was that they were in charge, there was no possible other option, they were doing their best to rectify the situation.

Other firms in other industries, too, face difficult tasks. This occurs all throughout the warp and woof of the economy. Sometimes failure occurs elsewhere as well. But, in the private sector, there is always a “fail-safe” mechanism undergirding the entire process: competition. If a given firm faltered, there would be others anxious and eager to take its place. Moreover, different companies could try alternative strategies. If one of them worked, others could follow suit.

But not on the nation’s highways. There, monopoly, central planning, was the only possibility.

What might have been done had competition been allowed. That is, if there were privately owned highways?

One possibility would be the “conga line:” a long line of specially fitted tractors, one after the other, brushing away the ice. This is the technique utilized at some airports. These vehicles travel at a snail’s pace, but at least roadway connections could remain open. “Slow but sure” is perhaps better than nothing at all. If need be, it would not be beyond the scope of private enterprise to use actual military style tanks as snow plows.

Another is to place metal that can be heated just below the concrete of the roadway. People with sloped driveways use this method of melting the snow and ice. The difficulty here is that this is a tremendously expensive option. Costs could be reduced by treating only one lane in this manner instead of all three, but, even so, the expenses would be vast. Would it be worthwhile to maintain automobile travel and reduce accidents? This is something only the free marketplace can answer. This is at basis an entrepreneurial matter.

Are There Other Options?

It is difficult for a mere economist to anticipate the market. If shoes had always been the province of government, and a wild and crazy free enterprise economist had advocated privatization, the objections would come thick and fast. How would resources be allocated between sneakers, slippers, boots and other kinds of footwear? Where would shoe stores be located? How many of them would there be? Who would supply shoe laces?

In the event the market addresses all these difficulties, these are non-problems. And so would it be in the case of roads. Yes, highways are long thin things. People think their provision must necessarily fall to the government. But railroads exhibit similar geographical elements. Privatization in that realm is not unknown.

There are perhaps more important reasons for engaging in this process than black ice. In Canada, some 4,000 people perish each year in motor vehicle accidents. Competition between road owners, as in the case of every other good and service known to man, would undoubtedly lead to improvements in this regard too. Fatalities are not at all the product of drunken driving, speed, vehicle malfunction, driver inattention; those are only proximate causes.

The ultimate cause is the inability of the road managers to deal with these challenges. How could they do so? This can only be speculative, as in the case of shoes, but, perhaps private highway owners could address not velocity, but its variance. Instead of minima and maxima speed limits for the entire highway, do so for each lane.

For example, 120 kilometers in the left lane, 100 in the middle, and 80 on the right. Would this reduce traffic fatalities. Hard to tell. The problem is, such experiments are not now undertaken. They would be, under free enterprise.

Walter E. Block is Harold E. Wirth Endowed Chair and Professor of Economics, College of Business, Loyola University New Orleans, and senior fellow at the Mises Institute. He earned his PhD in economics at Columbia University in 1972. He has taught at Rutgers, SUNY Stony Brook, Baruch CUNY, Holy Cross and the University of Central Arkansas. He is the author of more than 600 refereed articles in professional journals, two dozen books, and thousands of op eds (including the New York Times, the Wall Street Journal and numerous others). He lectures widely on college campuses, delivers seminars around the world and appears regularly on television and radio shows. He is the Schlarbaum Laureate, Mises Institute, 2011; and has won the Loyola University Research Award (2005, 2008) and the Mises Institute’s Rothbard Medal of Freedom, 2005; and the Dux Academicus award, Loyola University, 2007. Prof. Block counts among his friends Ron Paul and Murray Rothbard. He was converted to libertarianism by Ayn Rand. Block is old enough to have played chess with Friedrich Hayek and once met Ludwig von Mises, and shook his hand. Block has never washed that hand since. So, if you shake his hand (it’s pretty dirty, but what the heck) you channel Mises.

The image shows, “A Cart on the Snowy Road at Honfleur,” by Claude Monet, painted 1865 or 1867.

Modernity And Freedom – A Paradox?

Can one be modern and also free? There is a paradox here that bears examination. Modernity implements specific conditions (limitless progress and expanding production of goods, both fueled by relentless consumption). These conditions are determined by the grand trinity of capitalism, namely, economics, technology and science, each of which is said to be the guarantor of the summum bonum.

Life thus becomes a continual negotiation with processes of acquisition, not for necessities but for indulgence. This is the consequence of surplus, where gluttony is a virtue, and obesity its mark. Such consumption and production of goods also requires elaborate boundaries, which are the bureaucracies and hierarchies that dictate how we are to live and what we are to do. In such a vast machinery, what use freedom?

But modernity also creates problems that it cannot solve. For example, the packaging of consumer goods turns into highly sophisticated garbage that neither nature nor mankind can safely undo. And since countries are supposed to be run like efficient, profitable companies, politics sallies forth to solve all the problems of life. This leaves education rudderless, so that it can neither be instrumental nor idealist, thus devolving into a bureaucracy to manage the young.

Further, the refusal of God necessitates the bettering of mankind, down to biology. This turns society into an ever-expanding mechanism of profitable manipulation, that is, progress. Such manipulation of what it means to be human leads to tribalism (packaged as diversity and pluralism), which the strongest boundary of all. Such problems have no real solutions – and thus any critique offered can never get past describing all that has gone wrong (aka, the thriving outrage industry).

In the meanwhile, there is limitless expansion and profit, which now demands that the resources of the entire planet be controlled by monopolies. And when these resources themselves become insufficient, there lies the exploitation of neighboring planets (the key purpose of space exploration). Such is modernity. What function can freedom possibly serve in such a vast engine?

This ultimately leads to another problem – that of freedom itself. What does it mean to be free in modernity? Is it simply unhindered self-expression? Unfettered thought and speech? If so, then such unconstraint runs smack into the boundaries of consequence and human rights, and thus fritters away. Everyone knows how to repeat the mantra – that words and actions have consequences and must be used with great responsibility. What does modernity need more?

Human rights, responsibility, or freedom? There might be the jurisdictional approach of pegging freedom as a right (such as, the First Amendment in the United States), but this merely creates another boundary, which still must contend with all others (responsibility, rights, justice). Since freedom has no purpose in modernity, it can be easily defused through legal and political interpretation. Statutes are nothing more than agreements and are easily denied or broken.

Next comes a far trickier issue. Is freedom simply anarchy? No rules, no judgment, no boundaries – Paul Feyerabend’s injunction of “anything goes” run rampant? Or, must we take Nietzsche to heart and “live dangerously,” forever fashioning our own limits, our own values, our own laws – to become Uebermenschen? Such freedom, like modernity, also creates problems that it cannot solve. Indeed, what are people demanding when they cry, “Freedom!”?

The freedom from want is far different from the desire to speak one’s mind unhindered. Wittgenstein is correct – the world of the poor is different from the world of the rich, because indulgence can never be the same as necessity. In this context, that peculiar phrase, “the marketplace of ideas” (wrongly attributed to Mill) is often bandied about. The logic of modernity is obvious here. The wise consumer (informed by industry information) browses a plethora of products and chooses what appeals.

Those that favor this adage do so out of a belief that the marketplace offers the surest guarantee of freedom – the individual’s ability to make the right choice. This trust in the wisdom of the consumer is not only naïve but anti-freedom. The consumer buys not to express freedom, but to satisfy desire. Because modernity does not need freedom, for most consumers freedom is made undesirable and will never be bought – rant as its hawkers may.

The marketplace will promote the products that favor it – and it will destroy all competition. Those that advocate a “marketplace of ideas,” therefore, cannot complain that they are being censored – for the modus vivendi of capitalism is never fairness in the marketplace but dominance of the marketplace. Modernity is all about control which, again, makes freedom pointless.

Where does all this lead us? When providence was eliminated from life, it was supposed to bring about a never-ending expansion of self-determination. Again, the logic of modernity and the marketplace strategically deployed – the belief being that if you remove barriers to trade, all trade will flourish. Likewise, nothing could hold humanity back once it got free of old superstitions.

However, the variety of determination available to humanity has proven to be limited. Human potentiality hits a brick wall in human gluttony. Humanity will always be Icarus. Modernity seeks to blunt the ensuing disappointment by one rather powerful strategy – diversion (or, more consumption). In the end, the pampered human body considers freedom to be a hindrance, like the superstitions of old.

But if freedom is still deemed to have any value, it must break free of modernity and its agendas of physical determinism, which are concerned with more barriers (especially political utopias). Neither should freedom be described as a wild free-for-all, which too is a version of physical determinism. Instead, freedom can only be achieved when it is once again held as a process of ethics. Until that is clarified, any call for, and pursuit of, freedom will be illusory because it will only be a further expansion of modernity.

The words of Elizabeth Anscombe serve as a reminder of what freedom ought to be: “My actions are mostly physical movements; if these physical movements are physically predetermined by processes which I do not control, then my freedom is perfectly illusory. The truth of physical indeterminism is then indispensable if we are to make anything of the claim to freedom.”

Freedom may begin when we realize that it is the by-product of ethics.

The photo shows, “In the Train Compartment,” by Paul Gustav Fischer, painted in 1927.

Monopolies, Or More Is Less

The death of the free market at the hands of monopoly has gotten a lot of recent attention. By far the best book about this problem is Tim Wu’s The Curse of Bigness, which through a “neo-Brandeisian” lens focuses on how monopoly destroys the core frameworks of a free society.

This book, The Myth of Capitalism, comes to much the same conclusion from a more visceral starting place—why have wages stagnated even though the labor market is tight and corporate profits are soaring? The answer is corporate concentration, and Jonathan Tepper is, like Wu, offering concrete solutions.

The problems that monopoly causes are not disputed in any relevant way by anyone but a few University of Chicago ideologues. The difficulty is that all possible solutions are opposed by the ultra-powerful, ranked in armed array.

One traditional way of dealing with such concentrations of power is populism, of the Left or Right. On a good day, we get Theodore Roosevelt; on a bad day, someone less attractive. It is therefore no surprise we see populist realignments arising across the political spectrum, with both conservatives and liberals girding for battle against the neoliberal kingmakers who dominate the Republican and Democratic parties. The question is whether the populists have enough will to start, then finish, the fight. As Warren Zevon sang, “Some have the speed and the right combinations / If you can’t take the punches, it don’t mean a thing.”

If the new populists, the neo-Brandeisians, do have the will, this book offers some tools. It is less cerebral than Wu’s, aimed at people who have to be told who Leon Trotsky was (“a Marxist revolutionary,” if you’re curious). Tepper’s basic point is that we no longer have the free market (what he incorrectly calls “capitalism”), because most industries no longer have relevant competition.

It is not because of monopoly, which is usually very obvious, but rather the less noticeable oligopoly, where a handful of firms dominate but competition, to a casual observer, appears to exist. The inevitable result of oligopoly, as Tepper (along with what appears to be a co-author, Denise Hearn) shows and nobody who lives in the real world doubts, is tacit collusion on all fronts, pricing and otherwise, to avoid competition. In an oligopoly collusion is nearly as certain as death and taxes, even if done without any formal agreement.

Tepper demonstrates in several compelling ways that competition is dying. Mergers have reduced the number of firms in almost all industries, while antitrust enforcement has declined over the past four decades to nearly nothing. Since 1995, the word “competition” has declined by 75% in annual reports to shareholders of public companies.

Tepper offers a variety of technical measures to demonstrate his point, and I don’t think anyone disputes this. (If anyone does, I’ve missed it). He then lists an astonishing number of industries that are nearly totally consolidated (although someone should tell him that Purdue is the university and Perdue is the chicken company). Airlines and cable TV, obviously, but also beer, bacon (all those different brands in the store are owned by Smithfield), milk, eyeglasses, drug wholesalers, crop agriculture, and very much more.

Why is collusion to avoid competition bad? Tepper believes that oligopoly is literally destroying the country, and he’s pretty much right (though a lot of other unrelated things are simultaneously destroying the country). Obviously, everyone pays higher prices. But higher prices are the least of collusion’s evils.

The most evident problem for most people is that oligopolies, in Tepper’s words, killed your paycheck. Stagnant wages, the problem that sparked the writing of this book, lead to higher inequality, social tension, and societal destruction.

And a big cause of stagnant wages is corporate concentration, which directly lowers wages for workers, since oligopolies act as monopsonies (buyer price-setters) in the labor market, especially in smaller labor markets. It is not an answer to say that workers should go where the jobs are. The wages are often no higher there, and people are loathe to leave their communities and people, as they should be. (This is one of the key points of J. D. Vance’s Hillbilly Elegy).

It’s not just monopsony. Tepper also focuses on a particular burr that chafes me, non-compete agreements. These have exploded, and are commonly found now even in burger-flipping jobs. They are an abomination. (None of my employees, in any position, has to sign a non-competition agreement, on principle. I don’t care if my employees compete with me. Of course, I’m so wonderful to work for that nobody would ever quit).

Non-competition agreements are an offense against God and man, and it is not a coincidence that California has, for 150 years, forbidden them and developed Silicon Valley as a result. That rule should be extended nationwide, immediately, federalism be damned.

Beyond wage stagnation, lack of competition leads to lack of innovation. Again, this is a commonplace, known when the Sherman Act was passed (in 1890), but conveniently forgotten when the money flows to the right political pockets. Less competition means less investment in winning competitions.

Oligopoly also means that startups can be bought out with offers they can’t refuse, not dissimilar to Pablo Escobar’s famous demand to choose “plata o plomo.” And aside from buyouts, startups suffer direct attacks made possibly by the disproportionate power of oligopolists, such as Google’s suppression of, or theft of the data of, any type of business that might compete (not just in search, but in any type of data that Google thinks it can monetize).

Occasionally one hears the halfhearted response that we have monopoly or oligopoly because big companies provide what consumers want and do a better, more efficient job. Tepper, like Wu, sneers at this explanation. The reality is that most giant companies are actually less efficient; there is such a thing as diseconomies of scale.

Even back in the day, when Standard Oil was forcibly dismembered, the pieces collectively were more valuable than the monopoly. Again, nobody with any sense defends oligopoly; they just dodge or ignore attacks, and laugh all the way to the bank (Jamie Dimon’s bank, or another one of the oligopolist banks).

Covering all the bases, Tepper also criticizes common ownership cutting across publicly traded firms, noting that index fund investing has exacerbated the problem, since entities like Fidelity have large stakes in nearly every company, including those that are putatively competitors. He touches on the problems with CEO pay, too, which are covered in more detail in Steven Clifford’s The CEO Pay Machine, suggesting better alignment of incentives through workers being granted shares, restrictions on stock buybacks, and lockups on manager-held shares.

Government actively assists the process of oligopoly formation, and not just by failing to enforce the antitrust laws. Enforcement of those laws is corrupted by the ideology of Robert Bork and by highly compensated economists who spin fantasies of future consumer price reductions that never arrive.

On those rare occasions when the government attempts to enforce the laws, the courts side with the oligopolists (as in today’s decision by the D.C. Circuit Court of Appeals, rejecting the Trump administration’s attempt to block Time Warner’s merger with AT&T, where, bizarrely, the burden of proof appears to have been put on the government).

For another example, Congress forbids the sale of insurance across state lines, effectively creating oligopolies; Obamacare, largely written by insurance companies, did not change that at all. And Congress, along with administrative agencies, eagerly obeys the commands of oligopolists to increase regulation.

That may seem odd, until you realize what many people miss, that big companies always favor any regulation that falls harder on smaller companies, both due to compliance costs and as barriers to entry, and moreover they often write the laws and rules specifically to favor themselves.

The classic example of this is Mattel, when found importing toys contaminated with lead paint, got a law passed that required expensive third-party lead testing for all toy sellers—except for themselves, who were allowed to do it cheaply internally. Or, to take another example, what penalty did Equifax pay for massively exposing consumer data due to incompetence? None, because if you’re big enough and spread enough gold around, the regulations don’t really apply to you.

Government action is even worse and has greater impact than it appears, because beyond simple inefficiency and inequality, many of these oligopolies now themselves exercise the powers of government. Tepper offers Progressive economist Robert Lee Hale’s definition of government: “There is government whenever one person or group can tell others what they must do and when those others have to obey or suffer a penalty.”

By that token, certainly, all the Lords of Tech, from Google to Facebook to Amazon, are government, as are, in their own spheres, all the other consolidated industries. (And, of course, often these companies impose penalties on those who do not toe the line on their political ideologies; it is not just business penalties that are at issue). We are not that far off the classic science fiction dystopia where corporations are the government, and can impose their will on all sectors of society.

If everyone not in the pocket of oligopolists agrees that corporate concentration is a problem, why isn’t anything being done about it? Silly rabbit, it’s because all the money and power is on the side of the oligopolies. All these companies spend huge sums lobbying, and it’s been shown they get massive returns on the dollars spent.

They lobby to prevent antitrust enforcement; Google was the second-biggest source of campaign contributions to Obama. They lobby to add regulations. But it’s also the revolving door, at every agency and every level of government, that means oligopolists get what they want. Google, a particular target of Tepper, is one of the biggest offenders, with hundreds of its employees shuttling back and forth into and out of the government, collecting money and power both coming and going.

So far, so bad. These companies also use their power in perniciously creative ways, some of which Tepper does not mention. For example, it is well known that Amazon is the major source of income for many smaller businesses (and plenty of larger ones) that sell on its platform, and uses the data it obtains about such sales to benefit itself and eliminate the profits for those businesses, increasing its own monopoly power.

I don’t sell through Amazon; I’m a contract manufacturer, and thus invisible to Amazon. But one day last year an Amazon functionary called me up. They asked us to develop a brand in our industry (in essence, food, which we put into containers) which would be sold on Amazon. We could set the prices; the proposed deal was that we’d both profit if we developed an attractive brand, since Amazon would push it and we’d make money on the sales.

I figured this was a scam, since I am cynical and think Jeff Bezos should be put in a ducking chair, but set up a conference call anyway with a team of Amazonians. After buttering me up, they glibly mentioned in passing that, among other standard boilerplate in the agreements they’d send me to sign, which were of course trivial (but not negotiable), there was an unimportant standard provision: that at any point Amazon could buy this entire new brand from me, lock, stock, and barrel, for the lesser of $10,000 or fees actually paid to lawyers to register trademarks.

But, they assured me, this was just so they could “help me if there were any legal challenges.” A total lie, of course. What they were, and are, doing is suckering people who, unlike me, are not former M&A lawyers, by, at no cost to Amazon, throwing up hundreds or thousands of brands; seeing which succeed; then stealing them from their creators, who eagerly sign documents without paying any attention, hoping to hit the big time. A small thing, perhaps, but indicative of a cheater’s mentality. Fifty lashes for Jeff Bezos at the whipping post in the town square!

Tepper offers a long list of excellent solutions. Vastly more aggressive antitrust enforcement, using bright-line numerical rules about corporate concentration. Slowing down the revolving door. Common carriage rules for internet platforms that sell third-party services (not only Net Neutrality, presumably, but also other services, such as Amazon’s selling platform).

Creating rules that reduce switching costs, such as portability of social media data. All these are good, though I’d go farther. For internet common carriers, I would include rules that forbid viewpoint discrimination. I’d break up all major tech companies, and probably break up almost all existing corporate concentrations. I’d totally forbid the revolving door. Regardless, I find nothing deficient in Tepper’s solutions.

But these are all egghead solutions from eggheads, vaporware in the ether. Billions of dollars are being raked in by the powerful, and then distributed to protect their interests. The oligopolists will never accept a single one of these solutions.

Tepper works as an advisor to hedge funds (it is no surprise that those particular concentrations of power, which are also extremely pernicious and often eagerly participate in creating and extending the problems identified in this book, receive a grand total of zero attacks in this book). He is lucky he does not work for a think tank or other vulnerable entity.

Google, for example, brutalized Anne-Marie Slaughter’s New America Foundation in 2017 when it dared to have on staff an academic team who suggested that more antitrust enforcement against Google might be a good idea. Attacking the oligopolists is like chasing a demonic greased pig—even if you catch him, he’ll probably wriggle out of your grasp, and if he can’t, he’ll kill you.

What’s the answer, other than pitchforks? (I’m all for the pitchforks.) Well, divide and conquer, probably. We should serially use Saul Alinsky’s Rule 13: “Pick the target, freeze it, personalize it, and polarize it.”

This will probably have to be done at the intersection of two other unpredictable factors. First, some especially spectacular bad behavior by a target, which implies that the each sequential target will have to first identify itself. Second, action by ambitious politicians, probably of the Left but maybe of the Right, willing to use this as a signature issue.

Alexandria Ocasio-Cortez may be an economic illiterate, but she’s ambitious and self-promoting enough to take on such a task, and tough enough to ignore the pressure and attacks from the oligopolists. Bernie Sanders maybe, too, but he’s so old his heart probably can’t take the punches. This is a task for the young.

On the Right, I can’t think of anyone—Trump, of course, but he lacks the discipline and has shown a disinclination to actually act populist (thanks, Jared and Ivanka)! Marco Rubio and Mitt Romney aren’t going to do it. Maybe J. D. Vance, if he ever runs for office, but he strikes me as not nearly vicious or ambitious enough.

But with any luck, the problems themselves will call forth the problem solvers. History shows us that for every action, a reaction—though, unfortunately, often one with unintended side effects. Within reason, though, I’d happily risk the side effects to destroy the oligopolists.


Charles is a business owner and operator, in manufacturing, and a recovering big firm M&A lawyer. He runs the blog, The Worthy House.

The photo shows, “Puck & the Mechanical Knight – A Modern-Day David & Goliath,” a political cartoon from the later 19th-century.