Neo-Brandeisians led by Khan et al put forward the narrative that inflation was driven by corporate consolidation and "greedflation..."
They were proven immediately incorrect, e.g. egg prices skyrocketed due to avian flu supply shocks and subsequently crashed when flocks recovered, proving prices fluctuate based on supply, not because corporations suddenly decide to be "less greedy." Did they revise their statements? Of course not
Before them, the 2010s argument was that large corporations were short-termist and quarterly-focused. This idea brought people like Warren to power. Well, now we have the biggest tech companies in the world blowing large-nation-state levels of CapEx on long-term planning with gigantic structural investments in America, and the exact same people still accuse them of acting in bad faith regardless of the industry or the behavior.
Before then, the 90s/00s argument was that large corporations executed huge CapEx in extractive ways that destroyed the environment. This brought people like Nader into power. Now, big tech companies invest exponentially more in green energy and grid retrofitting than the Green New Deal even considered. The same ideological compatriots now pretend data centers are equally extractive by fabricating water use issues. The reality is the opposite. Massive AI infrastructure (like MSFTs new Wisconsin facility) uses the same amount of water annually as a single neighborhood restaurant. They're literally some of the most water and energy efficient businesses on the planet.
As I've written about before and as Noah points out, we deserve far better advocates for real antitrust issues. The 'Consumer Welfare Standard' should absolutely remain the legal baseline. Instead, these "advocates" abandon empirical harm metrics to accuse anyone who disagrees of being part of the oligarchic Epstein class or whatever other schoolyard nonsense they can throw and believe will stick.
Your argument that "they were wrong" involves a single data point: egg prices. This isn't convincing. I don't think anyone in the Biden administration would have disagreed with the idea that avian flu drove high egg prices; they were saying this constantly. It was Biden's USDA that was culling flocks.
It's a substack comment not an economics article. Here is a list of things neobrandisians have decided greedflation increased prices on and we're obviously wrong about:
-Lumber (actually caused by pandemic mill shutdowns colliding with a sudden DIY and housing demand surge; prices subsequently crashed back to pre-pandemic baselines)
-Used cars (actually caused by a global semiconductor shortage halting new car production; prices dropped steadily as chip supply chains recovered)
-Gasoline (actually caused by rapid post-COVID demand recovery and the Russia-Ukraine war supply shock)
-Beef and pork (actually caused by severe droughts increasing livestock feed costs and pandemic-induced labor shortages at processing facilities)
-Ocean freight (actually caused by port bottlenecks and a pandemic-driven consumer shift from services to physical goods; container rates collapsed entirely once backlogs cleared)
-Turkeys (actually caused by the same highly pathogenic avian influenza outbreak that affected egg-laying hens)
-Airline tickets (actually caused by a sudden post-pandemic travel surge overwhelming diminished airline staffing and capacity; fares dropped as capacity was restored)
There were like ten more examples given in the article.
Instead of demanding people prove a negative, why not find some counterexamples where this clearly DID happen? In a non-isolated, non "well we have no real evidence but like ya feelin what I'm feelin?" kind of way?
The "corporations are all just focused on short-term problems!" line makes sense to stupid people, because it's apparently what THEY would do in similar positions of power: make plainly idiotic decisions that might get you like a week of slightly increased profit before immediately torching the company and/or its credibility. But OBVIOUSLY they would do that! Because they're just focused on the shortest-term profits possible and not one person in the collective US corporate world understands concepts like "next week" nevermind "next year," or things like "if we do this we torch our competitive advantage and give it over to our competitors we actually make less money," or even the dreaded, never-to-be-spoken-aloud concept of "usually the best way to make more money is to actually do something good and useful, and not captain-planet-villianesque evil scheming for literally no sensible reason."
The sure sign of a person that doesn't know how to think is that they believe financial incentive = proof. Which is why, if their neighbors house burns down, it's immediately clear that they are the ones that burned it down, no trial needed, because they have a financial incentive to reduce the local supply of housing to make their home value go up. And then they'll MAKE MORE MONEY MUAHAHAHA!
I’m just a guy on the internet, but I am an antitrust lawyer and have spoken to all of these people (except Teachout) on many occasions. Barry Lynn is a dumb guy in the sense that he’s just incapable of reasoning through a complex topic. Any time you push him, he falls apart. One of his quotes in the Chait article is informative. He said he looks for journalists to hire to his think tank because “it’s easier to teach a journalist to ‘do policy’ than to teach a policy analyst how to write.” This reveals that he’s concerned entirely with messaging and not getting the right answer to any particular question. He’s almost Trump-like. The rest of the people in his orbit aren’t dumb like he is, but they are monomaniacal.
Second, the speed with they accuse people with different views of being paid for those views is also a tell. These people operate non profits and live on donations. Who do you think does the donating??? Yelp has been in Washington complaining about Google for 15+ years, and it and other competitive also-rans believe funding Barry Lynn and Lina Khan has positive ROI for their businesses. The “Antimonopoly Summit” is a yearly circle jerk of these various astroturfed orgs. One year it was sponsored by a pharmacist trade association. Who is their biggest marketplace enemy? The PBMs, who Lina Khan sued multiple times when she led the FTC. Maybe you hate the PBMs and think the lawsuits were good. Fine. But she and Barry Lynn are “on the take” in precisely the same way they accuse their critics of being. Maybe they think money is less green if it comes from “small corporations” rather than “big corporations.” You know, like Yelp.
You left out the crucial fact that the anti-monopoly people are primarily concerned that large companies might exert political powers and so they think bigness is bad even when there's competition.
This is batshit because we can expect each party to wield this power against their enemies.
Trump using antitrust to coerce firms to do his bidding is the flip side of the antimonoplist anti big tech crusade. Trump fully discredited their whole idea. Yawn
I'm moderately skeptical that anti-monopoly efforts have ever been really effective. There certainly aren't any clear cases in US history of "big, powerful, abusive market-created monopoly gets shut down by government action". The clearest candidate is Standard Oil, but Standard Oil was in the process of being massively disrupted by the widespread adoption of the automobile and the discovery of the Texas oil fields anyway.
There are two forces that create monopolies: Government and innovation. Government does it by explicitly setting up barriers to competition. AT&T is a classic US example, though AT&T's power and wealth also derived from technological innovation. Innovation does it by creating a new technology that disrupts existing markets or creates entirely new ones, and the massive new wealth created tends to end up highly concentrated.
What actually breaks up monopolies that were created by technological innovation is more technological innovation. They try to hold on and adapt when the technological landscape shifts, but they never manage to do that completely or effectively. All of the tech monopolies of the past still exist, but they're no longer in the controlling positions they had.
I think government anti-trust efforts do have a minor role here, emphasis on minor, and it's mostly one of deterrence rather than direct action. The anti-trust laws don't entirely prevent monopolies from engaging in anti-competitive behavior, but they do prevent the most egregious sort. I don't think we should scrap the laws, and we should engage in some amount of prosecution... but there's no evidence that making enormous efforts is worthwhile.
Just deter the worst abuses, and let the innovation cycle do its disruptive job.
Where I think we need to put a lot more focus is on identifying and defeating regulatory capture. It's striking to me that we've had many anti-trust task forces in the last 150 years, but as far as I can tell, no one has *ever* organized a task force chartered to identify cases of regulatory capture. We've had occasional waves of broad-based deregulation, which have been a mixed bag (though probably mostly beneficial). But we've never specifically focused on identifying cases where private enterprise is using regulation to entrench itself and prevent competition.
I could not help feeling by the end of this piece, that with just a few keyword substitutions for names of “the problem,” the theories, gurus, and advocacy groups, it could also be transformed with minimal editing into a perfectly legitimate criticism of issues and the behavior of various groups in the field of K-12 education….While I appreciated the insight into the complexity of economics, I think this gave me more insight into the broader education field as well by accidental proxy. Never thought much before about the similarities between these two fields, in part because education has had an embarrassing lack of research and intellectual rigor at times so at first glance they seem opposite, but in the end what’s being examined is so complex, contextualized, and difficult to generalize about at many levels, that many of the same types of problems still come up.
Public education is an especially bad monopoly, in that their “customers” are required to attend school and also don’t pay for it directly, instead all the taxpayers (most of whom don’t use it) pay for it. This is why you see that outcomes aren’t related to spending, poorly performing NYC public schools spend $45,000 per pupil for schools and higher ranked public and private schools often spend less.
Which is why, imo, it's imperative to adopt teacher training practices found in Asian countries like China, ROK, Taiwan, and Japan--that are directly focused on mentoring and training public school teachers, so they don't quit in droves within their first 2-3 years, and are able to more effectively teach students. In the US, we still have barely a 30% retention rate for new teachers; and the systemic failures of such a large wash-our percentage are directly borne by the students.
Anyone who denies the existence of market forces should play an MMO game and try to sell things to other players. If there’s one thing you quickly learn from that, it’s that you can’t just set whatever price you feel like and expect the item to actually sell. Competition matters, and so does the willingness of potential buyers to pay. Sellers are actually very much at the mercy of buyers!
I agree with you that the monomaniacal approach to blaming all ills on monopoly is counterproductive.
Regarding this point:
> The causal chain that runs from weak antitrust to all sorts of social harms necessarily runs through profits. If companies aren’t making profit, they aren’t controlling the market.
I wouldn't be so quick to look at profit margins as an exclusive component of the causal chain. Nonprofits can absolutely behave monopolistically, with timely examples being the Mayo Clinic (eliminating overnight respiratory therapy positions) and executives at the Cal Academy enriching themselves over the academy's mission. Make sure to look at a monopolist's employees (especially executives and unions) and suppliers (especially landlords, people who hold patent rights, and people with elite professional licenses). It could be that the direct owner class is getting a raw deal, while nearby rentiers are massively enriched.
There is a lot of evidence, but I will look at 2 pieces. Medical Loss Ratios/Medicare Advantage and the fact that economists in other countries probably aren't all uniformily idiots.
First, Medical Loss Ratios. "The percent of premium income that insurers pay out in the form of medical claims. Generally, lower MLRs mean that insurers have a higher share of income remaining after paying medical costs to use for administrative costs or keep as profits."
Now, the Affordable Care Act mandated that this had to be above 85%, because before, companies were only paying out 60% of premium income in the form of medical care and pocketing 40%. This made their investors happy but it meant a lot of denials of care and it added "shareholder returns" into the incentives of how these health insurers ran.
But even with the current status quo, 10 -15$ out of every 100$ of healthcare premiums a person spends is just going to the private insurer. They can use that to run themselves (salaries, capital equipment etc.) , pay dividends, or advertise. The point is, for a person who is spending several hundred dollars on their health insurance, they might be surprised that a chunk of that is going to just sustaining the insurance company. That would be fine if the insurance companies secured lower costs for their members; it would be the useful service they provide.
But there is no evidence that they do.
When Medicare started having the Medicare Advantage plans which, instead of the government paying providers through the normal Medicare program, is the government paying normal Medicare, and then Medicare paying private insurers to provide analogous Medicare benefits, spending went way up. https://www.kff.org/medicare/what-to-know-about-medicare-spending-and-financing/
I thought the private insurers were supposed to be more efficient? They were supposed to lower costs.
Instead of 100$ from the Medicare Hospital Insurance Trust Fund going to a hospital to pay for a hip replacement under normal Medicare Part A, now, under Medicare Advantage, 100$ goes from the Medicare Hospital Insurance Trust Fund, 15$ of that goes to the private company running the Medicare Advantage Plan, and only 85$ goes towards the actual hip replacement. Since hip replacements aren't cheaper for patients on Medicare Advantage that means that more money has to go out for every 100$ worth of hip replacement.
2. No one has tried to copy the US system of private insurance through mostly employers. If our system worked to provide cheaper and better alternative relative to other methods, surely some enterprising health minister in one of 30+ other wealthyish countries would have tried to copy it.
No one has. Either they are A) Raging idiots. (Unlikely) or B) The US system of private, mostly employer funded health insurance, is a path dependent accident of history that led us to a very supoptimal outcome that no one else wants to emulate.
You have your excellent series on how various countries got rich and developed. It is incredibly telling that none of these countries have ever tried to copy the US system. The US system is bad at delivering healthcare, cheaply, efficiently or universally.
When Taiwan made their NHI system in 1995, they were afraid of communists and so they built their system on allowing competing private insurers to drive costs down and.....
Wait, they didn't do that.
The Harvard economists who built the thing decided to make a national single payer system where almost everything is financed through a payroll tax and 98% of all the money in the system goes towards patient care. Private insurers exist, but only for areas of health above and beyond the basic health package.
Because the goal of the health system is universal care, not sustaining a robust private health insurance sector.
Why, in your opinion, has no other country tried to copy the US system?
Surely, if our private insurers provided cost, efficiency, or access benefits, other countries would want those benefits as well?
Even in places with health delivered through private insurance like the Netherlands, Singapore, or Switzerland, the private insurers are under much more direct control. (For example, in Switzerland, they have to be non profits)
Matthew, thank you for writing what would have been my response to Noah’s persistent defense of private health insurance because their profit margins are low. There is enormous waste at all levels, starting with the salaries of the executives and extending all the way down to “customer support/preauthorization” that does nothing when you try to figure out which provider you can go to or get treatment for a problem. All these resources spent on salaries and slowing or denying care count as operating expenses that reduce profits but don’t lower medical costs. This is why the US spends 50% more on healthcare than comparably advanced countries.
Using traditional Medicare vs Medicare Advantage as a case study:
I'm not defending private insurers. They may be inefficient, but that doesn't mean that they have market power. Those two things are incredibly different. If insurers raise costs because they spend too much money on competition and have little bargaining power, antitrust will make it worse!
The reason why private insurance should NOT be a part of basic healthcare is because what happens between doctors and patients is NOT a market transaction. The natural preferences and expectations, on both sides of that relationship, are not market preferences and expectations.
Consequently, to force healthcare into market logic is to distort our natural psychology. And to treat many of our problems in the healthcare system as "market failures" is to distort our natural psychology.
A list of our natural preferences and expectations in healthcare delivery is given at time 3:40 to 5:40 of the following video. (This list has been expanded since comments by Kenneth Arrow in 1963:)
This is an animated diagram of how a single-payer would work in the United States, including how the free market should still be used for production and innovation in medicines and machines, up to the point of the providers (doctors). The reason to use diagrams is because they pack in more information. The preceding introductory video explains the diagram symbols. (This is a chapter from a longer work to introduce into mainstream economics a conceptual model for cooperation.)
I myself have been asking people for years in blog comments and other fora, what is the "value added" of private insurance in basic healthcare?, and never getting an answer. But I've come to realize that this is actually the wrong question, or not the root question.
It is paramount to understand that discussion of private healthcare efficiency or utility in universal basic healthcare is academic, and beside the real point. Private health insurance in basic healthcare is simply inappropriate.
I think the "Left" should understand the market system much better than they do now. (One quick way would be to tell them to watch this whole series of videos, which explains the market system better than anyone. And might help to correct some of their ideas about monopoly among other things.)
But it is also long past the time when mainstream economists should be able to state, quite simply, that certain relationships are not meant to be market transactions, and that private health insurance in basic healthcare is simply inappropriate.
My objection wasn't their market power. It was their basic utility. Private health insurers in the US do not reduce costs, improve care, or reach more people relative to a public system.
When economists object (rightly) to the Oregon law that mandates that all gas must be pumped by gas station employees, they aren't grousing about the market power of the gas stations. They are seeing that law as introducing relatively pointless middlemen who raise the prices for everyone in this "get gas" transaction.
There are so many sources of bloat beyond just private insurance. Fixing the private insurance issue would help a lot, but not enough.
In places like Germany or Switzerland or Romania, they have a problem. If they want trained medical staff, they have to hope to get them from their own people. There isn't some reservoir of German speaking nurses outside of Germany that Germany can draw on.
The US is different. We could flip a switch tomorrow and have an extra 10 million trained doctors and nurses nearly instantly. Good, English speaking medical personnel are being trained in dozens of countries and many of them would love to work in the US.
But we don't because the AMA is a cartel which limits the supply of doctors in order to keep salaries high.
That's just 1 of dozens of reasons our costs are so high.
Completely agree that health insurance bloat is only one aspect of the problem. In addition to providers, US pays too much for medications and medical devices due to patent protections. See Dean Baker for further details
You were asked for evidence and your answer was that you don’t know of any evidence to the contrary. Even if that is not just simple ignorance on your part, that still isn’t evidence.
The first was Medicare advantage where allowing private insurers to serve as middlemen administering Medicare benefits has led to increased costs with no gains in efficiency.
I had a link and everything.
The second piece was more like what you accuse me of. I said that it stands to reason that if our system, which has existed since the 1940's, were an efficient, universal, cheap system that provided good health outcomes, someone would have copied it.
There are dozens of countries with universal health systems. Almost all of them are cheaper than ours and provide better health outcomes.
The problem with Medicare Advantage is that it is poorly designed to encourage cherry-picking. If, for example, Medicare consisted entirely of Medicare Advantage, it would not have its current problems. It’s not evidence of a general problem with private health insurance
The reason why our system has worse health outcomes has to do with, among other things, lack of universal coverage. People in the US who have good health insurance have very good outcomes relative to other countries.
it’s clear that you understand that insurers who make an effort to improve efficiency and reduce waste, fraud, overuse and abuse will have lower medical loss ratios so citing it as “evidence” that companies are not doing that and just lining their pockets is circular reasoning
If Medicare was entirely Medicare advantage, it would still have the problem of only 85$ out of every 100 going to actual health care for beneficiaries while 15 is siphoned off to maintain/profit the companies.
Companies will try to reduce expenditure and increase revenue.
They can do that by reducing waste, fraud, overuse, and abuse.
They can also do that by cherry picking the healthier patients. They can also do that by refusing to cover people for preexisting conditions and daring someone with stage 3 lung cancer to spend their last 4 years of life fighting it out in court.
The law about medical loss ratios and no denials for preexisting conditions didn't get made "theoretically." It came out because companies were not paying out premium revenue in the form of care and they were denying care because of preexisting conditions.
We know that systems like Taiwan's or Israel's or Germany's are not massively expensive (they are much cheaper), are not bloated (they run much more efficiently, and are not delivering bad health results.
His claim that private insurers do not lower costs is backed up by the incentive structure of the industry. Under the ACA health insurance companies are capped at 20% gross profit. So if an insurance company found a way to cut costs by 50%, they would also cut their earning potential by 50%.
I had to get a MRI on my knee a few years ago and it was $3000 (of which I paid about $900 out of pocket). I was able to get the same MRI from a imaging center paying cash for $700. I called the insurance company to see if they would cover this. I assumed I would get instant approval because this was the most obvious win-win situation ever. But no, that's not how it works. By any rational business model the insurance company would have an office staffed with people trying to find cost savings for these things. They would be calling around and telling people "if you go to <cheap imaging center> rather than the hospital your doctor sent the order to, we will waive your entire copay on this." That's a $1400 saving to the insurance company and a $900 saving to the patient.
Why don't they do this? I have to assume it is because of the incentive structure of capped profits means that the insurance company can't just pocket the $1400 savings like any other company would. They will be forced to give up that gain by lowering their revenue.
Isn't Lina Khan the pre-eminent standard bearer of the Antimonopolists?
But the Democratic Party admittedly has a weak bench when it comes to pro-entrepreurial, pro-growth experience and sentiment. Which was why I especially appreciated the attention VP Harris gave--whether just lip service or not--to actively supporting small businesses.
But regarding the ills of excessive market concentration, it'd be interesting to read Noah's take on to what degree highly concentrated market sectors--like Airlines, Banks, Meat Packers, etc.--have on A) Depressing industry wages, and B) Overcharging consumers.
If I could talk to these people that believe prices are downstream of greed and power (as opposed to supply and demand) I would ask how their model accounts for price differentials.
When I go to the grocery store, a steak costs more than a bag of carrots. Now the greed of the grocery store is the same when they sell me the carrots and the steak. The power of the grocery store is the same when they sell me the carrots and the steak. Yet the price differs.
This model clearly fails as if prices are downstream of greed and power, there doesn't seem to be a reason why a t shirt would have a different price than a private jet.
Greedflation is the dumbest theory, prices obviously respond to both what buyers are willing to pay for a good or service, and also what it costs to produce it. Warren says grocery stores increased egg prices because of greed, but ignores why they only got greedy that one time (just coincidence that avian flu was peaking, or maybe a convenient excuse by the greedy stores) and only for that one product. I guess she is now mad at the USPS now that they suddenly got greedy recently and are charging an extra 8% for Priority Mail packages as a “transportation surcharge”, and is totally unrelated to the Iran War, or maybe she believes governments can’t be greedy. If she believes government is immune to greed, maybe she can propose lower taxes.
I am more concerned about the individual power of rich people than the power of corporations. A large organization with lots of stakeholders always has to balance multiple demands, which keeps it from ever going off the rails if it wants to avoid collapse.
Whereas an individual rich guy like Elon Musk can go completely insane and face almost no accountability if he’s surrounded himself with yes men and paid off the people who might arrest him.
That’s why I’m far more interested in raising taxes on the rich than stepping up antitrust enforcement.
Musk is able to do things precisely because he controls large corporations.
I'm really not a fan of growth-killing taxes aimed at some nebulous "take rich people down a peg" goal. There's an Uber progressive Soros for every Musk. Harris raised more money than Trump.
This eat the rich stuff is the worst slopulism and it's an approach that was tried, and failed, in many other countries.
Do you think we aren't already taxing rich people similarly to other countries? Do you not realize it's the rest of our taxes that are outlier low not the high end?
I have yet to see real evidence that high taxes on high incomes actually kill growth. We had a 90% top tax rate in the 1950s and the economy grew fine. (And no, it wasn’t because our trading partners were still recovering from the war, that was a *drag* on our growth not a positive.)
Rich people are not motivated to work and build companies by money, they are motivated by *social status*. Money can be used to build status, but so can being in charge of something big, having lots of connections, having people depending on you, and cultivating a good reputation. If their competitors for social status are getting taxed at the same rate they are, it doesn’t actually reduce their motivation. Those who truly only care about *money* quit once they have enough to retire early in the style they want. The only reason to keep going after you have the money is for the status.
It’s true that poorly designed or arbitrary taxation can hurt growth, but income taxes that are applied fairly and consistently don’t seem to have that effect.
Those rates didn't kill growth because no one paid them. If you're curious, you can read up on the tax avoidance schemes that were popular at the time.
I don't disagree that status incentives mitigate work disincentives from taxation.
US taxes on rich people are already mid-to-high by global standards. I am not making the claim that all taxes kill all growth and we could unleash a growth miracle by slashing taxes. That would be nuts, given our deficits.
My view is basically that, looking around the globe, we are already at the point where higher taxes shifts the incentives and we get fewer (gasp) billionaires here and the fantastic companies they build, with all the opportunities those bring for the rest of us. There is no iron law that the next Nvidia is built here and not in Singapore or Poland.
So, yes, a bit higher taxes on the rich, a bit higher taxes on everyone else. Align ourselves more with social democratic countries that seem more socially healthy. At the end of the day though, I want the super rich to get even more super rich, that way, we can get more tax revenue from them *over the long term*, and achieve the best living standards for all.
Unfortunately, this kind of crab bucket logic where another man's gain is somehow my loss (even though I'm getting a percentage of his gain!) is getting way too ubiquitous nowadays.
Tax avoidance is also popular now, so the popularity of tax avoidance in the past doesn’t exactly disprove the idea that we should raise taxes now. Also, while rich people in the 1950s did avoid a lot of taxes, they didn’t avoid all of them, as clearly evidenced by the fact that their lifestyles were far more modest than those of their Gilded Age predecessors and they conducted themselves in a much more staid fashion.
It’s not that I don’t recognize that positive sum interactions exist, and I don’t think that someone else’s gain is my loss. The problem is that some people are so much more wealthy than everyone else that they can easily escape accountability for essentially any kind of bad behavior.
That’s a real problem, and a good reason to cut them down to size. Societies never work well if powerful people don’t face consequences for bad behavior.
"Tax avoidance is also popular now, so the popularity of tax avoidance in the past doesn’t exactly disprove the idea that we should raise taxes now."
I was refuting your claim that we had strong growth with 90% top rates. Obviously. I was not claiming tax avoidance is itself an argument for not raising taxes.
You made the Bernie/AOC 90% claim, but are you now seeing how the data should lead you to reject it?
~900 billionaires, and I don't think they have power over our lives like you imagine, but it's far better than one all powerful government that can just take away anyone's assets who is "too powerful" . This has all been tried with horrific results.
Even European social democracy is based on everyone having enough, not making sure no one has too much. They know that rich people help everyone get more. This was all discredited long ago, but you and many others seem to want to run these bad ideas again.
Those horrific results you’re referring to are from communist and corrupt crony regimes, where disfavored elites are selectively and arbitrarily ruined while those with the right connections are allowed to take what they want. You don’t get those horrific results from a non-arbitrary, rules-based tax system, even one with very high rates, which is what we had in the 1950s. The transition from the Gilded Age to the 1950s in the US was also conspicuously non-horrific.
Even with widespread avoidance, the high tax rates of the 1950s did in fact induce the business executives of the period to behave much better than either their Gilded Age predecessors or their successors who came in after Reagan’s tax cuts. And the high rates achieved that good result without wrecking the economy. That says to me that it was good policy and abandoning it was a mistake.
Swedish executives seem well-behaved, but the United States is not Sweden and I’m not inclined to assume that what works there will necessarily work here. We’re a bigger country with fewer workers in labor unions, which means that our executives don’t face as many pre-tax limitations as Swedish executives. What I care about is *elite behavior*, not the size of the welfare state. Whatever tax rate is needed to get good behavior is the rate we should want, and the rate we need may well be higher than the rate that suffices in Sweden.
I heard someone recently say that they should focus the Antimonopolist Eye of Sauron enormously rich people, such as Bezos and Musk. The logic being that they have wildly outsized influence on society by buying media companies and exerting influence in other significant ways.
I don't think that the normal antitrust logic applies to centibillionaires, but... hear me out for a second, there's some risk to allowing people to accumulate unlimited wealth. For most of my life, I would have argued that massive wealth accumulation wasn't a negative, and allowing it creates incentives that stimulates work and innovation, which we all benefit from. However, seeing the billionaires line up behind Trump, buy media and turn it to support him, and having watched that play out in Hungary and other places, it's starting to make me nervous. What if the robber barons aren't as philanthropic as they were 100 years ago?
There's also the dynamic that when a few Billionaires arise in their respective fields to market dominance, they effectively squelch the aspirations of thousands or millions of entrepreneurs down the food chain.
The GOP used to be the party of Laissez-Faire and entrepreneurialism. But have morphed into the "Leave No Billionaire Behind" party.
I would have agreed with you at one time, but it seems like these ultra rich are the only people who are actually able to get things done in this bureaucratic hell we have created for ourselves. If it's between the billionaires and the bureaucrats I will side with the billionaires.
You might be right about the people, but what I believe you're wrong about, and this is quite crucial, is the following:
"The causal chain that runs from weak antitrust to all sorts of social harms necessarily runs through profits."
I'm not saying profits are never a factor in the equation, but I don't see why you're analysis would 'necessarily' have to go through profits. If that's your premisse you're going to just dismiss the possibility of social harm from corporate power when a company makes no profits (yet)? In what timeframe?
For example, in tech, the fact that they're working on products or business models that did not yet exist before them means that they are basically the ones (re-)defining the legal-institutional frameworks around their own business through their terms & conditions/contracts/precedent/lobbying/etc.. If there's no competition that means law is is more likely going to be reflect, be in response to, and be favorable towards that exact business model, and thus that company, thereby reducing the possibility of a (future) competitor with a slightly different business model being able to compete effectively, etc. etc.
This might not be reflected in immediate profits, but can have serious long-term effects. Profits might one day be the result of this, of course, but if you wait for the profit signal, you're basically too late. And even from a micro-economic perspective, profits do not have to be the result for many years to come, as long as the share price of the company is increasing with increasing revenues/market power the shareholder will be happy.
You're right, market power can manifest as profits later down the line. But how much later? If an industry hasn't been very profitable for 50 years, do we keep saying "Well they still could have market power because they still could make profit after 100 years"?
Well, it took Amazon what, 20 years of no to low profits? And look at them going now. (Of course there are also other reasons for that, besides market power).
But now we're going through profits again, and the point I was trying to make is that an analysis of market power should not necessarily go through profits, nor are profits necessarily the mechanism through which market power causes social harms.
- Stock markets add an additional layer to the economy, so market power could be directed towards increasing stock prices, or other forms of derivative gains. Also international financial markets make that profits can be hidden/shifted.
- Market power can manifest itself in a myriad of other ways; through degradation of quality (crashing planes), or standards (environmental, labor, etc), infrastructural decay (Thames water), dependencies, reduced legal-institutional oversight, control & accountability, sub-optimal development trajectories, enshittification, information bubbles, or the thing economists hate most; inefficiency. And probably more examples can be found.
Of course these things will not necessarily happen in a case where there's monopoly, and likely these can also have other or additional causes. I'm not trying to be like the 'everything monopoly bad everything' people you criticize here. But I also don't think you should put on a pair of 'profit only' blinders.
On a side note ; I'm considering the possibility that the most harmful thing that comes from corporate power might actually be the fact that it gives lots of power to the people in charge of the corporation. But it might also be the power it gives to the nations in which this company is headquartered.
One of the weirdest contradictions in economic theory is the idea that monopoly or monopsony are bad and should be dismantled in favour of ‘competition’. By definition, competition is all about getting one over on the opposition – trying to corral resources to build your brand which gives you an advantage, so competition is always seeking to create monopoly. Economists think they can identify a set of conditions which by breaking up monopolies optimizes resources across the economy, and that therefore measures should be taken – and can be taken - to manage markets towards that nirvana.
But the question is whose efficiency and whose optimization. In trying to ‘win’, people striking a bargain have reconciled all their emotions and decisions down to a single figure which by definition is their optimal way of applying their resources for that deal. That does not necessarily make it the optimal way for the economy as a whole. All are competing to win in accordance with their individual definitions of winning (their ‘strategies’). From the monopolist’s point of view everything is optimised as he uses his resources to control the market. For anyone who buys from him, the confluence of motives in that buying decision to agree the purchase are personally optimal, because they by definition have overall outweighed an underlying displeasure at having to pay the power-driven monopolistic price.
Like beauty, ‘efficiency’ is in the eye of the beholder. It is a relative concept shifting with the ebb and flow of the markets, not some absolute, stable, neutral equilibrium. This is not competitive resource/equilibrium efficiency but competitive power efficiency. The dynamic nature of markets ensures that the power relationships change, and power structures reinforce their position by creating barriers to entry. Like the medieval guilds of London, they set up rules, regulations, the need to belong to a trade association and they lobby government to put up more barriers to protect them. Tearing down the rules and regulations that protect monopolistic operations allows money to flow to competing brand-builders. Forcing a break up may not be the right solution. The result may be smaller companies, but that is an effect, not a cause. The nirvana you are looking to achieve is not optimisation but innovation, and that is driven by people hungry to compete, whatever the size of their business.
My understanding of the basic idea is that competition should be an incentive to creating various goods that are natural to artificial-barrier-free market structures. Innovation is one of these, but also high quality, low cost, desirability for consumers, and so forth. When a monopolist "uses his resources to control the market" he is relying on rents to replace innovation, quality, and desirability by creating maximal engineered barriers to competitive entry, which are not natural to open markets and which serve the producer exclusively, to the detriment of the consumer.
The theory of open markets is not that tearing down a specific monopoly produces an optimal solution; it is that systematically preventing monopoly formations is an optimal solution. In practice, there will be carve outs for identified critical goods (e.g., utilities; certain forms of healthcare), where monopoly structure is seen as optimal but {supposedly] stringent government regulation limits the exploitation of rents to extract unlimited profits. Exceptions apart, social benefit is best served by building anti-monopolistic policy in the structures of all markets. The perspective is not that of the entrepreneur, it is that of society as a consumer.
I find it interesting that politicians in right to work states see very clearly supposed problems of excessive concentration when it comes unions, which can create the sorts of barriers you refer to, but downplay the problems of monopoly and monopsony.
So you write legislation that privileges certain structures of provider and where care is delivered, and then you become an antitrust crusader against the consolidation you legislated for.
Consider the fact that racism makes a repeated appearance in a post about monopolies. You suggest that the cited problem of increased racism is itself "doubtful". You should take on this problem directly and write about it, the evidence and lack thereof. The mistaken assumption that racially inequitable outcomes can only be the result of discrimination is the number-one article of faith of the Left and it has an outsized effect on liberal politics everywhere. Part of the effect is that ordinary people have watched decades of systemic preferences for minorities everywhere they look, while listening to Joe Biden complain about the "New Jim Crow", thus concluding that such ideologues and liars cannot be trusted. White workers prefer liars who are at least pretending to be on their side.
Irony Watch: many of those railing against corporate America have retirement accounts that are heavily invested in..............wait for it.............corporate America!!!!😊
Neo-Brandeisians led by Khan et al put forward the narrative that inflation was driven by corporate consolidation and "greedflation..."
They were proven immediately incorrect, e.g. egg prices skyrocketed due to avian flu supply shocks and subsequently crashed when flocks recovered, proving prices fluctuate based on supply, not because corporations suddenly decide to be "less greedy." Did they revise their statements? Of course not
Before them, the 2010s argument was that large corporations were short-termist and quarterly-focused. This idea brought people like Warren to power. Well, now we have the biggest tech companies in the world blowing large-nation-state levels of CapEx on long-term planning with gigantic structural investments in America, and the exact same people still accuse them of acting in bad faith regardless of the industry or the behavior.
Before then, the 90s/00s argument was that large corporations executed huge CapEx in extractive ways that destroyed the environment. This brought people like Nader into power. Now, big tech companies invest exponentially more in green energy and grid retrofitting than the Green New Deal even considered. The same ideological compatriots now pretend data centers are equally extractive by fabricating water use issues. The reality is the opposite. Massive AI infrastructure (like MSFTs new Wisconsin facility) uses the same amount of water annually as a single neighborhood restaurant. They're literally some of the most water and energy efficient businesses on the planet.
As I've written about before and as Noah points out, we deserve far better advocates for real antitrust issues. The 'Consumer Welfare Standard' should absolutely remain the legal baseline. Instead, these "advocates" abandon empirical harm metrics to accuse anyone who disagrees of being part of the oligarchic Epstein class or whatever other schoolyard nonsense they can throw and believe will stick.
Your argument that "they were wrong" involves a single data point: egg prices. This isn't convincing. I don't think anyone in the Biden administration would have disagreed with the idea that avian flu drove high egg prices; they were saying this constantly. It was Biden's USDA that was culling flocks.
It's a substack comment not an economics article. Here is a list of things neobrandisians have decided greedflation increased prices on and we're obviously wrong about:
-Lumber (actually caused by pandemic mill shutdowns colliding with a sudden DIY and housing demand surge; prices subsequently crashed back to pre-pandemic baselines)
-Used cars (actually caused by a global semiconductor shortage halting new car production; prices dropped steadily as chip supply chains recovered)
-Gasoline (actually caused by rapid post-COVID demand recovery and the Russia-Ukraine war supply shock)
-Beef and pork (actually caused by severe droughts increasing livestock feed costs and pandemic-induced labor shortages at processing facilities)
-Ocean freight (actually caused by port bottlenecks and a pandemic-driven consumer shift from services to physical goods; container rates collapsed entirely once backlogs cleared)
-Turkeys (actually caused by the same highly pathogenic avian influenza outbreak that affected egg-laying hens)
-Airline tickets (actually caused by a sudden post-pandemic travel surge overwhelming diminished airline staffing and capacity; fares dropped as capacity was restored)
Ok but like you’re basing your argument on seven data points.
I demand at least eight hundred more so I can dismiss them as anecdotal and irrelevant out of hand.
And will I provide any of my own to counter that? Of course not!
There were like ten more examples given in the article.
Instead of demanding people prove a negative, why not find some counterexamples where this clearly DID happen? In a non-isolated, non "well we have no real evidence but like ya feelin what I'm feelin?" kind of way?
The "corporations are all just focused on short-term problems!" line makes sense to stupid people, because it's apparently what THEY would do in similar positions of power: make plainly idiotic decisions that might get you like a week of slightly increased profit before immediately torching the company and/or its credibility. But OBVIOUSLY they would do that! Because they're just focused on the shortest-term profits possible and not one person in the collective US corporate world understands concepts like "next week" nevermind "next year," or things like "if we do this we torch our competitive advantage and give it over to our competitors we actually make less money," or even the dreaded, never-to-be-spoken-aloud concept of "usually the best way to make more money is to actually do something good and useful, and not captain-planet-villianesque evil scheming for literally no sensible reason."
The sure sign of a person that doesn't know how to think is that they believe financial incentive = proof. Which is why, if their neighbors house burns down, it's immediately clear that they are the ones that burned it down, no trial needed, because they have a financial incentive to reduce the local supply of housing to make their home value go up. And then they'll MAKE MORE MONEY MUAHAHAHA!
I’m just a guy on the internet, but I am an antitrust lawyer and have spoken to all of these people (except Teachout) on many occasions. Barry Lynn is a dumb guy in the sense that he’s just incapable of reasoning through a complex topic. Any time you push him, he falls apart. One of his quotes in the Chait article is informative. He said he looks for journalists to hire to his think tank because “it’s easier to teach a journalist to ‘do policy’ than to teach a policy analyst how to write.” This reveals that he’s concerned entirely with messaging and not getting the right answer to any particular question. He’s almost Trump-like. The rest of the people in his orbit aren’t dumb like he is, but they are monomaniacal.
Second, the speed with they accuse people with different views of being paid for those views is also a tell. These people operate non profits and live on donations. Who do you think does the donating??? Yelp has been in Washington complaining about Google for 15+ years, and it and other competitive also-rans believe funding Barry Lynn and Lina Khan has positive ROI for their businesses. The “Antimonopoly Summit” is a yearly circle jerk of these various astroturfed orgs. One year it was sponsored by a pharmacist trade association. Who is their biggest marketplace enemy? The PBMs, who Lina Khan sued multiple times when she led the FTC. Maybe you hate the PBMs and think the lawsuits were good. Fine. But she and Barry Lynn are “on the take” in precisely the same way they accuse their critics of being. Maybe they think money is less green if it comes from “small corporations” rather than “big corporations.” You know, like Yelp.
"Dumb guy incapable of reasoning" is essentially the engine of every populist movement.
You left out the crucial fact that the anti-monopoly people are primarily concerned that large companies might exert political powers and so they think bigness is bad even when there's competition.
This is batshit because we can expect each party to wield this power against their enemies.
Trump using antitrust to coerce firms to do his bidding is the flip side of the antimonoplist anti big tech crusade. Trump fully discredited their whole idea. Yawn
I'm moderately skeptical that anti-monopoly efforts have ever been really effective. There certainly aren't any clear cases in US history of "big, powerful, abusive market-created monopoly gets shut down by government action". The clearest candidate is Standard Oil, but Standard Oil was in the process of being massively disrupted by the widespread adoption of the automobile and the discovery of the Texas oil fields anyway.
There are two forces that create monopolies: Government and innovation. Government does it by explicitly setting up barriers to competition. AT&T is a classic US example, though AT&T's power and wealth also derived from technological innovation. Innovation does it by creating a new technology that disrupts existing markets or creates entirely new ones, and the massive new wealth created tends to end up highly concentrated.
What actually breaks up monopolies that were created by technological innovation is more technological innovation. They try to hold on and adapt when the technological landscape shifts, but they never manage to do that completely or effectively. All of the tech monopolies of the past still exist, but they're no longer in the controlling positions they had.
I think government anti-trust efforts do have a minor role here, emphasis on minor, and it's mostly one of deterrence rather than direct action. The anti-trust laws don't entirely prevent monopolies from engaging in anti-competitive behavior, but they do prevent the most egregious sort. I don't think we should scrap the laws, and we should engage in some amount of prosecution... but there's no evidence that making enormous efforts is worthwhile.
Just deter the worst abuses, and let the innovation cycle do its disruptive job.
Where I think we need to put a lot more focus is on identifying and defeating regulatory capture. It's striking to me that we've had many anti-trust task forces in the last 150 years, but as far as I can tell, no one has *ever* organized a task force chartered to identify cases of regulatory capture. We've had occasional waves of broad-based deregulation, which have been a mixed bag (though probably mostly beneficial). But we've never specifically focused on identifying cases where private enterprise is using regulation to entrench itself and prevent competition.
How about Microsoft and the consent decree? (I was working at Netscape at the time and I certainly felt the power of MS bundling)…
I could not help feeling by the end of this piece, that with just a few keyword substitutions for names of “the problem,” the theories, gurus, and advocacy groups, it could also be transformed with minimal editing into a perfectly legitimate criticism of issues and the behavior of various groups in the field of K-12 education….While I appreciated the insight into the complexity of economics, I think this gave me more insight into the broader education field as well by accidental proxy. Never thought much before about the similarities between these two fields, in part because education has had an embarrassing lack of research and intellectual rigor at times so at first glance they seem opposite, but in the end what’s being examined is so complex, contextualized, and difficult to generalize about at many levels, that many of the same types of problems still come up.
Public education is an especially bad monopoly, in that their “customers” are required to attend school and also don’t pay for it directly, instead all the taxpayers (most of whom don’t use it) pay for it. This is why you see that outcomes aren’t related to spending, poorly performing NYC public schools spend $45,000 per pupil for schools and higher ranked public and private schools often spend less.
Which is why, imo, it's imperative to adopt teacher training practices found in Asian countries like China, ROK, Taiwan, and Japan--that are directly focused on mentoring and training public school teachers, so they don't quit in droves within their first 2-3 years, and are able to more effectively teach students. In the US, we still have barely a 30% retention rate for new teachers; and the systemic failures of such a large wash-our percentage are directly borne by the students.
Wanting a simple solution to a complicated problem is an eternal human temptation.
Anyone who denies the existence of market forces should play an MMO game and try to sell things to other players. If there’s one thing you quickly learn from that, it’s that you can’t just set whatever price you feel like and expect the item to actually sell. Competition matters, and so does the willingness of potential buyers to pay. Sellers are actually very much at the mercy of buyers!
I agree with you that the monomaniacal approach to blaming all ills on monopoly is counterproductive.
Regarding this point:
> The causal chain that runs from weak antitrust to all sorts of social harms necessarily runs through profits. If companies aren’t making profit, they aren’t controlling the market.
I wouldn't be so quick to look at profit margins as an exclusive component of the causal chain. Nonprofits can absolutely behave monopolistically, with timely examples being the Mayo Clinic (eliminating overnight respiratory therapy positions) and executives at the Cal Academy enriching themselves over the academy's mission. Make sure to look at a monopolist's employees (especially executives and unions) and suppliers (especially landlords, people who hold patent rights, and people with elite professional licenses). It could be that the direct owner class is getting a raw deal, while nearby rentiers are massively enriched.
The idea that health insurers have "low margins" so they are OK is nuts.
Private health insurers in the US do not lower costs and do not improve patient care.
In the flow of money between patients and providers, private insurers just sit in that flow like a tapeworm and take money out to sustain themselves.
What's the evidence for this?
There is a lot of evidence, but I will look at 2 pieces. Medical Loss Ratios/Medicare Advantage and the fact that economists in other countries probably aren't all uniformily idiots.
First, Medical Loss Ratios. "The percent of premium income that insurers pay out in the form of medical claims. Generally, lower MLRs mean that insurers have a higher share of income remaining after paying medical costs to use for administrative costs or keep as profits."
Now, the Affordable Care Act mandated that this had to be above 85%, because before, companies were only paying out 60% of premium income in the form of medical care and pocketing 40%. This made their investors happy but it meant a lot of denials of care and it added "shareholder returns" into the incentives of how these health insurers ran.
But even with the current status quo, 10 -15$ out of every 100$ of healthcare premiums a person spends is just going to the private insurer. They can use that to run themselves (salaries, capital equipment etc.) , pay dividends, or advertise. The point is, for a person who is spending several hundred dollars on their health insurance, they might be surprised that a chunk of that is going to just sustaining the insurance company. That would be fine if the insurance companies secured lower costs for their members; it would be the useful service they provide.
But there is no evidence that they do.
When Medicare started having the Medicare Advantage plans which, instead of the government paying providers through the normal Medicare program, is the government paying normal Medicare, and then Medicare paying private insurers to provide analogous Medicare benefits, spending went way up. https://www.kff.org/medicare/what-to-know-about-medicare-spending-and-financing/
I thought the private insurers were supposed to be more efficient? They were supposed to lower costs.
Instead of 100$ from the Medicare Hospital Insurance Trust Fund going to a hospital to pay for a hip replacement under normal Medicare Part A, now, under Medicare Advantage, 100$ goes from the Medicare Hospital Insurance Trust Fund, 15$ of that goes to the private company running the Medicare Advantage Plan, and only 85$ goes towards the actual hip replacement. Since hip replacements aren't cheaper for patients on Medicare Advantage that means that more money has to go out for every 100$ worth of hip replacement.
2. No one has tried to copy the US system of private insurance through mostly employers. If our system worked to provide cheaper and better alternative relative to other methods, surely some enterprising health minister in one of 30+ other wealthyish countries would have tried to copy it.
No one has. Either they are A) Raging idiots. (Unlikely) or B) The US system of private, mostly employer funded health insurance, is a path dependent accident of history that led us to a very supoptimal outcome that no one else wants to emulate.
You have your excellent series on how various countries got rich and developed. It is incredibly telling that none of these countries have ever tried to copy the US system. The US system is bad at delivering healthcare, cheaply, efficiently or universally.
When Taiwan made their NHI system in 1995, they were afraid of communists and so they built their system on allowing competing private insurers to drive costs down and.....
Wait, they didn't do that.
The Harvard economists who built the thing decided to make a national single payer system where almost everything is financed through a payroll tax and 98% of all the money in the system goes towards patient care. Private insurers exist, but only for areas of health above and beyond the basic health package.
Because the goal of the health system is universal care, not sustaining a robust private health insurance sector.
Why, in your opinion, has no other country tried to copy the US system?
Surely, if our private insurers provided cost, efficiency, or access benefits, other countries would want those benefits as well?
Even in places with health delivered through private insurance like the Netherlands, Singapore, or Switzerland, the private insurers are under much more direct control. (For example, in Switzerland, they have to be non profits)
Matthew, thank you for writing what would have been my response to Noah’s persistent defense of private health insurance because their profit margins are low. There is enormous waste at all levels, starting with the salaries of the executives and extending all the way down to “customer support/preauthorization” that does nothing when you try to figure out which provider you can go to or get treatment for a problem. All these resources spent on salaries and slowing or denying care count as operating expenses that reduce profits but don’t lower medical costs. This is why the US spends 50% more on healthcare than comparably advanced countries.
Using traditional Medicare vs Medicare Advantage as a case study:
"according to KFF analysis...administrative expenses, including profits, were 17% for Medicare Advantage plans"…."while administrative expenses for traditional Medicare… totaled...1.3% of total program spending” https://www.kff.org/medicare/what-to-know-about-medicare-spending-and-financing/
I'm not defending private insurers. They may be inefficient, but that doesn't mean that they have market power. Those two things are incredibly different. If insurers raise costs because they spend too much money on competition and have little bargaining power, antitrust will make it worse!
The reason why private insurance should NOT be a part of basic healthcare is because what happens between doctors and patients is NOT a market transaction. The natural preferences and expectations, on both sides of that relationship, are not market preferences and expectations.
Consequently, to force healthcare into market logic is to distort our natural psychology. And to treat many of our problems in the healthcare system as "market failures" is to distort our natural psychology.
A list of our natural preferences and expectations in healthcare delivery is given at time 3:40 to 5:40 of the following video. (This list has been expanded since comments by Kenneth Arrow in 1963:)
https://www.youtube.com/playlist?list=PLT-vY3f9uw3AwU-OdsiSOdK1EtAE2rz3J
This is an animated diagram of how a single-payer would work in the United States, including how the free market should still be used for production and innovation in medicines and machines, up to the point of the providers (doctors). The reason to use diagrams is because they pack in more information. The preceding introductory video explains the diagram symbols. (This is a chapter from a longer work to introduce into mainstream economics a conceptual model for cooperation.)
I myself have been asking people for years in blog comments and other fora, what is the "value added" of private insurance in basic healthcare?, and never getting an answer. But I've come to realize that this is actually the wrong question, or not the root question.
It is paramount to understand that discussion of private healthcare efficiency or utility in universal basic healthcare is academic, and beside the real point. Private health insurance in basic healthcare is simply inappropriate.
I think the "Left" should understand the market system much better than they do now. (One quick way would be to tell them to watch this whole series of videos, which explains the market system better than anyone. And might help to correct some of their ideas about monopoly among other things.)
But it is also long past the time when mainstream economists should be able to state, quite simply, that certain relationships are not meant to be market transactions, and that private health insurance in basic healthcare is simply inappropriate.
My objection wasn't their market power. It was their basic utility. Private health insurers in the US do not reduce costs, improve care, or reach more people relative to a public system.
When economists object (rightly) to the Oregon law that mandates that all gas must be pumped by gas station employees, they aren't grousing about the market power of the gas stations. They are seeing that law as introducing relatively pointless middlemen who raise the prices for everyone in this "get gas" transaction.
There are so many sources of bloat beyond just private insurance. Fixing the private insurance issue would help a lot, but not enough.
In places like Germany or Switzerland or Romania, they have a problem. If they want trained medical staff, they have to hope to get them from their own people. There isn't some reservoir of German speaking nurses outside of Germany that Germany can draw on.
The US is different. We could flip a switch tomorrow and have an extra 10 million trained doctors and nurses nearly instantly. Good, English speaking medical personnel are being trained in dozens of countries and many of them would love to work in the US.
But we don't because the AMA is a cartel which limits the supply of doctors in order to keep salaries high.
That's just 1 of dozens of reasons our costs are so high.
Completely agree that health insurance bloat is only one aspect of the problem. In addition to providers, US pays too much for medications and medical devices due to patent protections. See Dean Baker for further details
https://deanbaker22.substack.com/p/a-free-market-approach-to-healthcare
You were asked for evidence and your answer was that you don’t know of any evidence to the contrary. Even if that is not just simple ignorance on your part, that still isn’t evidence.
I gave two pieces of evidence.
The first was Medicare advantage where allowing private insurers to serve as middlemen administering Medicare benefits has led to increased costs with no gains in efficiency.
I had a link and everything.
The second piece was more like what you accuse me of. I said that it stands to reason that if our system, which has existed since the 1940's, were an efficient, universal, cheap system that provided good health outcomes, someone would have copied it.
There are dozens of countries with universal health systems. Almost all of them are cheaper than ours and provide better health outcomes.
The problem with Medicare Advantage is that it is poorly designed to encourage cherry-picking. If, for example, Medicare consisted entirely of Medicare Advantage, it would not have its current problems. It’s not evidence of a general problem with private health insurance
The reason why our system has worse health outcomes has to do with, among other things, lack of universal coverage. People in the US who have good health insurance have very good outcomes relative to other countries.
it’s clear that you understand that insurers who make an effort to improve efficiency and reduce waste, fraud, overuse and abuse will have lower medical loss ratios so citing it as “evidence” that companies are not doing that and just lining their pockets is circular reasoning
If Medicare was entirely Medicare advantage, it would still have the problem of only 85$ out of every 100 going to actual health care for beneficiaries while 15 is siphoned off to maintain/profit the companies.
Companies will try to reduce expenditure and increase revenue.
They can do that by reducing waste, fraud, overuse, and abuse.
They can also do that by cherry picking the healthier patients. They can also do that by refusing to cover people for preexisting conditions and daring someone with stage 3 lung cancer to spend their last 4 years of life fighting it out in court.
The law about medical loss ratios and no denials for preexisting conditions didn't get made "theoretically." It came out because companies were not paying out premium revenue in the form of care and they were denying care because of preexisting conditions.
We know that systems like Taiwan's or Israel's or Germany's are not massively expensive (they are much cheaper), are not bloated (they run much more efficiently, and are not delivering bad health results.
His claim that private insurers do not lower costs is backed up by the incentive structure of the industry. Under the ACA health insurance companies are capped at 20% gross profit. So if an insurance company found a way to cut costs by 50%, they would also cut their earning potential by 50%.
I had to get a MRI on my knee a few years ago and it was $3000 (of which I paid about $900 out of pocket). I was able to get the same MRI from a imaging center paying cash for $700. I called the insurance company to see if they would cover this. I assumed I would get instant approval because this was the most obvious win-win situation ever. But no, that's not how it works. By any rational business model the insurance company would have an office staffed with people trying to find cost savings for these things. They would be calling around and telling people "if you go to <cheap imaging center> rather than the hospital your doctor sent the order to, we will waive your entire copay on this." That's a $1400 saving to the insurance company and a $900 saving to the patient.
Why don't they do this? I have to assume it is because of the incentive structure of capped profits means that the insurance company can't just pocket the $1400 savings like any other company would. They will be forced to give up that gain by lowering their revenue.
The minute somebody says this about health insurance, it is obvious that they have a very shallow understanding of the market.
I think the use of private health insurance in basic healthcare is inappropriate. See my rather long comment above, containing a video link.
Isn't Lina Khan the pre-eminent standard bearer of the Antimonopolists?
But the Democratic Party admittedly has a weak bench when it comes to pro-entrepreurial, pro-growth experience and sentiment. Which was why I especially appreciated the attention VP Harris gave--whether just lip service or not--to actively supporting small businesses.
But regarding the ills of excessive market concentration, it'd be interesting to read Noah's take on to what degree highly concentrated market sectors--like Airlines, Banks, Meat Packers, etc.--have on A) Depressing industry wages, and B) Overcharging consumers.
If I could talk to these people that believe prices are downstream of greed and power (as opposed to supply and demand) I would ask how their model accounts for price differentials.
When I go to the grocery store, a steak costs more than a bag of carrots. Now the greed of the grocery store is the same when they sell me the carrots and the steak. The power of the grocery store is the same when they sell me the carrots and the steak. Yet the price differs.
This model clearly fails as if prices are downstream of greed and power, there doesn't seem to be a reason why a t shirt would have a different price than a private jet.
They don't have a model. It's just envy.
Greedflation is the dumbest theory, prices obviously respond to both what buyers are willing to pay for a good or service, and also what it costs to produce it. Warren says grocery stores increased egg prices because of greed, but ignores why they only got greedy that one time (just coincidence that avian flu was peaking, or maybe a convenient excuse by the greedy stores) and only for that one product. I guess she is now mad at the USPS now that they suddenly got greedy recently and are charging an extra 8% for Priority Mail packages as a “transportation surcharge”, and is totally unrelated to the Iran War, or maybe she believes governments can’t be greedy. If she believes government is immune to greed, maybe she can propose lower taxes.
I love Robert Solow’s sex quote
I am more concerned about the individual power of rich people than the power of corporations. A large organization with lots of stakeholders always has to balance multiple demands, which keeps it from ever going off the rails if it wants to avoid collapse.
Whereas an individual rich guy like Elon Musk can go completely insane and face almost no accountability if he’s surrounded himself with yes men and paid off the people who might arrest him.
That’s why I’m far more interested in raising taxes on the rich than stepping up antitrust enforcement.
Musk is able to do things precisely because he controls large corporations.
I'm really not a fan of growth-killing taxes aimed at some nebulous "take rich people down a peg" goal. There's an Uber progressive Soros for every Musk. Harris raised more money than Trump.
This eat the rich stuff is the worst slopulism and it's an approach that was tried, and failed, in many other countries.
Do you think we aren't already taxing rich people similarly to other countries? Do you not realize it's the rest of our taxes that are outlier low not the high end?
Given our deficits, the rich do need to pay more, but so does everyone else.
The purpose of tax is to fund government, not address your envy and attack your enemies.
It’s not about attacking enemies. It’s about making society work better by ensuring that nobody gets to be unaccountable.
I have yet to see real evidence that high taxes on high incomes actually kill growth. We had a 90% top tax rate in the 1950s and the economy grew fine. (And no, it wasn’t because our trading partners were still recovering from the war, that was a *drag* on our growth not a positive.)
Rich people are not motivated to work and build companies by money, they are motivated by *social status*. Money can be used to build status, but so can being in charge of something big, having lots of connections, having people depending on you, and cultivating a good reputation. If their competitors for social status are getting taxed at the same rate they are, it doesn’t actually reduce their motivation. Those who truly only care about *money* quit once they have enough to retire early in the style they want. The only reason to keep going after you have the money is for the status.
It’s true that poorly designed or arbitrary taxation can hurt growth, but income taxes that are applied fairly and consistently don’t seem to have that effect.
Ah the old 90% top tax rate fallacy. Nice try!
https://fred.stlouisfed.org/series/FYFRGDA188S
Those rates didn't kill growth because no one paid them. If you're curious, you can read up on the tax avoidance schemes that were popular at the time.
I don't disagree that status incentives mitigate work disincentives from taxation.
US taxes on rich people are already mid-to-high by global standards. I am not making the claim that all taxes kill all growth and we could unleash a growth miracle by slashing taxes. That would be nuts, given our deficits.
My view is basically that, looking around the globe, we are already at the point where higher taxes shifts the incentives and we get fewer (gasp) billionaires here and the fantastic companies they build, with all the opportunities those bring for the rest of us. There is no iron law that the next Nvidia is built here and not in Singapore or Poland.
So, yes, a bit higher taxes on the rich, a bit higher taxes on everyone else. Align ourselves more with social democratic countries that seem more socially healthy. At the end of the day though, I want the super rich to get even more super rich, that way, we can get more tax revenue from them *over the long term*, and achieve the best living standards for all.
Unfortunately, this kind of crab bucket logic where another man's gain is somehow my loss (even though I'm getting a percentage of his gain!) is getting way too ubiquitous nowadays.
Tax avoidance is also popular now, so the popularity of tax avoidance in the past doesn’t exactly disprove the idea that we should raise taxes now. Also, while rich people in the 1950s did avoid a lot of taxes, they didn’t avoid all of them, as clearly evidenced by the fact that their lifestyles were far more modest than those of their Gilded Age predecessors and they conducted themselves in a much more staid fashion.
It’s not that I don’t recognize that positive sum interactions exist, and I don’t think that someone else’s gain is my loss. The problem is that some people are so much more wealthy than everyone else that they can easily escape accountability for essentially any kind of bad behavior.
That’s a real problem, and a good reason to cut them down to size. Societies never work well if powerful people don’t face consequences for bad behavior.
"Tax avoidance is also popular now, so the popularity of tax avoidance in the past doesn’t exactly disprove the idea that we should raise taxes now."
I was refuting your claim that we had strong growth with 90% top rates. Obviously. I was not claiming tax avoidance is itself an argument for not raising taxes.
You made the Bernie/AOC 90% claim, but are you now seeing how the data should lead you to reject it?
~900 billionaires, and I don't think they have power over our lives like you imagine, but it's far better than one all powerful government that can just take away anyone's assets who is "too powerful" . This has all been tried with horrific results.
Even European social democracy is based on everyone having enough, not making sure no one has too much. They know that rich people help everyone get more. This was all discredited long ago, but you and many others seem to want to run these bad ideas again.
Those horrific results you’re referring to are from communist and corrupt crony regimes, where disfavored elites are selectively and arbitrarily ruined while those with the right connections are allowed to take what they want. You don’t get those horrific results from a non-arbitrary, rules-based tax system, even one with very high rates, which is what we had in the 1950s. The transition from the Gilded Age to the 1950s in the US was also conspicuously non-horrific.
Even with widespread avoidance, the high tax rates of the 1950s did in fact induce the business executives of the period to behave much better than either their Gilded Age predecessors or their successors who came in after Reagan’s tax cuts. And the high rates achieved that good result without wrecking the economy. That says to me that it was good policy and abandoning it was a mistake.
Swedish executives seem well-behaved, but the United States is not Sweden and I’m not inclined to assume that what works there will necessarily work here. We’re a bigger country with fewer workers in labor unions, which means that our executives don’t face as many pre-tax limitations as Swedish executives. What I care about is *elite behavior*, not the size of the welfare state. Whatever tax rate is needed to get good behavior is the rate we should want, and the rate we need may well be higher than the rate that suffices in Sweden.
Yes! I'm here for this.
I heard someone recently say that they should focus the Antimonopolist Eye of Sauron enormously rich people, such as Bezos and Musk. The logic being that they have wildly outsized influence on society by buying media companies and exerting influence in other significant ways.
I don't think that the normal antitrust logic applies to centibillionaires, but... hear me out for a second, there's some risk to allowing people to accumulate unlimited wealth. For most of my life, I would have argued that massive wealth accumulation wasn't a negative, and allowing it creates incentives that stimulates work and innovation, which we all benefit from. However, seeing the billionaires line up behind Trump, buy media and turn it to support him, and having watched that play out in Hungary and other places, it's starting to make me nervous. What if the robber barons aren't as philanthropic as they were 100 years ago?
Good piece in The Atlantic about how billionaires think differently: https://www.theatlantic.com/magazine/2026/05/billionaire-consequence-free-reality/686588/
There's also the dynamic that when a few Billionaires arise in their respective fields to market dominance, they effectively squelch the aspirations of thousands or millions of entrepreneurs down the food chain.
The GOP used to be the party of Laissez-Faire and entrepreneurialism. But have morphed into the "Leave No Billionaire Behind" party.
I would have agreed with you at one time, but it seems like these ultra rich are the only people who are actually able to get things done in this bureaucratic hell we have created for ourselves. If it's between the billionaires and the bureaucrats I will side with the billionaires.
You might be right about the people, but what I believe you're wrong about, and this is quite crucial, is the following:
"The causal chain that runs from weak antitrust to all sorts of social harms necessarily runs through profits."
I'm not saying profits are never a factor in the equation, but I don't see why you're analysis would 'necessarily' have to go through profits. If that's your premisse you're going to just dismiss the possibility of social harm from corporate power when a company makes no profits (yet)? In what timeframe?
For example, in tech, the fact that they're working on products or business models that did not yet exist before them means that they are basically the ones (re-)defining the legal-institutional frameworks around their own business through their terms & conditions/contracts/precedent/lobbying/etc.. If there's no competition that means law is is more likely going to be reflect, be in response to, and be favorable towards that exact business model, and thus that company, thereby reducing the possibility of a (future) competitor with a slightly different business model being able to compete effectively, etc. etc.
This might not be reflected in immediate profits, but can have serious long-term effects. Profits might one day be the result of this, of course, but if you wait for the profit signal, you're basically too late. And even from a micro-economic perspective, profits do not have to be the result for many years to come, as long as the share price of the company is increasing with increasing revenues/market power the shareholder will be happy.
You're right, market power can manifest as profits later down the line. But how much later? If an industry hasn't been very profitable for 50 years, do we keep saying "Well they still could have market power because they still could make profit after 100 years"?
Well, it took Amazon what, 20 years of no to low profits? And look at them going now. (Of course there are also other reasons for that, besides market power).
But now we're going through profits again, and the point I was trying to make is that an analysis of market power should not necessarily go through profits, nor are profits necessarily the mechanism through which market power causes social harms.
- Stock markets add an additional layer to the economy, so market power could be directed towards increasing stock prices, or other forms of derivative gains. Also international financial markets make that profits can be hidden/shifted.
- Market power can manifest itself in a myriad of other ways; through degradation of quality (crashing planes), or standards (environmental, labor, etc), infrastructural decay (Thames water), dependencies, reduced legal-institutional oversight, control & accountability, sub-optimal development trajectories, enshittification, information bubbles, or the thing economists hate most; inefficiency. And probably more examples can be found.
Of course these things will not necessarily happen in a case where there's monopoly, and likely these can also have other or additional causes. I'm not trying to be like the 'everything monopoly bad everything' people you criticize here. But I also don't think you should put on a pair of 'profit only' blinders.
On a side note ; I'm considering the possibility that the most harmful thing that comes from corporate power might actually be the fact that it gives lots of power to the people in charge of the corporation. But it might also be the power it gives to the nations in which this company is headquartered.
One of the weirdest contradictions in economic theory is the idea that monopoly or monopsony are bad and should be dismantled in favour of ‘competition’. By definition, competition is all about getting one over on the opposition – trying to corral resources to build your brand which gives you an advantage, so competition is always seeking to create monopoly. Economists think they can identify a set of conditions which by breaking up monopolies optimizes resources across the economy, and that therefore measures should be taken – and can be taken - to manage markets towards that nirvana.
But the question is whose efficiency and whose optimization. In trying to ‘win’, people striking a bargain have reconciled all their emotions and decisions down to a single figure which by definition is their optimal way of applying their resources for that deal. That does not necessarily make it the optimal way for the economy as a whole. All are competing to win in accordance with their individual definitions of winning (their ‘strategies’). From the monopolist’s point of view everything is optimised as he uses his resources to control the market. For anyone who buys from him, the confluence of motives in that buying decision to agree the purchase are personally optimal, because they by definition have overall outweighed an underlying displeasure at having to pay the power-driven monopolistic price.
Like beauty, ‘efficiency’ is in the eye of the beholder. It is a relative concept shifting with the ebb and flow of the markets, not some absolute, stable, neutral equilibrium. This is not competitive resource/equilibrium efficiency but competitive power efficiency. The dynamic nature of markets ensures that the power relationships change, and power structures reinforce their position by creating barriers to entry. Like the medieval guilds of London, they set up rules, regulations, the need to belong to a trade association and they lobby government to put up more barriers to protect them. Tearing down the rules and regulations that protect monopolistic operations allows money to flow to competing brand-builders. Forcing a break up may not be the right solution. The result may be smaller companies, but that is an effect, not a cause. The nirvana you are looking to achieve is not optimisation but innovation, and that is driven by people hungry to compete, whatever the size of their business.
My understanding of the basic idea is that competition should be an incentive to creating various goods that are natural to artificial-barrier-free market structures. Innovation is one of these, but also high quality, low cost, desirability for consumers, and so forth. When a monopolist "uses his resources to control the market" he is relying on rents to replace innovation, quality, and desirability by creating maximal engineered barriers to competitive entry, which are not natural to open markets and which serve the producer exclusively, to the detriment of the consumer.
The theory of open markets is not that tearing down a specific monopoly produces an optimal solution; it is that systematically preventing monopoly formations is an optimal solution. In practice, there will be carve outs for identified critical goods (e.g., utilities; certain forms of healthcare), where monopoly structure is seen as optimal but {supposedly] stringent government regulation limits the exploitation of rents to extract unlimited profits. Exceptions apart, social benefit is best served by building anti-monopolistic policy in the structures of all markets. The perspective is not that of the entrepreneur, it is that of society as a consumer.
I find it interesting that politicians in right to work states see very clearly supposed problems of excessive concentration when it comes unions, which can create the sorts of barriers you refer to, but downplay the problems of monopoly and monopsony.
Innovation...is it.
"in medical care provision'
So you write legislation that privileges certain structures of provider and where care is delivered, and then you become an antitrust crusader against the consolidation you legislated for.
Brilliant work here.
Consider the fact that racism makes a repeated appearance in a post about monopolies. You suggest that the cited problem of increased racism is itself "doubtful". You should take on this problem directly and write about it, the evidence and lack thereof. The mistaken assumption that racially inequitable outcomes can only be the result of discrimination is the number-one article of faith of the Left and it has an outsized effect on liberal politics everywhere. Part of the effect is that ordinary people have watched decades of systemic preferences for minorities everywhere they look, while listening to Joe Biden complain about the "New Jim Crow", thus concluding that such ideologues and liars cannot be trusted. White workers prefer liars who are at least pretending to be on their side.
Irony Watch: many of those railing against corporate America have retirement accounts that are heavily invested in..............wait for it.............corporate America!!!!😊