Vengeance: America’s Antitrust Reform Movement
“We have recklessly chosen to tolerate global monopolies and oligopolies.… The middle class has no political influence over their stagnant wages, tax policy, the price of essential goods, or health care. This powerlessness is brewing a powerful feeling of outrage.” – National Economic Council Special Assistant to the President Tim Wu1
“After years of sacrifice, the great American middle is being pushed aside by a new, arrogant aristocracy. … Big banks, big tech, big multi-national corporations, along with their allies in the academy and the media – these are the aristocrats of our age.” – Senator Josh Hawley (R-MO)2
The current zeal for aggressive antitrust action reflects a desire for revenge. The Left and Right seek to punish corporations and their allies, alleging that “‘neoliberalism’ or ‘Chicago School’ economics opened the door to a revolutionary consolidation of wealth, power, and control throughout the U.S. political economy. This consolidation, in turn, is a direct cause of – or has contributed to – almost every major political, economic, and social ill in the United States today.”3 Unimpressed by the dramatic improvements achieved during the past 40 years in the nation’s material standard of living, contemporary antitrust advocates intend to impose harsh penalties for past transgressions as much as to shape future outcomes. The private sector should understand that vengeance, not quantitative assessment, animates the contemporary antitrust movement. The technical and legal arguments that once proved so successful in blunting antitrust enforcement no longer resonate with important political actors.
Neoliberalism in Decline
“This … marks, frankly, the end of neoliberalism, that has governed America for the last four decades.” – Representative Ro Khanna (D-CA-17)4
“Reaganism is DEAD.” – National Review5
Antitrust enthusiasts harken to an era that long predates the late Judge Robert Bork’s “consumer welfare standard,” which optimizes for low consumer prices rather than marketplace competition. His formulation departed from an earlier understanding of antitrust enforcement as a constraint on corporate influence. As articulated in 1902 by Teddy Roosevelt, “The great corporations which we have grown to speak of rather loosely as trusts are the creatures of the State, and the State not only has the right to control them, but it is in duty bound to control them wherever the need of such control is shown.”6 Louis Brandeis likewise advanced this view as an attorney in private practice and, later, a member of the Supreme Court of the United States. In 1912, Brandeis said, “There is a power in this country of a few men so great as to be supreme over the law.”7
Open Markets Institute Executive Director Barry Lynn, a father of the “hipster antitrust” movement inspired by Brandeis, offered his evaluation of neoliberals’ flaws: “They changed the operating idea, the fundamental idea of America. Rather than using our laws to protect our liberty and our democracy, they said, ‘hey, let’s use these laws instead to promote efficiency. Rather than thinking of ourselves as citizens, you should think of yourself as a consumer.’”8 Federal Trade Commission (FTC) Chair and leading hipster antitrust champion Lina Khan has described “the limits” of the largely free-market Chicago School (of which Bork was a fundamental figure) and the need for a Neo-Brandeisian project that would rebuild completely how enforcers approach antitrust.9 This revolution proposes to undo not only Chicago School economics, but also the broader neoliberal project.
Many on the contemporary Right have concluded that the “price problem” addressed by the Chicago School through the consumer welfare standard has been solved. Now, conservatives seek to address the economic powerlessness of those left behind by the last 40 years of economic policy making. A commitment to supporting the working class through nationalism and industrial policy – not supply-side economic orthodoxy – increasingly defines the GOP. Antitrust represents an important dimension of this shift among conservatives and the Republican Party. For example, Senator and Antitrust Subcommittee member Tom Cotton (R-AR), who tied for second-most conservative senator according to Heritage Action (the political arm of classically Reaganite think tank The Heritage Foundation), declared: “When it comes to Big Tech, this [antitrust lawsuit] is just the beginning. Winter is coming.”10 Even key anti-Trump leaders on the disaffected Right, such as The Bulwark’s William Kristol, oppose Big Tech and the consumer welfare standard.
Newsweek opinion editor and conservative legal scholar Josh Hammer has applauded his ideological peers for “leaving ‘efficiency’-maximizing utilitarianism in the rearview mirror.”11 Similarly, conservative thought leader Oren Cass has asserted, “Chicago School libertarian economic dogma is not conservative.”12
Passion Drives Policy
Emotion primarily inspires current antitrust reform efforts on the Right and the Left. Former President Barack Obama was motivated similarly in proposing to raise capital gains taxes. During the April 2008 Democratic presidential debate held in Philadelphia, moderator Charlie Gibson questioned then-candidate Obama, “When the [capital gains tax] rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all … ?”13 Then-candidate Obama replied, “Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness” [emphasis added].14
Today, a policy debate once again serves to express a common goal of righting a perceived injustice. Matt Stoller, Director of Research at the American Economic Liberties Project, has explicitly rejected the argument that “antitrust is all about efficiency, not morality.”15 Stoller’s broader goal: “Encourage both parties to compete for votes based on a view of a moral society that situates power in the hands of local communities, families, and producers, and removes power from the middlemen on Wall Street and at McKinsey, who today organize our corporate state.”16
In introducing antitrust legislation, Representative Pramila Jayapal (D-WA-7) – whose district encompasses Amazon’s headquarters – emphasized the moral obligation of government to take action: “From Facebook and Amazon to Google and Apple, it could not be more clear that these unregulated tech giants have become too big to care and too powerful to ever put people over profits – so we must.”17 Use of moral language is not unique to criticizing Big Tech: Antitrust Subcommittee Chair David Cicilline (D-RI-1) has described the “moral crisis” of private-sector health care consolidation.18
The Right also is impelled by an ethical calling. Senator Marco Rubio (R-FL) unabashedly explained that his economic views – “common-good capitalism” – are deeply rooted in his religious beliefs: “I have once again mixed politics with religion! … Common-good capitalism also means recognizing that the market may determine that outsourcing industries like manufacturing is the most efficient use of capital. But our national interest and the common good are threatened by the loss of these industries and capacities.”19 Within this framework, Senator Rubio has advocated antitrust action, introducing legislation to revoke Major League Baseball’s antitrust exemption and has strongly criticized Big Tech’s power. Senator Hawley, arguably antitrust’s biggest proponent on the Right, seeks to emulate Teddy Roosevelt’s moral crusade. In his biography of Roosevelt, Senator Hawley agrees with Roosevelt that “politics is a profoundly moral enterprise.”20
There Will Be Blood
Today’s antitrust reform movement is rooted in the emerging populist consensus. The allegation: America’s ruling elite has betrayed the middle and working classes. On the Right, House Antitrust Subcommittee Ranking Member Ken Buck (R-CO-4) has criticized the unwillingness of regulators to discipline bad actors: “Big Tech has had zero oversight for decades because the FTC and Congress completely failed to enforce antitrust laws.”21 Representative Buck demands nothing less than a “Big Tech Reckoning.”22
On the Left, in her seminal speech on the need for antitrust reform, Senator Elizabeth Warren (D-MA) concluded, “Concentration has contributed to the decline of what was once a strong, robust middle class in this country. As corporations get bigger, and bigger, and bigger, a handful of managers get richer, and richer, and richer.”23 Attorney Advisor to FTC Chair Lina Khan, Shaoul Sussman, and law professor Zephyr Teachout lamented the lack of retribution for this concentration: “These days, [monopolies] are rarely punished at all. The modern monopolists govern virtual superhighways, sure, but the way they rip off hard-working American small business owners and workers is similar to the thieves of the late 19th century.”24 This sentiment has manifested in serious legislative activity, with nearly a dozen bills introduced this session, and six passing through the House Judiciary Committee in June.25
Judge Bork’s consumer welfare standard provided a powerful technical argument for prioritizing prices and selection, not competition. His approach prevailed nearly unchallenged for decades and – along with accommodative immigration, trade, and tax policies – facilitated the rise of the American corporations that today offer consumers more products at lower prices than ever before. The political momentum for overturning antitrust law reflects a broader attack on the people and policies responsible for bringing the nation’s modern consumer economy into existence at the expense of domestic labor, manufacturing, and the communities built on both.
The two ascendent factions of American politics – progressives on the Left and national conservatives on the Right – find common cause in punishing those seen as having subordinated labor to capital and the nation state to the international system. Whichever ideological movement prevails in defining America’s future political economy, business leaders should plan for a legal and regulatory approach to antitrust fundamentally different from the status quo.
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– Managing engagement campaigns
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For a briefing on Baron’s capabilities based on the firm’s detailed analysis of congressional, executive, and state-level activity and broader antitrust trends, please contact Jonathan Fluger, Baron’s antitrust practice lead, at fluger [at] baronpa.com.
1 Tim Wu, The Curse of Bigness: Antitrust in the New Gilded Age, New York, NY: Columbia Global Reports, 2018.
2 Press release, “Senator Hawley Delivers Maiden Speech in the Senate,” Senator Josh Hawley, May 15, 2019, https://www.hawley.senate.gov/senator-hawley-delivers-maiden-speech-senate.
3 “Democracy and Ideology,” Open Markets Institute, https://www.openmarketsinstitute.org/democracy-and-ideology.
4 “‘The End of Neoliberalism’: Rep. Ro Khanna Hails ‘Historic’ $3.5 Trillion Budget Plan,” Democracy Now!, Twitter, August 11, 2021, https://www.democracynow.org/2021/8/11/senate_democrats_budget_resolution.
5 National Review, Twitter, April 29, 2016, https://twitter.com/NRO/status/726040951693578240.
6 President Theodore Roosevelt, “Remarks in Providence, Rhode Island,” August 23, 1902, https://www.presidency.ucsb.edu/documents/remarks-providence-rhode-island-1.
7 Lina Khan, “The New Brandeis Movement: America’s Antimonopoly Debate,” Journal of European Competition Law and Practice, Volume 9, Issue 3 (2018): 131-132, https://academic.oup.com/jeclap/article/9/3/131/4915966.
8 Barry C. Lynn, “How Neoliberalism Created the New Age of Monopolies: Barry C. Lynn in Conversation with Andrew Keen on Keen On,” Literary Hub, October 15, 2020, https://lithub.com/how-neoliberalism-created-the-new-age-of-monopolies.
9 Lina Khan, “The End of Antitrust History Revisited,” Harvard Law Review, March 10, 2020, https://harvardlawreview.org/2020/03/the-end-of-antitrust-history-revisited.
10 Scorecard, Heritage Action for America, https://heritageaction.com/scorecard/members; and Press release, “Cotton Statement on DOJ Antitrust Suit against Google,” Senator Tom Cotton, October 20, 2020, https://www.cotton.senate.gov/news/press-releases/cotton-statement-on-doj-antitrust-suit-against-google.
11 Josh Hammer, “How Do You Solve a Problem Like Amazon?,” American Affairs, August 20, 2021, https://americanaffairsjournal.org/2021/08/how-do-you-solve-a-problem-like-amazon.
12 Zaid Jilani, “The New Trustbusters,” Washington Examiner, July 22, 2021, https://www.washingtonexaminer.com/politics/the-new-trustbusters.
13 Gerald Prante, “Obama and Gibson Capital Gains Tax Exchange,” Tax Foundation, April 17, 2008, https://taxfoundation.org/obama-and-gibson-capital-gains-tax-exchange.
15 Matt Stoller, Twitter, November 29, 2017, https://twitter.com/matthewstoller/status/935860912204013568.
16 Matt Stoller, “Whither Corruption and Conservatism?,” American Compass, May 8, 2020, https://americancompass.org/the-commons/whither-corruption-and-conservatism.
17 Press release, “Jayapal’s Landmark Big Tech Legislation Passes House Judiciary Committee,” Representative Pramila Jayapal, June 24, 2021, https://jayapal.house.gov/2021/06/24/big-tech-legislation-passes-judiciary-committee.
18 Press release, “Cicilline Chairs First Antitrust Panel Hearing on Soaring Health Care Costs,” Representative David Cicilline, March 7, 2019, https://cicilline.house.gov/press-release/cicilline-chairs-first-antitrust-panel-hearing-soaring-health-care-costs.
19 Senator Marco Rubio, “Catholic Social Doctrine and the Dignity of Work,” The Catholic University of America, November 5, 2019, https://www.rubio.senate.gov/public/_cache/files/6d09ae19-8df3-4755-b301-795154a68c59/C58480B07D02452574C5DB8D603803EF.final—cua-speech-11.5.19.pdf.
20 Joshua David Hawley, Theodore Roosevelt: Preacher of Righteousness, New Haven, CT: Yale University Press, 2008.
21 Representative Ken Buck, Twitter, June 20, 2021, https://twitter.com/RepKenBuck/status/1406695178891563012.
22 Representative Ken Buck, Twitter, January 15, 2021, https://twitter.com/RepKenBuck/status/1350189093225963522.
23 Senator Elizabeth Warren, “Reigniting Competition in the American Economy,” speech at New America, June 29, 2016, https://www.warren.senate.gov/files/documents/2016-6-29_Warren_Antitrust_Speech.pdf.
24 Zephyr Teachout and Shaoul Sussman, “Monopoly isn’t a Game: Why Ordinary Americans Need to Worry about Big Tech,” New York Daily News, August 1, 2020, https://www.nydailynews.com/opinion/ny-oped-monopoly-isnt-a-game-20200801-652s2vo3ure65bpd2ds6evgyg4-story.html.
25 Press release, “Chairman Nadler Applauds Committee Passage of Bipartisan Tech Antitrust Legislation,” House Committee on the Judiciary, June 24, 2021, https://judiciary.house.gov/news/documentsingle.aspx?DocumentID=4622.