Antitrust and the Candlestick Makers
by
Author Matt Stoller (YouTube screenshot)

Goliath: The 100-Year War Between Monopoly Power and Democracy
by Matt Stoller
(Simon & Schuster, 588 pages, $29.99)

Goliath by Matt Stoller is a left-leaning account of American business and antitrust. The author probably studied American history by reading Howard Zinn’s A People’s History of the United States.

Goliath is subtitled “The 100-Year War between Monopoly Power and Democracy.” The first several chapters describe the horrors of business in America’s Gilded Age, but we are made suspicious of Stoller as early as the preface, where he castigates the Sackler family whose company made the opioid drug OxyContin. “And the Sackler family name, as of 2019, graced facilities at Harvard and Yale,” Stoller writes. Oh, please! The president of Harvard wrote last May, “Dr. Arthur Sackler [the man who donated funds to Harvard] died before the drug was developed. His family sold their interest in the company before the drug was developed.”

Details, details, my good man.

After this, you have to take everything Stoller writes with a grain of … OxyContin.

And then there is this problem (and we’re still in the preface!): Stoller writes, “In the meantime [i.e., since the mid-1970s], old problems have returned. Wage stagnation and economic inequality is [sic] back with a vengeance…. ” Stoller is pulling a fast one here because he is looking only at dollars, not at what those dollars can buy. Fact (one of many given to us by Phil Gramm and John Early writing in the Wall Street Journal): “Cars last 81.3% longer and are 72.7% safer” than in 1972.

Details, details, my good man. And don’t forget this detail: unemployment figures for blacks, Hispanics, and women are the lowest in decades. And everyone, everyone, has a cell phone. Some have two. Or three. It is, to put it mildly, an inauspicious beginning.

Stoller tells us “the barons of industry were unapologetic, almost gleeful” and “there was endless corruption, corporate pay-offs to politicians, newspapers, and academic experts, city bosses, everyone.” Yup. Don’t doubt it. And they called the wild west the “Wild West” for a reason.

Stoller tells us that J. P. Morgan “was finally able to seize control of the railroads after the panic of 1893, a financial crisis caused in part by railroad overbuilding.”

Yup, but why were the railroads overbuilt? Because politicians got their grubby hands on them and were fleecing the public, that’s why. But the Great Northern Railroad, under James J. Hill, received no federal subsidies and was so successful that it was the only transcontinental railroad not to lose money during the Panic of 1893. Does Stoller know that?

Stoller’s rant against the robber barons of the Gilded Age is designed to set the stage and make us suspicious of all big businesses of today.

Stoller’s heroes are the trust busters, the originals and their disciples. But there is no analysis of antitrust. Readers who want that analysis can find it in Robert Bork’s The Antitrust Paradox, a singularly influential book, one that changed the course of antitrust, and not in the direction that Stoller likes.

Stoller rails against the A&Ps of yesterday and the Walmarts of today, which were successful because ordinary people like shopping at them. If you’re a young mother of three, do you really want to have to drag the children and the dog out of the car to shop, seriatim, at the butcher, the baker, and the candlestick maker?

Chapter nine, “The Free Market Study Project,” is must reading for all think-tank presidents and fundraisers. It’s an account of how a group of conservatives changed the course of economic history. As told by Stoller, it’s a screenplay for a Bond film. Friedrich Hayek, author of The Road to Serfdom and founder of the Mont Pèlerin Society, was the first intellectual guru of the movement. He was joined by three others at the University of Chicago: Frank Knight, Jacob Viner, and Henry Simons. But then they recruited the real genius, the third economist of the group (scary music): Aaron Director (Dr. No). Director recruited his brother-in-law Milton Friedman (Francisco Scaramanga) and George Stigler (Colonel Moon). They are important, but the real villain, “the tip of the spear” of new antitrust is (really scary music): Robert Bork (Odd-job).

Bork’s views and writings on antitrust were dispositive and have informed all of antitrust thinking at least since the book’s publication in 1978. You can get your very own hard copy of The Antitrust Paradox from AbeBooks for only $480!

In chapter nine, Stoller shows the power of ideas, properly packaged and disseminated. And how ironic it is that in a book hostile to the ideas he promoted, Aaron Director receives his due.

Stoller lectures about the evil of predatory pricing — the practice of a merchant’s lowering his prices below his cost to attract customers in order to put his competitors out of business. For the most part, predatory pricing works in theory but not in practice. The merchant who lowers his price, and therefore takes a loss, must then raise his price above the competitive price after his competitor has gone out of business. But when he raises his price, he is likely to attract new competition, which means he won’t be able to recoup the losses he incurred by the previous lowering of his price. When I was chairman of the Federal Trade Commission, I put out an APB for a predatory pricing case — with an award attached. No case was ever found.

Recently, however, there was a case that looked as if it involved predatory pricing, but although Stoller mentions it, he doesn’t analyze it. Nor does he tell us that the Federal Trade Commission examined it and decided not to take any action. Diapers.com, a subsidiary of Quidsi, was selling diapers and baby care products online. Amazon expressed an interest in acquiring Quidsi which the firm rejected. Shortly afterwards, Amazon started selling diapers for up to 30 percent less. Quidsi was unable to compete and sold out to Amazon — whereupon Amazon raised its prices. Nevertheless, the FTC took no action. Why? Stoller doesn’t say — or even guess.

Stoller goes after Amazon, Google, and Facebook, but only because they’re big. For him big is bad, but he can’t quite explain why.

It’s too bad Stoller didn’t write more pointedly about the conflict at the heart of the dispute he posits between old antitrust theory and new (Chicago school) antitrust theory. He thinks old antitrust was against bigness. There is some truth in that, but not enough for his purposes. Original antitrust was pro-consumer, as Stoller could learn from Bork’s book. Then it fell on hard times. Decisions like the one in Brown Shoe and Von’s Grocery got it all wrong. “Brown Shoe” Bork writes, “is not merely a bad case, it is also a trend setter — as if the poems of E. A. Guest had determined the course of modern literature.” That’s the “old school” antitrust Stoller is pining for. New (or more accurately “more recent”) antitrust theory has returned to the original goal of consumer welfare.

Stoller writes, “America has always been a nation of tradespeople” and “[old antitrust] policy centered on engineering maximum liberty for the producer as opposed to the financier or monopolist.” That really just isn’t true. Because Stoller doesn’t offer any analysis of the Chicago School’s antitrust theories, he just sounds like a grumpy old man pining for yesterday.

Today, after a few decades of the giant sucking sound Ross Perot warned about in 1992, some people have become skeptical of Chicago school antitrust and have become more solicitous of workers, so many of whom were unemployed before Donald Trump took office. The issue can be raised by this question: Which is more important, marginally lower prices for underwear or more jobs for American workers? Stoller might have raised that question — and then answered it. He didn’t.

Nor does Stoller discuss (except for a single paragraph on the sixth to last paragraph of the book) what may be a valid reason for being suspicious of Amazon, Google, Facebook, and Twitter: Their tremendous power over information, a special concern of Americans reflected in their reverence for the First Amendment. Information is different from underwear , or at least information may be different from underwear: Just a dab of book censorship or search-results skewering might swing an election (Trump won Michigan by 0.3 percent). That is something we should take seriously. One paragraph is not enough. Where’s Stoller when we need him?

The basic problem Stoller has, along with other people who don’t like big corporations, is that the antitrust laws weren’t designed to oppose bigness. Bigness has delivered tremendous benefits to consumers. If that bigness, and those benefits, are to be taken away, they should be taken away by elected legislators fashioning new legislation, not by appointed judges skewering antitrust rules.

Goliath is not an uninteresting book and is worth skimming if you have time. But you can read, and skim, only so many books in a year — or a lifetime. Should this be one of them? Probably not, unless antitrust is your subject.

Daniel Oliver is Chairman of the Board of the Education and Research Institute and a Director of Pacific Research Institute for Public Policy in San Francisco. In addition to serving as Chairman of the Federal Trade Commission under President Reagan, he was Executive Editor and subsequently Chairman of the Board of William F. Buckley Jr.’s National Review.

Email Daniel Oliver at Daniel.Oliver@TheCandidAmerican.com.

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