EP. 120 — Our Anti-Monopoly Moment with Zachary Carter

FACT-120-20210827-Carter-RCv01-DYN.mp3

Speaker 1 [00:00:22] Hello and welcome to Factually. I’m Adam Conover, we are back with you today with another brand new episode in which I talked to an amazing expert about all the incredible things they know, that I probably don’t know and that you probably don’t know so that all of our minds can get blown together. We’re going to have a great time now on this show before we have talked about monopoly capitalism and antitrust in America, or more precisely the lack of any antitrust enforcement of any kind in recent decades. It’s a problem. It’s a problem that we have let companies get larger and larger; buy each other, merge, consolidate into monopolies to the point where a couple of corporate megaliths (we’re talking Amazon, Disney and Alphabet, that’s Google and YouTube’s parent company) have massive undue influence over American life. If you’re a consumer or a worker, you have felt the impact of this whether you know it or not. Again, we’ve talked about it on the show. We talked to Matt Stoller (wonderful expert on this topic) and even after those conversations I was starting to feel like this was an impossible problem in American politics. The fact that there are lots of other reasons that monopolies can be bad. They can control our political system. They can lower wages for workers, lots of other problems. But unless the price of your Big Macs go higher, the government wasn’t doing anything about it. And a lot of that, is because both parties have seemed hopelessly in thrall to big business for years, and that’s kept the Department of Justice rubber stamping mergers and the Federal Trade Commission from doing much in the way of anything in terms of regulating trade, which is its job. And as a result, I had assumed for a while the chances for change on this very important issue were nearly nonexistent until very recently. Very recently, this entire conversation has completely transformed in America. There are tender shoots springing from the once barren field of antitrust in America. For instance, there’s a woman named Lina Khan. If you follow antitrust, you’ve probably heard of her. She’s a young scholar. She wrote the seminal paper describing how antitrust enforcement needs to change to deal with Amazon. It was a sensation in the rarified world of economics papers. It’s too rarefied, even for me. I’ve not read this paper. I just know that it was a big, fucking deal. Well, this young, progressive woman with very (some would say) radical ideas on this topic. She was just confirmed as Joe Biden’s chair of the Federal Trade Commission. And not only that, she was confirmed with bipartisan support. Even arch conservative Ted Cruz welcomed her into one of the most powerful regulatory roles in government and said he was looking forward to working with her. Isn’t that interesting? Why did that happen? The Supreme Court has gotten into the renewed antitrust mix, too. They recently ruled that the NCAA was in violation of antitrust law, and that it can’t stop student athletes from getting education related payments. Now this opens the door for the first time to student athletes receiving some benefits from the multibillion dollar monopoly organization that their labor is benefiting. An even more incredibly conservative Justice Brett Kavanaugh wrote a concurring opinion, saying ‘Nowhere else in America can businesses get away with agreeing not to pay their workers a fair market rate’ and added that the NCAA is not above the law. I mean, when you’ve got Elena Kagan and Brett Kavanaugh agreeing on an issue that starts to seem like a pretty broad consensus is forming to some degree. And beyond that, we’ve started to see a broad cultural change in our political system. For the first time, politicians on both sides are discussing how we might actually go about breaking up big tech companies, even in my industry. Amazon’s recent attempt to buy MGM, a major player in the movie industry. Well, it turns out the government is suddenly taking a closer look at that, and maybe it’ll be overturned. Very rapidly, we’ve moved from a world in which no antitrust progress is impossible to one in which there’s a sudden thaw. In which it seems anything could happen. So what led to this transformation? What brought it about? And where might it go? Well, to answer that our guest today is Zach Carter. He’s a journalist. He’s a writer in residence at the Omidyar Network and is the author of ‘The Price of Peace: Money, Democracy and the Life of John Maynard Keynes.’ I can’t say enough how much I think you’re gonna enjoy this interview. I had a blast. Please welcome Zach Carter. Zach Carter, thank you so much for being here.

Speaker 2 [00:04:54] Thanks so much for having me.

Speaker 1 [00:04:56] So you’ve written extensively about economics, about Keynesian economics specifically. I want to start by talking about antitrust. We talked about antitrust on the show many times before; about the need for antitrust regulation. But the problem when we have massive consolidation in the economy, it’s always seemed like a very big problem that wouldn’t be fixed anytime soon. But it started to seem like there has been a bit of a sea change in the way our country (and maybe the world) is handling these issues. Do you feel that way and if so, why?

Speaker 2 [00:05:27] I think so. I think the Biden administration is taking the critique of the American economy (and to some extent, the global economy) that a handful of intellectuals in the antitrust movement have been putting forward for the past half a decade or so, and that their critique is essentially that most, if not all, of our economic problems stemmed from large concentrations of corporate power and that corporations, as we understand them, do not really function as businesses or commercial enterprises in the traditional sense, the way that most of us are sort of accustomed to thinking about about commerce. But are they’re more sort of like private governments, they’re so large that they exercise a kind of political control over resources and communities or aspects of communities that is undemocratic. It’s a sweeping critique. It’s a different conception of antitrust than the one that prevailed for the last half century or so. In that prior mode of thought, the consumer welfare standard was considered the only really legitimate reason for the government to get involved in an antitrust dispute.

Speaker 1 [00:06:48] Yeah.I think the courts would use the metric of ‘as long as it’s not raising the prices for consumers, then we’re not worried about it. But if a monopoly is causing prices to go up, that’s bad. But otherwise everything else is fine.’ But there’s other bad things that happen as a result of monopolies.

Speaker 2 [00:07:04] Yes, and this older way of thinking about about antitrust stems from a sort of laissez faire, market centric understanding of reality that that markets tell us critical information about the world and that if we organize the world according to the pricing information that we receive from markets, then we’ll end up with a good world. And there’s a lot of reasons, I think, over the past decade or so for people to question that sort of foundational belief. I think the change in sentiment about what antitrust policy is supposed to do is part of a broader reexamination of what markets do, why we have them and how they come to be and how they’re governed. And markets are governed, they don’t necessarily govern themselves. They’re created by political power and they’re governed by political power. Now, it depends on who you talk to in the antitrust movement. There are different conceptions about how this new framework ought to be implemented. But in general, I think the Biden administration has accepted this critique and is proceeding as if large concentrations of corporate power are a serious threat to shared prosperity.

Speaker 1 [00:08:33] Well, so let’s talk about some of the other bad consequences of large concentrations of corporate power, in addition to prices going up. That’s the one that I learned about in high school: ‘Monopolies are bad because then there’s no competition and therefore prices will go up willy nilly.’ I think most Americans probably have that sense of, ‘Oh, it’s a monopoly. That’s bad.’ But what are some of the other bad consequences like, for instance, you wrote about the concept of a monopsony in an issue of your newsletter that I read. What is it monopsony?

Speaker 2 [00:09:05] So monopsony is another fancy word for – I think a commonsense understanding of monopsony is a monopoly that affects workers. The reason monopsony became important in the 1930’s when it was developed by an economist named John Robinson, co-discovered by another economist named Ed Chamberlain. We traditionally think of monopoly as you know, Standard Oil: as a single producer that corners so much of the market that they’re able to dictate terms for the rest of the market. Monopsony is not about producers, it’s about buyers. If you have a buyer for that good, then that buyer (if it’s big enough) if it controls a big enough part of the market, it can dictate terms for the suppliers, for the sellers. And so you have all the problems that we associate with monopoly, but in a slightly different form. It’s an important distinction because it can be applied to the labor market. And if you think about a worker as somebody who is selling their labor and you think about a corporation as a buyer of labor, then you can easily see how if you have a power mismatch between the buyer and seller there, then the seller could end up getting a raw deal.

Speaker 1 [00:10:27] Look, I’ve seen an example of this in my own business; in television writing. As a TV writer, I’m trying to sell a new show. I have a new show that I’m trying to pitch and I want someone to buy it. And I’m out there pitching to different TV networks, hoping one of them is going to buy it from me. Literally, in the middle of me trying to sell my last show, two of the buyers bought each other. They merged: HBO Max and Discovery Plus said they’re merging. And so previously,  when I went to pitch this, I pitched five different places. I’m like, ‘Shit, next year, I’m going to pitch four and there’s going to be less competition between them and as a result, whichever one is left standing is not going to have to offer me as much money.’ I can see it currently in my industry versus Disney and Netflix, this is how they work. For folks in – For instance I am in the Writers Guild, the union that I’m a member of, people are concerned about this. If you’re like, ‘Hold on a second, less buyers means they’re going be able to drive our wages down.’ I guess it’s just a different way of looking at a monopoly. Normally when we say monopoly, we think of, ‘Oh, we’re consumers, we’re buying from the monopoly.’ But when we’re selling our labor to a monopsony, I guess it can be both things at once: a monopoly and monopsony simultaneously. It’s a different way of looking at who’s who’s harmed, and it’s the worker who’s harmed in this case, not the consumer.

Speaker 2 [00:11:49] Right. And this doesn’t exclusively apply to the labor market, although I do think that is where it is most powerful as a concept in economics, you can think about just a large retailer like Amazon being able to set terms for the sellers who work through through Amazon. Most of the problems that we see in today’s economy that the antitrust reform movement has identified, are not new problems. They’re not things that we’ve never seen before. But they are very intense in this particular moment. And I think one of the reasons they’re so intense and so acute at this stage of history is because we just ignored antitrust policy, largely, for the previous half century. But I do think there’s a couple of important distinctions here about about how you think about monopsony. Supreme Court Justice Brett Kavanaugh has written very passionately about monopsony in the context specifically of the NCAA student athlete compensation set up, or lack thereof. You don’t get paid if you’re a student athlete, even though your sports program makes a lot of money for your school.

Speaker 1 [00:12:58] And a lot of money for TV networks and a lot of money for advertisers and a lot of money for the people who make the jersey with your name on the back. And a lot of money for basically everybody, but you.

Speaker 2 [00:13:07] And people who write about it, even.

Speaker 1 [00:13:11] That’s right.

Speaker 2 [00:13:12] I feel a certain sense of obligation to mention that here. I’m not a sportswriter, but I’ve written about this particular case and I actually got paid. I have a Substack. I can quantify how much I got paid.

Speaker 1 [00:13:19] Yeah, you got paid for writing about the NCAA’s antitrust issues. Even though the athletes in the NCAA, again, didn’t get paid or they got paid in a scholarship, which let’s be honest, if you go to a state school that’s worth low five figures a year, that’s not even a yearly salary.

Speaker 2 [00:13:32] No, and look, let’s be fair, there are some universities whose sports programs don’t make a lot of money. There are some programs at universities that don’t make money at all, even if their other programs do. There are details here that are important. But in general, we’re talking about athletes in programs that make a lot of money for the schools. That’s why the programs exist. That’s why they’re so high profile. It’s a major part of the funding base for higher education in the United States. Brett Kavanaugh is a Supreme Court justice with whom I disagree on many, many issues. But his writing on monopsony is written with a certain sort of moral clarity and passion. But it is distinct from the way other people who have thought about monopsony have presented it. When you read Kavanaugh’s concurring opinion in the NCAA case, he makes it sound like monopsony is this very rare thing that it’s a terrible thing. It’s sort of a corruption of the market as it’s supposed to exist, that there’s a pure ideal of American commerce and this is a departure from that. It is a violation of the rules about how the world should be. When you look at the way earlier theorists of monopsony talked about it (and most importantly, here I think Joan Robinson was a very, very distinguished economist from the 20th century who worked very closely with John Maynard Keynes on the development of the general theory of employment, interest and money which we can talk about later. Robinson didn’t think that monopsony was this rare thing. She thought it was endemic to, at that time, a 20th century economy. The question then is what you do about it. We’re not just talking about a few outliers, or a crazy thing that happens when Amazon takes over too much of some particular sector or the NCAA refuses to pay student athletes. She was saying, ‘This is something that is in every labor market, really.’ And so the way that you want to respond to monopsony, if you think about it that way, she sees it as sort of a problem of degree. It can be more severe or less severe, but it’s everywhere and in some way pretty much all the time. There are thinkers who follow Robinson here who say, ‘The key here is not just to crack down on individual violators when things get totally out of control, you need to have some sort of regulator looking after this problem and paying attention to it all the time. An antitrust regulator who is worried about monopsony in the labor market. Now you don’t necessarily have to call that an antitrust regime. If you’re regulating wages and you have somebody in the market saying, ‘Look, corporations and businesses are constantly underpaying their workers, we need to figure out how much and make adjustments.’  The Department of Labor could just do that as part of its ordinary course of business, and we wouldn’t think of it as an antitrust issue.

Speaker 1 [00:16:27] Or we could have stronger unions that are able to advocate for themselves and so maybe we don’t need as much. We just need regulation to make sure that is a fair negotiation that’s happening there, that kind of thing.

Speaker 2 [00:16:39] Right. But there is an imbalance of power and you need some sort of institution with power to correct that imbalance of power. It’s not just a problem of prices getting awry. There is a clear power imbalance in the economy and it’s not going to do the things that we want if we don’t correct that with some sort of – The economist John Kenneth Galbraith, who was very deeply influenced by Robinson, he called this ‘countervailing power.’ That’s the essential thing that needs to be done to deal with this, whether it’s the state or the Labor Union or something else. Galbraith was fairly agnostic in his theoretical writings. But you can see different schools of thought emerged very quickly, once you start acknowledging these realities that I think most of us intuitively grasp this idea once it’s presented to us. It has a certain explanatory power that feels in some way almost obvious once you’ve heard it.

Speaker 1 [00:17:40] Yeah. You are starting to reorient the way I think about this because I was prepared to go down a whole list of like, ‘All right, what are the other problems of consolidation of monopoly in the economy? What do they cause?’ But what you’re describing is that the real problem is not strictly money related, it’s power. The issue is power imbalances. And so when you say, ‘Oh, monopsony problems can exist all throughout the economy,’ what it sounds to me like what you’re really saying is that throughout the economy, there are power imbalances that will crop up. Sure, Amazon is a giant one. That Amazon can dictate terms for all of these other companies as these as this huge seller. But also you can look at some little regional market and see how, I don’t know, a local fuckin paper supplier for an office is dictating terms for people there, et cetera. Having power imbalances is a problem because it means that one person is going to be dictating terms for another part of the market. That is the ultimate problem here that we want to keep an eye on. Am I getting it right?

Speaker 2 [00:18:45] I think so. You can see very quickly how these ideas about economics and economic theory very quickly turn into political considerations and disputes over political theory and the proper role of government and what we mean when we talk about democracy. And these questions, when people pursue these kind of breakthroughs in economics, are not easily sorted out quickly. I think the adoption of the consumer welfare standard: this idea that only an increase in prices for consumers at the end of this enormous production chain, only those higher prices are what matters; you get to this place if you think of of the market as a place where democracy happens. That as consumers, we make choices. We are in some way equals as buyers of products and the market responds to our preferences and what we want. And so as purchasers, we can provide information to the markets that will cause the world to be ordered in some way that we like. If you see the political mechanism as the home of democracy or the state, you’re going to come to a different set of conclusions. And if you see the labor union or workplace democracy as the true home for democracy, you could come to a different set of conclusions. And people who thought about this came to different conclusions over the course of their lives. I mentioned Joan Robinson earlier as one of the most important early theorists of this. She’s a brilliant antitrust anti-monopoly thinker. Then she goes on to being one of the founders of Keynesian economics and then she keeps going further, and by the 1960’s and 1970’s, she’s something of an apologist for Mao. So the people who are involved in this change their minds and not all of their political views are views that I think we would find attractive from the perspective of 21st century democratic thought. But you have to grapple with these ideas when you are talking about reforming the system. I think smart economists, since the financial crisis of 2008, have been trying to wrap their heads around what went wrong at that point in time and why that event happened. I think pretty much everybody can say (everybody, at least that I listen to) that something went wrong in 2008, right? Something very bad happened that should make you stop and take stock. But it isn’t immediately obvious to every smart person, what exactly that thing is. I think Biden is testing a couple of things right now. He’s testing it with antitrust and he’s testing it with with a return to a conception of Keynesian market and state relations that was very common around the world in the decades immediately following World War Two, but which has become very unpopular in the decades since.

Speaker 1 [00:21:59] OK, I want to find out more about what you mean by that in a second. But first, I just want to talk about the concrete changes that we’ve seen in the Biden administration’s approach, and in these Supreme Court cases. Just because we’ve already talked about it, let’s talk about this NCAA Supreme Court case. You wrote about this, that this case means that antitrust reform is now the norm. Just tell me a little bit more about that case and why you feel that such a bellwether.

Speaker 2 [00:22:26] I think it’s a big deal when you have this consensus across the progressive wing of the Democratic Party and the socially conservative wing of the Republican Party. That this is an explanation that they find attractive. I think Brett Kavanaugh’s understanding of monopsony is, for instance, different from mine. But I think the fact that he’s talking about it means that there is something that the progressive antitrust reformers and Brett Kavanaugh agree on. They have a way of communicating about this stuff. They’re going to have different political goals and different visions of a just society, ultimately. But this idea that this problem is in a conceptual space that we kind of share, to me, suggests that using the antitrust frame can be a particularly effective way for the Biden administration to go about making changes to the existing economic order without rocking the political boat as much as it would need to if it were adopting a different frame for what wrong in 2008. You can see it with the NCAA, it’s so flagrant. They don’t even pay the athletes. Clearly, there is a problem. I’m not so sure that Brett Kavanaugh would be in the majority on a decision requiring a $15 minimum wage or something, across the economy on the grounds that fast food workers face an overwhelming monopsony problem. But the fact that he’s already committed to it intellectually, makes it harder for him to oppose that sort of thing when it comes up. And I think the public consensus on this stuff often matters as much as the day to day positioning of different ideological movements. We forget that the legal profession, in particular, takes a lot of its cues on what is reasonable from the expert consensus in the economics profession. That’s why so many lawyers have upheld this consumer welfare standard for so long is because the economics profession (at least the side of the profession that faces Washington DC) has said ‘This is true’ for a long time. Now that there is a lot of skepticism about that in the economics profession (and importantly among political actors in Washington DC, who the economics profession discusses things with), I think the legal profession and the courts will follow suit. It’ll take some time but as those those ideas change, I think you’ll also see some of that elite sort of thought consensus trickling down to the rest of society because you’ll just hear leaders and famous people talking about things in such a way that monopsony is understood to be a central problem.

Speaker 1 [00:25:30] But it I mean, if you had asked me, I would have guessed that it would have taken a little bit longer for Kavanaugh to get on board. Being an arch conservative in many ways, and I would assume a fan of college sports and a lot of fans of college sports are not interested in the argument the athletes should be paid. I’ve had so many arguments with my dad about this. ‘No, no, they get a scholarship.’ Come on. The scholarship is worth so little and look at how much money is being made. Everyone is getting paid. I’m on TV. I get paid. I’m looking at these guys they’re on TV and they’re not getting paid. It’s flagrant. But again, people who are fans of these things tend to not be that open to it. An unlikely coalition appears to be forming, is the surprising part about it. In a place that I wouldn’t have really expected. What do you think caused that in conservative circles?

Speaker 2 [00:26:31] It’s hard. Look, I put my cards on the table here. I’m not a lifelong member of the conservative movement. My politics are generally more progressive, so I don’t speak with the authority of an insider here. But I think 2008 – You don’t have to be a left winger to think that something went terribly wrong. I was a financial journalist at the time, and you did see people who were sort of in denial for a little bit: that this must be all the fault of Fannie Mae or Freddie Mac. There’s some sort of government regulator that’s out of control. It was the feds fault, whatever. And you can certainly fault pretty much every institution that’s involved with the mortgage market at this period of time for doing something wrong. But it becomes pretty clear that you have a lot of really big banks that issued the mortgages either themselves or through mortgage brokers that they hired. They dominate this market not only for mortgages, but for mortgage backed securities and for credit default swaps and all these financial derivatives that were tied to these mortgages that went bad. Then you see the government rescuing them. It seems very clear that there is a market that is highly concentrated that has failed in a particular way. And the question then is what do you do about that? Do you break up the banks? Do you regulate them in a different way? I think it becomes very difficult, particularly after the crisis, as banks just continued to break the law over and over again about things that, in some cases, were not catastrophic for the broader economy. I’m thinking here about Wells Fargo and their checking account scandal; the huge scandal a few years ago, where they just invented millions of fake accounts. Going so far as to actually even calling it a fake account. They were real accounts. You just didn’t sign off on them. They were illegal real accounts that were invented for no reason.

Speaker 1 [00:28:38] Just a very funny personal aside. I remember, like a year after that, I received an audition request from my agent asking, like, ‘Hey, do you want to read to be this corporate spokesperson?’ They sent me the script for the audition. And it was a Wells Fargo ad that was like ‘At Wells Fargo, we’re sorry for what we did and we pledge that we’re going to be better,’ but in much more corporate language than that. But I was like, ‘There’s no fucking way I can read this,’ but I was like, ‘No, I’m not going to do this.’ I was like, ‘That’s the funniest thing, to be the voice of the corporate apology for one of the most massive corporate frauds in recent history’ that and Volkswagen were the biggest corporate frauds I can think of in the last decade.

Speaker 2 [00:29:23] And they didn’t destroy the economy the way the mortgage crash did, but it you see this and you’re like, ‘How does this happen?’ Well, it happens when you have a giant institution that can do it. I think the anti-monopoly movement built a lot of steam from seeing these big institutions behaving in these ways while they seemed unaccountable. Wells Fargo just kept happening. It wasn’t just the fake accounts scandal. They also had a problem where they acknowledged in SEC filings that they had accidentally repossessed thousands of cars. If you go down the street and you steal somebody’s car, you are a car thief. If you accidentally repossessed thousands of cars due to a computer glitch, then you’re Wells Fargo. I think the anti-monopoly movement got a lot of juice from this. But there are also good faith, smart critiques of the economy that say that this really doesn’t have anything to do with the size of these institutions. That’s not the salient factor here, it’s just that they’re behaving badly. This is something that happens in a private economy and in private markets in general. We have to have regulations for a different set of reasons. But I think ultimately, it’s not necessarily a huge deal which particular kind of reform camp you fall into. If everybody agrees that these large institutions are out of control and they need to be reined in some important way.

Speaker 1 [00:30:54] The pieces are starting to fall together for me, because I think the point that you’ve made and the point that we’re all sort of waking up to is that monopoly consolidation and these antitrust issues are not just again, about prices. They’re about power and about democracy and about the idea that when these companies get so big, like you said, they can just do what they want. Wells Fargo can just create all those accounts because they’re so powerful, they can just do whatever they feel like. We do have a revulsion against that in American society: of other actors dictating terms. We have a very individualistic society and then also we have a strong tradition of democracy and it’s anti-democratic to have these gigantic organizations that can just do whatever they want by fiat. One of the things I’ve noticed is that conservatives have gotten very mad about that as well. Specifically, they’ve gotten so mad at Facebook and Twitter for all this stuff about censoring conservative voices. Now we can have an argument about whether or not they actually were censoring conservative voices, but we’ll save that for a different episode. The point is that a whole lot of conservatives feel like that, and that’s an example of them waking up to, ‘Oh, hold on a second. Giant corporations can dictate terms to me in ways I maybe don’t like, and I don’t get a say in it.’ It’s anti-democratic, and that’s maybe how you end up with Ted Cruz saying, ‘Oh, I’m looking forward to working with Lina Khan,’ who is Biden’s new extremely antitrust FTC commissioner. They’re waking up to this same thing that we all are, just for different reasons and with different goals. Does that sound right?

Speaker 2 [00:32:41] Like all explanations, it’s a simplification. The map is never the territory.

Speaker 1 [00:32:45] I know! Of course I’m simplifying things. You’re the expert. My job is to simplify it and make it stupid.

Speaker 2 [00:32:54] And then my job is to say “Ahhhh, it’s a little more complicated,’ right? It is slightly more complicated but I think ultimately that whether you agree with the conservatives railing against the tech companies or you agree with the tech companies or you don’t agree with either one; it’s  the case that these are large, powerful corporations that (generally) whose power is not checked by any kind of democratic mechanism on important issues. If you believe that markets are self-correcting, then you believe that this problem will just take care of itself eventually without any kind of of public act. I think it’s significant that within the conservative movement, people don’t believe that anymore. I think this is a really, really interesting – Frankly, I think it’s been a longstanding tension in conservative thought: that if you break down the different ideas about the free market that someone like Milton Friedman put forward over the course of the 20th century. Milton Friedman argued in perfectly good faith and with totally sincerity about this. He argued that a free market would get rid of racism and maybe even end war because people would make choices and doing racist things would be bad for business.  So this racist stuff would just be forced out of public life. But he also said by 1970 that corporations that tried to do anything other than make as much money as possible were engaged in some sort of illegitimate socialist project. That it was really, really terrifying for corporations to adopt different social welfare or social justice programs instead of just trying to make money. There’s a tension there: either the market will drive out the bad stuff when these companies adopt their social welfare programs or these social welfare corporations are somehow bad and socialist and dangerous. That tension has always been there, and you can sort of see it breaking out in the conservative movement now where there are a lot of social conservatives who are angry about (I think the term that’s being thrown around a lot now is) ‘woke capital.’ But there are also more traditional business conservatives who say, ‘Hey, isn’t that what we want? Do we really want the government to come in here and start telling businesses what to do?’ It’s a really important philosophical thing. It’s a difficult nut to crack, and I don’t think it’s obvious where the conservative movement goes from here, because you can even easily imagine this resolving a lot of tensions between the left and the right on these philosophical issues. I think it’s a lot harder to imagine the social distinctions between left and right that we think of when we think of a conservative or a liberal dissolving just because this idea went away. But either way, you can tell that ideas are changing. This is a moment in time when a lot of thoughts are up for grabs in these different camps that weren’t ten years ago.

Speaker 1 [00:36:00] And that’s the really interesting thing about this, because it’s this disagreement that liberals and conservatives have had about economic policy, that there seems to be the beginning of a realignment on. Like, a fundamental realignment. It’s a little bit less visible to us because it’s not part of the culture war. It’s not part of what gets talked about on cable news and it’s not part of what people get angry about. It’s these deeper underlying assumptions that have been with us for close to a century, that are starting to get shuffled around in ways that are interesting and a little surprising and unpredictable. It’s a little hard to see where things are going to go when Ted Cruz is voting for Biden’s progressive antitrust appointee because they have something they agree on. That’s like ‘Oh, we’re starting to to shuffle the cards here in a way that I didn’t anticipate, and I don’t quite know where it’s going to go.’

Speaker 2 [00:36:54] I think that’s right and it’s not just on the right where this is happening, and I think you’re going to even see this within the Biden administration to some extent. The other area where the Biden administration, I think, has been really very different from its Democratic Party predecessors is on its very early and open push for a more aggressive Keynesian economic program. When I say Keynesian, I think most people think of Keynesian economics in terms of deficit spending: that it’s OK to take on big deficits when the economy gets bad.

Speaker 1 [00:37:33] Wait, wait. We got to take a break because this is going to be a whole new chapter of this interview. I want to dive into this. I don’t want you to say more because I’m going to ask you more about it. We’ll be right back with more Zach Carter. OK. We’re back with Zach Carter. Before the break, you were in the middle of what was going to be a wonderful explanation of the the Biden administration and their new Keynesian program. So tell me what you mean by Keynes and just remind us of who Keynes was. How do you say his name? I always say it wrong.

Speaker 2 [00:38:16] I would say Keynes. I’m not pushy about it. He’s dead. He doesn’t care. But he was an economist in the 20th century. Most important economists of the 20th century, probably. When he died, the Times said that he was the most important economist since Adam Smith, and I think in some extents, he’s more influential than Adam Smith in that he legitimized an entirely new  way of thinking about government. The history of the United States as a global superpower is intimately connected to this conception of economic power. And I think when they teach Keynes in econ 101 courses or at least when I was taught Keynes in an econ 101 course back in the very early 21st century, he was a deficit spending guy. He’s the guy who says, ‘Sometimes there’s something bad that happens. The economy goes into a slump and to get out of the slump, the government needs to spend some money and prime the pump, get things back on track and then the government can get out of the way and the market can can do its magic.’ That is one conception of Keynesian economics. But I think when you dig into the theory and the politics that were happening when Keynes was developing this theory, it’s very clear that deficit reduction (not deficit reduction, the opposite of that); adopting very large budget deficits as a sort of strategic policy tool is just one tool that can be used in in service of this broader set of ideas, which is that markets don’t govern themselves. They’re not forces of nature out there that lead naturally to prosperity. They have to be created and they have to be managed. Keynesian thesis is that they’re created and managed by the state. The reasons for this are many but the basic problem that Keyn says with the conventional economic view of humanity is that we can’t make easy, rational decisions about economic value over time, because we don’t know what’s going to happen in the future. We are governed by uncertainty. So it’s totally possible for something that we don’t see coming to rearrange are our judgments about the president. I think the coronavirus pandemic, is great example of an uncertain event changing everybody’s outlook. And then you’ve got to do something about that. You can’t just say ‘In the long run, this will work out.’

Speaker 1 [00:40:50] The market can’t handle coronavirus all by itself, just ‘Oh self-correct and we figured it out.’ You need some amount of someone saying, ‘OK, wait, we need to do x y z’ and implementing it.

Speaker 2 [00:41:01] Exactly. Like the monopsony discussion we had earlier. You can think of Keynesian stuff, ‘It’s only it only matters when coronavirus happens.’ Or you can think markets ‘Don’t just deliver full employment and prosperity on their own. They need to be managed.’ And the tools that you need to provide the aid that the government needs to needs to supply will vary at different times, for different reasons. But it’s not like this is an on off switch: where sometimes you need stimulus and sometimes you don’t. There’s is not so much a stimulus and step back approach, but a general course of macroeconomic management.

Speaker 1 [00:41:48] I don’t know. I think of it as being a little bit like a sporting event, like a game. You have the players, you have them competing, right? But then you also have the rules and conditions of the game, which are set by an outside party to get a result that we all want. Major League Baseball looks at how baseball is being played and they say, ‘No one can hit anything because all these baseballs’ – This is a bad example. I’m going to use an example from baseball in the 1920’s. When it was the Dead Ball Era and no one could hit any of the balls because the balls were all dirty and they use the ball the whole game. And so they said, ‘We’ll start replacing the baseballs. We’ll change the height of the mound, we’ll adjust things a little bit so that it’s a more equal competition between the hitters and pitchers and the games are more fun to watch.’ Like the NBA adds the shot clock In order to make the game play a little bit faster. And now we’re all enjoying it and we can see, and we know that different leagues have different amounts of equity between them, etc. I’m going to take the metaphor too far, but the conditions under which the event happens, determines what the results are to a certain extent. That’s something we know in life, of course it’s also true in markets.

Speaker 2 [00:43:01] The rules are supposed to lead to a certain kind of social outcome. In this case that the game is fun to watch. But in the labor market, you want it to lead to full employment. You want it to lead to new businesses coming up with new ideas because they have this market full of employed people to buy things. You want to see certain things happen, and what is profitable under certain sets of rules may not necessarily lead to good social outcomes. I think climate change is a really glaring example there. Oil companies made a lot of money for a long time. It’s not because it wasn’t profitable. Climate change is happening because doing things that were bad for the environment made a lot of money. What social goals you have are not things that are not scientific issues. Those are value issues and people in democracy have to sort those things out through some sort of democratic decision making process. But then you need rules just to see if those ideas about how society should look can actually be realized. And I think the Biden administration’s embrace (not just their embrace of large deficits in this year) but the rationale that Biden has given for them in a series of speeches, suggests to me a pretty serious change in the elite consensus opinion about what markets do and how they work. He said in multiple addresses now that the government is the United States government is not some occupying force from a foreign land in the United States. I mean, it’s a loaded statement with everything going on in Afghanistan but –

Speaker 1 [00:44:55] Yeah, it literally is in other foreign lands, but here it is not.

Speaker 2 [00:44:56] Yeah, but here it is not. It’s us. It’s we, the people. It is an expression of democracy and that was that’s not the way Bill Clinton would talk about government. He would say things like ‘The era of big government is over. We need to unleash the power of innovation. There’s all this technological change happening and we can’t stop that, but we can harness that.’ The assumption was that markets would do the things that we needed and maybe they were a little rough around the edges and you had to guide them a little bit here and there when they got a little bit wild. But in general, this was this was the stuff and I don’t think that’s a core assumption for the Biden administration: that markets can work, they cannot work. It depends on what you want to do, and you can see that with these different packages that economic packages, the Biden administration has proposed. We’re not just talking about roads and bridges and potholes in the infrastructure language. These bills have been separated and there’s a lot of horse trading going on, so things are up in the air. But one of the things that people really objected to  (that conservatives and his political opponents objected to) when he rolled this stuff out was the use of the classification of care work and in-home aid for people with serious medical issues. That this was considered infrastructure under one of these Biden proposals. And independently of whether that was popular, it was enormously popular and it still polls very well. But you could say ‘That’s not infrastructure’ because it sounds a little bit silly because we’re used to infrastructure being concrete and mixing trucks and rebar. But if you think about infrastructure is the stuff that’s necessary for the for the market to work, for a labor market to work, if you’re at home caring for your parents 18 hours a day required for you to go out and have a job. Same thing for child care. There’s a bunch of stuff on childcare in this Biden package, they’re talking about this stuff that has obvious social ramifications but that is also part of the support mechanism for making a market that works and that is responsive to what we want as a society.

Speaker 1 [00:47:13] In the same way that if you don’t have transportation, workers can’t get to their jobs and therefore the economy will suffer as a result. We know that’s infrastructure. If workers do not have a way to care for their children and they have to stay home, they have to drop out of the job market for a couple of years because they have no child care or because they’re caring for an elderly relative then that’s the same problem. It’s a necessary substrate for them to get to the fucking job site. So it’s infrastructure from that perspective, that makes a lot of sense to me.

Speaker 2 [00:47:44] I do think that there is some tension here, between the Keynesian conception of market management and some versions of the antitrust version of market measurement. The point I want to make here is that for Keyns, you have to have a concentration of power in order to make Keynesian policy work and that concentration of power is the government. What makes it different from concentrations of power in the private economy is that the government is assumed to be in some way democratically accountable. If you’re going to have what they call counter-cyclical devices in your economic management: spending a lot of money to to end a recession, for instance, you want the government to be a concentration of power that spends a lot of money. Someone’s got to be the spender. You’re not just waiting around for atomized institutions to make these decisions. So there’s a coordination thing which I think is in some ways in tension with some versions of the anti-monopoly diagnosis of the problem. But with that caveat being said, people with these two intuitions have worked together politically very effectively for much of American history. You can think about the New Deal and the type of state that was created by the New Deal, as as a hybrid of Keynesian demand management and aggressive antitrust enforcement. Those two things together really form the basis for the administrative state that develops out of the Great Depression. And one reason why these two things seem to go together so naturally – I mean, these different factions fought at different times for different reasons, but they had this political alliance that lasted for, like 40 years. And one reason that made sense was because these people had been talking about this and seeing these problems as somehow related. And these factions were working together all the way back into the 19th century, the original anti-monopoly movement is not just about corporate break ups it’s about worker hours and the eight hour day. All these ideas are sort of working together and people are talking to each other about them. But before you have names like John Maynard Keynes or John Robinson to attach them to and to be formalized into these theories. So I think we’re seeing under Biden the revival of of that kind of New Deal idea of democracy and government that has been out of fashion in both parties for quite some time. I think it’s come back into fashion, in part because of presidential politics. I think watching the primaries in 2016 and 2020 for the Democratic Party, these were very different events than presidential primaries had been over the course of my lifetime. But I think also people are just responding to events. It is amazing in a lot of Democratic Party in particular on the left, there are sort of these deterministic ideas about, ‘Well, under capitalism, everything is determined by the forces of production and who owns them. And so all of our ideas are dictated by some mechanistic force beyond our control.’ I look at the last 15 years or so and I see events happening in the world, people changing their minds and responding to them and actually having new ideas on both the left and the right. I don’t like all of the ideas that people are coming up with. But I think clearly people are changing their minds and it’s hard for me to believe that this intellectual stuff; that the actual discourse about this doesn’t matter in some way. It seems to me that it really does matter and it’s affected, particularly the leadership of the Democratic Party.

Speaker 1 [00:51:37] Well, yeah, it is surprising because you heard, for instance, in the last campaign Bernie Sanders and Elizabeth Warren both talking about issues of of antitrust to varying degrees. You could be forgiven for thinking, ‘Well unless one of them wins is not going to go anywhere.’ I mean, Biden wasn’t saying that stuff on the campaign trail, but then he is elected and he starts nominating all the people that you would think that they would have nominated. He starts following up on at least some of these policies. It’s not something that I would have predicted until I saw it happen and I think you’re probably right that the discussion about these things has actually led to changing people’s minds. So now that’s happening, what are the possibilities for the future that you see? For the last couple of years, ‘Break up Big Tech’ has been a motto for a lot of the people I’ve had on my platforms. Various speakers have been banging that drum, for example,  ‘It’s been decades since the governor even talked about breaking up monopolies, last one being Microsoft, and it failed to do it.’ But OK, last one that I know about. You’re shaking your head like I don’t know what I’m talking about.

Speaker 2 [00:53:01] Oh, no. You do know what you’re talking about. I mean, the lawsuit against Microsoft failed and a lot of important ways. But in other respects, I do think that lawsuits served as a pretty important check on Microsoft, and I’m not sure we would have seen, say, the rise of Google without that lawsuit. I don’t think the lawyers who filed that suit think that they achieved all of their goals. But I do think in a lot of ways, the birth of the internet around the turn of the 21st century (the turn of the millennium, I guess) in some respects is result of of that that case being brought. It changed the way Microsoft operated in the market, even if they didn’t have to pay a huge fine.

Speaker 1 [00:53:43] It was the government checking them and saying, ‘Hey, hold your fucking horses because hey, here we are and we’re paying attention.’ But 10 or 15 years later, something like, for instance,  (this is a gong I’ve banged a lot) the way that Google prioritizes YouTube and its search results to ensure its dominance in video. I think the death knell of the open internet that we should have seen coming, was the fact that when YouTube came on the scene, it was instantly the only place to watch video. Sure, you can go on Dailymotion, maybe, but you’re not really looking on Dailymotion. You’re looking on YouTube. If it’s not on YouTube, you’re not watching it. YouTube immediately became the only source. Part of the reason that was, was because Google was able to use their monopoly in one area to give themselves dominance in another area. That’s exactly what Microsoft was doing. They their web browser was part of their operating system and they were forcing people to use it. What Google does is arguably worse, because it actually worked, it actually happened. But there was absolutely no enforcement around it. Are we going to start seeing that sort of enforcement again? And are some of these companies going to be broken up in your view? I mean, that’s a big crystal ball for me to ask you to look into, but.

Speaker 2 [00:54:59] The future is always unwritten and predicting a future is a dangerous business. But we haven’t had a regulator like Lina Khan in the federal government in that kind of position for a long time. Lina Khan is Biden’s appointee to run the FTC and just has authority over everything from mergers to a lot of different ways to a lot of different aspects of all kinds of businesses, not just tech businesses. She’s not messing around. I mean, this is her intellectual movement. There are other important figures in it, but she really is the North Star theorist. She’s been teaching at Columbia for a while, and I’m not sure if she had another law professor job before that. I’ve only known her for a few years, but she’s been working on this for her whole career. She’s not there to just get a job and fill a seat. She’s going to do stuff, and there is a new consensus around people at the top levels of the administration that this stuff matters. So you will absolutely see the administration try. Now, whether they are successful depends a lot on how quickly these ideas circulate through the judiciary; because all these companies are going to invoke every single legal mechanism they possibly can to try and stop this stuff from happening. And if the courts are still stuck in 1978 legal theory, then they’ll lose. But I think the way that Kavanaugh is writing about things for the Supreme Court suggests that there’s some room for a lot of different types of antitrust action against different types of companies. Even Big Tech is rightfully – They’ve earned their slot as the big bad guys in the American economy right now. But tech is not the only sector in which you have a concentration problem, so I certainly think the administration will try. But I also think that when you look at these big multi-trillion dollar proposals to create new child care systems and or at least more support for child care for families who need child care and for in-home care. These have to go through something, the government doesn’t just send out checks and the checks just magically solve problems. They have to go to institutions which then do stuff and that process can be (that process is always) messy. And again, there’s there is kind of a tension here between spending a lot of money and getting it out the door quickly, so it can do things. That typically means operating with big, big operators. So how that money is actually spent will matter quite a bit, and you could easily see a lot of money being wasted by monopolies in that process. But it’s not as if these problems are going to solve themselves, absent some sort of coordinated public response. The reason that we have the problem is because we’ve had markets around for a long time. These are not the types of problems that the markets that we have had have been able to solve.

Speaker 1 [00:58:27] It’s just fascinating to me that like, look, there’s there’s a lot of things that the Biden administration wants to make progress on, right? They want to make progress on voting rights reform, on climate change, on this infrastructure (the first two seem to have very little chance of making their way through Congress). Infrastructure, they’re doing their best to sort of bully that through. But antitrust as just another pressing problem that the country has, it seems like we might actually see change on the issue. A little bit quietly, a little bit in the background, but in a way that’s really powerful. Perhaps, I don’t know. It feels like there’s a big rock that’s shifting a little bit? Do you share that feeling?

Speaker 2 [00:59:13] Yes. And you have administrative levers that can be pulled. You don’t have to go to Congress for a new bill every time you want to do something about what’s happening. In the case of Facebook, for instance, they had a consent order from the FTC, a regulatory sanction against them in 2011. It seems very clear that they violated that over and over and over again. How you deal with that is something that the regulator has to deal with, it’s not something the Congress deals with, it’s not something that the judiciary deals with unless the company sues over how the regulator enforced it. So you have things that only regulators can do under the law, and those tools are really very powerful. Whether the courts will respect them, depends on the court. But I do think there’s I do think there’s a lot of potential right now for some pretty big changes to take place. The Biden administration does have a lot of different priorities and it is a particularly difficult area to actually do things in the United States.

Speaker 1 [01:00:29] Yeah, to say the least.

Speaker 2 [01:00:33] These are not the glory days for American government, right? There’s a reason why the Trump, ‘Make America Great Again’ slogan really did harness a sense that a lot of people have, that something has gone wrong lately. That things are worse now than they were before, whether that’s true or not. These are big historical questions, but I think a lot of people do have that sense and certainly the government is not super functional. Even things like the rental assistance that was supposed to go out under the first tranche of Biden money, like eighty three percent of it is unspent. This is billions of dollars in aid that’s supposed to go to people trying to pay their rent, and we just haven’t able to get that money spent somehow. That’s a genuine cause for concern, I think. But over the course of the pandemic, generally, the government’s done a good job getting money out the door. There are a lot of horror stories but I don’t think there are a whole lot of people who think, ‘Wow, if the government just sat on its hands and not responded financially to the pandemic, things would have been better.’ That doesn’t seem to be a very popular opinion, even among people who are enthusiasts of what we used to call the free market or laissez faire economics.

Speaker 1 [01:01:49] Are you worried at all about the again, this growing coalition disappearing or maybe not having the results that we want? Because, for instance, there was a lot of news a couple of years ago about there being a growing coalition with the Conservatives and the Liberals about criminal justice reform. That we had a bunch of conservatives feeling that, ‘Oh mass incarceration is too expensive, and it’s not having the results that we want so we can reduce that.’ Of course, liberals want criminal justice reform. There was, I think, the only big reform bill that I can think of that came out of the Trump administration or that was signed by the Trump administration was the First Step Act, which was a first step at some criminal justice reforms. But then that coalition quickly dissipated as Trump started running more on a tough on crime platform and the Black Lives Matter protests and et cetera. With that First Step Act, you can debate how many steps forward and how many steps back it was. So there was a much ballyhooed consensus or coalition that sort of evaporated into the mist. Do you have that concern at all, that if we listen to this conversation again two years from now and I’m going, ‘Oh my God, Brett Kavanaugh and Ted Cruz agree with Lina Khan. Woo. We’re going to have a bunch of problems here.’ Is that going to look pretty naive a couple of years from now?

Speaker 2 [01:03:17] You know, you always run the risk of being naive anytime you say that a better world is in any way possible. But if you don’t try, then you never get there. So, sure it’s possible we will look foolish in a few years for for talking like this. But under Trump, I think It was very obvious to Democrats and people who are not aligned with the Republican Party that the Republican Party’s ideological beliefs were shifting because of the president’s personality. The president had an ability to say, ‘Nope, I want to do it this way,’ and the party would follow him. I think for Democrats, I was pretty horrifying to watch. But that is the way intellectual change often happens. There are these ideas; a lot of the ideas are good. Not all of them are good. But until somebody in power starts doing something with them, you don’t get the consensus or hegemonic shift in in conventional wisdom that you saw, at least within the Republican Party under Trump for a whole bunch of stuff. I think you’re seeing, now under Biden, at least with the turn to Keynesianism and into antitrust. On a whole bunch of other things where I don’t have a clear sense of the administration’s policy. Their foreign policy, For instance, is clearly different from Barack Obama’s foreign policy in that we are getting out of Afghanistan right now. But is there a comprehensive theory that links what’s happening in Afghanistan to antitrust and to Keynesianism that can explain all of this? I don’t know. There will be intellectuals who are sort of held up to legitimize whatever it is the Biden administration does, but I think the success or failure of these ideas as intellectual paradigms; as ways to see the world, depends entirely on their political success. If the political world can’t make it happen, then the ideas will be discarded and something else will come along.

Speaker 1 [01:05:28] Well, thank you so much for joining us to help piece us through all of this. Where can folks find you? Tell us about your book a little bit.

Speaker 2 [01:05:37] It’s a book called ‘The Price of Peace: Money, Democracy and the Life of John Maynard Keynes.’ It’s a biography of John Maynard Keynes, as the title suggests. It’s Random House, you can get it at bookstores everywhere. You can even get it on Amazon. I won’t be mad,

Speaker 1 [01:05:56] Or you can get it at our special bookshop at factuallypod.com/books. If you get it there, you support this show and your local bookshop because they gave a little money to your local bookstore.

Speaker 2 [01:06:06] See, that’s a good one, too.

Speaker 1 [01:06:10] Or Amazon, if you like. Or better yet, walk down to your local bookstore and buy a copy.

Speaker 2 [01:06:17] But do buy it, please. I really like your money,

Speaker 1 [01:06:21] And I hope you get a lot of it. Zach, thank you so much for being here. Can’t thank you enough.

Speaker 2 [01:06:25] Thanks so much for having me, Adam.

Speaker 1 [01:06:31] Well, thank you once again to Zach Carter for coming on the show, I hope you enjoyed that once again. If you want to purchase this book, you can pick it up at factuallypod.com/books that’s factuallypod.com/books. And that is it for us this week on factually, I want to thank our producers, Chelsea Jacobson and Sam Roudman. Our engineer, Ryan Connor. Andrew W.K. for our theme song. The fine folks at Falcon Northwest for building me the incredible custom gaming PC that I’m recording this very episode for you on. If you want to send me an email about the show, you can send it to factually@adamconover.net. That’s factually@adamconover.net and I do read those emails, and sometimes I even reply. You can find me online adamconover.net or @AdamConover or wherever you get your social media. Thank you so much for listening. We’ll see you next week on Factually.