We associate Louis Brandeis most with Boston. The legendary Supreme Court justice attended law school at Harvard, opened his private practice on Devonshire Street, and had a college named for him in the city’s suburbs. But as Tim Wu reminds us in his new book, The Curse of Bigness, the place that shaped Brandeis’s most influential thinking was not Boston but the smaller city where he grew up: Louisville, Kentucky. It was there that his Prague-born father, Adolph, decided to settle and came to prosper as a grain merchant. And it was there that Louis developed an abiding attachment to the American ideal of the level playing field.
Antitrust in the New Gilded Age
by Tim Wu
Columbia Global Reports, 154 pp.
“Louisville was no world capital, nor the seat of any corporate empire, but nonetheless a flourishing regional center, in a United States far more economically decentralized than today’s,” writes Wu. “It was, economically speaking, dominated by no few large concerns but a multitude of small producers.” Wu quotes biographer Melvin Urofsky, who wrote that Louisville seemed to Brandeis “the quintessential democratic society, in which individuals . . . could do well by dint of their intelligence and perseverance.”
The Curse of Bigness is intended to show how democratic society is threatened today by a new wave of “large concerns,” and to make the case for dismantling them. (The title is a reference to Brandeis’s famous evocation of the problem of monopolies.) Wu, a law professor at Columbia, is well suited to the task. In recent years, most notably with his 2016 book, The Attention Merchants, he has distinguished himself by combining analysis of the tech giants with a lyrical evocation of the changes they are inflicting on our daily lives, social interactions, and politics.
Wu’s thesis is straightforward and admonitory: we are, he argues, reenacting the economic concentration of the Gilded Era, with the only difference being that today’s “insensitive behemoths” traffic primarily in clicks and online sales rather than railroads and oil. And to overcome these goliaths, we need to channel the trustbusters of that earlier era—above all Brandeis, who, with what Wu calls his “sensitivity to human ends,” was among the first to identify the broader spiritual and political cost of concentration. “What Brandeis really cared about,” writes Wu, “was the economic conditions under which life is lived, and the effects of the economy on one’s character and on the nation’s soul.” A functioning democracy relied not only on a duly elected government, but also on citizens’ freedom from the abuses of overlords in the other realms of existence. That New Englanders could vote for their legislators was well and good; it was also important that they be spared the wrecks, derailments, and delays that flowed from J. P. Morgan’s consolidation of the New Haven Railroad monopoly, which caused twenty-four deaths and 105 injuries in 1911 alone.
After introducing his hero, Wu gives a concise history of the revolution in antitrust enforcement that Brandeis inspired. There were the trust-busting cases brought by Teddy Roosevelt, who didn’t mind bigness per se but was concerned about “preventing the growth of monopoly corporations into something that might transcend the power of elected government to control.” Then there were the cases brought by the less famous Thurman Arnold, who as head of the antitrust division under Franklin Roosevelt brought an astonishing 1,375 complaints involving forty industries. As Wu notes, the New Dealers’ federal competition policy was crucial to the broad-based prosperity that would characterize the postwar era. What goes mostly unsaid is that wealth wasn’t only being shared up and down the income ladder; it was also being broadly distributed in geographic terms, as guards against monopoly allowed for thriving regional-level businesses in retail, media, and countless other industries—including in midsize cities like Louisville.
Wu gives a succinct account of what happened next: the undermining of antitrust enforcement by the one-two punch of, first, Aaron Director, the obscure ex-socialist academic who inspired a generation of antitrust skeptics at the University of Chicago Law School; and then Robert Bork, the Chicago Law graduate who weaponized Director’s ideas as a law professor and federal judge. Beginning with an influential 1966 paper, Bork declared that antitrust law had only one legitimate objective: “the maximization of consumer welfare”—that is, low prices. Any concern for the broader economic or political costs of concentration must be ignored. A decade later, this position would be adopted by the Supreme Court; it has governed antitrust law ever since. Wu argues that Bork’s success lay in his having a moral element to his case, one that countered Brandeis’s. “In Bork’s critique, it seemed an antitrust law driven by anything but consumer welfare was the law of the libertine, degenerate and debauched,” writes Wu. In fact, Bork saw antitrust as just one front in a general rearguard action he was waging against the excesses of the Warren Court, which, he wrote, “wrecked many fields of law in its reckless and primitive egalitarianism. Antitrust was one such field.”
Bork had “managed to embed the culture war” in the antitrust debate, writes Wu, and proceeded to win that war by convincing a broad swath of lawyers and judges that respectability and intellectual rigor lay on the side of tamping down antitrust fervor. Never mind that, as Wu argues, there was nothing particularly rigorous about the highly simplistic consumer welfare standard. Bork’s victory was undeniable. There was the pullback in antitrust enforcement under Ronald Reagan—in 1981, the Federal Trade Commission even suspended a program that collected data on industry concentration. (See Sandeep Vaheesan, “Progressives’ Secret Weapon,” on page 39.) The Clinton administration did bring a big case against Microsoft, but George W. Bush’s administration settled it and brought not one antitrust case of its own. The Obama administration took a friendly stance toward the expansion of the tech titans—indeed, the upper ranks of those titans are now riddled with Obama veterans.
Meanwhile, since 2000, 75 percent of U.S. industries have grown more concentrated, with tech being the most obvious example—Google and Facebook now control more than 60 percent of all digital advertising, while Amazon controls more than half of the e-commerce market. This exacerbates the growing divide not only between urban and rural America but also between a handful of winner-take-all cities and many lagging ones. Nearly half of all venture capital is now invested in the Bay Area, the five largest metro areas now produce more than a quarter of all economic output, and half of the wealthiest counties in the country are in the Washington, D.C., area. “If there is a sector more ripe for the reinvigoration of the big case tradition,” writes Wu, referring to Microsoft-style breakups, “I do not know it.”
Wu then proceeds through a concise marshalling of the arguments for a return to a more aggressive antitrust approach. No, breaking up our new tech overlords won’t slow the economy or hamper innovation—quite the contrary, considering the advances that flowed from the breakup of giants like AT&T. The tech monopolies strain credulity when they claim that their voracious acquisitions of rivals are not subject to antitrust concern, as when Facebook claimed that it was not actually in competition with Instagram. “A teenager could have told you that Facebook and Instagram were competitors—after all, teenagers were the ones who were switching platforms,” Wu writes.
The odds of the Supreme Court being won over by such arguments anytime soon are slim, of course, given that liberals may not regain a majority for decades. But Wu sketches out a way forward for the other branches of government. Congress could do its part by passing legislation to “make clear, at a minimum, that the Anti-Merger Act of 1950 meant what it said” in making it harder for companies to buy the individual assets of competitors, in addition to undertaking wholesale mergers. He suggests setting a higher bar for giant mergers (those above $6 billion in value) and an outright ban on mergers that reduce the number of major firms in a market to less than four. He calls for more transparency in the merger review process, where regulators now withhold too much information, purportedly to avoid politicizing reviews. “Big mergers are political,” he writes, “and the idea that the public or its representatives be kept in the dark is hard to support.” He urges regulators to mimic their British counterparts by undertaking routine “market investigations” to prevent concentration, and to take inspiration from their EU counterparts, who still have the gumption for big cases against the tech giants.
Building the political will for a new direction is no small challenge. A survey conducted in June and July by Georgetown and NYU found that Democrats expressed more confidence in Amazon than in any other entity listed—ahead of unions, government, and the press—while Republicans ranked the company behind only the military and police. But sentiments on that front may well shift. For one thing, there’s palpable disquiet over the HQ2 extravaganza launched by Amazon, which resulted in its being showered with offers of billions of dollars in subsidies by countless cities. And we all now know how that turned out. HQ2 is headed to New York and Washington—not to Milwaukee or Cleveland or St. Louis or Baltimore. Or Louisville.
