The one big thing progressive critics of Big Business get wrong

For more than a decade, a contingent of populist lawyers, journalists, and academics have been hurling stones at America’s corporate Goliaths. And they’ve landed some solid blows.

In the Obama years, these intellectuals began warning that monopolistic businesses were gaining a chokehold on America’s politics, culture, and economy. As industries like health care, banking, e-commerce, and agriculture grew more consolidated, such thinkers explained, large corporations had gained the power to dictate terms to workers, consumers, suppliers, and even the US government. Combating them required policymakers to recognize what Supreme Court Justice Louis Brandeis had realized a century earlier: that concentrated corporate power posed a threat to Americans’ political and economic liberties.

When Elizabeth Warren came to the Senate, she popularized the New Brandeis analysis. And when Joe Biden won the presidency, he brought many of them with him to the White House. Lina Khan, one of the antimonopoly movement’s leading lights, became commissioner of the Federal Trade Commission (FTC), while the like-minded Jonathan Kanter spearheaded the Justice Department’s antitrust division. Together, they have orchestrated a blizzard of lawsuits against alleged monopolists in tech, pharmaceuticals, finance, groceries, air travel, and various other industries.

This litigation has often wrecked upon the shoals of America’s conservative judiciary. But the agencies’ enforcement actions have nevertheless returned hundreds of millions of dollars to exploited consumers and deterred various forms of petty corporate malfeasance. Thanks to the neo-Brandeisians, thieving landlords have returned their tenants’ stolen security deposits, scam colleges have compensated their deceived students, and drug companies have had a harder time blocking the rollout of generic drugs.

Thus, the antitrust movement has done a lot of good. In the absence of vigilant oversight, businesses in general — and monopolistic ones in particular — are liable to abuse their power. I’m not sure that FTC lawsuits are the optimal means of disciplining abusive firms (for one thing, the conservative Supreme Court puts limits on what a left-wing legal strategy can plausibly achieve) but they’re better than nothing.

And yet, if the neo-Brandeisians have revitalized antitrust enforcement, their impact on the Democratic Party’s broader thinking about public policy is less laudable.

This is because their movement’s analysis is sometimes distorted by fanaticism. And as the movement’s influence has grown, its intellectual flaws have become a liability for progressive politics.

Put simply, some neo-Brandeisians are not just concerned with corporate concentration, but fixated on it. In their telling, monopoly power lurks behind virtually every social problem in the United States, Google presents a greater threat to liberal democracy than Donald Trump, and trade-offs between reducing corporate concentration and other goods are beneath consideration.

This mode of argument — call it, anti-monopoly monomania — may be rhetorically effective. Certainly, it has proven compatible with obtaining remarkable political influence. But it is not conducive to lucid policy and political analysis. Corporate titans are not the main authors of every inequitable economic outcome nor the biggest obstacle to every worthwhile reform.

Formulating effective political strategies and policy programs requires privileging intellectual humility over ideological comfort. Opposition to corporate criminality and monopoly power is compatible with that task. Anti-monopoly monomania is not.

The fanatical streak in anti-monopoly thought may be best exemplified by Barry Lynn’s recent Harper’s cover story, “The Antitrust Revolution.”

Few intellectuals are more responsible for the antitrust movement’s ascent than Lynn. A former business reporter, he has spent the better part of two decades chronicling the harms of corporate concentration in the United States. At the New America Foundation, he led a program dedicated to researching abuses of monopoly power. In 2017, the left-wing think tank disbanded his team, allegedly at the behest of Google, one of its major donors. Since then, Lynn has directed the Open Markets Institute, where he employed such prominent neo-Brandeisians as Khan and commentator Matt Stoller.

In his Harper’s essay, Lynn argues that Google, Amazon, Microsoft, Facebook, and Apple have amassed a perilous amount of influence in American life, and liberals must disperse their power and regulate their operations in the public interest.

Or rather, that is the reasonable proposition buried beneath Lynn’s hyperbole. More precisely, Lynn’s argument is that the power of Big Tech in the US is analogous to that of absolute monarchs in the 17th century. Therefore, in his telling, it is Google, Amazon, and their like that pose the true threat to American democracy, not Trump. “In a second Trump term, we might reasonably expect chaos, paralysis, and destruction,” Lynn writes. “But a carefully calibrated cosmos of power? Hardly.”

By contrast, America’s largest tech companies already have “the power to create and destroy, to censor and punish, to ‘make and unmake’ who they will,” and are thus, “the absolute sovereigns of our age, the masters in the middle of us all.”

This reasoning seems … less than careful. Google has the power to determine which businesses and news outlets appear first in its search results. A second Trump administration would have the power (and, seemingly, the will) to dictate who the Justice Department investigates.

For all the genuine and excessive authorities that America’s tech giants have amassed, none compare to the executive branch’s power over federal law enforcement and the military. An instinctual authoritarian commanding the state’s monopoly on violence is a greater threat to democracy in the US than any social media company’s content moderation decisions, e-commerce giant’s recommendation algorithms, or search engine’s data collection policies. A tech company cannot put its enemies in prison. A corrupt president plausibly can.

It may seem odd that Lynn would choose to set such a grandiose bar for his own argument. After all, making the case for aggressive antitrust enforcement does not require proving that Google wields power analogous to that of an absolute monarch. But the rest of Lynn’s essay suggests he is simply too passionate about these issues to analyze them in a consistently rigorous or sober manner.

In fact, his piece contains many exaggerations and dubious assertions that it does not feel compelled to substantiate. Three are particularly egregious:

1) The Biden administration’s recent antitrust cases against Google amount to “one of the most important defenses of true intellectual and political liberty of the past four centuries.”

Reasonable people can disagree about what the most important defenses of political liberty since 1624 have been. The US Civil War, Haitian Revolution, and anti-apartheid struggle all strike me as candidates. But surely, the FTC’s recent success in forbidding Google from remaining the default search engine on the iPhone does not make the list. (I don’t think that would change, even if the Biden administration improbably persuades America’s conservative judiciary to break up Google as a remedy for its antitrust violations).

2) If the government does not force YouTube to platform advocacy for teen suicide, then America will be on the glide path to autocracy.

Early in his essay, Lynn argues that the Supreme Court’s liberal justices recently “mounted as outriders for autocracy” by ruling that Florida and Texas cannot dictate social media platforms’ content moderation policies.

Lynn argues that the liberal justices are hypocrites for reaching this decision in Moody v. NetChoice, even as they ruled that Trump should not be immune from prosecution for official acts he committed as president. In Lynn’s telling, whether a former commander-in-chief should be able to order a drone strike against a political rival without fear of prosecution and whether YouTube should be able to deplatform neo-Nazi vloggers are “essentially the same” question: In both cases, we must decide whether it is permissible to give a company or person “nearly unimaginable sovereign powers.”

This is a deeply unintuitive claim. At issue in Moody v. NetChoice was whether Texas’s and Florida’s laws constraining social media firms’ content moderation policies were consistent with the First Amendment. Texas’s law was especially broad, forbidding the platforms from moderating content based on “the viewpoint of the user or another person.” As Justice Elena Kagan noted in the Court’s majority opinion, this would plausibly compel YouTube, Facebook, and X to publish posts that “encourage teenage suicide and self-injury” or “support Nazi ideology.”

In an interview, Lynn suggested that Texas’s law would still allow social media companies to ban racist speech through their terms of service. But this is not true. That law forbids “viewpoint discrimination,” which would compel social media firms to tolerate advocacy for Nazism if they also platform anti-Nazi speech.

Perhaps, the harms of platforming such speech or allowing governments to dictate the content moderation decisions of private media companies pale in comparison to the harms of letting Elon Musk and Mark Zuckerberg decide what can be said on their websites. But making that case persuasively requires acknowledging relevant trade-offs and demonstrating the downsides of social media content moderation rather than merely asserting, without evidence, that Facebook taking down pro-anorexia posts will doom the republic.

3) Monopoly power has caused racism and anti-gay bigotry to increase in the United States.

It might sound like a caricature of Lynn’s position to say he believes monopolies are the cause of virtually every problem in American life, but this is what he argues. In a key passage of his essay, he writes of the Reagan administration’s embrace and popularization of antitrust enforcement:

It is hard to overstate the effects of these changes. Look at almost every crisis in America today and down the chain of causation we will find a monopolist. Inflation, shortages of drugs, the breakdown of supply chains, our industrial dependence on China. The cost of buying or renting a home or a car. How far we must drive to a hospital or to find fresh produce. The cost of medicine, milk, and chicken. The vast and growing inequality of wealth, political power, and control. The rise of the radical right. The surge in racism and homophobia. The attacks on reproductive choice and marriage. The collapse of our news media. In every instance, the concentration of control has played a big role or even the main role.

It’s far from clear that Covid-era supply chain disruptions derived from corporate concentration, rather than the combination of skyrocketing demand for manufactured goods (as homebound middle-class people shifted their spending away from in-person services) and pandemic-induced production stoppages. But there’s at least a theory behind that perspective.

The claims that monopolists caused “the surge in racism and homophobia” and “attacks on reproductive choice” are much less plausible.

For one thing, it is not even clear that a surge in racism and anti-gay bigotry has taken place. As of May, support for marriage between same-sex people in Gallup’s polling was near record highs. Approval of interracial marriage, meanwhile, sat at 94 percent in 2021. One can quibble about exactly how to measure racism and anti-gay animus, but Lynn dates the collapse of sound antitrust policy to 1981. And no one could seriously believe that the American people had more progressive views on race and gender in the early Reagan years than they do today.

Likewise, the religious right had little difficulty opposing women’s sexual freedom and bodily autonomy before 1981. Some large corporate interests may have underwritten the anti-abortion movement, but plenty of Big Tech executives and shareholders have also bankrolled the religious right’s political opposition. Indeed, in recent election cycles, Google, Apple, and Amazon have all donated dramatically more campaign funds to Democrats than to Republicans.

When I spoke with Lynn, he allowed that America had grown more tolerant during the first decades after the government abandoned aggressive antitrust enforcement. But he insisted that this turn in antitrust policy made the rise of social media companies in the 2010s possible, and those companies then caused an increase in racism and anti-LGBT animus in the United States.

Lynn’s only real evidence for that claim, however, is the fact that racist and anti-gay speech has become prominent on social media in recent years. Yet in that same time period, antiracist speech and pro-LGBT advocacy also became prevalent online. And in public opinion data, there remains little evidence that Americans have become more bigoted since Facebook, Twitter, and Instagram became culturally influential.

This is not an exhaustive list of the Lynn essay’s dubious claims. It seems sufficient, though, to establish that he does not always feel compelled to stress-test his ideological intuitions, back up extraordinary claims with extraordinary evidence, or acknowledge trade-offs to his preferred policies. And this leads him to needlessly exaggerate the scale of Big Tech’s threat to political liberty and misconstrue the causes of some social problems.

In other words, the piece demonstrates that the intellectual godfather of the antitrust movement sometimes falls prey to antimonopoly monomania.

Lynn’s essay is more fanatical than most of the antimonopoly movement’s output (including much of his own, more measured work). But many in the neo-Brandeisian orbit are nonetheless susceptible to similar lapses of analytical rigor.

To focus on one in particular, there is a tendency in antimonopolist circles to see large corporations as the primary authors of social and political problems, even when the evidence for that conclusion is weak. And this fixation on large corporate actors can lead to misguided policy priorities and distorted political analyses.

This dynamic may be most clear in housing. As Jerusalem Demsas notes, in recent years, some Democrats sympathetic to the antitrust movement have blamed large financial institutions for driving up rents by purchasing single-family homes.

The idea here is that, by buying single-family homes on a massive scale, institutional investors secured monopoly power in the rental market, thereby undermining competition between landlords. Yet this analysis is absurd. As of 2022, institutional investors owned only 3 percent of all single-family rental units in the United States. That year, the largest owner of such rental properties, Invitation Homes, owned just 0.6 percent of all single-family houses on the rental market.

Housing in the United States is not expensive because big corporations have a monopoly on rental properties. It is expensive because America suffers from a massive housing shortage that is perpetuated above all by restrictive zoning laws. Across US cities, it is illegal to build multifamily housing on 75 percent of residential land. Such zoning restrictions, combined with myriad other regulations that needlessly increase the cost of housing production, limit competition between landlords far more profoundly than the machinations of any single corporate actor.

Yet zoning reform attracts tepid interest from antimonopolists. Matt Stoller, director of research at the American Economic Liberties Project (AELP), argues that “it’s important to move the discussion about housing away from the focus on local [zoning] regulations.” Two scholars at Lynn’s Open Markets Institute recently suggested that upzoning fuels “mass displacement.” (That claim is at odds with research indicating new market-rate construction often reduces rents and displacement in the immediate vicinity, and certainly puts downward pressure on rents at a citywide level).

Ironically, large developers and landlords sometimes openly admit that zoning restrictions (and other obstacles to market-rate housing development) protect their profitability by reducing competition.

Nevertheless, some neo-Brandeisians downplay the significance of zoning restrictions and focus on less consequential impediments to landlord competition (specifically, those impediments that genuinely can be attributed to corporate malfeasance).

Antimonopoly monomania can also occlude clear-eyed thinking about the political obstacles to expanding America’s welfare state. A recent New York Times column from former National Security Council official Jen Harris illustrates this dynamic.

Harris is a cogent thinker on industrial policy. In her capacity as director of the Hewlett Foundation’s Beyond Neoliberalism project, she funded many worthwhile progressive policy initiatives, including antimonopoly think tanks. Yet in laying out a compelling vision for Kamala Harris’s economic agenda, Jen Harris proffers an analysis of the politics of public child care that doesn’t withstand scrutiny.

In Jen Harris’s telling, ensuring “quality child care from birth to kindergarten” will require “contending with the reach of financial power” since “eight of the top 11 child care businesses in the country are now owned by private-equity firms.”

She continues:

Many of these firms recently lobbied against a broad-based federal child care benefit because, as one noted, it could “place downward pressure on the tuition and fees we charge” and “adversely affect our revenues.” It resulted in higher fees and worse care for families and abysmal wages for workers. This is classic corporate extraction, with an economic toll topping $200 billion a year. Ms. Harris (and Congress) could end it by closing the carried-interest loophole as part of the looming tax fight next year.

In other words, Harris suggests that reducing the power of private equity is indispensable for enacting federal child care benefits, since the industry successfully blocked the passage of Joe Biden’s public child care program and is liable to quash similar bills in the future if it retains the power to do so.

But there are a couple of problems with this argument.

The first (and less significant) issue is that Jen Harris mischaracterizes the child care industry’s position on Build Back Better.

In truth, the consortium representing America’s large child care chains publicly endorsed that bill. What’s true is that, behind closed doors, the consortium “argued to policymakers that the bill’s numbers did not add up,” according to the New York Times. Specifically, it told lawmakers that the bill underestimated the true cost of providing high-quality child care to the broad swath of eligible children.

These concerns may or may not have been specious and self-serving. Regardless, when an industry is hellbent on killing a piece of legislation, they do not typically give business-friendly Democrats public cover to support it while lobbying privately for adjustments to its details.

Further, even if we stipulate that Harris’s account of child care chains’ role in the failure of Build Back Better is accurate, her strategy for combating their influence — closing the carried interest loophole — seems muddled. If private equity-owned child care businesses are powerful enough to veto the passage of federal subsidies to their own industry, why couldn’t they also kill changes to tax policy that directly reduce their profitability? Put differently, if Democrats have enough independence from such businesses to close the carried interest loophole, why wouldn’t they also have enough independence to enact a child care program that didn’t perfectly match the industry’s preferences?

The shakiness of this analysis might seem immaterial. After all, closing the carried interest loophole is a good idea, irrespective of private equity’s role in negotiations over Build Back Better.

But misunderstanding the causes of that legislative failure will only make it more difficult for progressives to expand the welfare state in the future.

What makes public child care politically challenging has little to do with the industry’s ownership structure (and not only because small businesses are perfectly capable of collectively organizing in opposition to policies they dislike).

The real difficulty is that there is profound tension between increasing wages in the child care sector and reducing costs for consumers, and Democrats are committed to doing both. Build Back Better tried to resolve this tension by mandating higher pay for child care workers and then giving consumers’ enough subsidies to offset the impact of those heightened labor costs. But that gets very fiscally expensive very quickly.

On paper, Biden’s child care program cost $275 billion. But Democrats only achieved this modest price tag by aggressively means-testing the policy’s benefits and phasing the whole program out after six years of operation. A permanent version of the policy — and Democrats never intended the measure to be temporary — would have cost $460 billion every 10 years.

To make the program politically sustainable, however, the government would likely have needed to spend a lot more than that. The reason for this is simple: By mandating a large wage increase for child care workers, Build Back Better would have dramatically increased the cost of child care for every family that earned too much money to access its means-tested subsidies.

Biden’s plan would have required child care centers to pay their workers the same wages as elementary school teachers with similar experience and credentials. As Matt Bruenig notes, when the District of Columbia scored the cost of a nearly identical proposal, it found that mandating such wage levels would boost the annual unsubsidized cost of infant and toddler care by between $6,335 and $12,175.

For this reason, families who earned more than 250 percent of their state’s median income — and were therefore ineligible for Build Back Better’s subsidies — would have seen a massive increase in child care costs had the program taken effect.

Democrats could avoid this political liability in the future by extending their program’s subsidies to the upper-middle class. But then the fiscal cost of a public child care program would swell.

America is a rich country. The nation can afford universal child care. But the more expensive a public child care program gets, the more it will compete with other progressive priorities. In an economy with low unemployment, you cannot massively subsidize child care, expand the child tax credit, provide paid family leave, increase the EITC, create new long-term elder care benefits, increase health insurance subsidies, and enact the various other unfulfilled elements of Biden’s social welfare agenda without generating inflation or enacting large tax increases.

Merely soaking the super-rich and corporations would likely be inadequate. In a full-employment economy, if you want to dramatically increase the number of workers in the care sector, you need to reduce labor demand in other parts of the economy; your new child care workers need to come from somewhere. And taxing billionaires does not actually do very much to reduce labor demand; cut Jeff Bezos’s net worth by $50 billion and he’ll still have more money than he can spend. If you want to really free up labor and resources for public programs, you need to reduce the spending power of the upper-middle class. And Democrats have demonstrated no appetite for doing that.

All of which is to say, proponents of a larger welfare state in general — and public child care in particular — face trade-offs far more vexing than Harris’s analysis lets on. To realize their social agenda, progressives will either need to overcome the Democratic coalition’s allergy to broad-based tax increases or embrace less labor-friendly versions of their desired care programs, or narrow their ambitions for expanding the welfare state to a smaller number of programs. Just sticking it to Wall Street isn’t going to cut it.

There may be ways to reduce these trade-offs. For example, expanding immigration opportunities for people eager to work in the child care sector would make the labor demands of public child care easier to accommodate. But progressives cannot devise a sound strategy for navigating the obstacles to a more robust welfare state if they misconstrue the nature of those barriers. They will not set optimal priorities or account for the true costs of their goals if they pretend that soaking private equity is an alternative to those tasks (as opposed to a separate, worthwhile project).

Disciplining anti-social corporations is indispensable for creating a more equitable and prosperous republic. But so is recognizing that, in some areas, the chief obstacle to progress is less the treachery of monopolists than the selfishness of the merely affluent or the unresolved tensions between liberals’ competing priorities. We can’t let big business monopolize our attention.