How wealth is breaking democracy.
Matt Stoller talks Big Tech, monopolies, and how America has failed.
I’m Isaac Saul, and this is Tangle: an independent, ad-free, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum. If someone sent you here, they’re asking you to subscribe. You can do that by clicking the button below:
Today’s read: 13 minutes.
An interview with author Matt Stoller, plus some quick hits on a wild 24 hours.
At the end of July, Congress held one of the most important hearings it has in decades. At least according to Matt Stoller.
Stoller was a Senior Policy Advisor and Budget Analyst to the Senate Budget Committee. He also worked in the U.S. House of Representatives on financial services issues like Dodd-Frank, the Federal Reserve and the foreclosure crisis. Today, Stoller is becoming a well-known critic of monopoly power, he’s an author of a forthcoming book and he runs his own Substack newsletter called BIG.
Stoller was anxiously awaiting Congress’s grilling of the four major tech CEO’s in July: Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos, Apple’s Tim Cook and Google’s Sundar Pichai. The hearing was a huge deal. Congress had been investigating these companies for more than a year, collecting millions of documents and poring over them trying to determine how much power they had, if it constituted monopoly power and if these companies needed to be reined in by the law.
After the hearings, I wrote about them in Tangle. My general takeaway was twofold: one, I wasn’t convinced that they had monopoly power. Two, I thought Congress missed an opportunity to squeeze these companies the way they could have.
But shortly after sending that newsletter to all of you, I read Stoller’s coverage of the hearings. I had been very curious to see what he wrote because I am familiar with his work — including an upcoming Simon and Schuster book he is set to release about this very topic: Goliath: The Hundred-Year War Between Monopoly Power and Democracy.
What Stoller wrote surprised me: he seemed thrilled. He thought it was a historic moment, seemed to think Congress did an excellent job, and also seemed quite encouraged about what was coming down the pipe. After reading his coverage of it and receiving a few emails from another friend who works in ad-tech, I moved on my position. At the same time, I wrote to Stoller and asked if he’d be interested in doing an interview. He accepted.
His perspective is fascinating to me not just because he’s an expert on a topic very few people in the general public know or care about — but also because he can talk about it in a way that’s interesting and engaging. Antitrust law, monopoly power, this stuff is boring. It’s a snoozefest. It’s deep, technical and thick, and it’s hard for me to follow even when I try my hardest to keep up with it.
You’ll see some of that in this interview: Stoller has a wealth of historical references and often refers to case law or historical events offhandedly as if the context they add is well-known or obvious. In those places, and others, I’ve annotated this interview with asterisks to add additional context.
On the whole, though, I thought this interview was fascinating. Stoller first caught my attention a few years ago when I saw him criticizing Democrats, President Barack Obama and other liberals for failing to recognize the importance of these business-centric issues. As a result, he’s become a bit of a pariah on both sides of the aisle, which I take as a clue he’s doing something right. I’ve seen plenty of liberals who criticize his views as being a certain kind of “shtick” where he rails against the left unnecessarily. He touches on that in this interview, and from speaking with him I sense that his criticism comes from a place of caring. But I’ll let you be the judge.
This interview has been lightly edited for clarity and length. This interview took place on Tuesday, August 11th, 2020.
Tangle: So, my readers are kind of familiar with you. I've referenced some of your writing about some of the hearings last week, so I definitely want to touch on that, but I'm also interested in, and would just like to chat about populism and the left-wing side of it a little bit as well, some views you've expressed about the Democratic party and the state of things. I guess maybe that's the easiest place to start for my readers is if you could just describe your politics and your political world view and tell me a little bit about some of the work you've done in D.C.
Matt Stoller: My politics are both very unusual but also historically common. I'm a pro-business, anti-monopoly populist. Someone who thinks that the way that we do business in America is the way that we do justice. And I think trade is good. I think it's good that people trade with each other — trade goods, ideas, whatever it is, voluntary exchange among people is part of the essence of freedom. But it's really important to make sure that trade happens in a way that's fair, that promotes human development.
That means the main enemies of that kind of pro-business, pro-democracy framework are monopolists and concentrated capital. And sometimes a badly run government. And that's weird because it doesn't really put me on the modern spectrum where people are like "oh, big government is good" or "oh, big government is bad." That's not the way that I think about it. The way that I think about it, which is traditionally how Americans prior to the 1980s thought about it, is that someone is going to govern. It's either going to be we the people, who are democratic institutions like Congress or unions or small businesses. Or it's going to be monopolists and Wall Street, who have often captured government institutions.
That's how I think about politics, which came out of my experiences in Washington, and I wrote a book called Goliath which is about the historical tension between monopoly power and democracy. So that's really the essence of the conflict.
I've worked on a whole bunch of different areas in politics involving corporate power, banking power, and how those intersect with questions of social justice. We do a lot of work around large technology platforms. If you look at the opening statement [from the hearings] where Congressman David Cicilline started the hearings, it really was democracy versus monopoly for hundreds of years.* That was the frame that he chose.
*Rep. David Cicilline (D-RI) is the U.S. House Antitrust, Commercial, and Administrative Law Subcommittee Chairman. He delivered the opening statement at the hearing with the tech giants, which you can watch (below):
Tangle: So it's funny, I was reading some of your stuff before we spoke and one of the first things that came up was an excerpt from Goliath and it was titled "How Democrats Became the Party of Monopoly and Corruption." In that excerpt, the opening is about a time that sort of reminds me of the place we're in now: you talk about 1985, the Dow Jones jumping 27%, how the rest of the country is really struggling. And I know this excerpt is a year old almost, but it really struck me how similar it sounded to the place we're in at this moment. I'm wondering if you could tell me from your perspective what you're seeing, how Congress and the president are responding, what you wish they were doing and maybe things they're doing that you are supportive of?
Stoller: Well, starting in the early 80s we turned our back on this whole tradition of constraining concentrated power. That was the main point of American politics: corporate power is dangerous. You go back to the British India company or even further back to the colonial power, and fear of monopoly power was foundational to America.* That’s why people believed in America. When FDR talked about "we have nothing to fear but fear itself," that wasn't just a nice phrase, he was talking about bank runs.** That's one of the most famous political phrases in American history and it was about a banking crisis. He was saying don't pull your money out of the banks, I'm going to fix it. That's a whole tradition we just got rid of in the early 80s on the right and the left. And I think this is why — to the left — I think I'm confusing, because I'm like "this is kind of our fault guys."*** We decided that the politics of personal liberation was more important than the politics of business and the politics of resources.
So starting in the 1980s, what began happening was we stopped caring about power in the private sector. Wall Street and monopolists went crazy and started rolling up power everywhere. The net result, which is that chapter in my book, was that the stock market was doing really well. When people who have capital get to do whatever they want, they make sure that the stock market goes up so that their assets go up and they get more power. And everyone else who works for a living gets undermined. So that chapter, in the mid-80s, there was a huge epidemic of farmer suicides, but the middlemen were making a lot of money — big agriculture. But the workers were getting crushed.
We haven't fixed any of those problems, in fact, they're just a lot worse. We haven’t reconstituted our philosophy since the early 80s. We're still in that period where people are confused about what the point of politics is. And so today, what you saw with Congress and pandemic, they argued about all sorts of bullshit about what to do about the pandemic — but what they really did, their main point, was they said to the fed "don't let the stock market go down." That was their main response to the coronavirus, was just don't let the stock market go down.
And that's why it feels very similar to any period within the last 30 or 40 years, because it’s consistent with that framework of just letting concentrated capital just do whatever they want. It's much worse today because small businesses are collapsing at a rate that they really never have. But that's why it feels so similar.
*The British India Company, also known as the East India Company, was an English joint-stock company that helped execute trade across the Indian Ocean region from the 16th to 19th centuries. Its competitive advantages over colonial American tea importers is part of what led to the Boston Tea Party, the famous historical event when protesters boarded British ships and threw the tea overboard.
**Franklin Roosevelt delivered these famous remarks in 1933, during his inauguration as the 32nd President of the United States. He stepped into office during the peak of the Great Depression. Stoller is right that he was blaming the crisis on bankers and businessmen. His full quote was: “So, first of all, let me assert my firm belief that the only thing we have to fear is...fear itself.” He was actually paraphrasing the poet and philosopher Thoreau. You can read about Roosevelt’s inauguration speech here.
***Stoller appears to be referring to the criticism he receives from Democrats and liberals online, which I referenced in his intro.
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Tangle: I want your perspective on the hearings because as I mentioned in our email exchange your writing had a big impact on my view and my perspective on them. But sort of tying that into this excerpt you wrote, I'm curious if the hearings made you feel differently about the Democratic party and the role they're going to play in the fight against monopoly power. Because you seem pretty pleased with how the hearings went in contrast to some of the more critical writing in this excerpt from your book, and I'd love to hear, maybe the best you can in layman's terms, to explain how these groups like Amazon, Facebook and Google are in fact monopolies. Because that's obviously a debate happening on the right and left.
Stoller: You know, I read your writing around this and I understand the skepticism. As I was writing about the hearings I heard a lot of people that were very skeptical, they were just like "aw, nothing is going to happen and this is all for show." And my attitude is why wouldn't people believe that? Nearly everything we've seen in the last 30 or 40 years has been for show. So why would anyone have any confidence that our governing institutions can actually constrain power? And I think that's a really fair perspective. What is also weird about the hearings is that they don't fit in any narrative that we're familiar with today.
First of all, it had nothing to do with Trump one way or the other. A congressional hearing that's a high-profile congressional hearing and Trump is just not a factor — even if a couple of people whined about him. Two, it was really bipartisan. Jim Jordan was a clown,* but mostly everyone was kind of on the same page that these companies are too powerful. Which is unusual, right?
The members of Congress were using documents confronting these CEOs with their own words, their own emails, they had a real investigation for about a year and it was really unusual to have a substantive discussion in Congress. It's usually much more superficial. And then the fourth thing that makes it weird is that these were some of the richest people in the world. In fact, Jeff Bezos is the richest person in the world. It's really unusual to have politicians grilling the richest man in the world for five and a half hours. That's a big deal, right?
And none of these things fit in any preset narrative, right? Because it's impossible to say "oh, screw Trump." How do you explain to people, "Congress did a good job, it was substantive, it was bipartisan and they confronted corporate power." None of that makes any sense to anyone who has been paying attention to politics for 20 years. It just doesn't make any sense.
So I get why there is a lot of skepticism. And I also think it could fall apart. This isn't necessarily going to lead to anything great. My book is about the first part of the 20th century, when we constrained the Robber Barons** and the second half of the 20th century when we chose to allow them to become powerful again. But when I listened to that hearing, and I've been paying attention to this hearing and this was the sixth one in a whole series of hearings. And this hearing and investigation very much reminded me of those early hearings in the 19-teens and 1930s.
That’s how they did it. They did real investigations, held real hearings, they put them on the spot, and then they made laws and enforced them. And now they've done an investigation, they've put these guys on the spot, but that's where we are. They haven't made laws and they haven't enforced them. But it's much closer to the 1930s than it is to the 1980s or any post-1980s moment. This is a real corporate power investigation from Congress.
*Rep. Jim Jordan (R-OH) spent a good part of his questioning to claim the Big Tech giants in front of Congress were “out to get” conservatives, something that momentarily derailed the hearings.
**Robber baron is a derogatory term applied to 19th-century American businessmen who were accused of using shady tactics to get rich and expand their wealth. It’s an analogy meant to elicit images of the German robber barons, who were local bandits that stole from travelers by claiming a tax or fine was owed.
Tangle: Right, and I guess the other facet of that argument related to the hearings and whether these group are monopolies or not —
Stoller: Oh, I didn't answer that question about whether they're monopolies or not. Do you want me to?
Tangle: Yeah, and I guess to just get more specific about it, I think the most common refrain and one that I at least found compelling was this framing that in America, monopoly law is around consumers and not competition.* And that consumers love these companies and love these products and they're not being negatively impacted by them. And it sounded like in our email that you had some thoughts about that, so I'd love to hear that addressed as well. Because that’s an argument I bought.
*Many conservatives made this point in the wake of the Big Tech hearings, and I cited their op-eds in the “What the right is saying” section of the newsletter. I also wrote in “My take” that I found those arguments convincing.
Stoller: So that's actually a point of ideological contestation. The traditional American anti-monopoly arguments have nothing to do with consumer rights. Consumers are part of the number of stakeholders that are involved in problems of monopoly, but monopolization ideas in America are basically political. The East Indian Company in the 1770s, the boycott and then the Boston Tea Party was opposed to the East India Company charging lower prices for tea, not higher prices. That's what people don't understand. The British crown was giving the East India company tax advantages so it could wipe out all of their competitors using a low price. It was almost like a 1770s version of Walmart.
People rebelled against it. A lot of the people who were rebelling were small businesses that actually were tea merchants. John Hancock and so forth. But it was also understood that this was an attempt to gain power over the colonists. And you can go forward into fights over bridges, which were early monopolization cases, fights over land. The yeoman farmer thing and Jefferson's ideas have nothing to do with consumer prices or cheap food.* That was about citizenship. Having a yeoman farmer who had his own land and his own sense of independence, that's the right of the producer.
This was a very producer-focused, worker-focused ideology. America was understood in the 19th century as a country that was run by labor. I know, as weird as that sounds, and slavery was a great anomaly. But that's what people thought in Europe. America is the country that is run by labor, it is run by producers, it is a place where you can take a piece of land and with your labor turn it into a farm. And that's what American anti-monopoly tradition is.
The whole thing about consumerism was an ideological change that happened in the mid to late 1970s. And that was sort of a way that the two groups -- the law and economics movement from the University of Chicago like Milton Friedman and Robert Bork, the conservatives that didn't like The New Deal, they said we want to roll back all the things they did to constrain corporate power and financial capital.**
And the way they did it was they fooled the left, they fooled the counter-culture, which was this new group that emerged from the 60s around new age utopian stuff. They got into civil rights, environmentalism, anti-war activism and they didn't really think about corporate power because banks and institutions were pretty much under control in the 1950s and 60s.
And they got into consumer rights. The counterculture coalesced into the consumer rights movement, consumer rights socialists. And they got fooled by Robert Bork and Milton Freidman into thinking, “well we don't care about small business or producers or how businesses are done.” They were in many cases pretty anti-union. This is Nader, Ralph Nader's world. And they said we don't think it should be the rights of small business people that matter. We think small business people kind of suck, right? One Ralph Nader guy named Mark Green wrote that "small businessmen are the noble savages of the business community." They're like these symbols that are not really meaningful. And a lot of left-wingers were very adamant that small businessmen were racist, reactionary, they were bad.
So in the 70s, there was a series of crises that had to do with the New Deal breaking down. It wasn't a bunch of right-wingers that got greedy, what happened is the system started breaking down. This is why you had inflation, stacked inflation, New York City almost went bankrupt. They reoriented antitrust law and financial regulation, basically how we run the economy, they reoriented it around deference to corporate power. And the way that they did it in the antitrust space is they said, "well we read antitrust law as only having to do with low prices to consumers as calculated by economists."
There's nothing in the statute — which is from 1890 — that says consumer or consumer welfare. It's not in there. It's just case law. And the ideological shift saying that the way that you can tell whether there is a monopoly or monopoly power, the way to make sure there, that there is competition, is to make sure that consumer’s prices are low.
Prior to the 1970s, the way that you could tell whether there was competition was are there multiple rivals in the market to buy or sell things? If there are, there's competition. If there aren't, there isn't competition. And what Bork and Nader did is they said it's all silly — we don't actually care if there is a big institution, or one buyer or seller, as long as they are efficient and deliver for consumers. And that's why in the 1980s and the big growth story in the 1990s of those decades was Walmart. And Walmart's slogan is “Everyday low prices.” And that's very much a worked-in legal framework, but translated into marketing.
Prior to the 1980s, much of what Walmart did, which is what Amazon does and Facebook and Google all do, was illegal. Because we were protecting small business people from predation. So that's the ideological conflict.
As for why these guys are monopolies, a monopoly is just an institution that has market power. So they can set the terms of markets. The terms and services for markets. And they can set the prices. And if you just look at each of these companies, they can set the terms and conditions over certain markets. And they have pricing power — and that's monopoly power.
Amazon says, “oh we're not a monopoly, we have a small percentage of the retail market.” Leaving aside how do you define that market, if you look at the other side, if you're a merchant and you have to sell online, Amazon processes probably on the order of 75% of online transactions,*** so you don't have any alternatives. You have to sell through Amazon. Now as a consumer, you might have alternatives or you might not, but as a producer, if you sell through online you have to sell from Amazon.
If you're buying a phone, yeah, you can buy an iPhone or you can buy various other phones that are all Android phones. So basically you have a choice between an Apple operating system or a Google operating system. So sure, there's some competition, and we can argue about whether there is enough competition. But if you make apps for a phone to get to Apple users, you have one choice: to go through the Apple store. To get to people that have Android phones or Google Play you have to go through Google. You have one choice. So that's really what we're talking about.
*Yeoman farmers were a class of farmers in England and then the United States. Thomas Jefferson was an advocate of the yeoman and much of his political ideology was built around the idea that they formed the basis of republican values.
**Robert Bork was an American judge and was once nominated to the Supreme Court (but the Senate rejected his nomination). He is perhaps best known for writing The Antitrust Paradox, a book arguing that consumers benefit from corporate mergers and antitrust laws often inadvertently hurt consumers. Stoller cites him repeatedly, usually to draw a contrast between his understanding of antitrust law and its perhaps compared to Bork’s.
***As of 2018, Amazon’s U.S. e-commerce market was 49.1% of all online retail spending, according to TechCrunch.
Tangle: I guess before I let you go, my last question would be, you seemed encouraged by the hearings. There's a lot of people who are understandably focused on the election coming up. What do you think is going to happen in the next few months and what do you hope to see in terms of reforms to address this?
Stoller: I think the number one obstacle is getting people to believe that we can use the rule of law against the powerful. I don't care whether it’s putting a banker in jail because of the Wall Street crash ten years ago or any number of other corporate crimes that we've seen besides monopolization. Nobody believes — I think with good reason — that the rule of law applies to the powerful. And I think that’s the number one problem that we have when dealing with this space. I think it's a crisis in America, I think it's actually at the root cause of a lot of the other problems that we're having as a country. And that’s not a question of antitrust law, that's a question of the rule of law itself.
In terms of dealing with this particular problem of dominant tech platforms, it's going to sound sort of weird... but antitrust law is kind of dumb, the way that it’s organized. It's all case law, it's all pretty arbitrary, and a lot of it depends on the judge who it’s brought before. If you bring a case, the judge might be like, "eh, it's Tuesday, I'm hungry, case dismissed." Or the judge might be like, "yeah, I had a nice meal last night, and that looks like a monopoly." And I'm not really exaggerating. The way that we do the law is totally arbitrary and stupid. And that was the intent of Bork, and Bork wanted it to be totally arbitrary judge-made law.
So a good part of the task here is to get the enforcers to just bring cases. Because by bringing cases you can help clarify the law, then you bring it to the judges. In the 60s, the judges made more rational forms of law. So if you bring it to judges now maybe they can start, and then you could have guideposts that are more clear than they are now. So that's number one, and there will be a case against Google and that's not going to be based on consumer welfare grounds.
They're not going to say you're [Google] raising prices on consumers, they're going to argue that you're monopolizing in other ways. So that's the number one thing: once the enforcers start bringing cases, the judges have to decide. And then the other thing is that Congress needs to investigate, which they are doing, and then propose new laws to get rid of some of the bad case law. Essentially overrule the courts and the stupid decisions the judges have made.
Tangle: Awesome. Got it. Well, thank you so much for the time Matt, I appreciate it. I'll follow up —
Stoller: Let me just say one last thing, and then I'll let you go. Do you know how weird this is? You're a smart guy. And yet we're having this conversation and you're like, "oh, the laws are oriented around consumers." And you're not wrong, and now I'm trying to explain it — this is way too complicated. This is not the rule of law. That's the thing is that what we're really trying to do is we're really trying to impose the rule of law, because you as a citizen should be able to just say "yes this is illegal" or "no this is not illegal.” But you can't because the law doesn't really exist as the rule of law. And so that's kind of what we're trying to do is just clarify things so we know what's legal and what's not.
Tangle: I mean it strikes me that it's so insanely complicated that I can spend days reading about this and reading your work and come away feeling unsure whether a company like Amazon is actually a monopoly and needs to be reined in or not. That is pretty remarkable.
Stoller: Yes. I mean, it should just be clear. What are the things that are illegal and legal? And it used to be pretty evident. Here's the thing you can do, here's the thing you can't do. You're not allowed to charge less than the cost of a good just to get market power. You can't do it. That used to be illegal and everybody does that now. Now is it illegal? I don't know, bring it to a judge, spend $5 million and maybe you'll learn in 10 years. That's ridiculous.
Tangle: Yeah. Yeah. Well, in that sense, I certainly hope you're right that there is some semblance of accountability ushered in during this next era. But it's certainly hard to be optimistic.
Stoller: I hear ya. I hear ya.
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