Matt writes compellingly about practicing a reality-based form of politics that isn’t as concerned about theory as results. But I would submit that in this piece he does just the opposite.
I’d suggest that this is an area where Matt’s own lived experiences are creating a large blind spot. If you have spent your life in NYC and DC you have lived in the two places in America that have benefitted the most from the change in anti-trust enforcement. NYC from the financialization / rollup of sooooo many industries and DC from the related spending to protect that financialization coupled with federal spending.
However, if you travel across the US, through towns of many sizes but especially small towns, you can see the economic catastrophe that has befallen them – which is a direct result of the changes to enforcement (or lack of enforcement) of anti-trust laws. It is one thing to argue using the theories of economics – and another entirely to look at the actual experience of the communities that have been deeply damaged. Some of that damage is from trade policy, but a lot of it is from allowing economic predation through lack of anti-trust enforcement. Walmart, Dollar stores, CVS, even doctors and vets – these are all basic businesses for any community – and they have been overtaken by national economic policy that allows for large corporations to set up shop in every town. And then allows differential pricing by suppliers between large and small firms such that small local firms are not competing on an even playing field with the big ones.
In my 30’s, I lived in Arlington, VA. My family benefitted from great schools and parks and amenities – made possible by prescient local leadership many decades ago – but also by a national economic model that allows money to be siphoned out of communities and refocused in superstar metros.
I have spent the last decade living in Kansas City and have seen business after business that was started in KC get bought out – and then moved out. Sprint, Cerner, DST, Kansas City Southern Railroad, and more. And KC is just one region – this is happening in city after city across the US. While the sales produce a few billionaires they make the entire region poorer. The same is true in finance. The Federal Reserve system of regional banking hubs created regional sources of wealth and capital aggregation. However, allowing the consolidation of the financial industry has in practice meant that these regional banking centers are bypassed for NYC.
They also have the perverse effect of hollowing out the civic core of cities. It has always been that the business owners in a city provided civic leadership and often a counter-weight to political leadership and/or support to move a city in a positive direction. However when these economic engines get bought out that leadership is severely weakened – and the political leadership steps into the void.
I read “BIG” and I read Basel’s recent piece on Dallas. I encourage Slow Boring readers to read the piece in it’s entirety. The acceleration of housing prices has brought a host of negative effects – and Matt has written (and I agree) about the need for reforming zoning and making it easier to build. The piece in BIG is complimentary to this idea – and provides another important part of the story – which is that consolidation in the home construction industry coupled with financial consolidation has made it much harder to meet the demand for housing while driving up prices and putting homes out of reach for many.
The lack of anti-trust enforcement has been a disaster economically – and it has been a disaster politically. If you don’t believe me take a road trip from Kansas City to Mobile, Alabama (spring time is a great season for a trip). There is no interstate. It is on the highways and byways that you see the state of America’s economic and political health. You can see the on-the-ground effects of national economic policy in hollowed-out town after town after town. It wasn’t always this way, and it doesn’t have to be this way in the future – but it will require robust anti-trust / anti-monopoly to get to that better future.
“Regulatory capture” might be the skeleton key to convince corporate power types about abundance.
“What if corporations were so powerful that they were pressuring government to write laws favoring themselves? Wouldn’t be good if we removed those bad laws and made it easier for small business????”
I work in leadership for a corporate (but tax exempt) real estate developer. We're what I'd call a "regionally prestigious" firm, so when we have job openings the majority of our high performing applicants come from other regional development firms, especially (like 95%) family owned operations. Family development firms are the sort of owner-operator small business that, apparently, some anti-monopolists think are better for both employees and society than corporate developers.
They are not. Our firm is staffed almost exclusive by refugees from family owned and operated developers/property management/CRE investment groups. Even though in many cases my now colleagues were the ones making all the money for the firm, or actually running operations, they were not family, so both their decision making power and compensation growth opportunities were extremely limited. Many were promised an ownership stake, only to see that slip away when the second generation starts being handed the business. To be frank, they got ripped off.
From what I see of real estate development from the inside, the best companies to work for are either 1) the few family firms (say 5%) that realize distributing profits/decision making to high performing employees keeps their business stable over the long term, even if ownership receives smaller distributions or 2) developers with a strict merit-based corporate structure and an independent board of directors. Both tend to act for the benefit of the entire company, and think and plan for the long term. One would think a family business would be more likely to think long term, given that the intent is usually to have the business passed down through the generations, but the default is usually sucking out all free cashflow to feed their lifestyle, at the expense of their employees and customers alike.
Great article and I think it really cuts to the heart of the division within the Democratic Party.
On one side we have liberals of a classically left-wing bent. For them the fight is more spiritual than it is material. Large corporations are evil - full stop. Regulation is good. Laws are good. The more laws and regulations the better.
On the other side we have the less spiritual, more practical liberals. How do we build more homes? We build more of them! How do we build more of them? We tear down the barriers!
This is a fight that we have to have and one that has to be won by the YIMBY side, or else we're likely to see permanent Republican control for the forseeable future - with perhaps occasional inneffective Democratic administrations popping up to remind everyone that Democrats don't actually ever do anything.
As someone who was a child when Carter deregulated the airline industry and saw the tremendous benefits for consumers I was shocked when I saw takes that airline deregulation was bad from people who ostensibly consider themselves allies of the working class. Working class people did not fly before deregulation and now they do— they are the beneficiaries of deregulation. I knew that ill informed people who are nostalgic for better conditions on airplanes would express this view but I didn’t realize that Lina Khan had done so. Does she stand by that analysis? Do the other antitrust folks? It’s hard to take such people seriously.
The wildest part of airline deregulation critiques for me is the number of times you see people casually blame deregulation (to much upvoting/liking when on social media) for the allegedly worsening safety of air travel -- it's objectively verifiable that commercial air travel has gotten safer in deaths/injuries per revenue mile almost every year since deregulation!!!
Iiiiiiiiiiiiin fairness, by my rough eyeball metric, about half of those were post-1980ish, when the type was largely filtering down to the likes of Air Zimbabwe or whatever (assuming the Wikipedia page is roughly complete).
ETA: For the benefit of those who don't want to click the link, Air Zimbabwe apparently actually sued the Chicago Tribune and CNN some years ago for "claiming it was the most dangerous airline in the world." The Wikipedia page doesn't say what the outcome of the suit was.
If I'm parsing this correctly, it looks like the Zimbabweans may have sold the plane to the company that did the repairs ("Turbine Services," as the name suggests, is an aircraft maintenance/repair company, not an airline, AFAICT), which then sold it to Inter Air, later rebranded Inter Air South Africa: https://asn.flightsafety.org/wikibase/324245 The latter company shut down in August 2015 and there are no later owners I see on-line, so the plane was probably scrapped at that point if it hadn't been disposed of earlier.
The more I read that Musharbash article, the more annoyed I get. I don't think the claims stand up to scrutiny. Just to take one example, in Figure 2, they plot the number of new single-family home sales in total and by the top-200 homebuilders. They claim "Figure 2. As the percentage of total new home sales controlled by the top 200 homebuilders has increased over the past two decades, the total number of new home sales has declined by 25-50%."
However, I did a linear regression on the total number of new homes sold as a function of the fraction by the top-200 and got an R^2 of 0.15, i.e., they are almost as uncorrelated as possible! How many other examples of rank innumeracy underpin their arguments?
Worker-owned firms are also likely to be much more risk averse, and over the longer run we should expect less innovation that promotes greater abundance.
In my small experience, In healthcare private equity can provide the scale to bring down costs enough to do Medicaid. Smaller businesses can provide boutique services but it costs more. Once boutique becomes the norm and there’s a drive to expand, then PE is needed to bring fund that expansion. Both have their parts to play in the market.
Would be cool to see a SB look at the state/local level where cartel behavior (economic cartel behavior, not the drug cartel use of the term) are the non profit social service/activist sector. See: San Francisco, LA, Oakland, Portland.
Matt writes compellingly about practicing a reality-based form of politics that isn’t as concerned about theory as results. But I would submit that in this piece he does just the opposite.
I’d suggest that this is an area where Matt’s own lived experiences are creating a large blind spot. If you have spent your life in NYC and DC you have lived in the two places in America that have benefitted the most from the change in anti-trust enforcement. NYC from the financialization / rollup of sooooo many industries and DC from the related spending to protect that financialization coupled with federal spending.
However, if you travel across the US, through towns of many sizes but especially small towns, you can see the economic catastrophe that has befallen them – which is a direct result of the changes to enforcement (or lack of enforcement) of anti-trust laws. It is one thing to argue using the theories of economics – and another entirely to look at the actual experience of the communities that have been deeply damaged. Some of that damage is from trade policy, but a lot of it is from allowing economic predation through lack of anti-trust enforcement. Walmart, Dollar stores, CVS, even doctors and vets – these are all basic businesses for any community – and they have been overtaken by national economic policy that allows for large corporations to set up shop in every town. And then allows differential pricing by suppliers between large and small firms such that small local firms are not competing on an even playing field with the big ones.
In my 30’s, I lived in Arlington, VA. My family benefitted from great schools and parks and amenities – made possible by prescient local leadership many decades ago – but also by a national economic model that allows money to be siphoned out of communities and refocused in superstar metros.
I have spent the last decade living in Kansas City and have seen business after business that was started in KC get bought out – and then moved out. Sprint, Cerner, DST, Kansas City Southern Railroad, and more. And KC is just one region – this is happening in city after city across the US. While the sales produce a few billionaires they make the entire region poorer. The same is true in finance. The Federal Reserve system of regional banking hubs created regional sources of wealth and capital aggregation. However, allowing the consolidation of the financial industry has in practice meant that these regional banking centers are bypassed for NYC.
They also have the perverse effect of hollowing out the civic core of cities. It has always been that the business owners in a city provided civic leadership and often a counter-weight to political leadership and/or support to move a city in a positive direction. However when these economic engines get bought out that leadership is severely weakened – and the political leadership steps into the void.
I read “BIG” and I read Basel’s recent piece on Dallas. I encourage Slow Boring readers to read the piece in it’s entirety. The acceleration of housing prices has brought a host of negative effects – and Matt has written (and I agree) about the need for reforming zoning and making it easier to build. The piece in BIG is complimentary to this idea – and provides another important part of the story – which is that consolidation in the home construction industry coupled with financial consolidation has made it much harder to meet the demand for housing while driving up prices and putting homes out of reach for many.
The lack of anti-trust enforcement has been a disaster economically – and it has been a disaster politically. If you don’t believe me take a road trip from Kansas City to Mobile, Alabama (spring time is a great season for a trip). There is no interstate. It is on the highways and byways that you see the state of America’s economic and political health. You can see the on-the-ground effects of national economic policy in hollowed-out town after town after town. It wasn’t always this way, and it doesn’t have to be this way in the future – but it will require robust anti-trust / anti-monopoly to get to that better future.
It's Hamilton vs. Jefferson all over again. I wonder how many anti-monopoly folks would consider themselves Jeffersonian.
“Regulatory capture” might be the skeleton key to convince corporate power types about abundance.
“What if corporations were so powerful that they were pressuring government to write laws favoring themselves? Wouldn’t be good if we removed those bad laws and made it easier for small business????”
My theory about commenting on public posts is undefeated.
If you want to see a western country with a large number of owner operators, look to Italy. And then look at how their economy has lagged.
https://www.currentaffairs.org/news/the-opinions-of-matt-yglesias-should-be-ignored
I work in leadership for a corporate (but tax exempt) real estate developer. We're what I'd call a "regionally prestigious" firm, so when we have job openings the majority of our high performing applicants come from other regional development firms, especially (like 95%) family owned operations. Family development firms are the sort of owner-operator small business that, apparently, some anti-monopolists think are better for both employees and society than corporate developers.
They are not. Our firm is staffed almost exclusive by refugees from family owned and operated developers/property management/CRE investment groups. Even though in many cases my now colleagues were the ones making all the money for the firm, or actually running operations, they were not family, so both their decision making power and compensation growth opportunities were extremely limited. Many were promised an ownership stake, only to see that slip away when the second generation starts being handed the business. To be frank, they got ripped off.
From what I see of real estate development from the inside, the best companies to work for are either 1) the few family firms (say 5%) that realize distributing profits/decision making to high performing employees keeps their business stable over the long term, even if ownership receives smaller distributions or 2) developers with a strict merit-based corporate structure and an independent board of directors. Both tend to act for the benefit of the entire company, and think and plan for the long term. One would think a family business would be more likely to think long term, given that the intent is usually to have the business passed down through the generations, but the default is usually sucking out all free cashflow to feed their lifestyle, at the expense of their employees and customers alike.
Phew! I was worried we were going to get more cope about how the NBA should bring back freezing the envelopes to give the Knicks the #1 pick!
Are the modern anti-monopoly movement actually distributists?
https://en.wikipedia.org/wiki/Distributism
Great article and I think it really cuts to the heart of the division within the Democratic Party.
On one side we have liberals of a classically left-wing bent. For them the fight is more spiritual than it is material. Large corporations are evil - full stop. Regulation is good. Laws are good. The more laws and regulations the better.
On the other side we have the less spiritual, more practical liberals. How do we build more homes? We build more of them! How do we build more of them? We tear down the barriers!
This is a fight that we have to have and one that has to be won by the YIMBY side, or else we're likely to see permanent Republican control for the forseeable future - with perhaps occasional inneffective Democratic administrations popping up to remind everyone that Democrats don't actually ever do anything.
As someone who was a child when Carter deregulated the airline industry and saw the tremendous benefits for consumers I was shocked when I saw takes that airline deregulation was bad from people who ostensibly consider themselves allies of the working class. Working class people did not fly before deregulation and now they do— they are the beneficiaries of deregulation. I knew that ill informed people who are nostalgic for better conditions on airplanes would express this view but I didn’t realize that Lina Khan had done so. Does she stand by that analysis? Do the other antitrust folks? It’s hard to take such people seriously.
The wildest part of airline deregulation critiques for me is the number of times you see people casually blame deregulation (to much upvoting/liking when on social media) for the allegedly worsening safety of air travel -- it's objectively verifiable that commercial air travel has gotten safer in deaths/injuries per revenue mile almost every year since deregulation!!!
A stat I read for the first time recently is that ~20% of all Boeing 707s were hull losses. That's insane.
Iiiiiiiiiiiiin fairness, by my rough eyeball metric, about half of those were post-1980ish, when the type was largely filtering down to the likes of Air Zimbabwe or whatever (assuming the Wikipedia page is roughly complete).
But that's still a remarkable number.
This Air Zimbabwe libel will not stand -- Air Zimbabwe has had no fatalities since being rebranded from being "Air Rhodesia" in 1980 and their only recorded hull loss was a Vickers Viscount! https://en.wikipedia.org/wiki/Air_Zimbabwe#Accidents_and_incidents
ETA: For the benefit of those who don't want to click the link, Air Zimbabwe apparently actually sued the Chicago Tribune and CNN some years ago for "claiming it was the most dangerous airline in the world." The Wikipedia page doesn't say what the outcome of the suit was.
Interesting, the 707 hull-loss page lists a 1988 loss, and it at least thinks it's citing a source. https://en.wikipedia.org/wiki/List_of_accidents_and_incidents_involving_the_Boeing_707
Aviation Safety Network says it was repaired, so no hull loss, properly speaking: https://asn.flightsafety.org/wikibase/324245
If I'm parsing this correctly, it looks like the Zimbabweans may have sold the plane to the company that did the repairs ("Turbine Services," as the name suggests, is an aircraft maintenance/repair company, not an airline, AFAICT), which then sold it to Inter Air, later rebranded Inter Air South Africa: https://asn.flightsafety.org/wikibase/324245 The latter company shut down in August 2015 and there are no later owners I see on-line, so the plane was probably scrapped at that point if it hadn't been disposed of earlier.
Yes, but look at the meal service and leg room you enjoyed paying supracompetitive pricing for prior to plummeting to your death: https://atom.drisa.co.za/collections/N_Collection_lo-res/N73331.jpg
The more I read that Musharbash article, the more annoyed I get. I don't think the claims stand up to scrutiny. Just to take one example, in Figure 2, they plot the number of new single-family home sales in total and by the top-200 homebuilders. They claim "Figure 2. As the percentage of total new home sales controlled by the top 200 homebuilders has increased over the past two decades, the total number of new home sales has declined by 25-50%."
However, I did a linear regression on the total number of new homes sold as a function of the fraction by the top-200 and got an R^2 of 0.15, i.e., they are almost as uncorrelated as possible! How many other examples of rank innumeracy underpin their arguments?
Worker-owned firms are also likely to be much more risk averse, and over the longer run we should expect less innovation that promotes greater abundance.
In my small experience, In healthcare private equity can provide the scale to bring down costs enough to do Medicaid. Smaller businesses can provide boutique services but it costs more. Once boutique becomes the norm and there’s a drive to expand, then PE is needed to bring fund that expansion. Both have their parts to play in the market.
Magnificent!
Would be cool to see a SB look at the state/local level where cartel behavior (economic cartel behavior, not the drug cartel use of the term) are the non profit social service/activist sector. See: San Francisco, LA, Oakland, Portland.