This book is my favorite book of the year so far. Here is my review that I first published in my weekly newsletter, Catalog of Curiosities. Please sign up if you find the review insightful and/or if you are curious like me.
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Here is the review:
I'm extremely interested in megatrends, sometimes a fuzzily defined term with disparate definitions, but I think of them as macro-level structural forces that shape and construct reality and future pathways. Megatrends are drivers. Some well-known megatrends are things like demographics, climate change, world orders whether apolar, unipolar, bipolar, or multipolar, decentralization or centralization, COVID-19, etc. Megatrends are patterns; megatrends, when real and not merely hypothesized, shape our world; they tilt and weight what is possible and probable.
This brings me to this week's curiosity: a book review of Monopolized: Life in the Age of Corporate Power (2020), by David Dayen, the executive editor of The American Prospect.
Book Review - Monopolized
Monopolized: Life in the Age of Corporate Power (2020) should be thought of as a "People's History of Monopoly" companion to Matt Stoller's historical work Goliath: The 100-Year War Between Monopoly Power and Democracy (2019). Both books focus on the monopoly (one or a few sellers, many buyers) and monopsony (one buyer, more sellers) problems in America. Stoller looks at the history of the battle between monopoly and democracy; Dayen chapter after chapter chillingly describes industry after industry that has been swallowed whole by private equity, global behemoth corporations, and, in doing so, truly created a market power problem that is anathema to the smooth flow of markets.
Daniel Dayen defines monopoly less stringent than one might want, writing that he is referring to large companies with significant market shares in increasingly concentrated industries. It is likely that after reading this book, Dayen's definition will not be at the front of your mind. The megatrend he highlights is happening and it's wrecking our lives. I repeat: all of our lives are worse off because of the political-economy (and thus: society) that we are living in. Our democracy is at stake. Our health is at stake. Our futures are wound up in this in a way that most people don't realize. This book is a must-read.
The introduction is worth the price alone (wellI received an advanced NetGalley copy of the book; but you know what I mean. I do plan on buying a copy. This is my favorite read of the year so far, well worth the shelf space) because in a handful of pages Dayen describes his thesis and reveals the magnitude of the problem. We know about Big Oil and Big Pharma, but did you know that office retail supply is dominated by two companies (Staples and Essendant) Did you know that the eyewear industry is dominated by one company, the Italian Luxocitta Dayen points to research that shows that 75% of all industries have experienced increases in concentration. All of this is in the introduction mind you. The consequences are immense:
Monopoly steals wages
Dayen supports this with academic research. A paper from Harvard's Nathan Wilmers finds that approximately 10 percent of wage stagnation since the 1970s can be attributed to buyers (that is you) having diminished market power.
Monopoly weakens economies
A book from a few years ago called The Captured Economy (2017) by a libertarian (Brink Lindsey) and a liberal political scientist (Steven M. Teles) is the best book on this side of the problem that I've read. Start-up activity is down; rent-seeking is increasing; and entrenched interest groups hire lobbyists to all but guarantee that the status-quo is rigged. This is a political problem, not merely economic. The economist Mancur Olson wrote about this decades ago, in his book The Logic of Collective Action (1965).
Monopoly degrades quality, heightens disaster, and supercharges inequality
Monopoly hollows out communities and screws up politics
Examples abound throughout the book. Concentrated industries and contracts that are impossible to get out of caused hospital bag IV shortages long before Hurricane Maria devastated the Caribbean. (Yes, a few companies have cornered the salt-saline IV bag market, too.) When workers have fewer choices to go to, dynamism declines, and communities become victims of "market" forces. As Lindsey and Teles write, "upward redistribution is not an accident" (2017, 153). You think people are in the streets now If they only knew.
Dayen is well-known to the left blogosphere, he started in 2004, and he has written for every single freakin' publication you can think of. Now he is the executive editor at The American Prospect. His last book Chain of Title (2017) covered the foreclosure fraud perpetrated by big banks such as JP Morgan Chase and Bear Stearns. Dayen is indefatigable, pumping out more words daily, and certainly monthly, then most writers that I read.
The reason why this is a "people's history" is because he saves the technical and legal analyses to books that came before him (he points to Stoller and Tim Wu's The Curse of Business). In chapter after chapter Dayen brings to the reader how flesh and blood people (remember those things) are impacted by mergers, monopolies, and monopsonies every day, in every way imaginable. Stoller (2019, 441) shows how "we have concentrated markets in everything from airlines to coffins to candy to hospitals." Dayen, in this book, makes you feel how intolerable, unfair, and morally and ethically grotesque our political-economy is.
Dayen (2020, 295) convincingly shows that monopoly power increases inequality; decreases wages and weakens workers' capacity to fight for a better life; turns politics into two parties groveling at the feet of big business; and convincingly argues that this is the "ur-problem," or the "problem of power, and solving it will allow us to solve everything else." This reality is why I support politicians who want to reform capitalism and who want to reform the Democratic process. The first bill the House passed in 2019 was truly good. Here is copy from the Brennan Center: "the House of Representatives voted 234-193 in favor of a sweeping democracy reform bill on Friday. The measure, known as H.R. 1 or the For the People Act of 2019, was introduced by House Democrats in January and marks the first time in decades Congress has made comprehensive democracy reform a central priority." Of course, the grim reaper Mitch McConnell found the bill dead on arrival; Senator Tom Udall (D-NM) introduced the bill in the Senate, but the body never voted on it.
The industries that Dayen covers are myriad: the airline industry, which is shot through with dozens of monopolies or near-monopolies. Boeing is the only U.S. airplane manufacturer; car rental companies inside airports are dominated by Hertz (which runs Thrifty and Dollar) and Enterprise (which also owns National, Alamo, and Zimride). Big animal agriculture is dominated by Chinese and Brazilian companies. The author shows that the only thing worse than the "military-industrial complex" might be wellthat the "industry" part of the equation has more leverage over the Pentagon than one would imagine-small and large monopolies within the private-sector side of this relationship engage in price-gouging and contribute to outsourcing and putting factories inside China that build parts that the U.S. might need.in a war.against China. Things are bad, folks. (Read that in the Obama "we tortured some folks" cadence, pitch, and tone.)
But there is more. Dayen discusses Big Tech (the Amazon chapter is so egregious that I paused from writing this to read it out loud with my girlfriend), the prison industry, retail, hotel chains, publishers, the medical industry (from individual product monopolies including IV-saline-bags to health insurance to hospital networks and outpatient facilities, most bought up by private-equity firms), banks, how private-equity itself is concentrated, website domains, the defense industry, and the list truly goes on and on. It's truly remarkable.
Some of the specific numbers in the book are worth mentioning:
By the end of the 1980s, 51 airlines had merged. And by publication date for this book, 80 percent of all flights are controlled by 4 airliners: Delta, United, American, and Southwest.
According to data from the Kaiser Family Foundation, 43 percent of U.S. counties have 2 or fewer health insurance companies to choose from. There have been nearly 1,700 hospital mergers since 1998.
Ticketmaster and LiveNation are the same company and have over 80 percent share in the concert/entertainment industry ticket market.
GateHouse Media merged with Gannett: the 2 largest newspaper chains are now 1. In total, private equity firms own about 1,500 newspapers.
Like Frank Portnoy wrote in his review of Dayen's previous book, "prepare to be surprised, and angry." This book is surprising-even to the reader who pays attention to this stuff will assuredly be surprised; this book will make you thoroughly and righteously angry. I haven't felt this viscerally angry and upset while reading a book in a long time.
I compiled a list of deadly serious problems that arise from market concentration and market power. These include price-fixing (market power plus collusion), information asymmetries, "rent-seeking" corporations preventing entry. Jonah Goldberg is fond of saying that "complexity is a subsidy," and I totally agree. Status-quo behemoths make it so hard to enter their markets that it becomes cost-prohibitive (another failure of monopoly). More: underinvestment, "sticky-prices," plausible deniability (wellthose aren't my suppliers, we outsource so the slavery isn't our problem. We will work on it. Thank you.) Market concentration is such a problem that the Federal Reserve System recently held a symposium on it.
Where do we go from here A preview of part two.
Monopoly is a problem that shouldn't be partisan. Russel Kirk, an influential conservative of the mid-20th century, stressed about the dangers of "private collectivism" ( 1957, 60% epub). Republican President Taft was a trustbuster; and socialists and liberals care deeply about the inequality, privacy concerns, and rupture of community that monopolies produce. Socialists call for "nationalization" while liberals call for regulation, oversight, labor rights, worker equity inside businesses (socialists like this stuff as well; some conservatives, too, including Oren Cass.)
Part two of this review will wrestle with solutions proposed, by Dayen and some of his fellow neo-Brandeisian anti-trusters such as Tim Wu and Matt Stoller, whose works I am now reading. I will not promise when part two will be published, as I have other newsletters I am working on and a lot of other work I am engaged with outside the newsletter as well. But it will come; it deserves its own space.