Further Reading for Americas Monopoly Moment

Inequality and Growth

Robber Baron Recessions

Paul Krugman, New York Times
"In recent years many economists, including people like Larry Summers and yours
truly, have come to the conclusion that growing monopoly power is a big problem
for the U.S. economy and not just because it raises profits at the expense of
wages. Verizon-type stories, in which lack of competition reduces the incentive to
invest, may contribute to persistent economic weakness.

How America became uncompetitive and unequal

Lina Khan & Sandeep Vaheesan, The Washington Post
Since the early 1980s, executives and financiers have consolidated control over
dozens of industries across the U.S. economy. From cable companies and hospitals
to airlines, grocery stores and meatpackers, where once many small and mid-size
businesses competed, today we see a few giants dominate. They use their power to
raise prices, drive down wages and foreclose opportunity. Wealth is transferred from
consumers, workers and entrepreneurs to affluent executives and shareholders.

Market Power and Inequality: The Antitrust Counterrevolution and its

Discontents
Lina Khan & Sandeep Vaheesan, Harvard Law and Policy Review
Given the current distribution of business ownership assets in the United States,
market power can be a powerful mechanism for transferring wealth from the many
among the working and middle classes to the few belonging to the 1% and 0.1% at
the top of the income and wealth distribution. In concrete terms, monopoly pricing
on goods and services turns the disposable income of the many into capital gains,
dividends, and executive compensation for the few.

Want to rescue rural America? Bust monopolies.

Lillian Salerno, The Washington Post
For decades, rural America has been punished by bad policy that places too much
power in the hands of distant financiers and middlemen through the formation of
monopolies, which undermines small, local businesses and drains communities of
resources. I know, because I started a company in rural Texas, and the challenges I
faced illustrate the problem.

Monopolies Are Killing America

Ross Baird & Ben Wrobel, Bright Magazine
According to the nonpartisan Economic Innovation Group, fewer Americans are
starting successful firms than at any point in the last century. In 1980, nearly half of
American firms were five years old or younger. By 2015, that number had fallen to
one-third. Although a new business starts every two minutes in this country,
another firm closes its doors every eighty secondsthe highest rate of firm death in
the past fifty years.

Thrown Out of Court

Lina Khan, Washington Monthly
Two recent U.S. Supreme Court rulingsAT&T Mobility v. Concepcion and American
Express v. Italian Colorshave deeply undercut these centuries-old public rights, by
empowering businesses to avoid any threat of private lawsuits or class actions. The
decisions culminate a thirty-year trend during which the judiciary, including initially
some prominent liberal jurists, has moved to eliminate courts as a means for
ordinary Americans to uphold their rights against companies. The result is a world
where corporations can evade accountability and effectively skirt swaths of law,
pushing their growing power over their consumers and employees past a tipping
point.

Arbitration as Wealth Transfer

Deepak Gupta & Lina Khan, Yale Law and Policy Review
Given the pressing need for public attention, this Essay offers a fresh way to
understand and talk about forced arbitration: as a wealth transfer. It argues that the
rise and prevalence of forced arbitration clauses should be understood as both an
outcome of and contributor to economic inequality, and that the national
conversation about economic inequality should therefore include the debate over
forced arbitration.

Workers, Jobs and Wages

Who Broke Americas Jobs Machine?

Barry C. Lynn & Phil Longman, Washington Monthly
f any single number captures the state of the American economy over the last
decade, it is zero. That was the net gain in jobs between 1999 and 2009nada, nil,
zip. By painful contrast, from the 1940s through the 1990s, recessions came and
went, but no decade ended without at least a 20 percent increase in the number of
jobs.

The Slow-Motion Collapse of American Entrepreneurship

Barry C. Lynn & Lina Khan, Washington Monthly
Compared to a generation ago, the report said, it is now much harder to start a
business in America and keep it running. In 1980 young firmsthose less than
five years oldaccounted for almost half of all going concerns. By 2010, their share
of the total had collapsed to less than 35 percent. And as the Kauffman authors
made clear, this doesnt only mean less opportunity for Americas entrepreneurs. It
also means millions fewer jobs every year, and much less economic growth.

Killing the Competition

Barry C. Lynn, Washington Monthly
But as every previous generation of Americans understood, a truly open market is
one of our fundamental democratic institutions. We construct such markets to
achieve some of our most basic rights: to deal with whom we choose, to work with
whom we choose, to govern our communities and nation as we (along with our
neighbors) choose. And so, as every previous generation of Americans also
understood, monopolization of our public markets is first and foremost a political
crisis, amounting to nothing less than the reestablishment of private government.
What is at stake is the survival of our democratic republic.
Declining Business Dynamism: Its For Real
Ian Hathaway and Robert E. Litan, Brookings Institution
To recap, our report showed a persistent decline in the rate of new firm formations
and in the job reallocation ratea broad measure of labor market churn that results
from firm formations, expansions, contractions, and failures (what we and other
economists call business dynamics). We also showed that these declines were
nearly universal across the U.S. states and metros during the 30 year period
between 1978 and 2011, as well as across a broad range of industries and firm
sizes. In short, the decline in dynamism and entrepreneurship doesnt appear to be
isolated to any one segment of the economy or region, but instead has been a
widely shared experience.

Why Arent Americans Getting Raises? Blame the Monopsony

Jason Furman and Alan Kreuger, The Wall Street Journal
Stories like this are too common, thanks to many employers exercising
monopsony power over workers. A monopsony is the flip side of a monopoly: It
occurs when a buyer, rather than a seller, has sufficient market power to set its own
price. While economics textbooks often describe the labor market as perfectly
competitive, in reality employers often use their power to underpay workers.

To Understand Rising Inequality, Consider the Janitors at Two Top

Companies, Then and Now
Neil Irwin, The New York Times
But major companies have also chosen to bifurcate their work force, contracting out
much of the labor that goes into their products to other companies, which compete
by lowering costs. Its not just janitors and security guards. In Silicon Valley, the
people who test operating for bugs, review social media posts that may violate
guidelines, and screen thousands of job applications are unlikely to receive a
paycheck directly from the company they are ultimately working for.

Noncompete Agreements Hobble Junior Employees

Aruna Viswanatha, Wall Street Journal
Noncompete agreementscommon in computing and engineering jobs, where
proprietary technology can be at stakeare spreading to other industries and
stretching further down the corporate ladder. Labor-law experts say some
employers appear to be using them to prevent turnover among rookie employees
they have spent time and money training. Since the agreements are private
contracts, they generally are enforced through lawsuits.

The Enduring Ambiguities of Antitrust Liability for Worker Collective Action

Sanjukta M. Paul, Loyola University Chicago Law Journal
This article examines the regulation, by antitrust law, of collective action by low-
wage workers who are classified as independent contractors, and who therefore
presumptively do not receive the benefit of the labor exemption from antitrust law.
Such workers find themselves in the position of most workers prior to the New Deal:
at once lacking labor protections, yet exposed to antitrust liability for organizing to
improve their conditions. I argue that this default rule is the legacy of a problematic
history that is taken for granted by the contemporary antitrust framework.

Bayers Empty Promise: Jobs in Exchange for Approval to Take Over

Monsanto
Leah Douglas, Food & Power
Days before entering office, President Donald Trump held a meeting with executives
from agrochemical giants Bayer and Monsanto. The companies sought Trumps
blessing for their $66 billion merger, promising to create thousands of jobs if the
merger is approved. But the companies track records, as well as evidence from
past mergers, suggest the deal would likely result in a net job loss.

Labor Unions and the Sherman Act: Rethinking Labor 's Nonstatutory
Exemption
Joseph L. Greenslade, Loyola of Los Angeles Law Review
To what extent should labor unions be subject to proscriptions of the Sherman Act?'
This question has generated much confusion and controversy amongst the legal
community. It has been the subject of heated debate since the Sherman Act was
passed in 1890.2 After almost one hundred years, however, courts have done very
little to clarify the confusion. The problem is two-fold. First, the antitrust laws3 and
the national labor laws4 embody two important, but at times conflicting,'
congressional declarations of public policy. On the one hand, the antitrust laws
strive to create and maintain a freely competitive commercial environment.6 On the
other hand, the national labor laws seek to improve employment conditions by
eliminating competition in the labor market over wages, hours and working
conditions. This conflict creates confusion for labor unions in determining how far
they can go, under the national labor laws, before they run afoul of the antitrust
laws.

Accommodating Capital and Policing Labor: Antitrust in the Two Gilded

Ages
Sandeep Vaheesan
During the original and current Gilded Ages, the antitrust laws were and have been
used to protect the power of large-scale business and also to limit the autonomy of
workers to organize and seek higher wages and better working conditions. Through
this anti-labor application, the federal government has employed antitrust to aid big
business, rather than restrain its power. Despite this history of accommodating
capital and policing labor, the antitrust laws can still be reinterpreted and
redeemed. Executive and judicial action can remake these laws to control the power
of large corporations through competitive market structures and also protect the
freedom of all workers to organize for higher wages and better working conditions.
A renewal of antitrust, in accordance with the expressed purposes of Congress,
would help remedy the inequities of the New Gilded Age and create a more just
society.

The Politics of Professionalism: Reappraising Occupational Licensure and

Competition Policy
Sandeep Vaheesan & Frank Pasquale, Annual Review of Law and Social
Science
Elite economists and lawyers have united to criticize occupational licensing. They
contend that licensure rules raise consumer prices and restrict labor market entry
and job mobility. The Obama Administrations Council of Economic Advisers and
Federal Trade Commission have joined libertarians and conservatives in calling for
occupational regulations to be scaled back. Billed as a bipartisan boost to market
competition, this technocratic policy agenda rests on thin empirical foundation.
Studies of the wage effects of licensing rarely couple this analysis of its putative
costs with convincing analysis of the benefits of the professional or vocational
education validated via licensure. While some licensing rules may be onerous and
excessive, licensing rules are inadequate or underenforced in other labor markets.
Furthermore, by limiting labor market entry, occupational licensing rules, like
minimum wage and labor laws, can help raise and stabilize working and middle
class wages goals that many center-left critics of occupational licensing claim to
support.

Beware the Fine Print- A three part series about forced arbitration clauses
by the New York Times
Part 1: Arbitration Everywhere, Stacking the Deck of Justice
Jessica Silver-Greenberg & Robert Gebeloff, The New York Times
By inserting individual arbitration clauses into a soaring number of consumer and
employment contracts, companies like American Express devised a way to
circumvent the courts and bar people from joining together in class-action lawsuits,
realistically the only tool citizens have to fight illegal or deceitful business practices.

Part 2: In Arbitration, a Privatization of the Justice System

Jessica Silver-Greenberg & Michael Corkery, The New York Times
Deborah L. Pierce, an emergency room doctor in Philadelphia, was optimistic when
she brought a sex discrimination claim against the medical group that had
dismissed her. Respected by colleagues, she said she had a stack of glowing
evaluations and evidence that the practice had a pattern of denying women
partnerships. She began to worry, though, once she was blocked from court and
forced into private arbitration.

Workers Begin to Organize Against Amazon Takeover of Whole Foods

Leah Douglas, Food & Power
Amazons announcement in June that it plans to buy Whole Foods for $13.7 billion
has led to speculation throughout the retail industry about the
corporations intentions in the grocery sector. Supply chain and retail workers in
particular fear the merger will result in layoffs and less bargaining power overall.
Some are ratcheting up unionization efforts in response.

The Real Enemy of Unions

Barry C. Lynn, Washington Monthly
The great middle class of twentieth-century America stood atop two foundations.
One was freedom to organize the industrial workplace, to erect a countervailing
power within a necessarily hierarchical governance structure. The other was
freedom from organization, the freedom to be ones own boss, the freedom to build
up a business thatthanks to anti-monopoly lawwas largely safe from predation.
Every American could choose the path that fit best. A citizen who wanted to be her
own boss, or run his own family business, could count on robust anti-monopoly law
to protect farm, factory, or store from predators wielding massed capital. Citizens
who wanted the security of a weekly wage could hire themselves out to an
industrial giant or government monopoly, confident that they were protected
against economic exploitation and arbitrary rule by open market
systems and robust labor law.

With Gigs Instead of Jobs, Workers Bear New Burdens

Neil Irwin, The New York Times
The proportion of American workers who dont have traditional jobs who instead
work as independent contractors, through temporary services or on-call has
soared in the last decade. They account for vastly more American workers than the
likes of Uber alone. Most remarkably, the number of Americans using these
alternate work arrangements rose 9.4 million from 2005 to 2015. That was greater
than the rise in overall employment, meaning there was a small net decline in the
number of workers with conventional jobs.

Innovation, Investment and Silicon Valley

The evidence is piling up Silicon Valley is being destroyed

Matt Stoller, Business Insider
This moment of stagnating innovation and productivity is happening because
Silicon Valley has turned its back on its most important political friend: antitrust.
Instead, it's embraced what it should understand as the enemy of innovation:
monopoly.

Seed Funding Slows in Silicon Valley

Heather Somerville, Reuters
The bloom is off seed funding, the business of providing money to brand-new
startups, as investors take a more measured approach to financing emerging U.S.
technology companies. Dominant players such as Facebook Inc have amassed so
much wealth they can quickly challenge a hot startup, diminishing its value.
Incumbents just get so much more power, so there are fewer super early-stage
opportunities that are very valuable, Tan said. I can imagine a 20 to 25 percent
reduction in valuable investment opportunities.

VCs raise less cash to fund Silicon Valleys next big thing
Marisa Kendall, The Mercury News
The venture capitalists who fuel Silicon Valleys tech ecosystem raised less cash last
quarter, slowing the frenzied flow of dollars gushing into the industry. Those
numbers show that deals keep getting bigger, but fewer companies are getting a
piece of the pie. Thats because investors are chasing big names like Uber and
Airbnb, hoping for a massive payout, said Paul Hsiao, co-founder and General
Partner of Canvas Ventures. New York-based WeWork, for example, closed a massive
$3 billion round in August, and that alone accounted for 17 percent of the quarters
overall investment into U.S. VC-backed companies, according to the Venture Monitor
report.

How Valuable Is a Unicorn? Maybe Not as Much as It Claims to Be

Andrew Ross Sorkin, The New York Times
Ilya A. Strebulaev and another professor working with him, Will Gornall of the
University of British Columbia, have come to a startling conclusion: The average
unicorn is worth half the headline price tag that is put out after each new valuation.
One of the many ways that some companies inflate their valuations, for instance,
is by offering certain investors guaranteed valuations in an initial public offering. In
other words, if a company doesnt reach a certain valuation at the time of an I.P.O.,
it will issue the investor more shares to make up the difference between the
guaranteed price and the one that was attained. Effectively, all the other common
shareholders end up paying the difference and often dont know it.

Two Views of Innovation

Timothy B. Lee, Forbes
The Schumpeterian view of innovation focuses on the importance of incentives. On
this view, the larger the rewards to innovation, the greater incentives firms have to
innovate, the more money they'll spend on innovation, and the more innovation
we'll get. The Hayekian view of innovation focuses on the limited knowledge and
capabilities of economic actors. They view innovation as a matter of trial and error
and seek to maximize the number of firms that have the opportunity to try to solve
any given problem.

Dirty Medicine
Mariah Blake, Washington Monthly
This is hardly the first time Shaw has found his path to market blocked. In fact, he
has spent the last fifteen years watching his potentially game-changing inventions
collect dust on warehouse shelves. And the same is true of countless other small
medical suppliers. Their plight is just the most visible outgrowth of the tangled
system hospitals use to purchase their suppliesa system built on a seemingly
minor provision in Medicare law that few people even know about. Its a system that
has stifled innovation and kept lifesaving medical devices off the market. And while
its supposed to curb prices, it may actually be driving up the cost of medical
supplies, the second largest expenditure for our nations hospitals and clinics and a
major contributor to the ballooning cost of health care, which consumes nearly a
fifth of our gross domestic product.

ABIs Venture Capital Fund Quietly Expanding the Mega-Brewers Reach

Leah Douglas, Food & Power
Anheuser-Busch InBev was consistently in the news last year as it closed its
blockbuster $100 billion acquisition of SABMiller. But beyond headline-generating
deals, the brewer is finding new ways to expand its reach, particularly in the craft
sector. The companys wholly-owned venture capital firm has been quietly investing
in beer ratings websites, delivery services, and international craft brewersan
indication that, despite cuts to its domestic craft acquisition program, the mega-
brewer is finding yet more ways to put pressure on the independent and craft beer
sector.

Farmers Warily Eye DuPont Purchase of Farm Software Leader

Leah Douglas, Food & Power
Amidst farmer concerns about data collection by agricultural technology companies,
agrochemical and seed giant DuPont on August 9th agreed to buy software
company Granular Inc. for $300 million. With the deal, DuPont greatly increases its
ability to collect detailed data on the operations of individual farms. Granular and
other farm data companies collect information on farming activities, which they
then aggregate and analyze. Farmers, in theory, could benefit from such
aggregation by receiving reports that help them increase their yields and to decide
when is the best time to harvest. But Terry Griffin, an assistant professor at Kansas
State University whose research focuses on agricultural technology and big data,
says that data companies stand to benefit far more than the farmers themselves,
and sometimes at the expense of the farmers.

It's official: Pharma mergers hurt innovation, and not only for the
dealmakers
Tracy Staton, FiercePharma
Our results very clearly show that R&D and patenting within the merged entity
decline substantially after a merger, compared to the same activity in both
companies beforehand, the authors, Justus Haucap and Joel Stiebale, wrote in the
HBR. Thats to be expected, the authors posit, because merger-minded
companies often target rivals with similar pipeline assets, to gain strength in
particular drug markets. But heres what else the authors found: On average,
patenting and R&D expenditures of non-merging competitors also fell--by more than
20%--within four years after a merger. Therefore, pharmaceutical mergers seem to
substantially reduce innovation activities in the relevant market as a whole.

Merging Seed Giants Tout Innovation, but Already Slashing R&D

Leah Douglas, Food & Power
In a September 20 hearing on Capitol Hill, executives from Monsanto, Bayer,
Syngenta, Dow and DuPont defended their plans to merge into three giant
agrochemical companies. Under questioning by Senators on the Judiciary
Committee, they emphasized that the deals would increase their companies ability
to innovate and to develop better seeds and agricultural chemicals.

Buyback outlook darkens for US stocks

Robin Wigglesworth and Adam Sanson, Financial Times
One of the biggest props of the US stock market is quietly eroding, with corporate
share buybacks falling 17.5 per cent year-on-year to $133.1bn in the first quarter of
2017, even as the S&P 500 has marched to new record highs. Citi analysts estimate
that US companies bought back nearly $3tn of their own shares between 2010 and
2016, and coupled with almost $2tn of dividend payments that has been a major
pillar of support for the US stock markets dramatic post-crisis recovery. The almost
$5tn of buybacks and dividends compares to the US S&P 500s total market
capitalisation of $21.7tn, and Goldman Sachs has calculated that US companies
have been the single biggest buyers of shares in recent years, dwarfing even
passive investment inflows and counteracting net sales by domestic pension funds
and foreign investors.

U.S. investors target 'buyback stocks' in bet on Trump tax plan

David Randall, Reuters
Rather than waiting to see how the Republican tax bill will fare in Congress, some
investors are already picking out gingerly technology, healthcare and consumer
companies they expect to use potential tax savings to buy back more of their own
stock.

Productivity Growth

Why Is Productivity So Weak? Three Theories

Neil Irwin, The New York Times
More than 151 million Americans count themselves employed, a number that has
risen sharply in the last few years. The question is this: What are they doing all day?
Because whatever it is, it barely seems to be registering in economic output. The
number of hours Americans worked rose 1.9 percent in the year ended in March.
New data released Thursday showed that gross domestic product in the first quarter
was up 1.9 percent over the previous year. Despite constant advances in software,
equipment and management practices to try to make corporate America more
efficient, actual economic output is merely moving in lock step with the number of
hours people put in, rather than rising as it has throughout modern history.

Can Declining Productivity Growth Be Reversed?

Bouree Lam, The Atlantic
One of the greatest mysteries about the American economy right now is why
workers dont seem to be getting all that much better at their jobs over time. From
2007 to 2016, productivity in the U.S. grew at about 1 percent
a historically low rate. In other recent periods, its been much higher: 2.6 percent
from 2000 to 2007 and 2.2 percent in the 1990s. A new report by the left-leaning
Economic Policy Institute (EPI) puts forward another theory. Josh Bivens, the director
of research at the EPI and the author of the paper, argues that the shortfall in
spending (or demand) by households, governments, and businesses has held back
the kinds of big-idea investments by American companies that drive increased
productivity. These investments can include a company improving its workforce,
such as by implementing training programs that help employees become more
productive or hiring more experienced workers; investing in equipment so workers
can do their jobs better; or researching technological advancements.

Technology is changing how we live, but it needs to change how we work

Ezra Klein, Vox
The closest the economics profession has to a measure of technological progress is
an indicator called total factor productivity, or TFP. It's a bit of an odd concept: It
measures the productivity gains left over after accounting for the growth of the
workforce and capital investments. When TFP is rising, it means the same number
of people, working with the same amount of land and machinery, are able to make
more than they were before. It's our best attempt to measure the hard-to-define
bundle of innovations and improvements that keep living standards rising. It means
we're figuring out how to, in Steve Jobs's famous formulation, work smarter. If TFP
goes flat, then so do living standards.