It is not surprising that Left-liberals are calling for more government power to regulate and break up information technology companies, particularly when, like Franklin Foer, they worked in industries disrupted by those companies. But it is disheartening to find that the some on the Right are joining the interventionist chorus. To be sure, Silicon Valley leans left on everything but government regulation. It is not clear that this exception is just hypocrisy driven by self-interest or reflects the general political truth that people tend to be most conservative on matters on which they are most knowledgeable. But the Right should be grateful that Silicon Valley, unlike Hollywood and the mainstream media, is an ally on one issue.
Arguments that antitrust rules should be changed to apply to dominant tech firms and not just firms engaged in “monopolization”—the term actually used in the Sherman Act—would both weaken our economy and, even worse, allow government to harass firms based on a vague and manipulable standard. Even beyond the statutory language, there are very good reasons that the law requires the government, before it can apply sanctions, to show both that a firm exercises monopoly power and engages in exclusionary conduct unjustified by a substantial business practice.
First, the desire for a monopoly is not itself a bad thing.
The course of antitrust law in American history has proved a barometer of good governance. In the New Deal, the Roosevelt administration lurched from one policy to another, united only by the injury they did to the economy. Sometimes that administration broke up companies simply on account of size and at other times permitted actual collusion by competitors on prices. In the Warren Court era, both the Department of Justice and the Court itself prevented mergers, even though they were economically beneficial. In Brown Shoe, the nadir of all antitrust law, Chief Justice Earl Warren invalidated a merger between two relatively small shoe companies in an extremely competitive market because he concluded that it might become part of a merger trend and because it would make the companies more efficient at selling shoes!
In contrast, since the Chicago School revolution in antitrust was empowered by the Reagan administration and sustained by its successors, antitrust law has become quite sensible. It has intervened only when needed to protect the welfare of consumers, preventing collusion or mergers that would likely keep prices higher than in a free market. The consumer welfare standard of modern antitrust has also offered relatively clear rules of conduct derived from microeconomics, thus protecting the rule of law and curbing government discretion over business.
But ideas percolating on the left threaten this sound consensus and an oped in the New York Times yesterday exemplifies the danger. Lina Khan, who was the policy director for Zephyr Teachout, the radical Democratic candidate for New York Governor in 2014, complained about Amazon’s recent purchase of Whole Foods.
The New York Times has recently portrayed Amazon as a workplace somewhere between the first circle of hell and a bad section of purgatory, with harsh supervisors and backbiting colleagues that are the inevitable consequence of the company’s management practices. I did not need Jeff Bezos’s demurral to doubt the accuracy of portrait. In a company this large, there will always be bad supervisors, intriguing colleagues and disgruntled employees that can support a lot of wild anecdotes. And the New York Times, a newspaper that even a former ombudsman has admitted is on the left, has an agenda of attacking business the better to justify an intrusive state.
But let us suppose for moment that the Times portrait is more accurate than Bezos’s denial that overall these anecdotes capture the reality of the company. Is it really any cause for concern? The employees chose to work there and can leave at any time: it is not a case of indentured servitude. The white collar jobs portrayed here pay good wages. And most important of all, we have a competitive labor market that serves the needs of employees and consumers alike. Even the Times’ description shows that many employees find the culture empowering and thrilling. Some employees stay for a long period. Others use the skills they learn to start their own businesses. It may well make perfect sense for some people to endure upfront unpleasantness—even of the kind that leads to occasional tears—to gain discipline and knowledge that will later stand them in good stead.
And the result is excellent for consumers. I am sure I am not alone in finding Amazon to be the emporium of dreams.