Many of today’s boldest thinkers across the ideological spectrum think the economy’s most serious malady isn’t inequality, populism or big government: it’s monopoly.
Yet if that diagnosis is becoming the consensus, the prescription isn’t. Liberals have loudly pushed for tougher antitrust enforcement, such as blocking mergers. A federal judge Tuesday allowed AT&T to proceed with its planned acquisition of
rejecting arguments it would suppress competition in the pay-TV industry.
Now, from the libertarian end of the spectrum comes a more radical approach.
a University of Chicago law professor, and
an economist at
in-house think tank, propose redesigning market mechanisms from the ground up to break monopolies’ hold on our data, property, economy and even politics.
Mr. Weyl, 33, was born into a Democratic family, then as a child embraced Republican politics, philosopher
and the economist
He believes, though, that the promises of Mr. Friedman, British Prime Minister
and U.S. President
have been betrayed.
“We were promised…if we cut taxes and allowed more inequality we’d get faster growth,” he said in an interview. But the costs of monopoly—the excessive prices they charge—“have risen more than government taxes have fallen. So we have seen stagnation right along with inequality.” That conservative failure, following the failure of liberal policies in the 1970s, he said, is why “people hate the technocracy.”
Mr. Weyl, who considers himself a “market radical” rather than libertarian, met Mr. Posner and the two have since co-written academic articles and now, a book: “Radical Markets: Uprooting Capitalism and Democracy for a Just Society.”
In it, they identify land as one of the most rudimentary sources of monopoly: the supply is fixed, which empowers holders to stifle far more productive uses, either private (like an apartment building) or public (such as public transit). The usual solution is “eminent domain,” i.e. expropriation by judicial fiat.
Messrs. Posner and Weyl propose a more elegant solution: require all property owners to name the price at which they would sell. Their taxes would then be based on that price. If you really value your property more than anyone else, you can keep it out of others’ hands by raising your assessed price and paying more tax. In fact, they argue such a self-assessed tax on all forms of property could replace property and corporate taxes and generate more revenue and economic growth.
Messrs. Posner and Weyl believe tech companies have gotten too big, via their monopsony (a monopoly in inputs rather than outputs) over personal data. When you post on
or search on Google, your data makes these platforms valuable to advertisers. Mr. Weyl, who minored in computer science, says that with machine learning the number of tasks Google and Facebook can master grows with their data, solidifying their market dominance.
Messrs. Posner and Weyl argue these companies’ advertising-based businesses elevate quantity over quality. Content on
which is subscription based, is a lot better than videos on YouTube, and as a result earns about 10 times as much per minute per viewer. If digital companies treated users as employees and paid them, it would improve the quality of online content while massively boosting labor income.
On the more conventional problem of market concentration, the authors note huge institutional investors such as Fidelity Investments and
are often the biggest shareholders of an industry’s top companies. Citing research that common ownership discourages companies from investing in market share, capacity or innovation, the authors propose banning such investors from owning big stakes in more than one company in an industry.
The authors believe monopoly is also stifling democracy, although here monopoly is wielded by the majority, not the minority. A town’s voters may not care enough about pollution to raise taxes to clean it up, overruling a minority whose livelihoods are at stake. A demagogue may emerge victorious from a multicandidate election because the people who disliked him most split their votes. The problem in both cases is one person, one vote: It means “votes are too cheap for those who care a lot, but too expensive for those who care little.”
Their solution is “weighted voting”: Everyone gets a fixed allotment of voting credits, to allocate according to how strongly they feel across issues. A minority that is passionately opposed to (or in favor of) gun control could defeat a more ambivalent majority by casting extra voting credits. In multicandidate elections, voters could register votes against a candidate, not just votes for another.
The ideas are getting attention: for example activists in the Netherlands have launched a “data union” to explore securing payments for Google and Facebook users.
Yet for the most part, the practical and political barriers are formidable (especially to weighted voting), and certainly harder to implement than conventional antitrust remedies such as halting mergers.
But Mr. Weyl believes economics needs more radical thinking. “The profession,” he said, “has become conservative, technocratic, narrow and centrist, tweaking along the edges rather than providing bold, novel visions about how to redesign things”
Write to Greg Ip at firstname.lastname@example.org