Reflections on the Revolution in Antitrust

And more from this week...

When President Trump took office, he had two important appointments to make in antitrust and competition policy: an Assistant Attorney General for the Department of Justice’s Antitrust Division, and a Commissioner for the Federal Trade Commission. In one of the most striking signs of how far and how fast conservative economic thinking has come, Trump chose stalwart skeptics of corporate power for both positions. While the Republican orthodoxy concerned itself only with limiting public power and took private power to be inherently benign, both Gail Slater at DOJ and Mark Meador at the FTC bring a radically different approach, which they outlined in parallel speeches over the past few days.

So your two things to read this week are Slater’s remarks at the University of Notre Dame on The Conservative Roots of America First Antitrust Enforcement, and Meador’s remarks at an event co-hosted by American Compass and the Conservative Partnership Institute on A Conservative Vision for Antitrust.

Here’s Slater:

Some say that free trade and open borders result in a larger pie. But it begs the question as to the size of the slice that each community in our society received. At the same time that global labor arbitrage traded American jobs for cheap manufacturing abroad, growing profit margins diverted the economic gains for many goods from American consumers and workers to our coastal elites.

…

The 19th century also saw the emergence of a new kind of monopoly—a private empire of oil, railroad, and agricultural robber barons. These private monopolies threatened liberty just as King George once had. Although the identity of the tyrant changed, the threat posed by monopoly to the American people’s endowed natural rights to liberty had not.

And here’s Meador:

That a corporation can’t compel anything at the point of a gun is cold comfort when it can cut you off from commerce, speech, and even your bank account. Human flourishing can be crushed by much less than a standing army. Likewise, economic transactions with a monopolist—or dominant competitors acting in concert—are anything but voluntary; by definition there is no meaningful alternative, and the terms imposed can be coercive.

…

Conservatives must once again reject libertarianism’s narrow conception of human freedom as the mere absence of government, while putting their heads in the sand when asked about how companies acquire, entrench, and maintain their economic power. We must instead acknowledge that tyranny can come from monopolies other than force, that freedom and free markets are not self-sustaining, and that our leaders swore an oath to defend the people from enemies foreign and domestic, whether armed with battalions or bankers.

These observations echo a point I’ve heard best made by Alida Kass, now at DOJ herself in the Office of Legal Policy. When she was director of strategic initiatives at the Federalist Society, she used to observe that one of its core principles, “the state exists to preserve freedom,” is in fact somewhat ambiguous. From what threats to freedom, one might ask, is the state providing protection? If in the modern society some of the greatest threats emerge from private economic actors, what are the principle’s implications for the role of state intervention in the market?

Just as the failure of the economic partnership with China has led conservatives to rethink the case for free trade, and various absurdities on Wall Street have led to questions about the efficiency of capital markets, the obviously excessive power wielded by Big Tech firms and other monopolists has led to revitalized interest in robust antitrust enforcement.

Bonus link: I had a lot to say about all this in a review I wrote for First Things of Sohrab Ahmari’s Tyranny, Inc. There, I concluded:

The Old Right will find Tyranny, Inc.’s analysis and prescriptions radical. But after a generous dose of Ahmari’s economic realism, one cannot help noticing that the real radicalism comes from those repeating the old nostrums—as when Senator Pat Toomey claims that “capitalism is just another word for economic freedom,” or Ambassador Nikki Haley condemns anything besides free-market absolutism as “a watered-down or hyphenated capitalism, which is the slow path to socialism.” Communists and market fundamentalists reach different conclusions, of course, but they share a simplistic, black-and-white understanding of political economy. The market is true freedom, or the market is pure coercion; only government can solve problems, or government can only make them worse. Seeking the places in between these extremes where real people live and real markets operate, Ahmari shows the potential of returning genuine conservatism to the economic sphere.

WHAT ELSE SHOULD YOU BE READING?

Meta’s ‘Digital Companions’ Will Talk Sex With Users—Even Children | Jeff Horwitz, Wall Street Journal

The question is no longer whether any shred of morality will weigh upon the tech companies plying kids with their toxic wares (it will not), but whether the rest of us are prepared to do anything in response. Especially when it comes to AI tools, we should probably consider a form of “strict product liability”—no need to prove “negligence,” a firm is automatically liable for whatever its AI does. And then we are probably going to need to impose real-world standards on the digital world by default. Would it have been illegal for a person to do something? Then it’s illegal for an AI to do it. And finally, we’ll need to impose personal liability: if your AI commits the crime, you go to jail.

We know what we would think if Mark Zuckerberg started engaging in sexually explicit conversations with thousands of minors. Why should we feel differently if he’s just unleashing a software program to do the same for profit?

Bonus link: Oh, that’s not fair, these tech leaders are trying to do the right thing, but we also have to give them room to innovate, I hear you say. Which just tells me you haven’t seen this extremely odd video of Zuckerberg explaining that the average person has 3 friends but has demand for 15 friends (whatever that means), and so AI companionship is a great solution. The clip is so cringeworthy I initially thought it must be an AI-generated prank. But no, it’s real, and it’s scary, not even in the specifics so much as in the shallowness of the thinking.

Bonus bonus link: Hold my beer, says Google, which Plans to Roll Out Its A.I. Chatbot to Children Under 13. The email sent to parents acknowledges that children “may encounter content you don’t want them to see” and that Google is turning it on automatically rather than letting parents opt in if they want. Also, “Gemini can make mistakes” and parents should “help your child think critically” about using it. What is this for?

Good Jobs, Strong Families | Grant Martsolf & Brad Wilcox, Institute for Family Studies

Martsolf & Wilcox test the hypothesis that the declining quality of jobs available to working-class men helps to explain the decline in marriage and family formation among those men. They disaggregate job characteristics across employment in various industries and find a significant relationship between working in an industry that offers good jobs on one hand and getting married and having kids on the other. The analysis comes with all the usual caveats about correlation versus causation (perhaps people who are getting married and having kids seek out jobs in industries compatible with such priorities?), but the effects are large and suggest something is going on here deserving of much more study.

As Markets Swooned, Pros Sold—and Individuals Pounced | Wall Street Journal

Happy Liberation Day + One Month, on which the S&P 500 closed above its level 30 days ago. Should we feel sorry for all those unsophisticated retail investors who panicked as markets plunged, only to see their shares get snapped up by savvy hedge funders who then rode the rebound higher? Nope, because the opposite happened. “Hedge-fund clients of Goldman Sachs sold more stocks on April 3 and April 4 than any other two-day period in 15 years. … As the pros sold, individual investors pounced. They picked up more than $4.5 billion worth of stocks and ETFs on April 3, when the S&P 500 plunged almost 5%, making it their strongest buying day on record.”

Why the ‘Pro-Democracy’ Center Can’t Save America | Evelyn Quartz, Compact

This is a really sharp commentary from someone who worked inside the “pro-democracy” movement—what I like to call the “Defenders of Democracy(TM)”—and came away, well let’s just say disenchanted. The Defenders mean well in this account, but their comical inability to grapple with their own culpability in weakening confidence in our political institutions makes their exercise a rather futile one. Why would you try to address what you think is a dangerous and unsustainable situation by… returning to the exact arrangement that led to that situation?

It's a fun question to ask folks in this crowd: So what have you learned this past decade, and what would you do differently? The answers tend not to be very edifying.

TARIFF CORNER

Trump Administration Lays Out Roadmap to Streamline Tariff Talks | Gavin Bade, Wall Street Journal

Good reporting on how the Trump administration is approaching negotiations during this 90-day pause in reciprocal tariffs: “U.S. officials plan to conduct staggered trade negotiations using a new template that sets common terms for many of the talks, according to people familiar with the plans.” Mostly I like it because of how closely it mirrors my own assessment of how negotiations could and should proceed: “The major benefit of the suspension is to stagger future conflicts. … The administration has already been fully transparent on the consequences for failure. Now it should present the terms for success, and then tell each country it has no room to give because it is asking the same of the others—and of itself.”

How Do U.S. Firms Withstand Foreign Industrial Policies? | Xiao Cen, et al.

An interesting paper from last year (h/t Michael Pettis) looking at the effect on U.S. firms of the industrial policies pursued in China. Unsurprisingly, to anyone except market fundamentalists, when China chooses to focus investment somewhere, American firms in the same industry suffer or have to move up- and downstream in supply chains. Imagine being one of those firms and hearing that this is just how the free market works. As I always like to say, free markets, free trade, choose one.

Seven Truths About Trade | Tim Harford, Financial Times

Even by the standard of condescending misfires on the basic economics of trade and comparative advantage, this one by “Undercover Economist” Tim Harford stands out:

The second truth about trade is that it’s beneficial even if you’re trading with someone who is better than you at everything. A classic example: your housemate can cook a meal in 30 minutes or do a load of laundry in 40 minutes. For you, cooking takes 90 minutes and laundry takes an hour. A Trumpian view of this interaction is that you’re doomed: the housemate is better at both cooking and laundry, so will do both while you do neither. A trade deficit! Sad! (Although exactly why this turn of events would be to your disadvantage is unclear.)

But if you offer to do three loads of laundry if your housemate cooks three meals, then both you and your housemate are getting clean clothes and home-cooked food for less effort. This, the principle of “comparative advantage”, is that rare idea in economics that is important, true, and far from obvious.

Tim gets every part of this wrong. What does it mean that the housemate does both the cooking and laundry? Why would he do that? Just to be nice? Tim’s scenario here is “the more productive person does all the work and you get the benefits for free.” What economy, or rooming situation for that matter, does he think he is modeling?

Now, Tim says the Trumpian would object to this, which is hard to know, because it’s a bizarro scenario that makes no sense. But never fear, thanks to comparative advantage, everything works out instead. We specialize in laundry while our housemate specializes in cooking the food and then, to quote Adam Smith, we “buy it of them with some part of the produce of our own industry.”

Tim has miraculously solved the trade deficit through comparative advantage, which is not what comparative advantage does. And he thinks if Trumpians understood this they would be happy, but of course if economics ensured we had no trade deficits, Trumpians would be happy. The entire problem for the United States is that Tim’s happy story is not playing out in the real world. The entire problem for Tim is that he seems not to have any ability to assess a reality or an argument departing from the Econ 101 textbook. Sad!

Kenneth Rogoff on Monetary Moves, Fiscal Gambits, and Classical Chess | Conversations with Tyler

And speaking of difficulty assessing arguments, I was genuinely delighted to see Tyler Cowen kick off his latest conversation by asking Harvard professor and former IMF chief economist Kenneth Rogoff, “Circa early 2025, the big debate is whether there’s such a thing as an unsustainable international trade balance. Oren Cass says there is. Michael Pettis says there is. Traditional theory is more skeptical or agnostic. What’s your view?”

Rogoff’s response is fascinating:

No. There’s unsustainable debt. There’s not particularly an unsustainable trade deficit. There’re good things about having a trade deficit, bad things, but it’s a result of many factors. … The trade balance depends a lot on your savings and your investment, these macro-economic factors. If there’s an underlying problem — and to be fair, when your trade deficit’s really negative, there often is — it could be something. I think in the case of the United States, when it hit a real peak in 2005 to 2007, I thought there was a problem. I must say, I didn’t know until very close to the event, what was going on. We weren’t regulating well, but I didn’t even know what their point is, to be honest.

There’s this mercantilist view. I want to collect all the gold in the world. We want to be able to buy things. Back in the day, you used to have to hire an army or navy to help fight off invaders and such, but today, that’s not so true. I think the current account deficit — that’s a broader measure of the deficit — it’s important, and if it’s really large, you can probably bet that it might go down, but it’s not something to try to wrestle to the ground.

Three observations:

1. I appreciate Ken’s honesty in saying “I didn’t even know what their point is.” As Tyler had noted, this is a rather big debate at the moment. If you’re not following it, that’s fine. But probably best then to just say so, rather than rambling vaguely for a while.

2. You can tell as the answer proceeds that this really is the first time he has thought about the question at all. In real-time, he talks himself into more or less agreeing with me and Michael. First he gives a flat “no,” there’s no such thing as an unsustainable trade deficit. Then he remembers that actually it could be a problem. Then he remembers when, in the U.S., it actually was a problem. Then he switches to the current account deficit (which is just another term for the trade deficit) and concludes that yes, if that’s really big, it is a problem. Finally, sensing that he may be landing in the wrong place, he waves his hand that this will be self-correcting—exactly the case once made by Paul Krugman, which Krugman has since acknowledged was naïve.

3. The mercantilism digression is very funny, as a sort of paint-by-numbers dismissal that can’t withstand even the most basic application of critical thinking. “You used to have to hire an army or navy to help fight off invaders and such, but today, that’s not so true.” In part, it’s funny because a major debate in the United States today is about how much material to give to Ukraine to help it fight off invaders and such. But more important, if you widen the aperture ever so slightly, from literally hiring foreign mercenaries to maintaining the basic economic resources necessary to the national defense, it’s still completely true. One of the main problems with running persistent trade deficits is that the hollowing out of your industrial base in fact leaves you incapable of maintaining the military you need.

AND AT COMMONPLACE

We published Commissioner Meador’s speech on antitrust, discussed above. Here are a few of the other must-reads:

Break 'Em Up by Rachel Bovard. Renewed conservative antitrust aimed at Big Tech can reshape society’s fraught relationship with the internet.

When Gradualism Fails by Karl Zinsmeister. Coping with truculent resistance to reform.

Not By Tariff Alone by Chris Griswold. Reorienting America’s economy requires a massive increase in industrial investment.

Stealing 'Abundance' by David Cowan. Conservatives, not liberals, are best positioned to build—and in many cases, are already doing so.

And now that we’re 100 days into the second Trump administration, what should conservatives make of it? The Conservative Partnership Institute’s Rachel Bovard joined me on the American Compass Podcast to assess this unconventional administration's early returns and consider how it can advance its legislative agenda over the next few months. Plus, we discussed her excellent piece in Commonplace on the rapid evolution in conservative thinking on antitrust.

As always, check out commonplace.org, follow us on X @commonplc, and subscribe for regular articles directly in your inbox.

Enjoy the weekend!