What if the American economy's foundation was built on small businesses rather than colossal corporations? Discover how we shifted from a decentralized landscape in the 1970s to today's monopolistic giants with our guest, Matt Stoller, an eminent public intellectual and author on monopolies and finance. Stoller reveals the philosophical shift that prioritized consumerism over citizenship, leading to a relaxation in antitrust laws and a landscape dominated by corporate mega-powers. Learn how this transition has created an economy riddled with extraction and bottlenecks, and how recent administrations are hinting at potential reforms to address these seismic changes.
We also delve deep into the political arena, examining how corporate power shapes the strategies of key political figures like Donald Trump and Kamala Harris. Trump’s evolution towards a traditional Republican stance is contrasted with Harris's nuanced and often contradictory relationship with corporate power and Silicon Valley. Gain insight into Harris’s mixed record as California's Attorney General and the potential influences from powerful entities like Wall Street and labor unions that could sway future policies. This chapter is a compelling look at the intricate dance between politics and corporate dominance.
On the global stage, Stoller tackles the complexities of antitrust enforcement, revealing the partisan divides that complicate the legislative process in the U.S. and similar challenges worldwide. Hear about the prolonged antitrust cases, such as the ongoing investigation into Google's monopoly, and the urgent need for more efficient enforcement. We also unpack the murky waters of pharmaceutical pricing, highlighting the significant role of pharmacy benefit managers in drug distribution and costs. This episode is a must-listen for those keen on understanding the systemic issues plaguing major industries and the emerging reform movements aimed at dismantling monopolistic control.
The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:08):
My name is Michael Guyatt, publisher of the Lead
Lag Report.
Joining me for the rough houris Mr Matt Stoller.
Matt, like I mentioned beforeus starting here, you've really
crushed it on Substack andcertainly have a phenomenal book
as well.
But introduce yourself to theaudience Now.
Who are you, what's yourbackground, what have you done
throughout your career and whyare you focusing so much on
monopolies?
Speaker 2 (00:28):
Yeah, so my name is Matt Stoller.
I'm a public intellectual,which is a bullshit job term.
It means that I write stuffonline and kind of a journalist.
So I write for a newslettercalled Big, which is where I
write about monopolies, I writeabout the politics of finance,
and then I also am the directorof research at a think tank
(00:49):
called the American EconomicLiberties Project.
Typically, I'm known as kind ofpart of a group of reformers
that are trying to address weakenforcement of our antitrust
laws, and so that's againstlarge technology firms, but
firms across the economy andhealthcare and other sectors.
Is that a good?
So that's what I do, and youcan find me at the
(01:11):
bignewslettercom or you can findme on Twitter, and there we go.
Speaker 1 (01:17):
So I love this quote when you describe what is big.
You started with Woodrow Wilson.
America was created to breakevery kind of monopoly and to
set men free upon a footing ofequality, upon a footing of
opportunity to match theirbrains and their energies.
We have come a long way fromWoodrow Wilson's quote here.
I want to hear your thoughts onhow do we get to a point where
(01:41):
it seems like almost everysingle industry is either an
oligopoly or outright monopoly?
What happened over time?
Speaker 2 (01:50):
Yeah, it's a great question.
So in the 1970s the US was apretty decentralized country.
It was just.
It was really.
There were big companies, butit was mostly a small business
nation a lot of small banks, alot of small retailers, small
farms.
And that was not an accident.
(02:11):
That was a consequence of ourchoices as a society.
We were like we're a nation ofcitizens and we want power to be
held at a local level, close tothe citizen.
But then there was a change inthat philosophy and this change
happened because of some veryeffective, really good writers
(02:34):
and thinkers on the right andthe left who argued that that
philosophy was foolish and whatwe need is not to think of
ourselves as citizens but tothink of ourselves as consumers.
And to think of ourselves asconsumers meant that our concern
should not be decentralizingpower or controlling commerce at
(02:56):
a local level through small,medium-sized businesses, through
making, selling things likethat.
It actually we should only beconcerned about low consumer
prices and it doesn't matter ifthere is consolidation.
Consolidation is actuallygenerally good because big
businesses are run by smartpeople and we like smart people,
(03:18):
we want them to run things, welike experts.
And so what happened is thatphilosophical change was
instrumentalized through therise of certain kinds of
economists.
And those economists you couldcall it neoliberalism or
whatever you want to, howeveryou want to talk about it.
(03:40):
But in both partiespolicymakers started saying you
know what, let's allowconsolidation as long as there
are the big guys promise lowprices.
So this would be everyday.
Low prices would be the sloganof Walmart.
So there were laws that wereconstraining the growth of these
kinds of discounters in the 70s, because these discounters had
(04:00):
caused really serious problems,and those laws were relaxed or
eliminated, and so Walmart was arelatively small store in 1970.
By 1980, it had a billiondollars in sales.
By 1985, sam Walton was therichest man in the country.
And then in the 1990s and 2000s, this new pro-monopoly
(04:23):
framework, which wasinstrumentalized by the
relaxation of antitrust laws.
Basically I mean regulation too.
You had a technologicalrevolution that was kind of put
on top of this politicalrevolution, and that
technological revolution was therise of these large technology
firms who were born native to apolitical, a legal environment
(04:48):
where monopolization wasessentially legal.
And so what happened is, youknow, a whole bunch of companies
just kind of consolidated inevery part of the economy, from
retail to media, to defense, totechnology economy, from retail
to media to defense, totechnology.
And if you didn't want toconsolidate, if you just wanted
to make your goods or servicesand you know, make some money,
(05:21):
train your workers, whatever itis, then you would get
eliminated right.
Either your ability todistribute your products would
be foreclosed by largercompetitors, you would be given
a buyout opportunity that wastoo good to pass up, or usually
some combination.
So make you an offer.
You can't refuse kind of thing.
And so that's what happenedkind of all over the economy.
And that's why we're living in asociety right now where you see
(05:43):
just increasing amounts ofextraction.
And this extraction is reallyobvious in the form of things
Like, if you go anywhere now youlike put on your when you pay
for things, they ask you for atip, right, not just restaurants
, but all over the place, andit's like nickel and diming you
in emotionally fraught ways,cause it's like, do I give a tip
(06:04):
to like the locksmith?
I mean I'm not trying to insultthe guy, but like it's a
locksmith.
It's just weird All of theseweird administrative junk fees
that we're seeing everywhere.
These are kind of justsignposts of the bottlenecks,
the toll booths we have to gothrough for everything Because
they can now annoy you intosubmission because you really
(06:24):
have nowhere else to go.
That's what a consolidatedeconomy looks like.
Now I'm not even getting intohealthcare, which is like you go
to a doctor's office and youdon't know what kind of bills
you're going to get, and youknow it's just.
All of these things are justincreasingly annoying and
difficult, but that's so.
That's what happened and I cantalk about some of the things
(06:45):
that I think you know.
There's been this reformmovement that's emerged the last
five to 10 years, concurrentwith Trump and Biden, that's
trying to alter this.
It can talk about that if youwant, but that's the answer to
your question.
Speaker 1 (07:00):
How much of this is more just sort of the general
aspect of the Pareto principleright, the 80-20 rule, that in
general you end up having aselect number of variables being
explanatory of the bulk of thesolution.
I mean, certainly you can makeit easier for monopolies to
become monopolies, but is theresome inevitability that tends to
(07:20):
happen anyway?
Speaker 2 (07:23):
No, there isn't.
I really reject that becausewe're not talking about anything
really technological in itscore right, we're talking about
legal structures.
So, for example, you could saythat Google search has natural
economies of scale.
(07:43):
It does Search requires largeamounts of data.
There are reasons why you wouldprobably have just a small
number of search engines, butthere's no reason why you would
have to choose to have Googleown, say, search and also
(08:04):
YouTube, to choose to haveGoogle own, say, search and also
YouTube.
That's just a legal decision toallow Google in 2005 to buy
YouTube.
It's just a choice, right?
There's no technological reason, like right now, if you try to
search Reddit with a non-Googlesearch engine, you can't.
Why?
Because Google has a contractwith Reddit where they pay them
(08:25):
money to exclude rivals.
That's not a technology element, that's just a legal choice.
And if you step back morebroadly, the internet itself is
a huge economy.
That's the biggest networkwe've ever seen in human history
and no one owns it.
And that's because we made achoice in the 60s and 70s and
(08:47):
80s when developing the internetthat no one would own it, that
it would be a set of protocolsand standards, and you could do
that in any industry the hugeamounts of data that Google owns
and controls to create itssearch engine, owns and controls
(09:08):
to create its search engine.
That data doesn't have to beowned and controlled solely by
Google.
They could give access to thatdata to anybody that wants to
create a rival search engine.
Right, that's a politicalchoice we could make.
We make choices about copyrightand AI all the time, and I'm
just using that.
But you could look at likethere are any number of other
ways to understand this problem.
Like, for example, we justassume, oh, you want to use some
(09:31):
sort of mapping service orlocation service, and there's
lots of different ways to dothat, and you know, what people
don't think about is that thegovernment just runs the GPS
system.
Right, it's just a governmentservice and the government
doesn't.
You know, it just allowsanybody to have access to it.
(09:52):
That's another choice that wecould make.
I'm not saying that thegovernment should be running
everything, but what I'm sayingis there are lots and lots and
lots and lots and lots and lotsof thoughts, of legal choices we
make about how to deploy thescientific and engineering
expertise that we have in oursociety, and we've made lots of
different choices throughouthistory to allow more people to
(10:13):
use that knowledge or to allowfewer people to use that
collective knowledge.
And that's so.
We just are making choices.
Speaker 1 (10:22):
So you said legal choices that we make, but in
reality it's policymakers, notthe voters, and that, I think,
kind of maybe dovetails a littlebit into the book Goliath the
war, 100-year war betweenmonopoly power and democracy.
It seems and you're obviouslymuch more entrenched into this
than I am it seems almostimpossible to disentangle the
(10:43):
incentives between the bigcorporate monopolies, the
policymakers themselves and theneven having voters be aware of
what's going on on the back end,as well as the legal frameworks
.
To your point, I mean, it seemslike the voter has no clue.
And even if they had a clue,they couldn't really affect much
change anyway, I'm not a cynic.
Speaker 2 (11:05):
I mean I know that there's this just pervasive
pessimism, but you know, in 2016, trump made an anti-monopoly
case.
I mean, he attacked foreigndumping and American companies
for offshoring stuff.
Remember that carrier thingwhere there was a video of
(11:30):
carrier consultants saying we'regoing to offshore the factory
and it went viral because allthe employees were mad.
And then Trump talked about itand Obama made fun of them and
Trump attacked.
He went after Ford, he wentafter Apple, he went after
Nabisco, he went after all thesedifferent companies.
He went after Amazon formonopolization and not paying
(11:52):
taxes.
And he made arguments aboutmarket power all the time.
He attacked the AT&T TimeWarner merger.
He said that NBC and Comcastthat merger shouldn't have gone
through until 2010 becausethat's too much control of the
media by a small number ofpeople.
And you know, I think there'slike a problem.
(12:12):
The narrative here that I'mtelling is a little bit weird,
right?
Because I'm a Democrat, Ididn't vote for Trump.
I'm not a Trump supporter,listened to what he said and
voters responded to it.
Now Biden similarly.
I mean, biden didn't make thesekinds of arguments publicly
because he had a differentframework, but he executed on
(12:34):
them and I think voters have alot of power.
I mean voters can make choices.
Now, the interesting thing is,today Trump isn't making these
arguments at all.
I mean he's really like totallygiven up on the anti-monopoly
frame and it'll be aninteresting question where
(12:58):
Kamala Harris is on it.
But I think I mean, generallyspeaking, you know, voters have
a lot of power and and it's truethat that sort of the, the, the
establishment per se, and, youknow, big money interests have
some ability to influence people.
But I've talked to, you know, Italked to a lot of voters and
(13:21):
they believe in.
You know, oftentimes theybelieve in bad ideas and vote
for them, or they believe ingood ideas and vote for them,
and you know they're getting Idon't want to say they're
totally getting what they want,but I am not one of these people
who is, who thinks, who wantsto infantilize voters and say,
oh, you're oppressed, right?
We have the honor of living ina democracy.
(13:42):
Our politicians are doing, wehire them and they largely do
the things that we want them todo, and then we often get mad at
them because they do thesethings, things.
But it's like you talk tosomeone.
(14:03):
I talk to people who are being,you know, dealt like monopolies
are screwing them all the time,and a lot of times they're you
know they're like we wantsomeone to do something about
this, but a lot of times they'renot.
A lot of times they're afraidof challenging power, and I
think that policymakers beingafraid of challenging power is
(14:23):
really just reflecting theirconstituents and their voters,
and so I'm not willing to letvoters off the hook.
I think voters need to grow upand make important choices, and
I think that they are startingto do that.
I'm not going to say I'm notgoing to give up on democracy.
I just don't think that's awise choice or an honest one.
Speaker 1 (14:44):
So, since you mentioned that point about Trump
you had a whole post on that onSubstack why has Trump stopped
attacking big business?
Because, you're right, I hadn'treally thought of it before,
but I remember the rhetoric whenhe was first running and
clearly you don't see it today.
Do you think that's?
Is that purposeful, or is itmore just a function of he's
latching onto the immigrationdynamic and doing what he always
(15:07):
does, which is just keephammering the thing that
everyone is talking about in themedia?
Speaker 2 (15:10):
I think it's because Steve Bannon isn't there.
I mean, I don't know, becauseI'm not a Republican, I don't,
that's not my world.
I'm a Democrat and I'm prettytied into the Democratic
establishment.
I'm just, I have a lot offriends on the on the right.
I have a lot of friends on theright.
I respect a lot of people onthe right, but that's my view is
like Steve Bannon, say what youwill about him, he understood
(15:32):
populism and he was a strategistand he's in jail right now and
so Trump.
Trump has kind of an instinctiveability to disdain the
establishment.
But it was I think it wasBannon who was kind of.
You know he's reading a lot ofstuff from, say, like Elizabeth
Warren and anti-monopolist, andkind of translating it into into
(15:53):
Trump isms, and that he's notthere now is basically running a
normie Republican campaign.
I mean, he doesn't look like anormie Republican because he's
Donald Trump.
But you know the the KamalaHarris is an ultra liberal and
you know, liberal, liberal,liberal, far left, radical, it's
(16:16):
like so boring and like it.
You know he's just not taking.
He's lost his ability todisrupt the news flow because he
doesn't, he doesn't seem to beable to.
He wants to be on the side ofthe establishment.
Now he's running like a like,kind of like a Republican
incumbent.
It's really weird.
It's weird to see Donald Trumptry to act like Bob Dole or
(16:36):
something like that.
Speaker 1 (16:43):
Let's talk about Kamala, because I don't know how
many people closely havefollowed her own views when it
comes to corporate power.
Again, you put a great post onthis as well.
What would Kamala Harris doabout corporate power?
What's your sense of her sortof philosophical view, if she
has one, around monopolies,corporate power and, more
importantly, around the role ofthe president in dealing with
(17:05):
that?
Speaker 2 (17:05):
So the best way that I somebody I don't know, I don't
know her, I've followed hercareer.
I somebody this is a seniorlabor labor told me that he
doesn't think that she has aphilosophy.
He thinks she has a set ofattitudes and the attitudes are,
you know, some good instincts,some bad instincts.
But she also has a set offriends in California and those
(17:27):
friends push her to do very sortof corporatist things.
So if you look at her campaign,it would be her brother-in-law
and close advisor is a guy namedTony West who's the general
counsel of Uber.
One of her advisors is.
Another one of her advisors,karen dunn.
She's actually a google lawyer,I believe she also did she
(17:50):
helped prep jeff bezos for histestimony to the um, to the to
congress.
She's also a qualcomm lawyer,um, so that's that's you know
one.
She's eric holder, who was alsoan you know worked, was
attorney general under obama andworked for uber big law guy.
(18:12):
He's vetting her vp pics.
Um, there's a you know, I kindof her her um niece worked for,
I believe, uh, facebook andslack, I think also uber, I
don't know.
There's just all of these uberlawyers around her, which is
just weird, and I'm not sayingshe doesn't have any good people
(18:36):
around her or anything.
I'm just saying, like, hernetwork is composed of this, uh,
this group of sort of siliconvalley obama crat type, and so I
don't know what she's going todo.
I mean, this is a differentpolitical party than it was
under obama.
It's moved in a much morepopulist direction, but, um, but
(18:59):
that's, that's kind of whereshe is.
I'm going to go into some of thethings that she did, which
which is, I think, moreillustrative, like as as
California AG, she was prettygood on healthcare consolidation
, so she she investigated SutterHealth, which is a big hospital
in California, and then hersuccessor brought case.
She did some things on healthinsurance mergers, some good
(19:19):
stuff on pharmaceutical pricesand patents, and that was, I
think, very kind of staff driven, but as a politician, she
didn't stop it.
She allowed it to go forward,she talked about it, so that's
good.
On the other hand, she did somereally bad things from my
perspective, in terms ofallowing for during the
(19:39):
financial crisis, allowing forforeclosures.
Financial crisis, allowing forforeclosures, mass foreclosures,
instead of trying to reallyaddress the, the large banks and
um signed a kind of a fakesettlement of where they there
were these fake fines, and nowshe's bragging about that
settlement, which is like Ithink it's pretty, pretty gross.
But you know, there there aresome reasons that you could say
(20:02):
I just did some things here orthere for a few homeowners, but
it it largely was a continuationof the Obama framework on the
financial crisis, which was abad framework.
And then on big tech, her trackrecord is mostly mixed to bad.
So as California AG, she didn'tdo anything while these
companies became immenselypowerful.
Do anything while thesecompanies became immensely
(20:27):
powerful.
She's a few things where shedid look at some privacy,
elements of, say, meta, but ingeneral has been, I would say,
more of a friend to big techthan not.
And then on the campaign, what'shappening now is Wall Street
and Silicon Valley people andcrypto people are telling her
hey, you should really reversethe Biden administration
framework on trade and antitrust.
(20:47):
And the campaign has mostlygiven signals that they're
willing to do that.
Whether they're doing that toraise money or whether they're
doing that because they arewilling to change the policy,
whether it's whether it's bothpolicy, whether it's both, I'm
not totally sure.
(21:08):
I mean at the same time, she isclose with some unions who like
this populist stuff, so it'skind of a mixed bag.
I, however, am generally apessimist on Harris.
I don't expect it to be a fightwithin the Democratic Party and
I don't think she's going to beon the side of populists.
(21:28):
But I could be wrong.
Speaker 1 (21:29):
I've been wrong before and I'm not definitively
saying that, but I am notencouraged by what I've seen so
far, there's a comment from theYouTube side I'm going to show
here.
I think you might bediscounting the PayPal mafia
influence on the Trump campaign.
I don't know.
(21:49):
I'm not quite sure exactly whatthat's referring to.
I don't know if you have anythoughts on that.
Speaker 2 (21:52):
Yeah, no, I can describe that.
So the PayPal mafia is a groupof very it's a very powerful
network in Silicon Valley.
So it's a group of people thatworked at PayPal.
So this would be like Elon Muskand Peter Thiel ran PayPal, but
(22:12):
then there was all sorts ofother people who started, you
know, who became billionaires.
Reid Hoffman, I think, was oneof them.
He was a founder of LinkedIn.
There's just a lot of, I think,yeah, there's a lot of venture
capitalists.
It's a powerful network andthey have split.
There are Democrats and theRepublicans in it, but a bunch
of the Republicans have gottenbehind JD Vance and uh and Trump
and they you know it's weird,because they are very into
(22:37):
crypto, they're, they're,they're kind of into um, like
military tech, and they havesome links with big tech, but
they also dislike Google, likePeter Thiel hates Google, for
example, and I think Elon Musksometimes talks about breaking
up Amazon or breaking up Google.
These are not Now, I don't knowif they're sincere, I don't.
I don't think Musk is.
(22:57):
I think he says things to makehimself more money, but I don't.
You know, I don't know, butit's.
There are splits in SiliconValley and the PayPal mafia.
Some of them have gotten behind, particularly Vance, and I
think they believe that, well,they really hated what Biden was
(23:18):
doing on a couple of differentthings.
Where they are on Harris is nottotally clear to me.
But yeah, I mean I think that'sa totally legitimate point.
Maybe they think that, maybethey want an end to antitrust.
Maybe they want antitrust usedagainst their opponents.
(23:40):
I mean, if Google gets brokenup, they'll probably do pretty
well because they can invest inrivals or something like that.
I don't know, but I thinkyou're right to not.
You know, I think it'simportant not to overlook the
funding and cultural power ofthose guys.
Speaker 1 (24:01):
When I look at stock market performance generally,
when you have a Democrat aspresident, the tech sector has
the most outperformance.
When you have a Republican inoffice, the tech sector is more
like other sectors, so you tendto not have that sort of
outsized return, which maybeit's random, but it makes me
(24:23):
think that.
Speaker 2 (24:24):
Right, we were saying under Republicans you don't
have an outsized return of tech.
Speaker 1 (24:28):
Historically when you look at the administrations and
tech performance relative toother sectors.
Right.
Speaker 2 (24:35):
Go, please.
Well, I mean, I just recalledTrump.
There's this image of him andit says him holding a piece of
paper that says MAGA and it saysI think Meta, amazon, google
and Apple, and it's the $1trillion club.
They all hit a trillion dollarsin market cap under Trump.
And he was bragging about thateven though he did bring some
(24:56):
antitrust cases against Googleand Facebook and talked a big
game.
So I don't know that.
Maybe there was outperformances, yeah, in the past.
Speaker 1 (25:09):
But I guess I guess where I'm going with that.
That point is is there is therea historical sense that
Democrats have been morefriendly towards tech
oligopolies and monopolies thanRepublicans outside of Trump?
Speaker 2 (25:18):
No, there there's a misconception that that is the
case, but in general, the bigtech has a lot more friends and
allies on the Republican sidethan on the Democratic side.
Early 2000s there were bigfights between the telecom
(25:44):
industry, which was Republicanaligned, and Google, which was
kind of emerging, and theRepublican aligned.
Like lobbyists at AT&T spread alot of rumors among Republican
staff about Google, how Googlewas Democratic and whatnot.
And a lot of the employees ofthe tech firms give to Democrats
, to Democrats.
(26:08):
But if you look at the actualpolicies and if you look at
actual votes, it is 100% theRepublicans, who are hostile to
more aggressive antitrustenforcement, who are hostile to.
You know, whenever you try todo something like prevent big
tech from using trade agreementsto expand their power, it's the
Republicans who are hostile tothat.
(26:28):
It's the Republicans who arereluctant to impose new rules
and it's the Democrats who arekind of split and a lot of the
Democrats are not necessarilylike.
The Democrats are in a struggle.
I think the Republicans are ina struggle too, but the way I
(26:49):
think the best way to understandit is that in 2022, there were
a series of antitrust bills thatwere put forward and the main
problem was the Republicans justdidn't want to vote for these
bills.
Some Republicans did, but mostof them didn't want to vote for
these bills.
Some Republicans did, but mostof them didn't.
And some Democrats didn't wantto vote for it, but most of them
(27:09):
did.
Now there was one bill that didmanage to make it into law
Ultimately.
Chuck Schumer didn't want to putthem up for a vote, because
Chuck Schumer is corrupt andtakes money from big tech, and
so does Mitch McConnell.
Mitch McConnell and ChuckSchumer collaborated together to
prevent a vote, but they didallow one bill to get a vote and
in that bill that made sometechnical improvements to
(27:30):
antitrust law, 80% of Democratsvoted for it and 20% voted
against it, and 80% ofRepublicans voted against it and
20% voted for it.
It and 20% voted for it.
So that's not to say and thelobbying on it was big tech.
So that's not to say that allRepublicans are for big tech and
(27:52):
all Democrats are against bigtech, because that's not the
case.
There are some reallyaggressive Republicans who are
populist and want to bring in,want to address big tech.
Trump was the president whobrought the first case antitrust
, federal antitrust case againstGoogle and Facebook.
But it is to say in generalthat the fight against big tech
(28:14):
is more supported by theDemocratic world than the
Republican world, and I thinkit's puzzling because I think
Republican voters are moresympathetic to the fight against
big tech.
But that is what is going on inDC.
Speaker 1 (28:30):
We're obviously talking from a very US-centric
perspective, but I am curioushow closely you've looked at
international monopoly oligopolydynamics.
Is it as pervasive?
Obviously different laws,different cultures.
Talk about that for a bit.
Speaker 2 (28:45):
Yeah, it is just as pervasive.
It's the same fight all overthe world.
I mean, maybe with someexception, china, with the
exception of China, but yeah,100% these trends are global,
the ideas are global.
There are global conferences ofantitrust enforcers.
The US helped set up antitrustagencies all over the world in
the 1990s, also in the 1960s Twodifferent it's in Europe in the
(29:10):
1960s, then all over the worldin the 1990s.
Antitrust enforcers look to theUS or did look to the US for
best practices.
So you know, google's a globalmonopoly, facebook's a global
monopoly, microsoft's a globalmonopoly.
These are so 100% same fight,same problems, slightly
different cultures and languages, but no difference and
(29:34):
intellectually the samearguments and ideas.
Canada just strengthened itsantitrust laws.
Australia has strengthened itsantitrust laws.
The Europeans-ish they're moretalk than action.
Changes in Japan, changes inSouth Korea, changes in India,
nigeria just find meta in India,nigeria, just find meta.
(29:54):
It's not there really are.
I mean it is a US-centric fight, but it is a global fight and
really you don't have to like.
You see the same politicaltrends all over the world, the
rise of populism for the samereasons.
This is not a US, this is notjust a US story.
Speaker 1 (30:18):
The comeback I often hear from people that say uh, or
that are cynical about the ideaof strengthening anti-trust
laws is that we don't need morelaws, we need just better
enforcement of the existing laws.
Um, is there a degree of truthto that when it comes to
monopolies?
Speaker 2 (30:30):
well, I mean, I don't .
I don't distinguish betweenwhen I say you know, I know I'm
not.
I'm not arguing for stronger,for a specific technical change
or whatever.
I'm just saying you needwhether you do it through more
enforcement, better judges,stronger statute, I don't care.
Or just regulate other rules,whatever look at it, I'm like I
(30:54):
don't want.
You know, I don't call itscalpel surgery, you call it
heart surgery.
Like who cares whether it'sdone with a new statute or with
a better interpretation of theexisting statute or whatever?
Like as long as it gets done,it gets done right a change in
policy so that there's lessconcentration and centralization
(31:17):
of power in the hands ofprivate, unregulated monopolies.
And then you know, often whatyou'll see is that there's a
conjoined government monopolyalliance, and you could do that
in lots of different ways.
It doesn't just have to bethrough.
You know antitrust cases whichtake a long time and judges
really don't like them.
(31:37):
I'm totally fine with passing alaw that just broke up Google
by statute.
That would be, I think, a goodthing to do To allow, to ban
TikTok or to divest TikTok.
That is a fine way to do things.
So I'm not.
However you want to do it.
(31:58):
I'm cool with it, right.
But to give you a sense of whyantitrust law is very annoying,
they started investigatingGoogle in 2019.
Actually, the firstinvestigations of Google started
in 2008, 9, 10.
And then the FTC decided not tobring cases because,
essentially, the Google bribedenough people and citizens
weren't paying attention.
And then in 2019, there's aninvestigation that was largely
(32:21):
pushed by Bill Barr in the Trumpadministration, and the Trump
administration finally broughtthe case in late 2020.
And then it just went to trialthis year, right, or was it?
Yeah, I think it was this year.
So it's 2024, it comes to trial.
The judge hasn't even made uphis mind about whether Google is
(32:42):
a monopoly.
If he does say that it's amonopoly, then there's going to
be a remedy phase.
All right, what do we do aboutthe monopoly?
And it'll get appealed, and sowe could see this case taking
until 2026, 2025, 2027 beforeit's resolved, and that is no
way to organize the law.
That's crazy to say, all right,we have a problem in 2019.
(33:04):
We might not even solve ituntil 2026.
So I agree with people that saythat you need to have better
enforcement, you need to havemore enforcement, you need to
have faster enforcement, and Idon't care how we do it.
Speaker 1 (33:19):
Actually, I think that point is actually really
interesting 2019 gettingresolved in 2026, 2027.
Okay, well, now with AI makingeverything even more exponential
, it seems like there's going tobe this incredible mismatch
between everything going on withtechnology and then the laws
themselves, more so than we'veever seen between everything
going on with technology andthen the laws themselves, more
so than we've ever seen.
Speaker 2 (33:37):
I don't, I mean, I don't know, I'm, I'm a sort of a
.
I mean like I don't mean to beargumentative, but, um, well, I
do mean to be argumentative.
Uh, come on, I don't think it'sthat hard.
I, I, you know people talkabout oh ai, oh my gosh.
It's like oh, oh, you, it's notthat hard.
Just force Google to sellYouTube.
Like that's not that hard.
(33:58):
Force Google to, you know,split up Google and Gmail.
Like, yeah, there's some likehard questions around AI.
What do you do about NVIDIA andtheir software mode?
I mean, okay, but there's a lotof easy questions, and this
idea that, oh, we're just as allso complicated and hard is a
way of saying that there are noeasy questions.
(34:20):
But there are.
There's a ton of them, and oneof that's one of the nice things
about not having addressedmarket power for 50 years or 40
years.
There's a lot of low hangingfruit, and so I'm not I know any
people who's who's.
I think the argument that it'sall so complicated and all so
hard and everything moves sofast and the government is so
slow, I think that's all a myth.
I think that's all talkingpoints that are just designed to
(34:41):
make people feel like there'snothing they can do.
The truth is, this isn't thathard.
This is not a like.
We've done it before.
We've broken up big companiesin the past.
We could do it again.
This is America.
We should be able to controlour society.
We've always done that.
We've always done it that wayand it's just like we've spun up
in our minds that likeeverything is so hard and
(35:02):
difficult and there's nothing wecan do, and it's like I mean
that's like crazy.
It's crazy to think that way.
This is the country that did.
You know?
We went to the moon, right, andI don't mean to be like cliched
about it, but like this countryhas done great things, built
great things.
It's not that hard.
I mean it's yeah, doing greatthings is hard, but just
(35:23):
addressing some of theseproblems like whatever, let's
just do it.
Let's just have a judge issuean order instead of being all
like like I watched this Googlecase and one of the reasons it's
taking so long is because thejudge's guy named Amit Mehta and
he's an anxious ladder climbingliberal that doesn't know
business and wants to get it allright, and it's very annoying
and it's very anxious and it'sjust like if you have idiots
(35:46):
like that making these decisions, then, yeah, everything's going
to look really complicated.
If you just have people who are, who are normal and are not
afraid of power to makedecisions, it's not that hard.
Speaker 1 (36:00):
All right.
Well, let's talk about howsectors of industry where it
might be harder.
So you put a piece out insidethe mafia of pharma pricing.
My mind automatically goes totech when I think about
monopolies, but clearly inhealthcare space you can see it
in the pricing side.
Let's talk about that, becauseI think this is where you can
argue.
Maybe it's not as simple asjust doing what you just said,
(36:21):
right?
Speaker 2 (36:24):
So you want me to just talk about healthcare, is
that?
Speaker 1 (36:26):
Yeah Well, healthcare in general just sort of explain
the dynamics of the mafiacomponent and why that's so
challenging to stop.
Speaker 2 (36:34):
Right?
Most people think so.
This is about pharmaceuticals,right, because healthcare is
about 20% of our economy.
Pharmaceuticals, that's about$700, $800 billion a year, which
is not 20% of our economy.
What's our economy?
It's $25 trillion, somethinglike that.
So that's it's about $4 or $5trillion.
Pharmaceuticals it's about $700billion.
(36:54):
So it's a chunk of it, but it'snot the majority.
Most of healthcare is hospitals,which is its own monopoly
problem, but pharmaceuticals are.
You can divide it into sort oftwo different problems.
There's the pharmaceuticalcompanies, which have patents
for branded medication andcharge a lot of money and what
they do very muchoversimplifying, but what they
(37:17):
do is they try to discover drugs, they get patents on them and
then they charge a lot of moneyfor those drugs.
They also, of late, have playeda lot of games to try to extend
those patents illegally, butwe'll put that aside.
The other problem and this isthe one that I think is harder
for people to grab is that thereare six firms that control the
(37:40):
pricing and distribution ofthese drugs.
I wrote about the ones thatcontrol the pricing.
They're called pharmacy benefitmanagers.
The other ones that control thedistribution are called the
wholesalers.
But the pharmacy benefitmanagers are the ones who work
for your health insurancecompany or actually are owned by
(38:01):
your health insurance company.
There are three major onesOptum, caremark and Express
Scripts, and each one of them isowned by United Health Group,
cigna and Right and what they dois they arrange.
They're like the payment networkor the payment mechanism for,
(38:24):
um, uh, for pharmacies andpatients.
So a doctor prescribes you acertain drug, uh, he goes to the
pharmacy.
That goes to the pharmacy.
The pharmacy then dispenses itand you do a copay to the
pharmacy.
That pharmacy then getsreimbursed.
The agent that handles themoney is the PBM.
(38:49):
They're a middleman and theywere originally just kind of a
claims processor, almost like acredit card Not a credit card,
but almost like a credit cardand they would just work for
health insurance companies tojust manage that, because you
got lots of new drugs andsomebody needs to keep track of
it all, lots of pharmacies.
So they built networks ofpharmacies and they built
networks of drugs and if youwere a health insurance company,
you could just go to a PBM andsay, all right, I'm a health
(39:21):
insurance company, I want tocover this number of people in a
union or a company or whatever.
Give me a network of pharmaciesthey can use and give me a
network of drugs that they canget access to.
And there we go.
Well, that's how theyoriginally started in the 60s
and 70s, but then over time,they have developed through
changes in law.
They now have the ability tonegotiate with pharmacies and
negotiate with drug makers, andthey've also consolidated and
(39:41):
become part of health insurancecompanies.
So imagine if Visa andMasterCard could control all the
prices that you pay.
That's effectively what'shappened with PBMs, and so PBMs
three PBMs in particular arejust extracting huge amounts of
money by they all they have theyown now, they own their own
specialty, they own their ownpharmacies to mail order
pharmacies.
(40:02):
So cbs owns a big pbm, they'rea big pharmacy, but but you know
, optum also has an optum.
Uh, you know pharmacy, mailorder pharmacies.
And so what they do is theytake patients and they say, all
right, if you you know you mightsay like a doctor might
prescribe you X drug, they willsay, all right, well, instead of
(40:23):
getting drug X, we want you tobuy, get drug Y, which might be
higher cost, but we have aspecial deal with the drug maker
of Drug Y where they give usspecial kickbacks, and so you
have to go to Drug Y and you paya lot more.
Or the government, throughMedicare Part D, pays a lot more
medication at prices that arenot just a little bit higher but
(40:59):
200, 300, 400 times the priceas you can get it just kind of
over the counter at, say, costco, and this is.
Americans pay about $90 billionthrough co-pays, co-insurance,
so that's $700 billion.
Most of it is paid indirectlythrough government, medicare
Part D, so taxpayer money, orthrough commercial health
insurance plans.
But now increasingly people paymore of it over the counter.
(41:22):
All of that is managed.
All of that payment flow ismanaged by PBM.
These three PBMs and these threePBMs are Fortune 50 companies
and they are manipulating theprice of drugs, all uh of drugs
all the time, causing huge uhcost overruns and um, and they
(41:42):
don't do anything that'sparticularly useful.
They're just a claims processor.
So it's like the pharmaceuticalcompanies.
They're price gouging, they'redoing lots of bad things, but
they are at some level.
They do have scientists workingon drugs.
The other guys they don't evenmove drugs around.
They're just like literallypricing agents and they are
extracting, I don't know,probably $50 to $100 billion,
(42:05):
maybe $200 billion a year ofexcess pricing from
pharmaceuticals and I should sayit's hard to explain what they
do.
But one of the arguments theymake, believe it or not, is that
they actually hold they saythat they hold down
pharmaceutical prices.
The best example we have of whatactually of how they operate is
(42:27):
in Kentucky, where last year ortwo years ago the legislature
just got rid of their PBMs andsaid, through Medicaid, we are
just going to work through ourown middleman and we're going to
get rid of their PBMs and saidthrough Medicaid, we are just
going to work through our ownmiddleman and we're going to get
rid of these big commercialones and we're not going to use
them anymore.
And they saved about 20% ondrug costs, which is a huge
amount of money.
It's a huge amount of money andthat's just Medicaid in
(42:51):
Kentucky.
So there are monopolizationproblems all over the economy.
There's a kind of a mafia.
I call them a mafia becausethey really are.
When you talk to people whodeal with them they act like a
mafia, except they just uselegal tools.
But fortunately, I thinkthere's a huge amount of policy
(43:12):
activity at a state level, inCongress and among enforcers to
and in the courts to kind ofroll back the power of these
PBMs and I suspect that withinthe next five to 10 years the
current model of PBMs is justgoing to disappear because
there's just policymakers areacting.
You know they've heard fromtheir constituents and they
don't like it like it.
Speaker 1 (43:40):
Let's talk about for the remaining few minutes here,
the sub stack, the types ofcontent that you put out there,
what people get if they aresubscribed.
I see your emails continuously.
I've actually recommended yoursub stack through the lead lag
report as well in the networkbut talk about that for a little
(44:07):
bit Sure.
Speaker 2 (44:08):
So I try to write about the politics of monopoly
and finance.
So this is a mix of businessystuff so like this if you can
see on the screen right nowpipes and sort of storage units
there's a merger going on thereand I just kind of discussed
those.
But I've discussed monopolieseverything from monopolies in
(44:29):
big tech to cheerleading this isa big cheerleading monopoly to
FICO scores cheerleading this isa big cheerleading monopoly to
FICO scorers and I really getinto the nitty gritty of how
these monopolies work, whatcontracts they use.
So that's kind of one bucket.
The other bucket is kind ofmore political.
So that's not elections,because other people do that
(44:49):
kind of stuff.
But what are the policymakersdoing about this?
And then, what are the fightsamong policymakers and elected
officials vis-a-vis monopolypower?
So some of the other storiesthat you've put up are like what
is Trump saying about bigbusiness?
What does Kamala Harris thinkabout big business?
How does JD Vance think aboutbig business?
(45:10):
These are, I think they allhave track records.
I think they all have trackrecords.
Really nobody, I think, outthere is focused on what these
people are doing vis-a-vis bigbusiness.
I think voters are reallyinterested, they really care
about this stuff, but thepolitical news is largely about
culture war, I think, culturewar stuff.
(45:33):
And so I try to avoid that andI really try to argue not argue,
but I try to sort of likeobserve.
What are the policymakers doing?
What is the government doing?
What's the stuff that you'renot really hearing through the
media about what government isdoing?
Because government does a lotof stuff.
Some of it's bad, a lot of it'sgood and we don't really hear
about it.
And I wanted people to know.
You know not you should likeyour government or not, but they
(46:02):
work for you.
This is your government.
So what is it doing?
Because I don't think you canhave a coherent political view
unless you actually know whatyour government is doing.
You know pro or con, right.
Speaker 1 (46:12):
So there we go, everybody.
Please make sure you check outthe bignewslettercom Matt
Silver's sub-sack.
Hopefully everybody enjoyedthis conversation.
Appreciate those that watchedthis live, those that are
listening to the edited version,and please make sure you share
the word around Lead Lag Live.
Hopefully I'll see you all inthe next episode.
Thank you, matt, appreciate it.
Thanks for having me Appreciateit.
Cheers everybody.
(46:33):
Thanks for having me appreciateit.
Cheers everybody, thank you.
My name is Michael Guyatt, publisher of the Lead
Lag Report.
Joining me for the rough houris Mr Matt Stoller.
Matt, like I mentioned beforeus starting here, you've really
crushed it on Substack andcertainly have a phenomenal book
as well.
But introduce yourself to theaudience Now.
Who are you, what's yourbackground, what have you done
throughout your career and whyare you focusing so much on
monopolies?
Speaker 2 (00:28):
Yeah, so my name is Matt Stoller.
I'm a public intellectual,which is a bullshit job term.
It means that I write stuffonline and kind of a journalist.
So I write for a newslettercalled Big, which is where I
write about monopolies, I writeabout the politics of finance,
and then I also am the directorof research at a think tank
(00:49):
called the American EconomicLiberties Project.
Typically, I'm known as kind ofpart of a group of reformers
that are trying to address weakenforcement of our antitrust
laws, and so that's againstlarge technology firms, but
firms across the economy andhealthcare and other sectors.
Is that a good?
So that's what I do, and youcan find me at the
(01:11):
bignewslettercom or you can findme on Twitter, and there we go.
Speaker 1 (01:17):
So I love this quote when you describe what is big.
You started with Woodrow Wilson.
America was created to breakevery kind of monopoly and to
set men free upon a footing ofequality, upon a footing of
opportunity to match theirbrains and their energies.
We have come a long way fromWoodrow Wilson's quote here.
I want to hear your thoughts onhow do we get to a point where
(01:41):
it seems like almost everysingle industry is either an
oligopoly or outright monopoly?
What happened over time?
Speaker 2 (01:50):
Yeah, it's a great question.
So in the 1970s the US was apretty decentralized country.
It was just.
It was really.
There were big companies, butit was mostly a small business
nation a lot of small banks, alot of small retailers, small
farms.
And that was not an accident.
(02:11):
That was a consequence of ourchoices as a society.
We were like we're a nation ofcitizens and we want power to be
held at a local level, close tothe citizen.
But then there was a change inthat philosophy and this change
happened because of some veryeffective, really good writers
(02:34):
and thinkers on the right andthe left who argued that that
philosophy was foolish and whatwe need is not to think of
ourselves as citizens but tothink of ourselves as consumers.
And to think of ourselves asconsumers meant that our concern
should not be decentralizingpower or controlling commerce at
(02:56):
a local level through small,medium-sized businesses, through
making, selling things likethat.
It actually we should only beconcerned about low consumer
prices and it doesn't matter ifthere is consolidation.
Consolidation is actuallygenerally good because big
businesses are run by smartpeople and we like smart people,
(03:18):
we want them to run things, welike experts.
And so what happened is thatphilosophical change was
instrumentalized through therise of certain kinds of
economists.
And those economists you couldcall it neoliberalism or
whatever you want to, howeveryou want to talk about it.
(03:40):
But in both partiespolicymakers started saying you
know what, let's allowconsolidation as long as there
are the big guys promise lowprices.
So this would be everyday.
Low prices would be the sloganof Walmart.
So there were laws that wereconstraining the growth of these
kinds of discounters in the 70s, because these discounters had
(04:00):
caused really serious problems,and those laws were relaxed or
eliminated, and so Walmart was arelatively small store in 1970.
By 1980, it had a billiondollars in sales.
By 1985, sam Walton was therichest man in the country.
And then in the 1990s and 2000s, this new pro-monopoly
(04:23):
framework, which wasinstrumentalized by the
relaxation of antitrust laws.
Basically I mean regulation too.
You had a technologicalrevolution that was kind of put
on top of this politicalrevolution, and that
technological revolution was therise of these large technology
firms who were born native to apolitical, a legal environment
(04:48):
where monopolization wasessentially legal.
And so what happened is, youknow, a whole bunch of companies
just kind of consolidated inevery part of the economy, from
retail to media, to defense, totechnology economy, from retail
to media to defense, totechnology.
And if you didn't want toconsolidate, if you just wanted
to make your goods or servicesand you know, make some money,
(05:21):
train your workers, whatever itis, then you would get
eliminated right.
Either your ability todistribute your products would
be foreclosed by largercompetitors, you would be given
a buyout opportunity that wastoo good to pass up, or usually
some combination.
So make you an offer.
You can't refuse kind of thing.
And so that's what happenedkind of all over the economy.
And that's why we're living in asociety right now where you see
(05:43):
just increasing amounts ofextraction.
And this extraction is reallyobvious in the form of things
Like, if you go anywhere now youlike put on your when you pay
for things, they ask you for atip, right, not just restaurants
, but all over the place, andit's like nickel and diming you
in emotionally fraught ways,cause it's like, do I give a tip
(06:04):
to like the locksmith?
I mean I'm not trying to insultthe guy, but like it's a
locksmith.
It's just weird All of theseweird administrative junk fees
that we're seeing everywhere.
These are kind of justsignposts of the bottlenecks,
the toll booths we have to gothrough for everything Because
they can now annoy you intosubmission because you really
(06:24):
have nowhere else to go.
That's what a consolidatedeconomy looks like.
Now I'm not even getting intohealthcare, which is like you go
to a doctor's office and youdon't know what kind of bills
you're going to get, and youknow it's just.
All of these things are justincreasingly annoying and
difficult, but that's so.
That's what happened and I cantalk about some of the things
(06:45):
that I think you know.
There's been this reformmovement that's emerged the last
five to 10 years, concurrentwith Trump and Biden, that's
trying to alter this.
It can talk about that if youwant, but that's the answer to
your question.
Speaker 1 (07:00):
How much of this is more just sort of the general
aspect of the Pareto principleright, the 80-20 rule, that in
general you end up having aselect number of variables being
explanatory of the bulk of thesolution.
I mean, certainly you can makeit easier for monopolies to
become monopolies, but is theresome inevitability that tends to
(07:20):
happen anyway?
Speaker 2 (07:23):
No, there isn't.
I really reject that becausewe're not talking about anything
really technological in itscore right, we're talking about
legal structures.
So, for example, you could saythat Google search has natural
economies of scale.
(07:43):
It does Search requires largeamounts of data.
There are reasons why you wouldprobably have just a small
number of search engines, butthere's no reason why you would
have to choose to have Googleown, say, search and also
(08:04):
YouTube, to choose to haveGoogle own, say, search and also
YouTube.
That's just a legal decision toallow Google in 2005 to buy
YouTube.
It's just a choice, right?
There's no technological reason, like right now, if you try to
search Reddit with a non-Googlesearch engine, you can't.
Why?
Because Google has a contractwith Reddit where they pay them
(08:25):
money to exclude rivals.
That's not a technology element, that's just a legal choice.
And if you step back morebroadly, the internet itself is
a huge economy.
That's the biggest networkwe've ever seen in human history
and no one owns it.
And that's because we made achoice in the 60s and 70s and
(08:47):
80s when developing the internetthat no one would own it, that
it would be a set of protocolsand standards, and you could do
that in any industry the hugeamounts of data that Google owns
and controls to create itssearch engine, owns and controls
(09:08):
to create its search engine.
That data doesn't have to beowned and controlled solely by
Google.
They could give access to thatdata to anybody that wants to
create a rival search engine.
Right, that's a politicalchoice we could make.
We make choices about copyrightand AI all the time, and I'm
just using that.
But you could look at likethere are any number of other
ways to understand this problem.
Like, for example, we justassume, oh, you want to use some
(09:31):
sort of mapping service orlocation service, and there's
lots of different ways to dothat, and you know, what people
don't think about is that thegovernment just runs the GPS
system.
Right, it's just a governmentservice and the government
doesn't.
You know, it just allowsanybody to have access to it.
(09:52):
That's another choice that wecould make.
I'm not saying that thegovernment should be running
everything, but what I'm sayingis there are lots and lots and
lots and lots and lots and lotsof thoughts, of legal choices we
make about how to deploy thescientific and engineering
expertise that we have in oursociety, and we've made lots of
different choices throughouthistory to allow more people to
(10:13):
use that knowledge or to allowfewer people to use that
collective knowledge.
And that's so.
We just are making choices.
Speaker 1 (10:22):
So you said legal choices that we make, but in
reality it's policymakers, notthe voters, and that, I think,
kind of maybe dovetails a littlebit into the book Goliath the
war, 100-year war betweenmonopoly power and democracy.
It seems and you're obviouslymuch more entrenched into this
than I am it seems almostimpossible to disentangle the
(10:43):
incentives between the bigcorporate monopolies, the
policymakers themselves and theneven having voters be aware of
what's going on on the back end,as well as the legal frameworks
.
To your point, I mean, it seemslike the voter has no clue.
And even if they had a clue,they couldn't really affect much
change anyway, I'm not a cynic.
Speaker 2 (11:05):
I mean I know that there's this just pervasive
pessimism, but you know, in 2016, trump made an anti-monopoly
case.
I mean, he attacked foreigndumping and American companies
for offshoring stuff.
Remember that carrier thingwhere there was a video of
(11:30):
carrier consultants saying we'regoing to offshore the factory
and it went viral because allthe employees were mad.
And then Trump talked about itand Obama made fun of them and
Trump attacked.
He went after Ford, he wentafter Apple, he went after
Nabisco, he went after all thesedifferent companies.
He went after Amazon formonopolization and not paying
(11:52):
taxes.
And he made arguments aboutmarket power all the time.
He attacked the AT&T TimeWarner merger.
He said that NBC and Comcastthat merger shouldn't have gone
through until 2010 becausethat's too much control of the
media by a small number ofpeople.
And you know, I think there'slike a problem.
(12:12):
The narrative here that I'mtelling is a little bit weird,
right?
Because I'm a Democrat, Ididn't vote for Trump.
I'm not a Trump supporter,listened to what he said and
voters responded to it.
Now Biden similarly.
I mean, biden didn't make thesekinds of arguments publicly
because he had a differentframework, but he executed on
(12:34):
them and I think voters have alot of power.
I mean voters can make choices.
Now, the interesting thing is,today Trump isn't making these
arguments at all.
I mean he's really like totallygiven up on the anti-monopoly
frame and it'll be aninteresting question where
(12:58):
Kamala Harris is on it.
But I think I mean, generallyspeaking, you know, voters have
a lot of power and and it's truethat that sort of the, the, the
establishment per se, and, youknow, big money interests have
some ability to influence people.
But I've talked to, you know, Italked to a lot of voters and
(13:21):
they believe in.
You know, oftentimes theybelieve in bad ideas and vote
for them, or they believe ingood ideas and vote for them,
and you know they're getting Idon't want to say they're
totally getting what they want,but I am not one of these people
who is, who thinks, who wantsto infantilize voters and say,
oh, you're oppressed, right?
We have the honor of living ina democracy.
(13:42):
Our politicians are doing, wehire them and they largely do
the things that we want them todo, and then we often get mad at
them because they do thesethings, things.
But it's like you talk tosomeone.
(14:03):
I talk to people who are being,you know, dealt like monopolies
are screwing them all the time,and a lot of times they're you
know they're like we wantsomeone to do something about
this, but a lot of times they'renot.
A lot of times they're afraidof challenging power, and I
think that policymakers beingafraid of challenging power is
(14:23):
really just reflecting theirconstituents and their voters,
and so I'm not willing to letvoters off the hook.
I think voters need to grow upand make important choices, and
I think that they are startingto do that.
I'm not going to say I'm notgoing to give up on democracy.
I just don't think that's awise choice or an honest one.
Speaker 1 (14:44):
So, since you mentioned that point about Trump
you had a whole post on that onSubstack why has Trump stopped
attacking big business?
Because, you're right, I hadn'treally thought of it before,
but I remember the rhetoric whenhe was first running and
clearly you don't see it today.
Do you think that's?
Is that purposeful, or is itmore just a function of he's
latching onto the immigrationdynamic and doing what he always
(15:07):
does, which is just keephammering the thing that
everyone is talking about in themedia?
Speaker 2 (15:10):
I think it's because Steve Bannon isn't there.
I mean, I don't know, becauseI'm not a Republican, I don't,
that's not my world.
I'm a Democrat and I'm prettytied into the Democratic
establishment.
I'm just, I have a lot offriends on the on the right.
I have a lot of friends on theright.
I respect a lot of people onthe right, but that's my view is
like Steve Bannon, say what youwill about him, he understood
(15:32):
populism and he was a strategistand he's in jail right now and
so Trump.
Trump has kind of an instinctiveability to disdain the
establishment.
But it was I think it wasBannon who was kind of.
You know he's reading a lot ofstuff from, say, like Elizabeth
Warren and anti-monopolist, andkind of translating it into into
(15:53):
Trump isms, and that he's notthere now is basically running a
normie Republican campaign.
I mean, he doesn't look like anormie Republican because he's
Donald Trump.
But you know the the KamalaHarris is an ultra liberal and
you know, liberal, liberal,liberal, far left, radical, it's
(16:16):
like so boring and like it.
You know he's just not taking.
He's lost his ability todisrupt the news flow because he
doesn't, he doesn't seem to beable to.
He wants to be on the side ofthe establishment.
Now he's running like a like,kind of like a Republican
incumbent.
It's really weird.
It's weird to see Donald Trumptry to act like Bob Dole or
(16:36):
something like that.
Speaker 1 (16:43):
Let's talk about Kamala, because I don't know how
many people closely havefollowed her own views when it
comes to corporate power.
Again, you put a great post onthis as well.
What would Kamala Harris doabout corporate power?
What's your sense of her sortof philosophical view, if she
has one, around monopolies,corporate power and, more
importantly, around the role ofthe president in dealing with
(17:05):
that?
Speaker 2 (17:05):
So the best way that I somebody I don't know, I don't
know her, I've followed hercareer.
I somebody this is a seniorlabor labor told me that he
doesn't think that she has aphilosophy.
He thinks she has a set ofattitudes and the attitudes are,
you know, some good instincts,some bad instincts.
But she also has a set offriends in California and those
(17:27):
friends push her to do very sortof corporatist things.
So if you look at her campaign,it would be her brother-in-law
and close advisor is a guy namedTony West who's the general
counsel of Uber.
One of her advisors is.
Another one of her advisors,karen dunn.
She's actually a google lawyer,I believe she also did she
(17:50):
helped prep jeff bezos for histestimony to the um, to the to
congress.
She's also a qualcomm lawyer,um, so that's that's you know
one.
She's eric holder, who was alsoan you know worked, was
attorney general under obama andworked for uber big law guy.
(18:12):
He's vetting her vp pics.
Um, there's a you know, I kindof her her um niece worked for,
I believe, uh, facebook andslack, I think also uber, I
don't know.
There's just all of these uberlawyers around her, which is
just weird, and I'm not sayingshe doesn't have any good people
(18:36):
around her or anything.
I'm just saying, like, hernetwork is composed of this, uh,
this group of sort of siliconvalley obama crat type, and so I
don't know what she's going todo.
I mean, this is a differentpolitical party than it was
under obama.
It's moved in a much morepopulist direction, but, um, but
(18:59):
that's, that's kind of whereshe is.
I'm going to go into some of thethings that she did, which
which is, I think, moreillustrative, like as as
California AG, she was prettygood on healthcare consolidation
, so she she investigated SutterHealth, which is a big hospital
in California, and then hersuccessor brought case.
She did some things on healthinsurance mergers, some good
(19:19):
stuff on pharmaceutical pricesand patents, and that was, I
think, very kind of staff driven, but as a politician, she
didn't stop it.
She allowed it to go forward,she talked about it, so that's
good.
On the other hand, she did somereally bad things from my
perspective, in terms ofallowing for during the
(19:39):
financial crisis, allowing forforeclosures.
Financial crisis, allowing forforeclosures, mass foreclosures,
instead of trying to reallyaddress the, the large banks and
um signed a kind of a fakesettlement of where they there
were these fake fines, and nowshe's bragging about that
settlement, which is like Ithink it's pretty, pretty gross.
But you know, there there aresome reasons that you could say
(20:02):
I just did some things here orthere for a few homeowners, but
it it largely was a continuationof the Obama framework on the
financial crisis, which was abad framework.
And then on big tech, her trackrecord is mostly mixed to bad.
So as California AG, she didn'tdo anything while these
companies became immenselypowerful.
Do anything while thesecompanies became immensely
(20:27):
powerful.
She's a few things where shedid look at some privacy,
elements of, say, meta, but ingeneral has been, I would say,
more of a friend to big techthan not.
And then on the campaign, what'shappening now is Wall Street
and Silicon Valley people andcrypto people are telling her
hey, you should really reversethe Biden administration
framework on trade and antitrust.
(20:47):
And the campaign has mostlygiven signals that they're
willing to do that.
Whether they're doing that toraise money or whether they're
doing that because they arewilling to change the policy,
whether it's whether it's bothpolicy, whether it's both, I'm
not totally sure.
(21:08):
I mean at the same time, she isclose with some unions who like
this populist stuff, so it'skind of a mixed bag.
I, however, am generally apessimist on Harris.
I don't expect it to be a fightwithin the Democratic Party and
I don't think she's going to beon the side of populists.
(21:28):
But I could be wrong.
Speaker 1 (21:29):
I've been wrong before and I'm not definitively
saying that, but I am notencouraged by what I've seen so
far, there's a comment from theYouTube side I'm going to show
here.
I think you might bediscounting the PayPal mafia
influence on the Trump campaign.
I don't know.
(21:49):
I'm not quite sure exactly whatthat's referring to.
I don't know if you have anythoughts on that.
Speaker 2 (21:52):
Yeah, no, I can describe that.
So the PayPal mafia is a groupof very it's a very powerful
network in Silicon Valley.
So it's a group of people thatworked at PayPal.
So this would be like Elon Muskand Peter Thiel ran PayPal, but
(22:12):
then there was all sorts ofother people who started, you
know, who became billionaires.
Reid Hoffman, I think, was oneof them.
He was a founder of LinkedIn.
There's just a lot of, I think,yeah, there's a lot of venture
capitalists.
It's a powerful network andthey have split.
There are Democrats and theRepublicans in it, but a bunch
of the Republicans have gottenbehind JD Vance and uh and Trump
and they you know it's weird,because they are very into
(22:37):
crypto, they're, they're,they're kind of into um, like
military tech, and they havesome links with big tech, but
they also dislike Google, likePeter Thiel hates Google, for
example, and I think Elon Musksometimes talks about breaking
up Amazon or breaking up Google.
These are not Now, I don't knowif they're sincere, I don't.
I don't think Musk is.
(22:57):
I think he says things to makehimself more money, but I don't.
You know, I don't know, butit's.
There are splits in SiliconValley and the PayPal mafia.
Some of them have gotten behind, particularly Vance, and I
think they believe that, well,they really hated what Biden was
(23:18):
doing on a couple of differentthings.
Where they are on Harris is nottotally clear to me.
But yeah, I mean I think that'sa totally legitimate point.
Maybe they think that, maybethey want an end to antitrust.
Maybe they want antitrust usedagainst their opponents.
(23:40):
I mean, if Google gets brokenup, they'll probably do pretty
well because they can invest inrivals or something like that.
I don't know, but I thinkyou're right to not.
You know, I think it'simportant not to overlook the
funding and cultural power ofthose guys.
Speaker 1 (24:01):
When I look at stock market performance generally,
when you have a Democrat aspresident, the tech sector has
the most outperformance.
When you have a Republican inoffice, the tech sector is more
like other sectors, so you tendto not have that sort of
outsized return, which maybeit's random, but it makes me
(24:23):
think that.
Speaker 2 (24:24):
Right, we were saying under Republicans you don't
have an outsized return of tech.
Speaker 1 (24:28):
Historically when you look at the administrations and
tech performance relative toother sectors.
Right.
Speaker 2 (24:35):
Go, please.
Well, I mean, I just recalledTrump.
There's this image of him andit says him holding a piece of
paper that says MAGA and it saysI think Meta, amazon, google
and Apple, and it's the $1trillion club.
They all hit a trillion dollarsin market cap under Trump.
And he was bragging about thateven though he did bring some
(24:56):
antitrust cases against Googleand Facebook and talked a big
game.
So I don't know that.
Maybe there was outperformances, yeah, in the past.
Speaker 1 (25:09):
But I guess I guess where I'm going with that.
That point is is there is therea historical sense that
Democrats have been morefriendly towards tech
oligopolies and monopolies thanRepublicans outside of Trump?
Speaker 2 (25:18):
No, there there's a misconception that that is the
case, but in general, the bigtech has a lot more friends and
allies on the Republican sidethan on the Democratic side.
Early 2000s there were bigfights between the telecom
(25:44):
industry, which was Republicanaligned, and Google, which was
kind of emerging, and theRepublican aligned.
Like lobbyists at AT&T spread alot of rumors among Republican
staff about Google, how Googlewas Democratic and whatnot.
And a lot of the employees ofthe tech firms give to Democrats
, to Democrats.
(26:08):
But if you look at the actualpolicies and if you look at
actual votes, it is 100% theRepublicans, who are hostile to
more aggressive antitrustenforcement, who are hostile to.
You know, whenever you try todo something like prevent big
tech from using trade agreementsto expand their power, it's the
Republicans who are hostile tothat.
(26:28):
It's the Republicans who arereluctant to impose new rules
and it's the Democrats who arekind of split and a lot of the
Democrats are not necessarilylike.
The Democrats are in a struggle.
I think the Republicans are ina struggle too, but the way I
(26:49):
think the best way to understandit is that in 2022, there were
a series of antitrust bills thatwere put forward and the main
problem was the Republicans justdidn't want to vote for these
bills.
Some Republicans did, but mostof them didn't want to vote for
these bills.
Some Republicans did, but mostof them didn't.
And some Democrats didn't wantto vote for it, but most of them
(27:09):
did.
Now there was one bill that didmanage to make it into law
Ultimately.
Chuck Schumer didn't want to putthem up for a vote, because
Chuck Schumer is corrupt andtakes money from big tech, and
so does Mitch McConnell.
Mitch McConnell and ChuckSchumer collaborated together to
prevent a vote, but they didallow one bill to get a vote and
in that bill that made sometechnical improvements to
(27:30):
antitrust law, 80% of Democratsvoted for it and 20% voted
against it, and 80% ofRepublicans voted against it and
20% voted for it.
It and 20% voted for it.
So that's not to say and thelobbying on it was big tech.
So that's not to say that allRepublicans are for big tech and
(27:52):
all Democrats are against bigtech, because that's not the
case.
There are some reallyaggressive Republicans who are
populist and want to bring in,want to address big tech.
Trump was the president whobrought the first case antitrust
, federal antitrust case againstGoogle and Facebook.
But it is to say in generalthat the fight against big tech
(28:14):
is more supported by theDemocratic world than the
Republican world, and I thinkit's puzzling because I think
Republican voters are moresympathetic to the fight against
big tech.
But that is what is going on inDC.
Speaker 1 (28:30):
We're obviously talking from a very US-centric
perspective, but I am curioushow closely you've looked at
international monopoly oligopolydynamics.
Is it as pervasive?
Obviously different laws,different cultures.
Talk about that for a bit.
Speaker 2 (28:45):
Yeah, it is just as pervasive.
It's the same fight all overthe world.
I mean, maybe with someexception, china, with the
exception of China, but yeah,100% these trends are global,
the ideas are global.
There are global conferences ofantitrust enforcers.
The US helped set up antitrustagencies all over the world in
the 1990s, also in the 1960s Twodifferent it's in Europe in the
(29:10):
1960s, then all over the worldin the 1990s.
Antitrust enforcers look to theUS or did look to the US for
best practices.
So you know, google's a globalmonopoly, facebook's a global
monopoly, microsoft's a globalmonopoly.
These are so 100% same fight,same problems, slightly
different cultures and languages, but no difference and
(29:34):
intellectually the samearguments and ideas.
Canada just strengthened itsantitrust laws.
Australia has strengthened itsantitrust laws.
The Europeans-ish they're moretalk than action.
Changes in Japan, changes inSouth Korea, changes in India,
nigeria just find meta in India,nigeria, just find meta.
(29:54):
It's not there really are.
I mean it is a US-centric fight, but it is a global fight and
really you don't have to like.
You see the same politicaltrends all over the world, the
rise of populism for the samereasons.
This is not a US, this is notjust a US story.
Speaker 1 (30:18):
The comeback I often hear from people that say uh, or
that are cynical about the ideaof strengthening anti-trust
laws is that we don't need morelaws, we need just better
enforcement of the existing laws.
Um, is there a degree of truthto that when it comes to
monopolies?
Speaker 2 (30:30):
well, I mean, I don't .
I don't distinguish betweenwhen I say you know, I know I'm
not.
I'm not arguing for stronger,for a specific technical change
or whatever.
I'm just saying you needwhether you do it through more
enforcement, better judges,stronger statute, I don't care.
Or just regulate other rules,whatever look at it, I'm like I
(30:54):
don't want.
You know, I don't call itscalpel surgery, you call it
heart surgery.
Like who cares whether it'sdone with a new statute or with
a better interpretation of theexisting statute or whatever?
Like as long as it gets done,it gets done right a change in
policy so that there's lessconcentration and centralization
(31:17):
of power in the hands ofprivate, unregulated monopolies.
And then you know, often whatyou'll see is that there's a
conjoined government monopolyalliance, and you could do that
in lots of different ways.
It doesn't just have to bethrough.
You know antitrust cases whichtake a long time and judges
really don't like them.
(31:37):
I'm totally fine with passing alaw that just broke up Google
by statute.
That would be, I think, a goodthing to do To allow, to ban
TikTok or to divest TikTok.
That is a fine way to do things.
So I'm not.
However you want to do it.
(31:58):
I'm cool with it, right.
But to give you a sense of whyantitrust law is very annoying,
they started investigatingGoogle in 2019.
Actually, the firstinvestigations of Google started
in 2008, 9, 10.
And then the FTC decided not tobring cases because,
essentially, the Google bribedenough people and citizens
weren't paying attention.
And then in 2019, there's aninvestigation that was largely
(32:21):
pushed by Bill Barr in the Trumpadministration, and the Trump
administration finally broughtthe case in late 2020.
And then it just went to trialthis year, right, or was it?
Yeah, I think it was this year.
So it's 2024, it comes to trial.
The judge hasn't even made uphis mind about whether Google is
(32:42):
a monopoly.
If he does say that it's amonopoly, then there's going to
be a remedy phase.
All right, what do we do aboutthe monopoly?
And it'll get appealed, and sowe could see this case taking
until 2026, 2025, 2027 beforeit's resolved, and that is no
way to organize the law.
That's crazy to say, all right,we have a problem in 2019.
(33:04):
We might not even solve ituntil 2026.
So I agree with people that saythat you need to have better
enforcement, you need to havemore enforcement, you need to
have faster enforcement, and Idon't care how we do it.
Speaker 1 (33:19):
Actually, I think that point is actually really
interesting 2019 gettingresolved in 2026, 2027.
Okay, well, now with AI makingeverything even more exponential
, it seems like there's going tobe this incredible mismatch
between everything going on withtechnology and then the laws
themselves, more so than we'veever seen between everything
going on with technology andthen the laws themselves, more
so than we've ever seen.
Speaker 2 (33:37):
I don't, I mean, I don't know, I'm, I'm a sort of a
.
I mean like I don't mean to beargumentative, but, um, well, I
do mean to be argumentative.
Uh, come on, I don't think it'sthat hard.
I, I, you know people talkabout oh ai, oh my gosh.
It's like oh, oh, you, it's notthat hard.
Just force Google to sellYouTube.
Like that's not that hard.
(33:58):
Force Google to, you know,split up Google and Gmail.
Like, yeah, there's some likehard questions around AI.
What do you do about NVIDIA andtheir software mode?
I mean, okay, but there's a lotof easy questions, and this
idea that, oh, we're just as allso complicated and hard is a
way of saying that there are noeasy questions.
(34:20):
But there are.
There's a ton of them, and oneof that's one of the nice things
about not having addressedmarket power for 50 years or 40
years.
There's a lot of low hangingfruit, and so I'm not I know any
people who's who's.
I think the argument that it'sall so complicated and all so
hard and everything moves sofast and the government is so
slow, I think that's all a myth.
I think that's all talkingpoints that are just designed to
(34:41):
make people feel like there'snothing they can do.
The truth is, this isn't thathard.
This is not a like.
We've done it before.
We've broken up big companiesin the past.
We could do it again.
This is America.
We should be able to controlour society.
We've always done that.
We've always done it that wayand it's just like we've spun up
in our minds that likeeverything is so hard and
(35:02):
difficult and there's nothing wecan do, and it's like I mean
that's like crazy.
It's crazy to think that way.
This is the country that did.
You know?
We went to the moon, right, andI don't mean to be like cliched
about it, but like this countryhas done great things, built
great things.
It's not that hard.
I mean it's yeah, doing greatthings is hard, but just
(35:23):
addressing some of theseproblems like whatever, let's
just do it.
Let's just have a judge issuean order instead of being all
like like I watched this Googlecase and one of the reasons it's
taking so long is because thejudge's guy named Amit Mehta and
he's an anxious ladder climbingliberal that doesn't know
business and wants to get it allright, and it's very annoying
and it's very anxious and it'sjust like if you have idiots
(35:46):
like that making these decisions, then, yeah, everything's going
to look really complicated.
If you just have people who are, who are normal and are not
afraid of power to makedecisions, it's not that hard.
Speaker 1 (36:00):
All right.
Well, let's talk about howsectors of industry where it
might be harder.
So you put a piece out insidethe mafia of pharma pricing.
My mind automatically goes totech when I think about
monopolies, but clearly inhealthcare space you can see it
in the pricing side.
Let's talk about that, becauseI think this is where you can
argue.
Maybe it's not as simple asjust doing what you just said,
(36:21):
right?
Speaker 2 (36:24):
So you want me to just talk about healthcare, is
that?
Speaker 1 (36:26):
Yeah Well, healthcare in general just sort of explain
the dynamics of the mafiacomponent and why that's so
challenging to stop.
Speaker 2 (36:34):
Right?
Most people think so.
This is about pharmaceuticals,right, because healthcare is
about 20% of our economy.
Pharmaceuticals, that's about$700, $800 billion a year, which
is not 20% of our economy.
What's our economy?
It's $25 trillion, somethinglike that.
So that's it's about $4 or $5trillion.
Pharmaceuticals it's about $700billion.
(36:54):
So it's a chunk of it, but it'snot the majority.
Most of healthcare is hospitals,which is its own monopoly
problem, but pharmaceuticals are.
You can divide it into sort oftwo different problems.
There's the pharmaceuticalcompanies, which have patents
for branded medication andcharge a lot of money and what
they do very muchoversimplifying, but what they
(37:17):
do is they try to discover drugs, they get patents on them and
then they charge a lot of moneyfor those drugs.
They also, of late, have playeda lot of games to try to extend
those patents illegally, butwe'll put that aside.
The other problem and this isthe one that I think is harder
for people to grab is that thereare six firms that control the
(37:40):
pricing and distribution ofthese drugs.
I wrote about the ones thatcontrol the pricing.
They're called pharmacy benefitmanagers.
The other ones that control thedistribution are called the
wholesalers.
But the pharmacy benefitmanagers are the ones who work
for your health insurancecompany or actually are owned by
(38:01):
your health insurance company.
There are three major onesOptum, caremark and Express
Scripts, and each one of them isowned by United Health Group,
cigna and Right and what they dois they arrange.
They're like the payment networkor the payment mechanism for,
(38:24):
um, uh, for pharmacies andpatients.
So a doctor prescribes you acertain drug, uh, he goes to the
pharmacy.
That goes to the pharmacy.
The pharmacy then dispenses itand you do a copay to the
pharmacy.
That pharmacy then getsreimbursed.
The agent that handles themoney is the PBM.
(38:49):
They're a middleman and theywere originally just kind of a
claims processor, almost like acredit card Not a credit card,
but almost like a credit cardand they would just work for
health insurance companies tojust manage that, because you
got lots of new drugs andsomebody needs to keep track of
it all, lots of pharmacies.
So they built networks ofpharmacies and they built
networks of drugs and if youwere a health insurance company,
you could just go to a PBM andsay, all right, I'm a health
(39:21):
insurance company, I want tocover this number of people in a
union or a company or whatever.
Give me a network of pharmaciesthey can use and give me a
network of drugs that they canget access to.
And there we go.
Well, that's how theyoriginally started in the 60s
and 70s, but then over time,they have developed through
changes in law.
They now have the ability tonegotiate with pharmacies and
negotiate with drug makers, andthey've also consolidated and
(39:41):
become part of health insurancecompanies.
So imagine if Visa andMasterCard could control all the
prices that you pay.
That's effectively what'shappened with PBMs, and so PBMs
three PBMs in particular arejust extracting huge amounts of
money by they all they have theyown now, they own their own
specialty, they own their ownpharmacies to mail order
pharmacies.
(40:02):
So cbs owns a big pbm, they'rea big pharmacy, but but you know
, optum also has an optum.
Uh, you know pharmacy, mailorder pharmacies.
And so what they do is theytake patients and they say, all
right, if you you know you mightsay like a doctor might
prescribe you X drug, they willsay, all right, well, instead of
(40:23):
getting drug X, we want you tobuy, get drug Y, which might be
higher cost, but we have aspecial deal with the drug maker
of Drug Y where they give usspecial kickbacks, and so you
have to go to Drug Y and you paya lot more.
Or the government, throughMedicare Part D, pays a lot more
medication at prices that arenot just a little bit higher but
(40:59):
200, 300, 400 times the priceas you can get it just kind of
over the counter at, say, costco, and this is.
Americans pay about $90 billionthrough co-pays, co-insurance,
so that's $700 billion.
Most of it is paid indirectlythrough government, medicare
Part D, so taxpayer money, orthrough commercial health
insurance plans.
But now increasingly people paymore of it over the counter.
(41:22):
All of that is managed.
All of that payment flow ismanaged by PBM.
These three PBMs and these threePBMs are Fortune 50 companies
and they are manipulating theprice of drugs, all uh of drugs
all the time, causing huge uhcost overruns and um, and they
(41:42):
don't do anything that'sparticularly useful.
They're just a claims processor.
So it's like the pharmaceuticalcompanies.
They're price gouging, they'redoing lots of bad things, but
they are at some level.
They do have scientists workingon drugs.
The other guys they don't evenmove drugs around.
They're just like literallypricing agents and they are
extracting, I don't know,probably $50 to $100 billion,
(42:05):
maybe $200 billion a year ofexcess pricing from
pharmaceuticals and I should sayit's hard to explain what they
do.
But one of the arguments theymake, believe it or not, is that
they actually hold they saythat they hold down
pharmaceutical prices.
The best example we have of whatactually of how they operate is
(42:27):
in Kentucky, where last year ortwo years ago the legislature
just got rid of their PBMs andsaid, through Medicaid, we are
just going to work through ourown middleman and we're going to
get rid of their PBMs and saidthrough Medicaid, we are just
going to work through our ownmiddleman and we're going to get
rid of these big commercialones and we're not going to use
them anymore.
And they saved about 20% ondrug costs, which is a huge
amount of money.
It's a huge amount of money andthat's just Medicaid in
(42:51):
Kentucky.
So there are monopolizationproblems all over the economy.
There's a kind of a mafia.
I call them a mafia becausethey really are.
When you talk to people whodeal with them they act like a
mafia, except they just uselegal tools.
But fortunately, I thinkthere's a huge amount of policy
(43:12):
activity at a state level, inCongress and among enforcers to
and in the courts to kind ofroll back the power of these
PBMs and I suspect that withinthe next five to 10 years the
current model of PBMs is justgoing to disappear because
there's just policymakers areacting.
You know they've heard fromtheir constituents and they
don't like it like it.
Speaker 1 (43:40):
Let's talk about for the remaining few minutes here,
the sub stack, the types ofcontent that you put out there,
what people get if they aresubscribed.
I see your emails continuously.
I've actually recommended yoursub stack through the lead lag
report as well in the networkbut talk about that for a little
(44:07):
bit Sure.
Speaker 2 (44:08):
So I try to write about the politics of monopoly
and finance.
So this is a mix of businessystuff so like this if you can
see on the screen right nowpipes and sort of storage units
there's a merger going on thereand I just kind of discussed
those.
But I've discussed monopolieseverything from monopolies in
(44:29):
big tech to cheerleading this isa big cheerleading monopoly to
FICO scores cheerleading this isa big cheerleading monopoly to
FICO scorers and I really getinto the nitty gritty of how
these monopolies work, whatcontracts they use.
So that's kind of one bucket.
The other bucket is kind ofmore political.
So that's not elections,because other people do that
(44:49):
kind of stuff.
But what are the policymakersdoing about this?
And then, what are the fightsamong policymakers and elected
officials vis-a-vis monopolypower?
So some of the other storiesthat you've put up are like what
is Trump saying about bigbusiness?
What does Kamala Harris thinkabout big business?
How does JD Vance think aboutbig business?
(45:10):
These are, I think they allhave track records.
I think they all have trackrecords.
Really nobody, I think, outthere is focused on what these
people are doing vis-a-vis bigbusiness.
I think voters are reallyinterested, they really care
about this stuff, but thepolitical news is largely about
culture war, I think, culturewar stuff.
(45:33):
And so I try to avoid that andI really try to argue not argue,
but I try to sort of likeobserve.
What are the policymakers doing?
What is the government doing?
What's the stuff that you'renot really hearing through the
media about what government isdoing?
Because government does a lotof stuff.
Some of it's bad, a lot of it'sgood and we don't really hear
about it.
And I wanted people to know.
You know not you should likeyour government or not, but they
(46:02):
work for you.
This is your government.
So what is it doing?
Because I don't think you canhave a coherent political view
unless you actually know whatyour government is doing.
You know pro or con, right.
Speaker 1 (46:12):
So there we go, everybody.
Please make sure you check outthe bignewslettercom Matt
Silver's sub-sack.
Hopefully everybody enjoyedthis conversation.
Appreciate those that watchedthis live, those that are
listening to the edited version,and please make sure you share
the word around Lead Lag Live.
Hopefully I'll see you all inthe next episode.
Thank you, matt, appreciate it.
Thanks for having me Appreciateit.
Cheers everybody.
(46:33):
Thanks for having me appreciateit.
Cheers everybody, thank you.
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