This book has been a weird combination of compelling and infuriating. Compared to every other money-related book I've read, it is very personal and narrative in structure. Stoller doesn't write about abstract trends or forces: he has a cast of heroes and villains, hundreds of "characters" who are actual historic persons, famous or not, and the tale he tells is all about the individual choices people made and the effects they had: who created a policy and why, what effect that had on another person, how that influenced a later thinker, who tried to stop that policy. It's much more of a page-turner than I was expecting. But, it's also a book that I frequently wanted to hurl at the wall in fury. About half of the time that's because I was so mad with Stoller at the greed and stupidity on display. The other half of the time I was so mad at Stoller for the moral equivocation of his monomaniacal framing.
I have a lot that I want to write about this book and am having trouble structuring all of it. I'm planning to start with a summary of the book, then how I'm processing it in conjunction with other recent readings of mine, then why I think it'd bad and important, and finally how it relates to some contemporary political topics I've been mulling over recently.
The book starts with the founding of America, and specifically the famous Hamilton/Jefferson conflict between strong centralized power and weak dispersed power. Stoller continues the longstanding historic tradition (not the recent post-Miranda trend) of viewing Jefferson as a "man of the people," a champion of small independent farmers, seeking to break up concentrations of wealth and control. I'll have more opinions about this below! Obviously the 1790s don't map directly to the later concerns of the industrialized nation, but Stoller identifies the seeds of the coming battle: On the one side, a New York City-based, Wall Street-oriented, bank-funded faction seeking to grow larger businesses; on the other side a populist, small-town, entrepreneurial spirit.
Stoller moves relatively quickly through the early era of monopolization, the "trusts" that arose after the Civil War: the railroads, Rockefeller and Standard Oil, the Morgan bankers. I'd recently read about this era in Strike!, and it was cool to see it from another perspective, focusing more on how these corporations got to be so large and powerful in the first place. It's a dynamic that continues through the whole book: a new industry starts, lots of competitors jump in, someone raises a lot of money on Wall Street, buys out their competitors, raises prices, cuts service/quality, bankrolls politicians and the media, uses their dominance in one industry to establish beachheads in another, and continues. The vast majority of people end up losers: workers have their pay cut and conditions worsen, customers pay more for worse service, communities are shuttered or dilapidated, citizens feel outraged and helpless; the only benefit flows to the monopolists, who collect obscene profits and built permanent dynasties.
The book slows down a little and gets more detailed in the early 20th century. Louis Brandeis emerges as the great leading intellectual light of the antimonopoly movement, and a wide variety of politicians arise offering solutions to the problem. Pretty much all of these politicians are flawed for various reasons - again, I'll have more opinions on this below - but Brandeis himself is easy to root for. Brandeis's great insight was that the bigness of companies was itself the problem, and in order for markets to flourish, they needed to be broken up. Communist, fascist, and capitalist movements all took for granted that consolidation of industry was good and inevitable and that the important decision was who would run these large organizations and for what purpose. Brandeis had a uniquely American vision and goal: return to a system with many buyers, many sellers, all competing against one another in a fair market following democratically-established rules. The government should pro-actively keep companies from gaining an unbalancing dominance in their market, rather than wait for the consolidation to finish and a crisis to occur. Stoller never uses this phrasing, but I kept thinking of the old phrase "Power corrupts and absolute power corrupts absolutely." The goal of regulated competition was to remove the temptation to do evil, and eliminate the possibility of harm from an out-of-control and unstoppable force.
This period, maybe from roughly 1900-1935 or so, is one of the most intellectually interesting, with lots of competing philosophies, and I learned a ton about it. My shallow understanding had been that there was a "Progressive" movement, and I sort of lumped together all the opponents of Big Business into one group. In Stoller's framing, though, it wasn't so much a division between pro-corporate and pro-people; rather, it was a battle between Big and Small. As one major example, I tend to think of Teddy Roosevelt as being a progressive: a trust-buster who stood up to the giants of his day. As Stoller presents it, though, Teddy didn't object to the companies' size, but rather their behavior. He wanted them to be subservient to the government, to follow his plans for the country. This repeats over and over throughout the 20th century as a schism within the left/progressive/liberal side: on the one hand, followers of Teddy who like central planning, managed markets, national industries run for the benefit on the people; on the other hand, followers of Brandeis who want markets that are free but filled with small players, a government that sets the rules but does not direct industry.
This perspective was really interesting and leads to some (to me) unusual conclusions. There's a brief reference to the famed socialist Eugene Debs; as Debs devoted his life to fighting the same corporate villains as Stoller chastises, I was kind of expecting him to be lauded. But Debs, like all good socialists, believed (with Marx) that consolidation of industry was a historical inevitability, driven by ineluctable forces of efficiency. Debs didn't want to break up the railroads and other monopolies, he just wanted them to be run for the good of the workers rather than the benefit of the owners.
Of course, the US wasn't the only nation grappling with these issues. The specter of fascism looms over this era, and it's kind of creepy how close America got to adopting something very similar: a command economy, fusing together political, military and economic power. This, in fact, ends up being one of the more successful drivers for the eventual establishment of the New Deal and implementing something like Brandeis's vision. FDR and other politicians would eventually see diverse, decentralized economic markets as a key bulwark against political fascism, and intentionally crafted an American system that would resist the cartelization that IG Farben and other European firms established on the road to the Third Reich.
It wasn't an easily or quickly settled debate, and well into FDR's presidency there was still a powerful and active faction pushing for TR-style nationalization of industry. But managed competition eventually triumphed: in this setting, government is still an actor, but much more like a referee than a coach. It does act: it can legally block mergers, and can split up companies that have grown so large and powerful that they dominate their field. And sometimes the government will get more directly involved; one of the more interesting examples is the fight with Alcoa in the 1930. Alcoa had monopolized the aluminum trade, and, as the US started to get on a war footing, the military grew alarmed at the state of the industry: it could not produce enough aluminum to meet military needs, and they had grown complacent, slashing R&D and falling significantly behind European aluminum technology. The solution wasn't to nationalize Alcoa: rather, the government seeded competitors, providing capital and land and resources to highly-motivated entrepreneurs, and then signing favorable contracts that would support them as they ramped up production. This didn't just solve the aluminum shortfall, it also incentivized Alcoa to improve: to re-invest in its business, expand production, and actually get better instead of just collect on its dominant position. As a result, the American aluminum industry emerged far stronger after WW2 and would dominate for decades to come.
Throughout the late 19th and early 20th century, there was a constant yo-yoing: monopolies would grow huge, there would be a large financial bubble, the bubble would burst, the real economy would suffer, politicians would enact reforms, those reforms would be subverted or co-opted (as in the capture of the FTC by pro-business interests), monopolies would rise again, and the cycle would continue. This was finally broken by FDR and the New Deal. It was not easy! It was a long, decades-long struggle to bring giant corporations to heel, to embarrass the banks, to pass progressive legislation, to create a bureaucracy to carry out that legislation, to appoint a judiciary that would enforce the legislation. But, once it was in place, it was remarkably resilient. The boom-and-bust cycle finally paused and there was remarkable consensus across parties and generations. Even as late as Richard Nixon, anti-monopoly action was accepted as good. I'm not used to seeing Nixon presented sympathetically, and he's not exactly one of Stoller's heroes, but he does come off pretty well: Nixon's legendary bitterness was often directed against large corporations, and he's quoted as saying things like "I'd rather deal with an entrepeneur than a stuffed shirt at a department store" and "I'm not sure if we want to be a nation of supermarkets." Nixon wasn't a committed ideological adherent to antimonopolism, but his Justice Department vigorously prosecuted monopolies, and he saw these actions as being popular.
I tend to think of the Cold War Consensus as being all about foreign policy, of Republicans and Democrats agreeing on the importance of supporting western European democracies against the Communist threat; but there was an economic consensus, too: skepticism of banks, a "small is beautiful" ethos, a willingness to challenge concentrations of power. These weren't even controversial, political opinions, just technical details, like funding the military or collecting taxes. I suspect that at least part of the reason why the New Deal framework was so resilient was because so many people had lived through the Great Depression and never wanted to experience it again; they saw the New Deal as something that solved the problem and wanted to keep it. And, I suspect, it was at least partly due to that generation of people dying off that the New Deal consensus eventually dissolved and we got to where we are today.
Stoller's account of how it all falls apart is interesting. I tend to point to 1980, the rise of Reagan and trickle-down economics and the Chicago School. In Stoller's view, though, it was the left that destroyed itself, long before Reagan arrived at the White House. There was an interior, intellectual and moral rot that took hold within the Democratic Party, causing it to abandon its roots, alienate its popular base of support, and lose the Brandeisian legacy.
There are a lot of people Stoller points fingers at, but high on the list are public intellectuals like John Kenneth Galbraith. Several things started happening in the 1950s. The party grew increasingly under the sway of "eggheads", Ivy League-educated thinkers based in the Academy; in comparison with, say, President Truman, who had personal experience as a farmer and failed haberdasher, the center of the party drifted towards a more affluent, educated, white-collar leadership. The party grew increasingly elite, disdainful of its core membership. As monopolies ceased to be as threatening (since they no longer existed, or were thoroughly tamed), they were ignored, and leading thinkers once again fell under the lure of central planning. Mid-20th-century liberalism became a project of planned economies, of socialism. Big was no longer considered bad.
Of course, this wasn't happening in a vacuum: the Red Scare poisoned American politics and discourse, leading to widespread self-censorship and an upswing in Goldwater-esque conservatism. The field of economics stepped back from engaging with "political" questions, starting to view itself as a branch of mathematics or science rather than policy, intentionally removing consideration of values from its analyses. A nascent class of new billionaires, ironically funded by New Deal-era spending and protected by antitrust laws, emerged from the Texas oilfields and began funding right-wing academics and projects. This eventually organized around the Austrian and then the Chicago School of economics, led by Aaron Director and a network of like-minded academics and businessmen. But the struggle of the Chicago School against the New Deal regime took decades, and by the 1970s, their opposition had been hollowed out: not interested in defending the "small people," not recognizing any inherent problem with bigness, not viewing economic issues in general as particularly important.
Starting around the 1960s, there wasn't much economic ideology in either party, so individual behavior ended up seeming somewhat random. Nixon's Republican administration vigorously prosecuted IBM's computer monopoly and initiated the breakup of Bell Telephone. In the 1970s, Ralph Nader emerged as an anti-corporate crusader; but he was also reflectively anti-government and was not schooled in the history of the antitrust movement, and so the consumer-oriented movement he founded ended up unwittingly aiding in the dismantling of important antimonopoly systems because Nader didn't understand or care why they existed or how they worked. There is a real shallowness to the later years of this book that Nader helps exemplify: a group of self-righteous consumers demands that things be cheaper and more convenient. Businesses are all too happy to comply: they don't care about the prices they charge, they care about the profit they make. So consumer-rights groups ally with corporations to disable Fair Trade laws, to remove protections for workers and merchants, to encourage the growth of chain stores and monopolies. Workers get squeezed, or lose their jobs entirely as industries move overseas. And, in the long term, the consumers are defeated: with the rich variety of mom-and-pop shops vanished, they are not helpless against the whims of big retailers raising prices and slashing services, exactly what happened before the New Deal.
This is one of the subtle shifts that I hadn't thought about before. For most of US history, political economy focused on the citizen as a worker, considering a person in terms of what they can produce and contribute to society. For the "children of affluence," the post-WW2 generation, political economics started focusing on the citizen as a consumer, considering a person in terms of what they can consume and receive from society. This is a radical re-orientation, and obviously causes a host of problems. Why worry about your neighbor getting laid off, so long as you can buy a cheaper car?
It took me a while to put my finger on what the vacillation between monopoly and antimonopoly policy reminded me of, but I've finally got it: it's like the Old Testament stories about the Israelites. They're in trouble, God saves them, they honor Him and follow His laws, the nation prospers for a time; gradually they lose their way, grow complacent, stop honoring Him, and fall into trouble again. Reading scripture, it's very frustrating to see the loss of hard-won wisdom and the entirely predictable, inevitable consequences of straying from the right path. That's exactly the sense I got reading through Goliath: We've been here before, we know enough about human nature and finance to understand what's going to happen, we know how bad it can be, and yet we forgot our way, forgot our history, and so fell back into a completely preventable catastrophe.
It was really interesting to read about the technical details of how things unraveled. On the economic front, Stoller focuses on Walter Wriston, a hard-charging banker who rose to become the CEO of Citibank. Wriston invented the Certificate of Deposit, which I've grown up with and have always viewed as a benign, responsible savings vehicle; but the CD was specifically created as a loophole around New Deal banking regulations, particularly the prohibition against "hot money" (spending money to acquire deposits). CDs supercharged the lending system, allowing banks to leverage themselves and engage in riskier bets than they otherwise would have been allowed to take. A key quote comes on page 314, describing the economic system around 1970 once these new innovations had been accepted:
There was now one financial system for normal people, which was heavily regulated in the lending and borrowing one could undertake. There was another for big banks and corporations, who could operate in an unregulated land of exotic financial instruments, all backed by the Fed in the event of a crash.
That last clause is key. The Federal Reserve, originally invented by progressive reformers to bring big banks under the watchful eye of the government, had now turned a corner, implicitly guaranteeing to step in and protect large, private financial companies that had gotten into enough trouble to threaten the economy. We had now entered the world where profits are privatized and losses are socialized, where once again big banks could call the shots and the American people would suffer the consequences.
The book continues all the way through to the present day, and I increasingly recognized the names in the book as people I've seen on TV or read about in newspapers and not as figures from history. The Reagan/Bush administration undoes the New Deal, and Bill Clinton ensures it stays dead, lending bipartisan consensus to the folly of opposing monopolies. There are several pages on technology near the end which are really well-written. It's very concise, but I think Stoller gets everything right, down to the Homebrew Computer Club's sharing culture and Bill Gates' early efforts to commercialize and then monopolize software. Reading this belatedly reminded me at how viscerally furious I felt at the Microsoft monopoly in the late 90s and early 2000s, at the peak of my Linux advocacy. It's interesting how I haven't thought about it for so long. I think that at the time I viewed it as a single, offensive, personally-relevant thing; I now can see it in terms of a long tradition of monopolistic predation.
Reading about the economic and political disasters that have struck during my own lifetime is frustrating. In an earlier era events seemed to be driven by malevolence, like Andrew Mellon and Morgan colluding to enrich themselves with the corruption and complicity of public officials. Today, though, events are driven more by ignorance. George W. Bush didn't even understand what was happening when Lehman Brothers collapsed. Most of the Democrats under Obama had no understanding of the New Deal, and the few who did, like Robert Rubin, had built their careers on opposing it. Earlier generations had at least understood the struggle between centralized market power and a dispersed populist citizenry, so financial collapse was always followed by political reforms. After the 2008 financial crisis, though, both parties had the same underlying belief in big business, and took the essentiality of supporting financial markets for granted, so no reforms were done. (The only slight change was the creation of the Consumer Financial Protection Bureau, and even that was done to fit within the modern "consumerist" mindset of Nader and his descendants, rather than the worker- and citizen-oriented mindset of our predecessors.)
Okay! This is a long book and there's obviously a lot more (particularly more Andrew Mellon shenanigans), but that's a super-brief summary. Onward:
I thought a lot about Capital in the 21st Century while reading this. They aren't directly comparable, for several reasons. Stylistically, Piketty is very much based in data, with tables and graphs and charts, while Stoller is telling a story, with heroes and villains and plot twists. The timeline is different: both are especially interested in what happened before and after World War 2, but Piketty goes all the way back to 0AD and pays equal attention to many countries, including Germany and France and China and Britain and Japan, while Stoller is exclusively interested in the United States since its founding and particularly since the Civil War. And the scale is different. Piketty looks at the highest level, of the total wealth of nations, and at the lowest level, of how much wealth individuals hold. Stoller seems more interested in the midlevel: corporations, dynasties, specific industries and federal agencies.
That said, there are some meaningful intersections. I think their core argument is actually pretty similar: there aren't any natural laws that generate fairness or economic equality, and the mid-20th-century movement towards equality was largely the result of specific policies that were implemented in the West during that era. And, after those policies were unwound in the 1980s, vast accumulation of wealth (Piketty) and power (Stoller) resumed.
Capital in the 21st Century may be a little more pessimistic, as Piketty also argues that the postwar boom era was due to an incredibly unique intersection of circumstances (postwar reconstruction, technology advancement, a population boom AND progressive laws) that may not occur again in history. Stoller seems to imply (but doesn't flat-out state) that we could return to the good times of the 50s if we break the monopolistic chokehold on our democracy and return to New Deal-esque policies.
Stoller has a monomaniacal focus on bigness, while I don't remember Piketty making any particular arguments around the structure of the economy. It might be that Stoller's politics are a prerequisite for Piketty's economics: in order to reduce inequality, we will need to implement changes in our taxation and spending, but we won't be able to make those changes until we break up the power than monopolies hold over our government.
Once again, though, I think Piketty gives more reason for pessimism. If he is right, then equality tends to naturally increase as the economy grows, and decrease as it flattens (or declines). With that as background, there may have been natural forces at work that made it easier to implement some of the massive structural changes of the New Deal. Once again, Alcoa is a great example. There was a booming demand for aluminum at that time, and Alcoa couldn't keep up with all the demand that was out there, which made it relatively easy for the federal government to encourage competitors to start, and in doing so break up the monopoly. That would have been vastly more difficult, though, if growth had been stagnant and Alcoa could easily supply all the demand: simply starting competitors wouldn't have been enough if there wasn't unmet demand. So, as economic growth continues to slow in the coming decades, addressing monopolies in the 21st century may be significantly harder than it was in the 20th: governments will have fewer tools to address them, monopolies will fight harder to hold onto the existing pie, and there will be fewer natural openings in the market for new entrepreneurs.
And, I think the political and psychological dimensions may make it even more challenging to not just win reforms but to keep them enforced. FDR and his allies fought hard through the 30s and 40s to implement the New Deal, and that was followed by an unprecedented period of prosperity, which everyone could point to as proof that those reforms worked. But, if our economy is slowing now, then implementing those policies won't lead to a big boom: things will be fairer, more stable and more sustainable, but the actual size of our economy won't grow as much as it did in the 40s and 50s. Without as big and obvious of an economic reward, it will probably be more challenging to sell and sustain those policies over the long run, particularly since they will eternally be under assault from future would-be Mellons.
Not to mention that, as the economy slows and wealth and power are increasingly concentrated into fewer hands, it will get even harder to fight against those big companies... and, every year we wait, the harder it becomes to take them on. That's dispiriting!
All right, that's all stuff that's, uh, "good" about this book. As I noted before, though, I got pretty upset at a lot of what it does. I'm going to try and organize my thoughts here but they're probably going to end up sounding somewhat ranty, I apologize in advance for that.
One thing that this book has reinforced for me is that, while I increasingly want to view myself as a progressive, at the end of the day I'm probably a liberal. Those are terms that tend to get used and re-used and shift depending on your social circle and era, but in the current discourse, progressives are generally identified with the faction that wants big, structural change in our economic system, while liberals are more concerned with social justice and equality. Goliath is relentlessly a book about individual people making individual decisions, and at the end of the day I just can't make myself cheer on slavers and bigots, no matter how good their economic policy is.
It really is remarkable how, over and over again, the heroes and champions that Stoller identifies are people on the wrong side of history. Thomas Jefferson won office thanks to an image as a down-to-earth man of the plain people, but he was a slaver who owned hundreds of human beings, raped with impunity and lived a life of luxury and excess. Woodrow Wilson was a racist who segregated federal offices and screened Birth Of A Nation in the White House. Stoller's hero, Wright Patman, consistently voted against civil rights legislation throughout his career, opposed the integration of public schools, and supported the war in Vietnam.
To his credit, Stoller doesn't hide this dark side of his protagonists, and he duly notes their sins (though I feel like he does excessively airbrush Jefferson). In Stoller's telling, though, these are unimportant or irrelevant details that should not distract us from the enlightened wisdom of their economic plans.
It cuts both ways, too. Walter Wriston is one of the main villains of the book, right up there with Mellon and Bork, a prime architect of the financial trickery that will lead the country to ruin. And yet, Stoller concedes, Wriston also marked a break from the past. In a previous chapter, Stoller lauded the chastened bankers of the 1950s: men who were timid, boring, unintelligent. Banking was a profession where you would stash the wealthy and underwhelming scion of a local magnate. This was also a field that was universally staffed by Anglo-Saxon protestant men. Wriston, as part of his hard-charging ways, broke the mold, gleefully hiring Catholics, Jews, blacks, women: he liked all talent, no matter where it came from or what it looked like. Stoller explicitly decries the idea of a meritocracy, but never really gets around to defending his alternative. Once again, the advancement of gender and racial inequality is treated as an unimportant distraction, not meaningful in the same way that economic power is.
Of course, we need to do all of the above: make an inclusive society, promote both economic and social justice. We talk all the time about how the moneyed class uses racial tensions to divide and conquer the working class, pointing to racial minorities as bogeymen to undercut labor solidarity. But racial unity can also be used to distract from issues of money; this is most pronounced in the modern Silicon Valley monopolies, where companies like Google and Facebook are strong champions for liberal social issues like gay rights and invest real money and influence in advancing those causes, but also use those liberal alliances as a smokescreen to shield their greed from scrutiny and regulation.
Given all the above, I found myself morosely asking a question throughout the book: Why does it seem to be so rare for a politician to have been good on both social and economic issues? In the real world, at the end of the day we're eventually casting a ballot each November, and all too often are confronted by a choice between, at best, a racist warmonger with a progressive and populist economic agenda, or a tolerant champion of freedom and equality who will turn a blind eye to the concentration of capital. Stoller doesn't attack this question head-on in the book; my current, weak theory is that most societies will only tolerate a limited amount of change in a given amount of time. You can plausibly move the needle on economic issues, or you can plausibly move the needle on social issues, but if you try to change both then you start being identified as a radical or revolutionary, and can't win the popular support required in a democratic society to implement those changes.
Which isn't to say that there haven't been people who have called for both, of course. The very first name that came to my mind, who I think is completely missing from this book, is Martin Luther King Jr., who famously saw the struggle for racial justice, for improving the lives of poor people, and for ending the imperialist war in Vietnam as inextricably linked. And, MLK was assassinated for it. Stoller seems much happier with Wright Patman compromising on racist legislation throughout his career so he could keep getting re-elected and pushing forward New Deal policies.
There might be some parallels to draw with intersectionality. Intersectionality seems to be helping the left be far more effective now than it was in the 1960s, at least on the social justice side, as we now have a vision of a shared struggle where an advancement by any group helps every group, unlike the factionalized orientation of the 60s and 70s that saw justice as a limited resource and correspondingly fought to determine who was most oppressed and needed attention at the expense of others. It feels to me, though, like we're lacking that sense of shared struggle between the economic left and the social left. At least in my media feed, there's at least as much criticism about "identity politics" coming from the populist economic left as there is from the entirety of the right. I think that the alliance between economic and social leftists will be critically important in the near future. A lot of this stuff got raised very explicitly in recent weeks when Joe Rogan endorsed Bernie Sanders, which got a lot of people asking: Is it worth embracing someone with bigoted views if their support will help you achieve a bold economic agenda? To be fair, many victims of bigotry answered "Yes!" The intersection of economic populists and social liberals is a minority in the American population; the union of the two is a majority.
Throughout the book, Stoller implicitly denigrates the importance of gay rights, civil rights, racial rights, war and peace and so on, at the expense of economic justice. To be fair, this is a book about monopolies, so of course it's more interested in monopolies than it is about the civil rights movement. But it's an unfortunate consequence of the otherwise compelling decision to make this a personal book about real people and the real struggles they had, and makes it incredibly hard for me to get excited about the movements and people that he champions. I mean... having read the book, knowing everything that I know now about monopolism and the New Deal and the Watergate Babies and the Chicago School, if I was sent back in time to 1974, would I vote for Wright Patman? Hell no! Our country was responsible for over a million deaths in Vietnam, and for all the misery and injustice the return of monopolies has unleashed on America and the world, they still haven't murdered as many Americans and Asians as the policies enabled by Patman and his fellows.
This tension over Patman's legacy echoes similar tensions throughout the book. I think I (predictably) got off on the wrong foot with the very opening about the Hamilton/Jefferson struggle. I've been nursing an anti-Jefferson vendetta for over thirty years, and the pendulum has swung much more pro-Hamilton in the last few years, so overall I'm feeling much more charitable about pro-Jefferson, anti-Hamilton perspectives than when I was younger. Nonetheless, I'm still stunned that a wealthy plantation owner and slave-holder still gets lauded as the plain, common man of the people, while someone who was born into poverty and out of wedlock, who inherited no wealth, who repeatedly divested himself from lucrative opportunities for enrichment to dedicate himself to public service, still gets remembered as a figure of greed.
But, of course, Stoller doesn't generally care about personal biography, just about policy. Jefferson's hypocrisy doesn't bother him, and Hamilton's personal life doesn't interest him, just their respective policies. Which, fine, that's a fair perspective. That said, I got really upset and argumentative during the early chapters. Why was it bad for Hamilton to establish a bank, and good for Wilson to create one? Why was it bad for Hamilton to create new taxes, and good for Wilson to create new taxes? Why was industrialization bad when Hamilton was promoting manufacturing, and good when Wilson was building up pre-World War I arms manufacturing, or when FDR was pushing for more aluminum? Stoller is continuing a centuries-long tradition of painting Hamilton as the villain, the original satanic devil responsible for all subsequent ills in America, and it feels like he often takes Hamilton's badness for granted, seemingly arguing that a thing is bad because Hamilton supports it.
All right, those were the things I disliked about the book! Finally, here are some muddled thoughts-in-progress on how I'm applying the book to the present day.
I've been reflecting a little on how to define and present my own personal political beliefs. Part of that is the above discussion about progressivism versus liberalism. Goliath's discussion about the changing meaning of the word "Liberal" has been very helpful to me, tracing its origins from classical liberalism through its New Deal incarnation and forward into the neoliberalism of today; I really like FDR's definition quoted here on page 202-203:
Roosevelt called himself "a liberal." This did not mean, as classical liberalism had meant in much of the previous era, protecting the rights of industrial barons using the rhetoric of self-sufficiency. It meant moral leadership, the willingness to address a civilizational crisis by updating the machinery of governance. A liberal, Roosevelt said, broke from the past, but not too quickly to provoke violence.
The struggle between liberalism and progressivism is important, but the more important division in this book is between populism and elitism. Populists are almost invariably the heroes of this book: down-to-earth men and women, independent farmers and small shopkeepers, and the politicians allied with them. I'm slowly recognizing what I think is an anti-populist (and, thus, pro-elitist) bias on my part: to some extent that's due to the past association of populist movements with nativism and racism, but I think it's deeper than that. I wonder if part of it might date back to my childhood when I was tagged as "gifted and talented" in elementary school; I definitely went through a long period in my pre-adolescent and teenage years when I proudly thought and said stuff like "Most people are too dumb to vote correctly!" and "People who are smart deserve to be rewarded for it!"
These days my conscious thoughts are much more egalitarian, but I think I still have a knee-jerk aversion towards purely popular movements. I'm much more comfortable engaging with an intellectual "egghead" framework, tend to trust the words of credentialed experts over man-on-the-street anecdotes, and carry some deep-seated misgivings that populist movements will slide into demagoguery and chaos.
One big point that the book makes, over and over and over again, is that it is the elite, educated, credentialed intelligentsia that frequently and easily falls under the sway of business and moneyed power, and so is often the lever that enables economic chaos. Just because someone is smart does not mean that they are wise, and most people aren't as smart as they think. (Including me!) One particularly resonant era is the mid-70s, with the sea change of the Watergate Babies and Nader's Raiders. The dominant attitude of that time was "The system is terrible, we need to throw it all out and start all over again!" And... the system definitely had problems, but it did a lot of good, and those people didn't understand their history (or their present!) enough to recognize that they were throwing out their babies along with the bathwater. It's very easy to connect that with the present day, with the general sense of disgust and distrust at the system, that has enabled the rise of Donald Trump and drives our daily politics. It's tempting to say "Things can't possibly can't get worse," but yes, yes, they definitely can.
How do we solve this in the future? Taking on the monopolies in the 2020s may be harder than ever, and how to we ensure that our descendants won't return to worshiping golden idols? My initial thought is that, in addition to political policy, we need to focus on culture and media, creating art and stories that communicate the threat to future generations even when they don't face an imminent threat. But, that's kind of what we did before: there's a rich heritage of powerful political cartoons from the 1800s, novels by John Steinbeck, plays by Brecht; those have all endured as works of art, but don't seem to have helped at all as relevant expressions of alarm.
Democracy can sometimes seem like a failed system for confronting monopoly power, as monopolies can all too easily buy politicians, fund think tanks, and otherwise use their wealth and influence to subvert policy. But I don't think the answer is to eliminate democracy; I'm tempted to think of a mechanism like Prop 13 that both closes the gate and makes it incredibly hard to unlock in the future; but implementing unchangeable antimonopoly laws doesn't seem like the best approach, we want something that's resilient instead of rigid, that can be flexible enough to adapt and meet the challenge of future Walter Wristons who create the next financial risk that none of us have considered yet. It's important to be clear and steadfast in our principals, while still allowing our system to grow and evolve.
I dunno, it's hard! I think there's an innate human tendency for future generations to want to do their own thing, to discount the experience of their ancestors, to swing the pendulum in the other direction. And the capitalist side can afford to be very patient and relentless, spending decades lying low and laying the groundwork, and then suddenly seize a six-month opening when a chink appears in the antimonopoly armor.
One silver lining is that there is now a lot more interest and attention being paid to high-level economic policy: not just battling over what the top marginal tax rate should be or the relative importance of entitlement payments and military spending, but wonky discussions over tariffs and interest rates. I have to confess that my economic thinking is often driven by my political leanings and not the other way around. For example, I've spent most of the Trump presidency grousing about the low interest rates at the Federal Reserve: decrying the obvious political interference over economic policy, and worrying that the low rates are further inflating an already-stretched bubble, buying a few years of illusory good times that will just make the eventual reckoning and collapse far worse. Goliath, though, repeatedly presents low interest rates as good in their own right: they help independent farmers and small businesses borrow to survive rough patches or (reasonably) grow, help state and local governments provide essential services at reasonable cost, and put fewer dollars in the pockets of the banks. This reminded me of a recent congressional hearing where Alexandria Ocasio-Cortez questioned the Trump-aligned Jerome Powell over interest rates; where most Democrats lambasted the Fed's acquiescence to political power, AOC extracted an admission that low rates do help grow the economy, and probably should have been lower before and for a longer period of time. Anyways, this is all a reminder that I should check my knee-jerk tribalistic responses and think more carefully about the impact of underlying policies.
As a tangent to the above: Stoller does spend several (righteously furious) pages covering the 2008 collapse and the subsequent bailout, but doesn't specifically cover the slashing of interest rates and quantitative easing, and I am a little curious about his thoughts on that. Throughout the book, high interest rates are treated as bank-friendly (which makes sense, as every dollar of interest is a dollar going to Wall Street), so I assume that lower interest rates are bank-unfriendly. But that seems a little weird: if Mellonism is back and Wall Street controls both parties, then why are interest rates still so low? I'm not informed enough to answer, but I found myself wondering if this also might be related to the repeal of Glass-Steagall. Now that all deposit-taking banks are also investment banks, they can profit from speculation in the stock market, and I suspect that the latter activity is a lot more profitable. One of the huge changes of the last 12 years has been the collapse of rates on personal savings (bank savings accounts, Treasury bills, etc.), which has led to a massive migration into the stock market (abetted by the GWB capital gain tax cuts), which has supercharged and probably inflated the market. As always, Wall Street profits enormously from this expansion, and will pay little or no price when it collapses. So, on balance, maybe they're fine with low interest rates, so long as they still get to capture the savings dollars that are now going elsewhere.
Much like the Federal Reserve, I was surprised that the book makes positive references to the Tea Party, noting their billionaire backing but also casting them as channeling genuine populist disgust at the banks. That kind of caught me off guard; in my memory, the Tea Party gained steam in response to the bailout of the auto industry, not bailing out the banks. But, based on my light research since then, I was incorrect: the immediate impetus behind the rise of the Tea Party was, in fact, the Bush/Obama bank bailout.
The end of the book segues directly into today and feels very relevant to the 2020 race, not least because Bernie Sanders and Elizabeth Warren get cameos in the closing pages. Warren comes off particularly well as a rare, effective champion of reform, and is specifically thanked in the (long!) acknowledgements; Sanders gets a much briefer but still positive reference for running a populist Presidential campaign in 2016 that resurrects the forgotten promises of the New Deal.
One immediate impact of the book has been prompting me to re-think some contemporary monopoly-related topics. Over the past year, Warren has been a particularly vocal trust-buster, with "break them up!" as her go-to solution to the bad actions of Silicon Valley tech giants. In the past I've appreciated the sentiment but haven't been particularly enthusiastic; there are a lot of different tools at our disposal, in addition to breaking up companies. For example, I would love to nationalize the monopolistic Internet telco providers like Comcast, Time Warner, and AT&T: I think we should run them at cost, for the benefit of the public, while ensuring access to all Americans, just like we do with the Postal Service and physical mail. In the past I've said that I don't see much benefit to seeing a lot of smaller Facebooks, but I do think that Mark Zuckerberg should be in prison, and probably Sheryl Sandberg too.
After reading Goliath, though, I do see the logic in breaking up companies like these, instead of nationalizing them or replacing bad actors at the helm. Social media is a particularly compelling case: having a wide variety of competing social media sites would do enormous good in diminishing the power of echo chambers, making our elections less vulnerable to internal manipulation and foreign interference, and limiting the spread of viral falsehoods. Managed competition could work very well in that industry. And ISPs might work better as smaller utilities rather than a federal agency, returning to state-level regulation of smaller and mid-sized providers; we definitely need more regulation there, not just managed competition (it's wasteful to run duplicate wires to the same dwellings), but keeping these entities small would reduce the risk of future consolidation and too-big-to-fail abuse.
Along the same lines, I've been thinking a lot about what we should do with PG&E here in California. I've been a big advocate of having the state of California take it over, and have preferred that approach over alternative proposals to split it up into municipal or smaller private power companies. I think that, like many of the eggheads in Goliath, I tend to view larger companies as being more efficient and productive; the cautionary message of the book, though, is that large entities can be inherently dangerous. In the future, a statewide PG&E could more easily be re-privatized and return to unduly influencing our elections (PG&E had a terrible record of using ratepayer money to fund ballot initiatives that helped the business and harmed the state). Keeping smaller (hopefully publicly-owned but maybe not) utilities might result in slightly higher rates than a unified statewide utility would, but it might also be more responsive to the needs of the diverse communities (rural and heavily forested regions have substantially different risks than densely urban environments), and even a private company might ultimately lead to a genuine sense of service and partnership with the community, rather than overseeing an empire to extract profits from.
The biggest topic in the Democratic primary thus far has been Medicare For All. Stoller doesn't really talk about health care in the book, other than briefly describing the merger wave that consolidated hospitals. This is another topic where I'm curious about his thoughts on the single-payer debate, given his monopoly-oriented perspective. On the surface, it seems like he would be opposed, and would prefer having multiple insurance companies competing against each other, rather than a single, centralized, command-oriented federal payer. Or maybe single payer would be fine, but he would prefer multiple providers, more like the Canadian system than Britain's NHS.
Other people have written about how the healthcare market is different from other markets, particularly when it comes to cost. Historically, having fewer insurers has been more effective at keeping costs down, as hospitals need to agree to limited payments in order to retain their customers; when there are many weak insurers, it is easier for hospitals to play them off against one another and extract higher prices. I'm curious whether health insurance is a specialized one-off case that breaks from the "big is bad" rule, or whether it follows the same principles that consolidation is bad.
Anyways, happy Valentine's Day!