Big Government Has Made Big Tech Way Too Powerful

Robert Reich contends that “Big Tech Has Become Way Too Powerful” (New York Times, September 20) — and so, to curb its power, big government must become way more powerful.

Amazon, Apple, Facebook and Google, like the railroad and oil trusts of the Gilded Age, are to Reich the natural result of market consolidation. Retelling the civics-textbook story of trust busters using government action to restrain laissez-faire on behalf of the little guy, Reich calls for a modern revival of their efforts. He ignores the evidence of Gabriel Kolko that “it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it.”

Reich also brings up network effects, the increased power of communications tools as more people use them, to explain why monopolies seem particularly tenacious in the information age. Exclusive networks will grow as big as they can. AT&T’s telephone monopoly seemed so inevitable that its government support was defended as being more in the public interest than a breakup. But in the Internet age, everyone already being on a network, in and of itself, isn’t enough to keep them there long: ask AOL or MySpace. Networks like email and blogs, not requiring users to have the same service to connect, have flourished under nobody’s control.

Reich’s notion of markets invites Inigo Montoya‘s “You keep using that word. I do not think it means what you think it means.” Not only does Reich identify “the free market” with the winners of a very rigged market, but he goes so far as to assert that “There can’t be a market without government.” Has Reich heard of the Soviet bloc’s black-market economies, or international trade in the absence of world government?

Similarly, the virtually-zero costs of digital copies is taken to imply that “the new economy could not exist” if not for intellectual property artificially raising prices enough to create a market. This ignores the existence of digital exchanges, from shareware to cryptocurrency, that rely solely on trust between the parties involved. Reich decries the corralling of digital commerce into the walled-garden shopping malls of iTunes and Amazon. A full-fledged mutualistic economy of the digital age would instead be like the bazaars of eBay and Etsy, but for everything.

The most perceptive of the original trusts’ contemporary opponents anticipated Kolko in seeing them as the outcome of competition-suppressing favoritism. Byron Webber Holt, both an anti-truster and a free-trader, observed that “special privileges, of which the tariff is foremost, are the mother of trusts.” Its Octomom reincarnation is Reich’s “key building block” intellectual property. Reich’s decrying patents being scooped up by corporations large enough to pool them and shut independent inventors out of the market, while calling them “crucial to innovation,” is reminiscent of both Edmund Burke‘s “the thing itself is the abuse!” and Karl Hess‘s “That’s like Dr. Frankenstein’s publishing an antimonster tract.”

Citations to this article:

Free Markets & Capitalism?
Markets Not Capitalism
Organization Theory
Conscience of an Anarchist