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what problems do people think antitrust is going to solve?

Last week, I asked why antitrust is having a moment (it’s continued, on Planet Money and elsewhere), and why Democrats are using radical language to make fairly modest proposals. In this post, I’m going to ask what problems people think antitrust is going to solve, anyway.

Certainly a lot of the current concern about antitrust comes from a broad sense that corporations are too economically and politically powerful, that our economy has been restructured in ways that make ordinary people worse off, and that massive tech companies are able to use our data in ways that we have little control over. That’s political antitrust. And those are totally real issues.

But I want to explore some new questions being raised that are not exactly within the current scope of economic antitrust, but that are still kind of speaking its language—that are pushing to change the antitrust technocracy, not up-end it. To recap, as it has been construed for the last thirty-plus years, the purpose of antitrust is to promote consumer welfare, generally by trying to keep firms from being able to raise and keep prices above a competitive level. The focus is consumers, and prices.

Increasingly, though, people at least adjacent to the space of antitrust expertise are making claims about economic problems they think are being caused by lax antitrust enforcement, or that antitrust should be addressing. And those proposals are worth keeping an eye on, because as hard as it might be to change the expert consensus, it’s still more likely than a new anti-monopoly movement. (Though the two could certainly reinforce each other.) I see these new arguments as falling into basically three categories.

Market power has effects we didn’t realize

Market power is the ability to keep prices above a competitive level (i.e. above marginal cost). Once upon a time, people thought there was a fairly close relationship between how concentrated a market is—that is, how many companies control what share of the market—and how much market power firms have. Since the 1970s, there has been much less of a presumption that concentration, on its own, indicates market power. That means that there’s been less concern about whether we’ve got four airlines controlling 70% of the U.S. market, or that four carriers control 99% of the U.S. wireless market.

Increasingly, though, people are raising flags about other problems that might result from market power. One of these is labor monopsony—the idea that firms have market power, but as purchasers of labor, not sellers of products, and that this is driving wages down. The Council of Economic Advisers put out a report last fall suggesting this might be happening, and Democrats’ mention of “bargaining power for workers” implies this is part of what they’re trying to address. There are related arguments about market power in supply chains and the emergence of “winner take most” industries that also suggest links between concentration or market power and wages.

In theory, monopsony can be handled within the current legal framework, though it is rarely addressed in practice. So developing arguments about the effects of market power on workers, and a legal framework for addressing that within antitrust, is one conceivable new direction for antitrust.

Others are arguing that market power can lead firms to attach undesirable conditions to products that make them lower quality, even as price remains the same. In particular, some scholars, including Nobel Laureate Joe Stiglitz, have framed privacy as an antitrust issue: the product may be free, but consumers have no choice about how their data is used (and in the case of platforms like Facebook, no equivalent competitors). Privacy is hard to address within a framework focused purely on price. But in Europe, competition policy is increasingly tackling privacy issues, and Germany is currently investigating whether Facebook’s dominant position is forcing consumers to give up their privacy without having an alternative choice.

Market power has causes we didn’t realize

The Atlantic just featured a story with the dramatic title, “Are Index Funds Evil?” The article discusses the rise of large institutional investors—index funds, though not only index funds—and what it means that, increasingly, big chunks of competitors in a specific market are actually owned by the same few corporations. It goes on to discuss work by José Azar, Martin Schmalz, and Isabel Tecu that finds that this common ownership enhances market power, and that airline ticket prices are 3-7% higher than they would be under separate ownership.

In this story, index funds were the hook, but it just as easily could have been framed around antitrust. In a way, common ownership was the original antitrust question: the big trusts of the late 19th century were not single-firm monopolies, but competitors that had turned over ownership to a group of trustees that made unified governance decisions. And while research in this area is still new and findings tentative, legal scholars are already making the case that antitrust law can cover the anticompetitive effects of these horizontal shareholdings. If this work continues to hold up, this seems potentially transformative.

Technological change is creating new threats to competition

Finally, a fair bit of the recent chatter is basically arguing, “it’s the technology, stupid.” The dynamics of competition change as more of the economy shifts to online platforms. Because of network effects, companies like Facebook, Google, Apple, and Amazon are hard to compete with—much of their value comes from their existing user base. And because they aren’t just selling products to consumers, but connecting consumers with producers, they aren’t acquiring market power in the traditional sense. Facebook and Google are free products, after all.

But the power of network effects means that they have a tendency towards monopoly. And the fact that the four largest companies by market capitalization are platforms suggests how central platforms have become to our economy.

So we have these new companies that have become very large, and that appear monopolistic, though they also create great value for consumers. From an antitrust perspective, they don’t really appear to be a problem, because they aren’t raising prices. And the history of rapid technological change over the past 25 years, including the rise and fall of a number of once-dominant platforms, raises the question of whether even platforms behaving in anticompetitive ways pose much of a long-term threat.

Recent scholarship, though, argues that monopolistic platforms are in fact anticompetitive, that it is a problem, and that current law is poorly equipped to handle. Lina Khan’s much-circulated note in the Yale Law Journal, for example, argues that 1) platforms encourage predatory pricing—generally seen as irrational (and thus not an issue) within antitrust law—because network effects encourage pursuit of growth over profit, and 2) platforms collect data on rivals that give them an unfair competitive advantage. These sorts of issues clearly fit within the broad scope of “protecting competition,” but don’t fit easily with a consumer welfare, market power conception of antitrust.

Changing that would be a significant project, but if we have an economy that is dominated by firms whose potentially anticompetitive activity is essentially beyond the scope of antitrust, there’s not much left to antitrust. And again, the massive fine the E.U. just levied on Google—for favoring its own shopping service, consisting of companies that pay Google to be on it, over competitors in search results—suggests what this could look like. So far, the U.S. has not demonstrated much enthusiasm about expanding antitrust in this direction. But it’s not inconceivable that it could happen, and it could be done within a framework that was focused solely on competition, if not only on consumer welfare.

Again, all these challenges to the current antitrust framework are at least in the ballpark of its conversation, even if they would require pushing the law in new directions or advancing the acceptance of new economic theories. And they are not the only arguments that are in play here. For example, the question of whether inequality is facilitated by concentration or market power, or whether it has become such a central economic problem that antitrust should try to address it, have prompted enough discussion that two leading antitrust scholars have felt the need to argue that antitrust should leave inequality alone.

Unlike political antitrust, which would probably require a social movement to move it forward, these antitrust arguments have the potential to gain traction without necessarily requiring legislation or a revolution against the current antitrust regime. The 1970s shift toward Chicago-style antitrust happened, to a considerable extent, because the old economic framework seemed increasingly inadequate for explaining the world people found themselves in. As the current framework comes to seem similarly dated, this could be another moment when such change is possible.

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Written by epopp

August 10, 2017 at 1:33 pm

the democrats can’t decide how radical they want to be on antitrust

The other day I wrote about the current moment in the spotlight for antitrust. (Here’s the latest along these lines from Noah Smith.) Today I’ll say something about the new Democratic proposals on antitrust and how to think about them in terms of the larger policy space.

The Democrats are basically proposing three things. First, they want to limit large mergers. Second, they want active post-merger review. Third, they want a new agency to recommend investigations into anticompetitive behavior. None of these—as long as you don’t go too far with the first—is totally out of keeping with the current antitrust regime. And by that I mean however politically unlikely these proposals may be, they don’t challenge the expert and legal consensus about the purpose of antitrust.

But the language they use certainly does. The proposal’s subhead is “Cracking Down on Corporate Monopolies and the Abuse of Economic and Political Power”. The first paragraph says that concentration “hurts wages, undermines job growth, and threatens to squeeze out small businesses, suppliers, and new, innovative competitors.” The next one states that “concentrated market power leads to concentrated political power.” This is political language, and it goes strongly against the grain of actual antitrust policy.

Economic antitrust versus political antitrust

Antitrust has always had multiple, competing purposes. The original Progressive-Era antitrust movement was partly about the power of trusts like Standard Oil to keep prices high. But it was also about more diffuse forms of power—the power of demanding favorable treatment by banks, or the power to influence Congress. That’s why the cartoons of the day show the trusts as octopuses, or as about to throw Uncle Sam overboard.

The Sherman Act (1890) and the Clayton Act (1914), the two major pieces of antitrust legislation, are pretty vague on what antitrust is trying to accomplish. The former outlaws combinations and conspiracies in restraint of trade, and monopolizing or attempt to monopolize. The latter outlaws various behaviors if their effect is “substantially to lessen competition, or to tend to create a monopoly.” The courts have always played the major role in deciding what that means.

Throughout the last century, the courts have mostly tried to address the ability of firms to raise prices above competitive levels—the economic side of antitrust. For the last forty years, they have focused specifically on maximizing consumer welfare, often (though not always) defined as allocative efficiency. Since the late 1970s, this has been pretty locked in, both through court decisions, and through strong professional consensus that makes antitrust officials very unlikely to challenge it.

Before the 1970s, though, two things were different. For one thing, the focus was more on protecting competition, and less on consumer welfare per se (the latter was assumed to follow from the former, and was thought of a little more broadly). For another, the courts sometimes took concerns into account other than keeping prices low.

The most common such concern was the fate of small business. Concern for small business motivated the Robinson-Patman Act of 1936, which prohibited anticompetitive price discrimination. It was clear in the Celler-Kefauver Act of 1950, which restricted mergers out of fear that chain stores would eliminate local competition. And the courts acknowledged it in cases like Brown Shoe (1962), which prevented a merger that would have controlled 7% of the shoe market by pointing to Congress’s concern with preserving an “economic way of life” and protecting “local control of industry” and “small business.”

Today, Brown Shoe is seen as part of the bad old days of antitrust, when it was used to protect inefficient small businesses and to pursue confused social goals. This is a strong consensus position among antitrust experts across the political spectrum. While no one thinks that low prices for consumers are the only thing worth pursuing in life, they are the appropriate goal for antitrust because they make it coherent and administrable. Since those experts’ views dominate the antitrust agencies, and have been codified into law through court decisions, they are very resistant to change.

The Democrats’ proposal: radical language, incremental proposals

So when the Democrats start talking about “the abuse of economic and political power,” the effects of concentration on small business, and limiting mergers that “reduce wages, cut jobs, [or] lower product quality,” they are doing two things. First, they are hearkening back to the original antitrust movement, with its complex mix of concerns and its fear of unadulterated corporate power.

Second, they are very much talking about political antitrust, and political antitrust is deeply challenging to the status quo. But their actual proposals are considerably tamer than the fiery language at the beginning, and are structured in a way that doesn’t push very hard on the current consensus. New merger guidelines could make some difference around the margins. Post-merger review would definitely be good, since there’s currently no enforcement of pre-merger conditions that firms agree to, and no good way to figure out which merger approvals had negative effects. I have a hard time seeing a new review agency having much effect, though, since it’s just supposed to make recommendations to other agencies. Even I don’t like bureaucracy that much.

So my read on this is that the Democrats feel like they need a new issue, and it needs to look like it helps the little guy, and they want to sound like populist firebrands. But when you get down to the nitty gritty, they aren’t really so interested in challenging the status quo. That is, basically, they’re Democrats. Still, that the language is in there at all is remarkable, and reflects a changing set of political possibilities.

Next time I’ll look at some of the problems people are suggesting antitrust can solve. Because there are a lot of them, and they’re a diverse group. Tying them together under the umbrella of “antitrust” gives an eclectic political project some nominal coherence. But is it politically practicable? And could it actually work?

Final note: If you are interested in the grand historical sweep of antitrust in capitalism, I recommend Brett Christophers’ The Great Leveler. Among other things, he totally called the emerging wave of interest before it actually happened. Sometimes the very long lens is the right one to use.

Written by epopp

August 3, 2017 at 3:04 pm

why antitrust now?

Antitrust is having a moment. A couple of years ago, with the possible exception of complaining about never-ending airline mergers, no one paid attention to antitrust debates. Today, it’s all over the place. A few months ago, it was the Economist proclaiming “America Needs a Giant Dose of Competition.” Last month it was Amazon and Whole Foods. And now antitrust has become a key plank of the new Democratic platform.

I’ve been thinking about this for a while, but this antitrust explainer written by Matt Yglesias yesterday (which is generally quite good) motivated me to put fingers to keyboard. So I’m going to break this reflection up into three parts: Why antitrust now? What does the new antitrust debate mean? And what would it take for it to succeed? Today, I’ll tackle the first.

At one level, the rise of antitrust interest is just a perfect convening of streams, in the Kingdon sense. A problem (or loose collection of problems) rises to public attention, people are already out there advocating a solution, even if so far unsuccessfully, and—the moment we’re in now—politicians have the motivation to grab that solution and turn it into policy, or at least a platform. It’s just about timing, and it’s not predictable.

At the same time, I think we can unpack a couple of different factors that help us think about “why now”. Some of this is covered in the Yglesias piece. But there are a few things I’d add, and some different angles I’d highlight. So without further ado, here are four reasons antitrust is suddenly getting attention.

1. It’s a reaction to a change in objective conditions.

There is a degree of consensus that market concentration is increasing across the economy. Even if you don’t think concentration is a problem, it wouldn’t be surprising that an increase would lead some people to challenge it, and make media more open to hearing that claim. This is probably a contributing factor. But market concentration has been increasing for a long time, and the link between concentration and exercise of power, whether market power or political power, is at best complicated. I don’t think the rise in concentration explains much of the antitrust attention.

Other phenomena are emerging that are objectively new, and raise new questions about how to govern them. Amazon now controls 43% of internet retail sales in the U.S. That’s astonishing, and at least a little alarming. But we’ve now seen several generations of various platforms (operating systems, browsers, social networks) rise to dominance and sometimes fall, mostly without a lot of antitrust attention—Microsoft, at the turn of the millennium, being the significant exception. These objective changes are a necessary but definitely not sufficient for public attention to rise.

2. New actors are organizing around this issue.

A lot of the noise around antitrust is coming from a relative handful of people. Until the Democrats came on board, it was Elizabeth Warren on the political side, and before that Zephyr Teachout, the Fordham law professor who gave Andrew Cuomo a run for his money in 2014.

On the think tank side, as Yglesias notes, it’s the Open Markets Program at New America. Fellow Lina Khan, once of the Teachout campaign, landed an NYT op-ed on Amazon and Whole Foods. Fellow Matt Stoller’s Atlantic article on antitrust, “How Democrats Killed Their Populist Soul,” got a lot of attention when it came out last fall. Barry Lynn, who runs the program, has been working on this issue for a decade.

The Roosevelt Institute is the other significant player in this space. (Here’s a good, if now difficult to read, piece from last summer explaining the history of Roosevelt.) Marshall Steinbaum and others have made the case for a range of antitrust issues on a variety of grounds, and the influence of both these organizations on the new Democratic congressional platform is clearly visible.

There’s no question that this kind of policy advocacy—talking to policymakers, writing articles and op-eds—is making a difference. But its impact has been facilitated by two other things.

3. The space of expertise is changing in unexpected ways.

Antitrust policy is a space heavily dominated by experts. Congress rarely touches antitrust issues. The public rarely pays attention. Presidents generally talk a good antitrust game, and may care more or less about appointing antitrust officials who will pursue a particular policy line. But for the most part, antitrust is dominated by the lawyers and economists who serve in the Antitrust Division and FTC, consult on antitrust cases, write academic articles, and a handful of whom become judges.

And there is bipartisan consensus among these experts that concentration isn’t generally a problem. Markets are contestable. Predatory pricing is irrational, because firms know that if they drive out competitors then jack up prices, they’ll just attract some new entrant into the market. There’s really no point. Yes, there may be a little more antitrust enforcement among Democrats than Republicans. But it’s a game played “between the 45 yard lines.” As Richard Posner said recently, “Antitrust is dead, isn’t it?”

But this space is changing in interesting ways. The change doesn’t seem to be coming from the antitrust community itself, exactly. But it’s coming from people with the academic clout to be taken seriously.

From one direction, you have people like Jason Furman and Joseph Stiglitz making arguments about labor market monopsony contributing to lower wages and arguing that economic changes require new kinds of antitrust solutions. From another, you have Luigi Zingales overseeing an effort (at the University of Chicago’s Stigler Center, no less) to advocate for stronger antitrust, calling his position “pro-market” rather than “pro-business”. Zingales’ efforts are also notable for bringing in historians, political scientists and other experts usually not privy to the antitrust policy conversation.

None of these people work primarily on antitrust issues or even industrial organization, but they have the status to be taken seriously even if they are not among the usual suspects of antitrust. Their novel arguments have the capacity to shift the expert consensus about antitrust—either mildly, as in Furman’s arguments about the importance of labor monopsony (which don’t require a radical rethinking of the current approach), or more radically, as in Zingales’s advocacy of an antitrust that takes political power seriously.

I’ll discuss these changes more in the next couple of posts, but in terms of explaining “why antitrust now,” the point is that these insider/outsider dissenters are amplifying new voices and new issues, and thus contributing to the current wave of attention.

4. The cultural moment is right for other reasons.

If there’s one belief that seems to unite Americans across the political spectrum these days, it’s that the game is rigged against the ordinary person. For the many Americans who think big business is doing at least some of the rigging, this produces a new openness to arguments about concentration and corporate control. As much as anything else, I think this explains the current interest in antitrust. People are receptive to arguments that purport to explain why they’re being screwed.

Antitrust is a protean issue. It can channel many different types of fears and at least theoretically respond to many different kinds of problems. Whether it can do so effectively, and whether antitrust is the right tool for the job, is a different question. In my next post I’ll try to unpack some of those different problems, why they’re now being linked together under the umbrella of “antitrust,” and draw on some antitrust history to think about what current efforts mean.

Written by epopp

August 1, 2017 at 1:51 pm

is ethnography the most policy-relevant sociology?

The New York Times – the Upshot, no less – is feeling the love for sociology today. Which is great. Neil Irwin suggests that sociologists have a lot to say about the current state of affairs in the U.S., and perhaps might merit a little more attention relative to you-know-who.

Irwin emphasizes sociologists’ understanding “how tied up work is with a sense of purpose and identity,” quotes Michèle Lamont and Herb Gans, and mentions the work of Ofer Sharone, Jennifer Silva, and Matt Desmond.

Which all reinforces something I’ve been thinking about for a while—that ethnography, that often-maligned, inadequately scientific method—is the sociology most likely to break through to policymakers and the larger public. Besides Evicted, what other sociologists have made it into the consciousness of policy types in the last couple of years? Of the four who immediately pop to mind—Kathy Edin, Alice Goffman, Arlie Hochschild and Sara Goldrick-Rab—three are ethnographers.

I think there are a couple reasons for this. One is that as applied microeconomics has moved more and more into the traditional territory of quantitative sociology, it has created a knowledge base that is weirdly parallel to sociology, but not in very direct communication with it, because economists tend to discount work that isn’t produced by economics.

And that knowledge base is much more tapped into policy conversations because the status of economics and a long history of preexisting links between economics and government. So if anything I think the Raj Chettys of the world—who, to be clear, are doing work that is incredibly interesting—probably make it harder for quantitative sociology to get attention.

But it’s not just quantitative sociology’s inability to be heard that comes into play. It’s also the positive attraction of ethnography. Ethnography gives us stories—often causal stories, about the effects of landlord-tenant law or the fraying safety net or welfare reform or unemployment policy—and puts human flesh on statistics. And those stories about how social circumstances or policy changes lead people to behave in particular, understandable ways, can change people’s thinking.

Indeed, Robert Shiller’s presidential address at the AEA this year argued for “narrative economics”—that narratives about the world have huge economic effects. Of course, his recommendation was that economists use epidemiological models to study the spread of narratives, which to my mind kind of misses the point, but still.

The risk, I suppose, is that readers will overgeneralize from ethnography, when that’s not what it’s meant for. They read Evicted, find it compelling, and come up with solutions to the problems of low-income Milwaukeeans that don’t work, because they’re based on evidence from a couple of communities in a single city.

But I’m honestly not too worried about that. The more likely impact, I think, is that people realize “hey, eviction is a really important piece of the poverty problem” and give it attention as an issue. And lots of quantitative folks, including both sociologists and economists, will take that insight and run with it and collect and analyze new data on housing—advancing the larger conversation.

At least that’s what I hope. In the current moment all of this may be moot, as evidence-based social policy seems to be mostly a bludgeoning device. But that’s a topic for another post.

 

Written by epopp

March 17, 2017 at 2:04 pm

let’s panic thoughtfully

Since we’re both here, my social media bubble probably looks a lot like your social media bubble. And in my social media bubble, people are freaking out about the Trump presidency. There are false voter fraud claims, ugly attacks on the media, chilling of speech at government agencies, and a whole host of policy actions many find disastrous. I am also disturbed and fear that the U.S. is making an irreversible turn toward authoritarianism.

At the same time, I’m disheartened by how quickly academics and others who should know better unreflectively buy into the latest outrage on social media. This has negative consequences independent of Trump’s actions. Catastrophizing the bits that aren’t catastrophic undermines our authority to speak up about the things that actually are. And further politicization of the media and, now, the federal bureaucracy will continue to erode the very things that protect us from Trump’s worst.

I do not mean to create a false equivalence here. What Trump has the power to do vastly outweighs the chattering of academics or journalists on Twitter or Facebook. But I have no direct influence over Trump’s administration. I can, however, exhort my academic colleagues to do better.

In that spirit, here’s two things to consider before you decide to share the latest outrage.

1) Is this an important bill? Or just another bill?

In the 114th Congress, more than 12,000 bills were introduced. You know how many became law? 329. 86% never even make it out of committee. There are a bunch of extremists in Congress. Some of them introduce the same bills over and over that are never going to see the light of day. This has been going on for decades.

A few days ago, an Alabama Republican introduced a bill that would pull the U.S. out of the United Nations. Twitter went nuts, quoting the bill with captions like “WHAT. THE. ACTUAL. HELL.” It spread like crazy.

Problem is, this is nothing new. This representative has been introducing this bill into each Congress for the last two decades. It has nothing to do with Trump, nor are there any indications it was treated differently this time. There are lots of things to get worked up about. This bill is not one.

2) Is this politics as usual? Or something truly new and dangerous?

There has also been a lot of freaking out in the last couple of days about the silencing of federal agencies. EPA, NIH, and USDA have all had reports about communications restrictions, including cancellation of a planned climate change conference and a halt on all “public-facing documents” at USDA.

A lot of Trump’s political agenda will play out—or not—through the executive agencies. It is very likely that his appointees will attempt to undercut what many see as their basic missions. By all means, oppose this with great intensity.

But when administrations change, they are going to point agencies in new political directions. I don’t have firsthand experience working in federal agencies. But I have spent a lot of time reading documents from just these types of agencies in the 1960s, 70s, and 80s. Putting a pause on public communication during a transition doesn’t seem that radical to me.

I keep looking for a quote from an actual agency employee that says, “This is wildly different from what happened when George W. Bush took office.” The closest I can find is ProPublica saying an EPA employee “had never seen anything like it in nearly a decade with the agency.” But that only covers the Obama transition, which aligned with the mission of the EPA. It’s not clear that this is not politics-as-usual. Could it transition into something new and dangerous? Absolutely. But that ship has not yet sailed.

Why commitment to critical thinking matters in the face of a Trump administration

I can already hear people yelling that I’m not taking Trump seriously enough. “This isn’t ordinary times! This is an emergency. Real lives are at stake!”

But it’s precisely because I don’t think this is ordinary times—because I think we’re in a uniquely dangerous moment—that it is especially important that we retain the ability to think clearly, for two big reasons.

First, treating every single action of the administration as dangerous and disastrous, without any larger context, further politicizes our fragile institutions. It may be too late for the media. But it is not good for democracy if our bureaucracies go rogue.

People are delighted that the Badlands National Park gave the administration a big old middle finger yesterday with its climate change tweets. But to the extent that federal government functions at all, it functions because of all the unelected, unappointed people who do their jobs, regardless of administration. If ordinary government employees become seen as actively in the bag for the left, we are one step closer to having our government stop functioning entirely.

Is there a time to say “no”, and openly rebel or quit? Absolutely. And if you haven’t already, you should probably write down your own personal lines in the sand, before our sense of “normal” further erodes. If you’re at the EPA, maybe it’s active suppression of climate change evidence. If you’re at NSF, maybe it’s meddling with individual grants. Maybe your lines have already been crossed.

But if they haven’t, as a civil servant you serve democracy better by doing your job—even if that’s carrying out decisions made by someone you hate—than by throwing shade from a government Twitter account.

Second, assuming everything is catastrophic limits our ability to focus on the real catastrophes. The single most dangerous thing Trump has done in the last few days (and I know, it’s been a busy few days) is double down on his claims about massive voter fraud. Because if people don’t believe that our elections are basically honest and agree to respect the results of those elections, our democracy is truly toast.

The good news is that, according to the Washington Post, “Trump has virtually no elected allies in this assault on the election system.” Not even Sean Spicer will say Trump’s claims are actually true.

If we cry wolf about every change that is not in fact catastrophe—if we suddenly scream “fascism” about changes that are part of the normal workings of democracy, we undermine our ability to fight the things that matter most.

And if we don’t have a democratic government, all this other stuff we care so much about—healthcare, immigration policy, racial justice, science, foreign policy, whatever your personal biggest concerns are—will be irrelevant. A fully authoritarian government can do what ever it wants, and we’ll have no say. Defending democracy has to be priority #1. And defending democracy means commitment to reason.

Written by epopp

January 25, 2017 at 5:10 pm

the antitrust equilibrium and three pathways to policy change

Antitrust is one of the classic topics in economic sociology. Fligstein’s The Transformation of Corporate Control and Dobbin’s Forging Industrial Policy both dealt with how the rules that govern economic life are created. But with some exceptions, it hasn’t received a lot of attention in the last decade in econ soc.

In fact, antitrust hasn’t been on the public radar that much at all. After the Microsoft case was settled in 2001, antitrust policy just hasn’t thrown up a lot of issues that have gotten wide public attention, beyond maybe griping about airline mergers.

But in the last year or so, it seems like popular interest in antitrust is starting to bubble up again.

Just in the last few months, there have been several widely circulated pieces on antitrust policy. Washington Monthly, the Atlantic, ProPublica (twice), the American Prospect—all these have criticized existing antitrust policy and argued for strengthening it.

This is timely for me, because I’ve also been studying antitrust. As a policy domain that is both heavily technocratic and heavily influenced by economists, it’s a great place to think about the role of economics in public policy.

Yesterday I put a draft paper up on SocArXiv on the changing role of economics in antitrust policy. The 1970s saw a big reversal in antitrust, when we went from a regime that was highly skeptical of mergers and all sorts of restraints on trade to one that saw them as generally efficiency-promoting and beneficial for consumers. At the same time, the influence of economics in antitrust policy increased dramatically.

But while these two development are definitely related—there was a close affinity between the Chicago School and the relaxed antitrust policy of the Reagan administration, for example—there’s no simple relationship here: economists’ influence began to increase at a time when they were more favorable to antitrust intervention, and after the 1980s most economists rejected the strongest Chicago arguments.

I might write about the sociology part of the paper later, but in this post I just want to touch on the question of what this history implies about the present moment and the possibility of change in antitrust policy.

Read the rest of this entry »

Written by epopp

January 9, 2017 at 6:51 pm

free college: not dead yet

im-not-dead-yet

I’m not dead yet.

While higher ed has certainly been under attack since the election, Donald Trump hasn’t said too much about his agenda for higher education, and with Betsy DeVos, charter school aficionado, at the helm of the Department of Education, it seems like K-12 issues may be at the forefront of the new administration.

What’s pretty clear, though, is that “free college”, a la Bernie or, more reluctantly, Hillary, is not on that agenda. But free college, it turns out, has not disappeared: New York State Governor Andrew Cuomo has announced a free college proposal of his own, to apply to SUNY and CUNY schools.

Cuomo’s proposal would make SUNY/CUNY tuition-free for families with incomes of up to $125,000. It would require full-time attendance, and be “last-dollar” aid—i.e., the fee waiver would kick in after federal Pell grants, NY state Tuition Assistance Program (TAP) grants, and any scholarships were already used up.

New York is not the first state to set forth some kind of “free college” proposal—see Tennessee and Oregon. However, it is the first to take it beyond the community college level. And the mere size of the NYS system—enrolling a million students—makes it impossible to ignore.

So, some caveats. “Free tuition” probably doesn’t cover fees, which at my SUNY, at least, are nearly $3000 a year. And it definitely doesn’t cover living expenses. New York also has low tuition, compared to most states—it is still only $6470 at four-year SUNYs. And it has a decent—though not as generous as California’s—state grant aid program in TAP. If your income is low enough—I’d guess below $50k, though that’s just a ballpark—between Pell and TAP you’re not paying any tuition anyway. As Matthew Chingos accurately points out in the Washington Post, families with incomes between $80,000 and $125,000 will benefit most.

And the fact that living expenses are still, at SUNY/CUNY, larger than tuition costs means that it’s also not going to make that much dent in student loans, which are lower-than-average (about $20k for four-year degrees) for SUNY graduates anyway. Cuomo’s headline about “alleviating crushing burden of student loans” is hyperbole.

So what this is, is a significant, and expensive, expansion of grant aid for the middle-class, and a reframing of what college costs (nothing! I know, I know) that may encourage lower-income students to go to college. And tying the benefit to full-time attendance may encourage more full-time enrollment, which evidence suggests (though there are a lot of selection effects here) facilitates completion.

And, of course, this is just a proposal. It’s not yet legislation, and there are a lot of steps between here and there. Nevertheless, despite its limitations, if this became a reality I think the implications for higher ed would be huge—for the symbolic value of committing to the idea that students should not pay for tuition, if nothing else.

Several commentators have explored the policy and student effects of Cuomo’s proposal. But what would the organizational impacts look like? Here, there are a couple of things to think through.

One is the question of whether this would be resource-neutral for SUNY and CUNY. There’s no indication it’s not intended to be, but a lot will depend on the details. For SUNY, at least, funding has only been loosely linked to tuition levels. Sometimes New York State has raised tuition to plug its revenue gaps, without SUNY ever seeing the money.

A second is how it intersects with the push for larger enrollments, which has been a pounding drumbeat over the last three or four years at SUNY (not sure about CUNY). Right now, additional students—even in-state ones—bring marginal benefits, but would that still be the case if many of them weren’t paying tuition? I don’t think the enrollment push has been particularly good for the institution, but it’s also been sold as the path to financial solvency. If free tuition means no benefits to larger enrollments, SUNY will have to find a new strategy for achieving long-term fiscal stability.

This could also affect who gets to enroll. Free tuition might make selective schools more competitive—which is probably good for them as institutions. But it also might encourage an even heavier focus on out-of-state and international students who can bring more revenue. That, in turn, could lead to battles over who gets the seats—New York residents or non-New-Yorkers paying full freight—which have been brutal in California, but largely absent in New York.

Finally, this clearly affects the complex organizational ecosystem of higher ed. It’s bad for private institutions in New York, especially small struggling colleges like Albany’s Saint Rose, which cut two dozen tenure lines last year in a desperate attempt to stay afloat. It’s probably also bad for for-profit colleges—largely because of the symbolic value of making college “free” rather than real changes in relative cost, since for-profit students are disproportionately in the lower-income group that wouldn’t benefit anyway.

But I’d hold that the biggest impact of such a plan would be the symbolic one. Is it ideal that it’s basically a middle-class tax benefit that does nothing material for lower-income families? No. But the institutional details of the New York State system—its relatively low tuition and preexisting state grant aid—make it possible to create “tuition-free college” here for less money than it would cost in many places. Showing that it can be done will make free college more than a pipe dream. SUNY/CUNY is the 500-pound gorilla of public higher ed. Where New York leads, others will follow.

Written by epopp

January 5, 2017 at 6:05 pm

Posted in academia, education, policy