Our panel last month discussed Robert Bork’s consumer welfare standard, which has heavily influenced the evolution of antitrust analysis and enforcement over the past 42 years, and how Bork’s paradigm is under attack. Many defenders of the rule of law are concerned with the populist notion that competition law should be weaponized and used as a tool to address broader socio-economic concerns. Furthermore, adopting populist proposals that seek to rewrite antitrust law would upend more than a century of legal and economic learning and progress. In this panel, we will dive deeper into the recent populist antitrust movement and how the failure to distinguish between the proper and improper uses of antitrust laws poses a threat to the rule of law.

FEATURING:

Richard A. Epstein

Laurence A. Tisch Professor of Law, NYU School of Law

Kristian Stout

Associate Director, International Center for Law & Economics

Mark Jamison

Director and Gunter Professor, Public Utility Research Center, University of Florida

Ashley Baker (moderator)

Director of Public Policy, The Committee for Justice

Event Transcript:

Ashley Baker: (00:00)
Good afternoon and welcome to the committee for justices panel discussion on antitrust populism and the rule of law. I'm Ashley Baker. You're, I'm the director of public policy at the committee for justice. And I'm going to introduce the panelists in the order in which they're going to be speaking. We have a really exciting line up here. First we have Richard Epstein, who is the inaugural Lawrence Satish professor of law at NYU school of law. Prior to joining the faculty is a visiting law professor at NYU from 2007, through 2009. He has served as the Peter and Kristin Benford senior fellow at the Hoover institution since 2000. Obscene is also the James Peter Hall, distinguished service professionals, and they see your lecture at the university of Chicago and his initial law school appointment was at the university of Southern California from it 1968 to 1972.

Ashley Baker: (00:52)
He served me as editor of the journal of legal studies from 1981 to 1991. And the journal of law and economics from 1991 to 2001. If Kayla's could please put themselves on mute while you're not speaking, I hear some people, paper, ruffling, and such and it messes with the zoom call quality. Thank you. Yeah, Buster Epstein has written numerous articles on a wide range of legal and interdisciplinary subjects. He has taught courses in administrative law, antitrust law, civil procedure, and about a hundred different other vast areas that I want less for benefit of time right now. Kristin stout is the associate director of the international center of law and economics, and is an expert in intellectual property, antitrust, telecommunications, and internet governance, Christian grads, graduating monochrome water from the unit from Rutgers university school of law served as the editorial board of the Rutgers journal blond public policy and was awarded a governor's executive fellowship from the Eagleton Institute of politics.

Ashley Baker: (01:49)
A former fellow in the internet law and policy Foundry. Christian was previously a lecturer in computer science. Christian is frequently invited to speak on law and technology policy and has been published in laundry annals and law trees use, he is licensed to practice law in New Jersey and Pennsylvania, his counsel at eight and S technologies, a software services firm, and as a member of the New Jersey state advisory committee to the United States commission on civil rights, dr. Martin Jamison is the director and Gerald L Gartner professor at the public utility research center at the university of Florida, and is also director of the university's digital markets initiative. Darwin FEMA, since her current research topics include information, technology, development, regulation, and antitrust recent projects include the impact of the iPhone mobile broadband development market power and big tech, the value of information technologies during the pandemic and barriers to business evaluation.

Ashley Baker: (02:43)
He has conducted education programs in numerous countries in Asia, Africa, Europe, the Caribbean and North, South, and central America. The energy medicine is also research associated with the U S center for public policy research and a visiting scholar with the American enterprise Institute. A couple of notes for the Q and a session. If you guys could please send me your questions through the Q and a function via zoom, and you can go ahead and send me your questions during the discussion or during the panels whenever you'd like. And I'll receive those on my end. And what I'll do is I'll introduce those at the end of the discussion element. That way I don't have to, you know, enable your microphone. And we don't have to have that moment of pause between the Q and a and the discussion we can kind of keep things rolling. So if you could kindly send those to me, that'd be really great. And with that said, professor, the floor is yours.

Richard Epstein: (03:33)
You can thank me. Thank you so much. It's a very great pleasure to be here, to speak about this topic. And the first thing I would like to say about it before I give my substance abuse is to relate a story that happened about, so now I'm probably 20 years ago there was a panel which was held at the DePaul law school in honor of Ralph native and his work as an antitrust lawyer and what Ralph did was to get up there and to announce that antitrust law was secure for all evils, including non various forms of corporate malfeasance, including various situations having to do with the then nascent science of climate change and the so forth. And I was sitting there as one of his commentators, and I said to myself there is no tool in the legal system whatsoever.

Richard Epstein: (04:20)
That is the Jack of all trades. If you have gone in to try to find something with your, have to do is to be able to match the particular body of law and the particular doctrines that you have with the particular problems. And it turns out that you will lose your way very badly. If you try to make the antitrust thoughts, apply to those things too, which it does not do because the great danger is then you'll miss apply to those things where it does too. And so I made that particular point and that was, I thought, the end of it. And then two days later, I get a call from somebody in the audience and he says, we heard your position. And what we do is we have a antitrust case that we are trying to undo the damage, which took place at the trial court.

Richard Epstein: (05:03)
And it was a case involving an alleged. And actually I think a real cartel associated with the production of the various kinds of potash products that existed in Canada. And he said, we lost the very bad judgment in the district court in Minnesota. And now what we have to do is to get somebody who could take this thing up to the court and to make those liberals on the court, see sense about the fact that a cartilage station is in fact, the primary target of the antitrust law. And in this case, the evidence of cartilage station was in fact overwhelming. And so the way the project workers, I was to persuade the democratic judge to join the Republican judges who would already be versed in this particular kind of wisdom. And this was a case that most not only argued before a panel, which we won two to one, but it was then taken on bank.

Richard Epstein: (05:53)
And there were 11 judges on this panel. And when the whole thing done, I looked at my clients sadly, since I was largely on a contingent fee basis. And I said is, I could tell you the position of every one of the judges and we have lost this case six to five, and we were all unanimous on that. And this just shows you how the world works. The five democratic judges on that particular panels all believe that it was important to control cartels and the six Republican judges on that panel for that, it was extremely important that you make excuses with respect to cartels so that they are going to be allowed to flourish. And that's a kind of a lesson for you. It also turns out that you know, I've worked with Ralph Nader on other kinds of issues, because I think on some of the stuff he does with respect to corporate malfeasance, he's pretty good when he sees the various kinds of rating.

Richard Epstein: (06:43)
And that just makes the same point that I wanted to make. Again, a, which is the set of doctrines that you want to do with corporate misconduct have to do with the law of fiduciary duties. They do not have to do with the law of antitrust. Now, what do we think about the law of antitrust before we talk about the populism issue? I think in effect that the antitrust law basically has two, three categories. And if you keep the categories clipped, you can organize most of the subject. And so the first situation you'll have is horizontal arrangements, cartels merges, and things of that particular soar, where there's a strong theory, which explains what the social potential danger is. And then what you can do is to work out a set of doctrines to figure out whether on a narrow basis, there's some particular justification for this particular arrangement, which should allow it to pass on the other hand.

Richard Epstein: (07:32)
And if you have a vertical kind of an arrangement, the efficiency justifications of essentially getting rid of the multiple marginalization problem by having sequential elements put together in a single package is in fact they highly advanced efficiency situation. So now the presumption switches in favor of allowing these things to take waste rather than against it. And indeed in the United shoe case of mass demand who put this particular deal together was none other than Louis Brandeis operating out of Boston in the first part of the 20th century. And the third set of cases are essentially sort of random cases to predation cases and so forth, and the conglomerate and use cases. And by and large, in those particular situations, there's no particular peril and you should let them go. Everything else. As far as I'm concerned is explication about the way in which you execute the techniques needed to make this particular away way of the problem start to work.

Richard Epstein: (08:25)
Well, then the next particular question is, well, what is antitrust populism? Well, it's the modernization of the situations that we have with respect to nature. Only the objects today are somewhat different. And so when we start to talk about the weaponization of the antitrust laws what happens is there are a whole variety of ways in which this can be done. One which is associated with the name Tim Wu, with whom I had the pleasure of debating many times starts to see the curse of bigness as the thing that we really have to be able to deal with. And what you do when you start having a curse of bigness is you want to break up companies for their own sake. And what you then have to ask is whether or not the integration produce a certain kind of efficiency, which will be lost when you try to get these separations to take place one illustration of how this can be quite few times was the Microsoft case back in 1998, if you try to figure out what is you going to do to break up Microsoft and to make it work, and you can take the peripherals and put them in one corporation and the operating system and put it in the other, what would you achieve by that?

Richard Epstein: (09:28)
Well, if the monopoly power lies and the operating system is still going to be there, and if it turns out there are efficiencies with integrated products on the peripheral side, you're going to lose those. This is not the kind of thing that we would want to have, and you have to be extremely careful about remedies that are designed to make sure that illicit practices don't take place. Because what happened in that case is that IBM was able to manipulate the system so that every time Microsoft wanted to make an innovation, there was always going to have to be a hearing to see which way it would go. And this kind of aggressive antitrust stuff turns out, I think, to be really quite, quite dangerous, because what you're doing is you're losing sight of the main point, which is to see how it is that you prevent counterproductive market arrangements from taking place, not to make sure that you take a large company and make it smaller, no matter what the economic consequences turned out to be.

Richard Epstein: (10:19)
You know, for example, as another version of this today, you update with respect to Amazon I'm no fan of the Washington post. So this is not to be treated as an apology with respect to Jeff Bezos. But on the other hand, when you see these various articles written starting to denounce Amazon on the grounds that it supplies effective goods at low prices then you start to ask yourself just exactly what you think this purpose is. And typically what people will say is that you'll have to worry about their nefarious political operation, and this then compounds and unmasked under understanding about the general operation of the antitrust law within general misunderstanding about the way in which the political process for rent seeking starts to take away. Jeff Fred McChesney, a dear friend now passed on basically wrote a very powerful set of articles saying, look, if you are very big, you can do things, but if you are very big, you can be made to do things.

Richard Epstein: (11:15)
Is it you don't want to do so that when you're trying to figure out what the relationship is between size and political power, or what you'll have to do is to understand the vulnerabilities are every bit as important just to, okay. And so the moment you want to put this thing into political solution, it may well turn out it be that you're going to lose sight of the advantages that a company like Amazon has in its productive capacities and get very little in exchange. And the last thing I want to mention as a weaponization type situation is the whole situation today. American legal academics and American society at large has become fixated on the question of inequality and racial. And, you know, I think these are very long and complicated debates. I have my own views of Mount this my view about any qualities, if they create Parado improvements, that is if you can make somebody more better off than somebody else you don't want MB to block this thing from taking place.

Richard Epstein: (12:09)
And my view with respect to racist, that there's simply nothing in the antitrust law, which allows you to help that particular situation. But if you use it to force the monopoly power, sometimes the people have the fewest alternatives are, those are going to be way down on the bottom of the economic ladder. So you're going to very much hurt the people whom you would like to help. And so the correct answer, I think in the situation in all of these cases is to simply say, we can't do anything of that here. You have to try something else. Think of a civil rights law. Let's think of a progressive tax. I may disagree with you as to whether or not these remedies are going to be efficacious, but at least I'll say you're playing in the right court. And so I think in effect, if you keep the simple propositions of the antitrust law alive and well, the rest of the stuff will start to fall into the place. If what you do is you try to turn it into a Jack of all trades. It will turn out that it will be something which will be a master of none and will probably hurt collateral areas without giving you any advantage in the area in which antitrust law ought to work the best. And with that, I turn the microphone over to

Mark Jamison: (13:11)
Dr. Jamison. Thank you, professor Epstein, right on time. Yes, you were right on time. Thank you, dr. Davidson.

Mark Jamison: (13:19)
All right. Well thank you very much. And I appreciate the opportunity to do, to speak with everyone here today. So I agree with pretty much anything that, that Richard said in that space. So I'll talk about some things that are a little bit different, but some of the same topics, but just in a slightly different way. I think it's important too, to remember how we got to where we are with antitrust, that at one time, it really was a vehicle that people could use to go after others. They did not. Like if you read the history with Louis, Brandeis, you could see that some of this was quite personal to him and, and quite quite, just kind of his view of the world, what he liked and what he did not like. And, and a lot of people pursued that I trust that way until we got into the 1970s, 1980s, when some people that largely supposedly affiliate with the Chicago school said, well, that doesn't look right.

Mark Jamison: (14:18)
And what we should do is have some sort of a standard by which we measure whether or not antitrust is doing the right thing. It pause and thought, well, you know, the economy is for consumers. We know that from reading Adam Smith a very long time ago, that's why we have an economy. So why not make antitrust focus on that as well? That gave us very objective matrix, excuse me, metrics. It also took us away from being able to, just to go after enemies using antitrust tools, which we have seen happen from to time. I think that, that we're also in a moment where the way we have done antitrust since that time is now under challenged, not just from the populace type movements, but also just from the way the digital markets work. Now, I won't go into the, all the ways that they're different than what we've seen in the past, but one of the keys is how dynamic they are, how fast they change that we have the technology's becoming more and more efficient on a very rapid scale.

Mark Jamison: (15:24)
And then we have these periodic disruptions. Bell wrote a paper about that just a few years ago and said, every 10 years we have some sort of major disruption that changes everything. And so in that kind of a context, it's really hard to do that. I don't trust the way that we have. We, we, it's very difficult to look at what the market is doing to say, this is good or bad or indifferent, and then decide how you're going to act. Because by the time you've done all your studies, you're talking about some history that is just not relevant for the future at all. So I think that what we need to be thinking about is a way of, of taking the focus off of outcomes that we decide we like or dislike. And instead, going back to how Adams Smith and John Stuart mill talked about the problem of monopoly when they were doing some of the very foundations of economics, they said, what causes something to be a monopoly so that it doesn't have to be responsive to customers.

Mark Jamison: (16:22)
And they S they centered on, or they drilled down on an issue that this is my phrasing, that there's some sort of endowment, something that keeps it company a protects this company from competition. And I think we're going to have to go back to looking for those types of items rather than look at market outcomes and saying we like or dislike them. Let's look at what would be the endowments that give market power and try to deal with those more directly. Let me step back then to the populism issue. And here, you know, Richard's really laid it out quite well. Essentially what people are talking about is correct. Some sort of, kind of commercials are, and if you allow someone, the authority to shape markets shape any way they see fit one, you're making a tremendous assumption that someone actually has the wisdom to do that, which land Louis, Brandeis would disagree with.

Mark Jamison: (17:18)
He didn't think people were smart enough to do that kind of a thing. The Neo brand Dyson's tend to think people are, but so that's, that's a real problem, but what happens? Cause we've seen this all over the world, what happens when you give someone that kind of authority, they tend to use it for their own personal lens and for their ends of their friends. So rinse seguing goes rapid. That is the main way to succeed is by having friends and the government, making sure your political allies are the ones that are there. And to, to be sure that what the, the laws are doing is protecting you from competition so that you get your way. So one of the most wonderful things you can be is a regulated monopoly because you're just not going to face the customers. All you have to face is the the government regulator. So I'll wrap up there Ashley and let Kristen take it, take it from here.

Kristian Stout: (18:14)
Thank you. Thanks Mark. Thanks for Richard. Thank you also to actually for the impatient speak today and to the committee for justice for putting this together, these really interesting discussion I'm going to keep my comments brief so we can move to the discussion section. And I think most of what I'm about to say is largely line with what Richard and Mark had to say. So I'll try to focus on a few points that I think are the most important, understand about what's going on with the populous antitrust movement. And hopefully I won't be too duplicative populous critics of modern antitrust law. They don't have a single coherent project that can be easily ascertained. What presented instead is something of a grab bag of criticisms then and propose remedies that aren't exactly anchored to a specific guiding standard.

Kristian Stout: (18:58)
I think indeed one of the common thread that you will find in the populous antitrust rhetoric is, is a wish to move away from the consumer welfare standard that Richard and Mark mentioned which currently serve as the lodestone for antitrust analysis. One of the main virtues of the consumer welfare standard is that as Mark alluded to and Richard mentioned that it limits political discretion. I think it does this by smoothing out doctrinal shifts that would occur across administrations without some sort of neutral standard to guide antitrust analysis and that without such a standard, these these administrations would be able to seek particular worldviews through antitrust law rather than treating it as a neutrally administered body of law to go to the, the topic of this this discussion to actual function as a rule of law, as opposed to a source of political discretion, populous critics maintain that basically any institutional arrangement is in fact, an expression and political preference.

Kristian Stout: (19:56)
And I think they're correct when they say that, but I think that their observation, they think that their observation proves more than it actually does. The chief objection that the populace have when they want to revert to a more antiquated state of antitrust enforcement that Mark mentioned from the early 20th century is that the expression of political preferences in their arrangement becomes unmoored from broad democratic accountability and, and become subject to the whims of enforcers in the executive branch. But these facile observations that all enforcement structures are expressions of political views. I don't think they contribute much to the central question, that functions that were one of the central questions that's important are democracy. And that's how do you channel the broad democratic political will that establishes antitrust law? How do you, how do you channel that through enforcement structures that are subject to explicit implicit capture?

Kristian Stout: (20:48)
I think that's why the consumer welfare standard came to exist and why to evolve over the course of the 20th century, the consumer welfare standard. It doesn't dictate the particulars of any particular case ex-ante, but it prescribes the creation of testable, a testable relatively objective metrics by which to gauge competition and competitive harms consumer welfare standard doesn't require any particular doctrinal rules. Instead it requires only that when doctrine is adopted, its analysis is grounded. In one ultimate question, are consumers better or worse off as a result of behavior, that's being challenged. A new standard to replace a consumer welfare standard is not per se bad, but it is going to be subject to reasonable skepticism, particularly since the current standard is very flexible and capable of incorporating new theories as empirical evidence emerges to challenge existing theories, but the changes that have been preferred by the populace so far aren't going to do the trick and broadly you can break them into two separate categories.

Kristian Stout: (21:44)
And I think both of them are not particularly desirable with the populace, have their ways one set of changes that would be introduced would be to introduce simple, bright line rules, something like the, what comes out of the brand deicing flavored body blocks from the early 20th century for instance, strong and arbitrary line with respect to market share thresholds economic theory and evidence has shown us though repeatedly that there really isn't a single bright line metric that you can apply for firms size across all firms and all industries. There's an even a reliable range that you're going to be able to abstract from what we've seen in different industries and say that there is one ideal set up or one ideal number of competitors that should apply across a broad range of industries. Some markets do very well when concentrated relatively some don't do as well.

Kristian Stout: (22:33)
And it comes down to an empirical examination of particular cases that that guides the best analysis, the consumer welfare standard in this context, tasks, enforcers and courts with using evidence to pull apart the particulars of cases and determining when competition isn't functioning well, bright line rules in this regard, then if we apply them in this kind of situation would be both under an over-inclusive as they were in the 20th century. And they would be likely to generate net harm to society. As I think it's arguably the case happened in the enforcement of antitrust in 20th century a second set of proposals that comes out of the populace. That is likewise, not very convincing, is that in Fort and this system, something more that Richard and Mark were talking about earlier is that enforcement should consider a range of values that are not obviously related to competition when administering the antitrust laws, for instance, the effects of vertical conduct and mergers on employment patterns or environmental quality.

Kristian Stout: (23:29)
These are, as I think our panelists would, would acknowledge these are valid issues to consider, but these are not issues for antitrust law and trying to include them in the enforcement of antitrust laws, a categorical mistake, how we deal with climate change and the opportunity to access employment or policy areas best out within an open form of Congress, shouldn't be lodged in arcane enforcement agencies like antitrust agencies. So including these policy areas and antitrust law would shift the responsibility for considering these issues, these issues into bodies of reinforcement that are not suited for doing that. And it would Rob voters of their agency through elected representatives by facilitating disturbing degrees of regulatory discretion within the executive branch antitrust agencies are not designed to function as metal legislation, nor should we desire them to do that. That's, that's a function that should be reserved for Congress.

Kristian Stout: (24:20)
And finally there's a fundamental error that I think drives much of these evolutionary populous pushes. They presume that political power necessary follow necessarily follows economic power. And I, as I read the literature such relationship does not in fact exist. And, and following this sort of populist intuition can lead us astray and lead to damaging policy. The fact is that there is not actually any empirical research that persuasively demonstrates that large firms are any more likely to capture the political process than small and medium sized firms, particularly when the acting coalitions when you look at the top 50 us companies by market cap, there's at best a weak relationship between the size of the firm and their lobbying footprint. And in fact, if lobbying, and this is, this is well known, color paradox if lobbying were in fact such a surefire way to achieve the ends you would see far more resources directed toward lobbying.

Kristian Stout: (25:19)
So the argument that large firms by their very nature hurt the democratic process is, is unpersuasive on that account. If anything, I think we would expect to see relatively more outsize influence from coalitions of small and medium sized firms functioning in congressional districts, they're able to deliver votes to particular politicians which is as we know the lifeblood of elected office and related to this, if we, if we think through the populace project to try to break up large firms or cap the size of large firms and thereby logically increase the amount of smaller firms in the economy. And, and to do this through introducing political discretion, you actually, you actually end up at a perverse end. What ends up happening is with a larger number of affirms in operating in an antitrust environment, ruled by political discretion. There's relatively greater incentive to attempt capture of the agencies and elected representatives to try to obtain exemptions for particular firms or particular districts. What you get is less of a uniform body of law. That's applied neutrally across many firms, and you get something like the tax code, which is patchily administered based on, on who lobbied particular agencies and Congressman best ultimately conflating economic and political power, even though it provides a lot of fiery rhetoric for populace. I think it does very little to actually inform modern antitrust

Richard Epstein: (26:44)
Law. If we want to have a neutral rule of law, we should look for reliable standards. I like the consumer welfare standard. I'm prepared to defend it. I'm also prepared to hear real arguments about where it's fallen down and how we can improve it or advance it. But the arguments that the populace have issued to date just don't fill this bill.

Ashley Baker: (27:07)
Thank you, Christian. I particularly appreciate your point to about how antitrust is particularly really over the years has been asked to, you know, serve too many masters on too many causes such as economic causes and environmental and start knocking out environmental. And and so other civil rights, exactly. Civil rights, equality, everything else under the sun, and, you know, it always, it depends on the enforcer. So it's just a bit of a more pointed question than I usually do to start this off as why do we see conservative settling, choosing Brandeis were born now have anything to do with antitrust at all?

Richard Epstein: (27:47)
I answered that question in a slightly different fashion. Brandeis was a man of two hats. He was the guy who organized the United shoe machinery geo which was the first person who recognized that vertical integration presented, who else wants to have additional opportunities for antitrust growth. And it was upheld in a very good opinion, Winslow by justice Holmes in about 1913 or so. And it was only when you got into 1968, when the foreign competition was in that they wrecked the company. And I saw that the whole market was turned over to importers. He also wrote the Chicago board of trade decision, which was an extraordinary decision having to do with forward contracts into the Chicago market. And what he did under a rule of reasons is he managed to give an analysis, which I think had one or two tiny mistakes in it, which took it to a decision below, which had been a per se judgment against the company.

Richard Epstein: (28:40)
And under a rule of reason, he managed to give it a per se judgment in favor of the company, complete switchover. I've never seen that happen in any other antitrust case. I don't know if Marco and and Christian have, so, I mean, he's a very mixed bag. You read the Chris of bigness and that the book is completely unreadable. If you want to read something else, that's completely unreadable. Try to read the Brandeis brief that he wrote in Mueller against Oregon in 1908. It is basically a bunch of intellectual full scab. He has one sentence. Lochner allows you to regulate it on the grounds of, Oh, and then he quotes all sorts of domestic and foreign sources, Lilly Lilly saying that this is a health regulation missing every relevant issue in the particular case. And so he was what I regard as bi-modal there were days when he was an a plus guy and there were days when he was a kind of a solid D. And so it's very hard to know with brand X there's God, where you really want to come down upon him, because it is it's. I can't think of anybody else who's been so inconsistent in his ability. I don't know what Mark and Christian think, but that's my impression of him

Ashley Baker: (29:51)
Justice to kind of get more to the root of my question though, as like Christian, Mark were both pointing out you know, antitrust will be, you know, in the hands of whatever the goals, the enforcers will, you know, what, why, why are those in the populous smooth, but not not understanding now that the goals of the enforcers will be, you know, the outcomes here that this will not necessarily work very well in their favor, in the long run.

Richard Epstein: (30:17)
I mean, it depends who you listen to, but some of them acknowledge that and they're comfortable with that. And I think that there's there's some acceptance that despite the democratic rhetoric, there's some, there's some some view that a more democratic process is not going to yield the results that are necessary. So it'll be okay if there's some experts who will be properly administered. And to your question, why are some conservatives okay with this now? I mean, increasingly it seems like the political climate is one where whatever tools are at hand, we'll use them. Principals do dams. And in fancy trust, if you can get on board with antitrust getting to punish your political enemies, some people are okay with that. Unfortunately, there's also, I think something else about conservatives, which is what's the definition of a market imperfection the way in which I tend to look at this.

Richard Epstein: (31:06)
And I think that my co-panelists degree is there is no market, which is perfectly competitive. Every little market's gonna have some hiccups in it. So every time you renew a lease, there's some degree of monopoly power that exists on both sides. If you try to figure out how you regulate it, you will not solve that bilateral monopoly problem. Over $10. What you'll do is you'll wreck the entire market. So there have been a bunch of papers, Glen, while feeling this Scott Morton, Eric Posner, which have taken the position, we can find a monopoly in any competitive industry that you want to look to. So you'll look at the airlines and, you know, there are all sorts of practices they do, but these things are deeply monopolistic. What they do is they identify if they're lucky on 1% deviation from the competitive situation and have remedies, which are far worse than the disease, Eric posted the other day, presented a paper, which, which I took strong exception.

Richard Epstein: (31:57)
He said, my terrible mistake was to think that labor markets turned out to be competitive, competitive. He says, I, you look at these huge data sets and there's all sorts of monopoly power. Well, that may be true. May be true. When you have an individual employer dealing with an individual employee, I don't know how you divide that surplus, but they seem to know, but when you're talking about labor markets, is it a, basically a monopolistic market by these buyers of blame? When you have two workers, two firms bidding for work, or the same worker and so forth, you really think it's monopoly Powell. When in a bad season, many people get laid off and in a good season, many more people quit. To my mind that when you're doing is you're taking a fly speck of one particular issue, and then using that imperfection to lever, the whole system, Ronald Coase had, I think, had a much better view on this. He said, look, this is all consequence of positive transaction. And if you want to treat positive transactions as a sign of monopoly, then you're always going to go too far. And the distance between what we're talking about here and the old fashioned sugar cartels is so far that it simply boggles the mind to see that these modern analysts treat the two things as though they're the same. I don't know what Christian and mocks think, but I mean, I think this is important to stay.

Mark Jamison: (33:09)
Yeah. To try and answer your question, Ashley. I would, I struggle with it because one, I don't know who falls into the bucket of conservatives and I always struggled to being able to read other people's minds anyway. So I'm not sure I'm good at answering that question, except for the general observation that regardless of one's political philosophy, if there's money left on the table and you think you can grab it, people will tend to grab it and giving someone in government a lot of discretion to punish enemies and do do favors for friends, regardless of political philosophy. A lot of people will fall for that temptation. Let me add something to things that Richard and Christian had said sort of about Brandeis and [inaudible]. Well, I think one of the things that we see is that they're incredibly good at marketing their ideas.

Mark Jamison: (34:00)
I, as I've read Brandeis, I just, that he has a very passionate language that gets people riled up. And my, my sister, but one of my sisters is a bestselling author, incredibly good writer. I had her look at some of the writings of the Neo brand ICMs. And she said, wow, these people are amazing writers. They're really good at marketing their ideas. And, and that is just, that's true here. So regardless of what the evidence is, the marketing is really good. And one more thing on the evidence that we did talk about when you look at the empirically economic writings, where they try to put numbers together, essentially the art, as I read them, the essential argument against the consumer welfare standard is that it's not the same as an antibusiness standard. So they will look at fill, they'll do analysis to say, look, companies are bigger that proves that antitrust has failed.

Mark Jamison: (34:48)
And so consumer welfare standard is bad, but they simply changed the metrics and said, well, it doesn't meet our metrics. So therefore it's bad. And that's just a bad way of doing research. Yeah. And to just add to Mark's point on the marketing side of things, they are very good with fiery rhetoric. And then essentially the position that I haven't reached your Mark probably have it's something more like, wait a minute, everybody let's stop and think about what's going on in this particular case and talk about the economic intricacies of it, which is a much harder marketing sell saying, you know, promoting general rule of law, separation of powers is a hard sell when there's people who are really angry, you're muted, Richard,

Richard Epstein: (35:32)
They turn out to be angry, is it's much easier to argue that been theft by the big rich guys, to which we now have to restore it. So they have a theory of Aristotelian, restorative justice that's going on in there. And when you try to explain to people, particularly those people in the populous situation about incentive effects, double marginalization, kinds of problems, brand affinities, you really have to develop a much more micro analysis of the particular problem and that loses audience. So, I mean, if you're actually in a public audience and so forth, the only way that you can combat is to sort of scream back at the same level of generalities that they're coming at you. And frankly, that just isn't part of our sort of psychological temperamental thing. I have been forced to do that more times than I care to mention, but it's not because I start that way.

Richard Epstein: (36:22)
It's because what happens is that if I say something like, you know, it turns out that there's a lot of efficiencies in say using various kinds of cooperative ventures in order to deal with standard essential patents and so forth, there's always going to be somebody in the audience who said, this is just a giant rip off of you name the group. And then what you have to do is to some extent you can't be meek in response to indignation. You have to show a little bit of indignation yourself on this panel. I don't think we're going to get to,

Kristian Stout: (36:50)
Well, you know what though? I think that some of the populace, the populace really like going after, I mean, every large firm, but they're really on the digital platforms frequently. And I think that they actually leave themselves open to some of that rhetorical fire, right back, especially in the wake of the pandemic where everyone came to realize exactly how useful a lot of digital platforms were in our daily lives. So when they say, Oh, well we want to break up Amazon because of this and that. It's like, well, you know, there's people who can see demonstrably, why Amazon makes their lives better with its with its shipping network. And it's a backend having access to information through Google and keeping in touch with people through Facebook. This is something that goes into people's daily lives and they can actually see that. So when a populace comes in and says, Oh, but they're evil because they're big. You, you have an in, I think to have like a more subjective conversation, let's say

Richard Epstein: (37:43)
There's also, there's also the following irony. When you're dealing with companies like this, there are two issues there's size and concentration, and then there's also political bias. And, you know, there's a very profound difference between what Zuckerberg, who seems to have developed the brain around his original technical skill. This is I'm not going to get in the business of centers. And Jack Dorsey seems sitting there on Twitter saying, I'm going to basically tell the public that they want to read a Donald Trump thing they have to know from me personally, that it's inflammatory and arguably racist and hyperbolic and so forth. What has happened is at this point, you've got political bias. And is there any on privacy invasions in those? And one of the things that you have to say is it's not at all clear that breaking these companies up are going to be able to deal with any way, shape or form these particular kinds of interests.

Richard Epstein: (38:34)
Particularly if you have two left wing heads of the divided Twitter, one and Twitter too, that's not going to solve this problem with privacy. The more firms you have, the more difficult it is to chase it down. That was Brandeis, his original insight with respect to vertical integration, something goes wrong with an integrative product called his shoe. And I don't know whether the Sue, the guy who made the sole or the heel, but if the company says, we'll take care of all of this and work out the internal adjustments, we're all better off in terms of what's going on. And so the antitrust stuff is oftentimes a thought to everything else that is going on in this kind of space. And then when you start having various kinds of privacy regulations, it's not an antitrust problem at all on what people have to realize is any bit of information that you put on the site as part of a commercial transaction is probably going to have to be used 20, 30 or 40 times for all sorts of purposes.

Richard Epstein: (39:24)
Now, most of which are completely legitimate. And if you start having barriers, I'm the way in which this stuff can shift down. You're going to make it very difficult. For example, to identify medical trends, where the hotspots are going to be with one kind of disease or another. And I just don't think there's enough appreciation of the way in which this aggregation of information at the backend, it is monetized suitable, but it's also beneficial for people like us who no longer have to try to figure out how to do these things themselves. So because others have done it for us. Mark is nodding. Yeah.

Ashley Baker: (39:59)
Does anyone have anything to the same audience? I mean, I know there were a lot of recent proposals in Congress out there perfectly to girly, to, you know, almost debts to the consumer welfare standard. We have a report coming out probably with the house judiciary committee pretty soon. Does anyone have any commentary on any of those proposals?

Richard Epstein: (40:17)
It's hard to have comment. Go ahead, Christian. I've been talking about Christian. I actually was going to say almost exactly the same thing that you said. It's hard to have commentary on them in particular because it's hard to know. It's hard to know exactly where the series efforts are. So you see the same thing in analogous area with section two 30 reform stuff that's going on. To me, a lot of it seems like saber rattling, trying to extract concessions from the large companies that they're targeting. Because if we're being serious about antitrust short of there being some sort of strange come together moment in Congress where they decide that they're going to Institute new standards. I don't see that really moving instead what there's going to be. I try to push, to get the agencies to, to sort of push back on the companies that are disfavored right now. And I think it's political maneuvering to some extent because I just don't see it as legislation really pushing through Congress right now. Now after the election that who knows.

Ashley Baker: (41:17)
I agree. It's hard to say a lot of it's merger oriented. I mean, it was a pretty radical idea that some of them have regarding, you know, mergers. I mean, some of it would take us back to 1968. I feel like I'm starting to feel stop seeing that. You can go ahead with this.

Richard Epstein: (41:29)
I don't know. I, I, but I miss thinking of, even for example, Christine Varney takes over in the Obama administration. And if she does one, I think dumb thing which is, she says that the Bush administration report dealing with various kinds of combination activities was wrong. And she basically wants to undo some of it. But you know, she didn't do anything there. And then you start looking at the next seven or eight years under her and her successors. And there's nothing about the Obama administration on antitrust law that gives rise to the hackles that I feel about his behavior on environmental areas of civil rights areas at all. I think in fact, she and her successors were all pretty much in the old antitrust consensus group, which is sort of cautious Chicago types. Right. the moment it turns out that, you know, you get Trump into office.

Richard Epstein: (42:23)
All of a sudden the rhetoric on the antitrust laws for the American left is no longer conciliatory, no longer part of this sort of national consensus. It goes the other way. So for example, I've worked for many years with Qualcomm and I can say, although I did not participate in the litigation stuff, I have not read a worst antitrust opinions in years, other than the one that was written in that case, it was just a ghastly situation. Everything was wrong about it, the citations, the arguments, and so forth. I know maybe Mark or Christian will want to do it. I just get too angry when I talk about it.

Mark Jamison: (43:02)
Yeah, yeah, yeah. I'm in on the general topics. One of the things that I, I have always found useful to keep in mind is that the, the, what was the, the tech industry, if you will, that's, that's come from Silicon Valley and from scandal and such basically ignored Washington DC until the Microsoft antitrust case and people within the Clinton administration. So at least some of them openly admitted that one of the reasons for the case was to bring their money into DC and it worked beautifully. So there's a lot more DC lobbying firms now coming from, from those industries because the government got involved until the government was involved, they stayed out into the marketplace. The idea that we could break these companies up and somehow make things better, or keep them from merging and make things better. What, I don't know how to split Facebook in half and still have all the communications across between people around the world.

Mark Jamison: (44:02)
I'd have no idea how you do that. Same thing for Google. Are we just going to tell Google, you can complete searches until 2:00 PM and then all bets are off. Cause then you have too big of a market share. I just don't see how any of that works. The prohibitions on mergers just ignores how businesses work, especially in a very dynamic environment. Nobody knows enough about what the technology is going to look like a year from now two years from now, three years from now, let's say I have the business plan. This is all going to work. We're always looking for what's the idea or the product out there that we can package together somehow meld into what we have to make it even better. I think what some people fail to realize is that one 90% of all the tech startups fail, and that's a lot of money that people are investing in those companies.

Mark Jamison: (44:55)
What they have to aspire to is that at some point we're either going to sell to the big tech companies or we're going to become them. But if we cap off and say, you can't get big, a lot of that money starts drying up because a successful product has to one, be a good idea. It has to also be a good product. So you have to take the eye from idea that what the scientist and the artist all dream about, and then the engineers have to design it. Then you have to be able to execute a business plan. It's the last thing that they tend to fail at more often than not. And it's the successful companies that say, we don't have to run a business. We can take what you've done and do something good for consumers and consumers are all better off with that

Richard Epstein: (45:41)
Would, it would be a total disaster to try to operate a system in which you wanted to oversee the process through the antitrust laws of going from a bright idea in somebody's backyard to a major company, there are issues here. And this goes back to the theme about the right tools that involved. And one of the serious problems that we have is in many cases, the patent law is insufficient protection by way of injunctions for small product. There's a wonderful book. That's coming up by Jonathan Barnett, who talks about this issue saying in effect that a small company that has a single asset, that it wants to sell into the world can only do it by way of patent protection, large companies, which tend to be pretty much either mediocre or anti-patent. They can protect by trade secret contractual arrangements and other kinds of business deals.

Richard Epstein: (46:30)
So that paradoxically a week antitrust law becomes a barrier to a weak patent. Law becomes a barrier to entry rather than an assist to counterintuitive. But I think by and large, it's probably going to be correct. And then it also turns out this is the securities law. I have to really be done in a very precise way, because if you make it too expensive as somebody to go public, what they're going to do is they're going to be bought out. And it's not as though these two are equal alternative routes. Mark mentioned that you could have both, but the real difficulty in buying out a small company and putting it into a big company is it now becomes a subdivision. There's going to be oversight, layers on it. And the people in large companies don't have the same attitude towards risk. That's small people do small companies.

Richard Epstein: (47:13)
You've got all your eggs in one basket. You know, if you're a double the size of this particular product, you're gonna double your wealth. You make this a 1% division of a large company, a double its output. It's a 1% change on the bottom line. And so we essentially really want to do this, not an antitrust, it's a patent problem, and it's a securities problem. And one of the reasons why I get very nervous today is academic specialization has to become a menace to this because if all you do is antitrust law, then everything's an antitrust problem. All you do is corporate law. That way when you really have to do is to have people actually have some industry experience and then try to figure out the multiple areas of law that they have to engage in in order to move from the beginning to the end of these processes, I've been lucky enough to have to work on a number of these kinds of arrangements.

Richard Epstein: (47:59)
And this is what I've always discovered is I'm better at Siri than all the guys I talked to and they are better deals than I am. Why is that? Because they've got experience in that pulse on this stuff. And so what I do is I talk to them, figure out what they're doing, and then try to figure out why they're right, rather than to figure out why they're wrong. And I think if you have that attitude as an academic, it's actually much healthier than the kind of constant skepticism that you see in the Academy. Well, we got our PhD with small, smarter than these people. They haven't done it and they may not be able to explain it. And this gets you back to the famous stuff having to do with Plato. I don't know if you will care about Greek philosophy. What always happened is you know, Socrates was always examined somebody who knew what he was talking about and then by cross-examination would take this guy and rip him to shreds. And if you actually knew something about the business, you say, well, he's a better advocate, but in fact, the Socrates was the Sophos rather than the guy in the search of truth. And that's important to understand, I think, and it's sort of a general question of intellectual discourse

Mark Jamison: (49:01)
Once I had the opportunity to another, I'm sorry, go ahead. Once had the opportunity, Richard reminded me of this to speak with some of the academic economists who were on the department of justice team attacking Microsoft. And he said they were just so amazed. They would dig through emails and memos by bill Gates. And he knew more about network economics than they did. And they would go back to their hotel rooms at night today. He said, this, I wonder if it's true. They do their mathematical model. He was right. And he was doing this by intuition as opposed to all of our analytical proof. So just supports what Richard was talking about and to get back to what you were talking about. Even speaking of not having VC investments that were small companies at all, our first Q and a, from the audience is about Europe. And it says, well, European antitrust enforcement influence us courts as Europe already committed to the populous view or some hybrid, I guess that's poorly reference as well with the news about Amazon

Richard Epstein: (49:59)
W B the European, the European standards for competition law are different than the U S standard. So even if there are cases that proceed in Europe, you may not be able to bring those same cases under current jurisprudence. Ideally we will stay American and we will convince the Europeans where they're going wrong. That said, I think that's going to be dependent on who you get in, in the next the next administration. And some back to your previous question, if some of the legislative changes that have been proposed, actually start to gain traction. You could see a more European shift right now. I don't see a lot of the European cases prevailing in the United States on the current doctrine. I agree with that. I mean, I've spent some time arguing with Europeans and you know, Khan was a pretty smart guy, but many of his successes are not.

Richard Epstein: (50:49)
And what they do is they take this unduly rigid view of individual autonomy. And what that leads them to believe is that anytime you see somebody make a deal, they're doing something which offends some first principles of natural law. And most of them are not trained in economics. They don't understand the consequentialist, or they don't understand the vocabulary that we're involved in here. So it was just a huge battle to try to let them understand that, you know, this, the Cabo is rather richer than you think it is. It's not when somebody talks about efficiency, that they're just a mindless little clone. It's an elaborate set of trade offs. And you have to have that kind of mind, Europeans are not comfortable with trade offs, which means that they're not going to get things right. Very well. That's the first point. The second point is I agree.

Richard Epstein: (51:32)
I think the American academics for the most part, well, the courts are reasonably immune to that. You know, you look at something like the Amex case, which came out a couple of years ago, very sophisticated arguments on both sides, no influence. I think as Christian said on this, the difficulty is you get big deals like the Honeywell deal and so forth years ago, well, you need to get approval from both sides. It's the slowest train that basically you go this strict, this set of restrictions that the trim is the speed of the train. You could go only as fast as that. And the problem about the Europeans is I think they're often so confident of themselves that they're basically willing to block America. There's always been a kind of European snobbery about Americans was funny access, not being as smart and as educated as they are.

Richard Epstein: (52:16)
I mean, it, it really does take place just the way it turns out. But you know, I've been the lawyer for 52 years. The number of times I'm told that, well, I mean, you simply, as a lawyer, do not understand, then you fill in the blank and you think philosophical issue, any historical question, any moral question. My attitude is we want to roll over the lock and the exposures that we get to multiple disciplines, put us at an enormous advantage over people who spend their time doing one thing. Cause if you do only one thing you tend to do only one thing badly.

Mark Jamison: (52:47)
I agree with, with what Richard and Christian have been saying. My experience just talking with Europeans that are working in this space is one, they are very comfortable with this, this one very narrow view of, of Liberty. And that is I have the right to stop anyone from effecting me and that's that really isolates people and that's going to be hard to live out and practice. But then there is a very comfortable,

Richard Epstein: (53:12)
Mmm,

Mark Jamison: (53:14)
There's a great comfort with letting geopolitics affect antitrust. And so we see, you know, a lot of this, an American company, we should do something. What it's doing,

Kristian Stout: (53:26)
We're going to raise the in Europe, the next the next tech giants, these kinds of ideas. Whereas if they would just simply liberalize the markets and get the government out of the space of trying to pick and choose who the winners might be, some of the European companies might actually become successful. You look at the top 20 tech companies in the world. None of them are European, they're all American or Chinese with the scattered in firms. A couple of other places.

Richard Epstein: (53:53)
I mean, my mother had a statement which I had to cure. She said when she was go to the market, says, if it's a good deal for him, it has to be a bad deal. And so all exchange stopped in the Epstein households when that maximum was put into place.

Kristian Stout: (54:17)
So we have about four minutes left here. Each of you have a minute or so for concluding thoughts. Sure. I can go first since I was in the middle before. So let me go go first this time. I think it's really important that we focus in on how should laws work and, and not so much have a lot of discretion where someone could say, this is my, my ally. This, this person helped me get into office, this person and whatever that might be and let that drive how antitrust works. It's any economy that has gone down that road has been unsuccessful going forward. So I think we definitely want to stay out of that space.

Kristian Stout: (55:08)
So for following, along with what Mark said the American approach to law is to hold as I read it one evolutionary, we have a common law approach to the way we, we, we deal with law, even in the context of antitrust, which is a statutory law. We still interpret it and develop it in common law fashion. And the other thing is we have modularity in the way that we write our laws and that helps promote a neutral application of the laws. It helps promote the rule of law, which you don't want antitrust to do is to become a metal legislation that overrides legislatures from doing what they're supposed to be doing. And this is an unfortunate trend that I think we see broadly in politics over the last hundred years, where Congress is all too willing to give away lots of, lots of its authority, over different areas, and then complain about the agencies that take over that authority that they gave to them. And I don't think we should allow him to trust, to become yet. Another victim of this trend. Antitrust is really good at doing the one thing it does, which is looking at where there's competitive harms that harm consumers. And if we don't keep it on that track, I think in the end we ultimately harm our society.

Richard Epstein: (56:12)
I will take aim and slightly more pessimistic view on this. If one starts to look at the history of development, two premises stand out. One is the progressive has always that there were never any public choice issues about a collective decisions made through political bodies. Cause they always envision themselves in charge and there was nobody smarter than Felix Frankfurter. And that's what Felix would have told you about all of these issues. And if you read some of his opinions, it's quite clear that he was massively uninformed about how competition and markets work. So the first thing you want to do is to have skepticism on the public choice level as Jim Buchanan has said about over romanticizing, the way in which these things go. And the second point is, it's not just that you are going to fine tune all the law wrong. If you go back and you look at the new deal regulation, but these guys did is they had a manual for cartels and they put them together with incredible rapidity.

Richard Epstein: (57:07)
And these were really damaging their agricultural cartels. There were motor vehicle cartels that were airline cartels. You name it, do a labor cartel. And these guys said, well, this is all wonderful because we now stabilize the returns within the industry. So their attitude was if they gained some, the members of the cartel that was a social benefit, this, they never conceived that there might've been social losses outside of that. And if one wants us to think about this, that's the danger of people like Tim Wu and so forth. They're so clever. They're going to start Ricardo lies and other kinds of industries in various sorts of ways. And so it's not just a question of miss tuning, the burdens of proof and in various kinds of integration or vertical, horizontal integration cases. It's the question of going exactly in reverse. And that's the thing that we really have to be careful about. That's the thing that I think that the new Democrats to Joe Biden much more liberal than he is personally as an institution, the Bernie Sanders, a likely to bring us up. They're elected.

Ashley Baker: (58:05)
Thank you, professor Epstein. And thank you to all of our panelists. We're out of time now, but I'd like to thank all of you for coming out today. And he, hasn't really great, really productive discussion in Victorian and tuned in. I'll have this video up on YouTube later and I'll send it out to everyone. Thank you and have a great rest of your sentence to us. Yes, I will.

Richard Epstein: (58:22)
Thank you. Thanks everybody. That was a great session guys. Say hi to Jeff Mandy, before you leave Christian. Now talking about Roman law, do you know who one of my prize Roman law students was? Was it Jeff? He was my Roman Lawson at the university of Chicago. Hasn't talked to me about it and he Roman long. And I have to ask him about that, but he actually was an extremely astute Roman lawyer. I just want to leave him. I'll tell him, tell him that. Okay. Take care. Nice seeing you all. Bye bye. Thanks Ashley. Bye bye. Bye.

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