Robert Reich on big tech



Robert Reich, former Secretary of Labor and current liberal gadfly, has an op-ed featured in the New York Times this morning. It concerns the concentration of market power in the tech industry. Reich establishes what I think is a useful and dynamic framework regarding this issue. "Two centuries ago," he writes, "slaves were among the nation’s most valuable assets, and after the Civil War, perhaps land was. Then factories, machines, railroads and oil transformed America." Throughout American history, he suggests, the most prominent and profitable industries of any given era have tended to engage in behavior that leads to unproductive levels of monopolization and concentrations of political power.

Today "information and ideas are the most valuable forms of property." True to form, Reich argues, the tech industry has entered into a monopolistic phase reminiscent of the Gilded Age. Fifteen years ago, he points out, the top ten websites generated 31 percent of page views; today that number is 75 percent. "Amazon is now the first stop for almost a third of all American consumers seeking to buy anything." (He does not add, though it is equally true, that "gig economy" firms like Uber and TaskRabbit are attempting to redefine contemporary modes of employment to the disadvantage of most workers.) Though we tend to imagine Silicon Valley as awash with innovation and bustling startups, Reich points out that monopolization has taken its toll on the industry. New businesses are actually formed at a much lower rate than in previous decades. "Big Tech’s sweeping patents, standard platforms, fleets of lawyers to litigate against potential rivals and armies of lobbyists have created formidable barriers to new entrants."

Reich's analysis puts this historical argument in the context of an intellectual framework with which I have great sympathy. He rejects the typical distinction between the market and government. "In reality, they aren’t two separate things. There can’t be a market without government. Legislators, agency heads and judges decide the rules of the game. And, over time, they change the rules. The important question, too rarely discussed, is who has the most influence over these decisions and in that way wins the game." Under the currently setup, Reich argues, tech businesses have too much of this influence. The only ways to level the playing field, then, require an increase in government action. Reich specifically mentions that the patent system is rigged in favor of bigger companies, and he advocates an expanded antitrust regime.

I do not have the expertise regarding the specific role of tech industries in the nation's larger economy, though Reich's argument aligns with my personal experience and is convincing to me. What particularly draws me to today's piece, though, is his perspective on the history and theory of theory of the interaction between market and government. Particularly, I agree with his take that the "government versus business" dichotomy frequently invoked in political discussions is counterproductive. Though Reich does not make this point, it is largely the case that those who typically employ this trope are conservatives seeking to decry the "big government" or "socialist" tactics of liberal policies, programs or ideas. But this criticism turns on an unwillingness or inability to recognize the necessary interrelatedness of government and the economy. Of course, I am very sympathetic to this view. As I wrote in A Commercial Republic, "the impossibility of an economically neutral policy does not suggest that government should restrain itself from influencing the economy. Instead, it means that the influence it will inevitably wield should be subject to some check by the people." It's nice to see such a view represented from time to time in the newspaper of record.