Trump's 'Liberation Day' Tariffs: Fair trade or global trade war?

柯茲（Mordecai Kurz）【双语】《大家論壇》市場視角：技術競賽造就壟斷現狀　創造性破壞也難救經濟 讚 1,246 柯茲（Mordecai Kurz） 2024年03月23日 柯茲（Mordecai Kurz） ●史丹佛大學經濟學名譽教授 自由市場資本主義到底是鞏固民主制度？還是威脅民主的力量？這個問題最早出現在啟蒙時代，當時大家樂觀地看待資本主義，認為資本主義是解放的工具與手段，協助人民擺脫僵化的封建秩序。許多人想像一個機會均等的社會，由小型生產者和消費者組成，在這個社會，沒有人擁有足以壟斷市場的過大權力，價格也不會由 「看不見的手」決定。在這樣的條件下，民主和資本主義互相依存，猶如一枚硬幣的兩面。 過去100年來，美國國內的宣傳也一直在推廣同樣樂觀的願景，目的是說服選民，自由市場資本主義對「美國觀」（American Way）至關重要，美國人的自由取決於支持不受約束、自由競爭的企業，以及不信任政府。但近幾十年來的經濟發展顯示，我們應該重新審視這種看法。 為什麼這麼說？首先讓我釐清創新公司之間有關技術競爭的背景與觀點。一，這些公司試圖靠技術積累市場影響力。再者，不同於傳統的價格競爭，這種技術競爭只會產生一個或幾個贏家，不會允許所有公司以降價、減少利潤的方式繼續存在。 技術競賽的贏家擁有得天獨厚的優勢，可以透過各種戰略鞏固在市場的影響力，包括定期推出技術更新、購併競爭對手或透過專利權設置進入壁壘，目的是限制競爭（往往因此獲得的市場影響力遠超過專利法的規定）。因此，技術支配權是獲得市場影響力的基礎，而市場影響力反過來又有利公司取得壟斷地位以及隨之而來的利潤。 影響所及，市場影響力與支配力會大到難以撼動，以至於潛在競爭對手寧願與頂尖公司合作，也不願與其競爭。允許壟斷企業不受限制自由發展的放任政策，只會加強這種市場影響力，結果市場影響力成為資本主義經濟體的永久特徵。技術競爭也無法有效改變壟斷的現狀，甚至創造性破壞也無法恢復經濟效率。 永久的市場影響力透過「贏者全拿」的經濟模式改變了資本主義，在這種經濟模式下，一個或少數幾個在技術上占主導地位的公司壟斷了各行各業。這樣的經濟模式不僅導致資源分配效率不彰，也造成經濟權和政治權過於集中，對民主構成威脅，所以民主的存續有賴於建立新的政策工具，保護民主制度。 第二個鍍金時代 第一個鍍金時代（1870─1914年）是理解當前時代的一個重要參考點，因為它對商業影響力的崇拜高於對民主的追求，以致於破壞了啟蒙運動對市場的樂觀看法。誠然，第一個鍍金時代是一個技術和經濟進步非凡的時期，20世紀諸多重大創新都源於這時期。然而，在1895年到1904年期間，2000多家公司被合併成157家大型企業集團，導致美國經濟各個產業幾乎都被強大的壟斷企業所支配。 催生這些托拉斯企業的人相信，他們在做上帝的工作，拯救經濟免受「毀滅性」競爭的荼毒，進而改善經濟。企業領袖援引優生學家高爾頓（Francis Galton）的觀點和史賓塞（Herbert Spencer）的社會達爾文主義理論，將自己視為在天擇的過程中勝出的聰明人。 這個天擇過程也適用於他們的公司，他們透過公司建立了由少數強人領導的新社會。因此，實力弱小的企業必須被淘汰，或者被強大的壟斷企業併吞。相較於那些在經濟衰退時經營不善、陷入破產困境的企業，強大的壟斷企業被視為更優越。這些壟斷市場的大企業也被認為是進步的組織。根據洛克菲勒（John D. Rockefeller）的說法，壟斷現象銳不可擋，因為它是 「上帝的法則」。 1901年之後，在老羅斯福總統領導下，以及在新政時代小羅斯福總統主政下，進步派改革者和追求反托拉斯的執法者摒棄了這些觀點。在這些時期，美國人選擇了民主，摒棄了崇拜權力的寡頭政治，實現了長期的經濟成長和共同繁榮。 但這個榮景在1981年劃下句點，因為自由放任經濟政策重新上路，導致當代技術贏者全拿的經濟模式。在第二個鍍金時代，對權力和財富的崇拜捲土重來，力道有過之而無不及。資本主義促進創新和成長的強大驅力依舊存在，但民主的存續卻有賴於能否約束這個制度裡對民主最具破壞性的影響力。 在技術贏者全拿的經濟模式中，創新所累積的市場影響力會導致一個或少數幾家公司壟斷其所在的產業。某家公司可能提供價格昂貴、品質一流的產品，而另一家公司可能提供低價、品質尚可的產品。所有這些產品都有註冊商標，法律認為這些利潤是企業「自主」創新的結果，不是靠壟斷地位，所以這些利潤全都「無罪」，不受反托拉斯法的約束。 但是在這樣的環境下，處於邊緣地位的小公司很容易受到惡意行為或被大公司收購等威脅。占主導地位的公司很容易搶奪與其競爭的創新技術，這是因為小公司不願意冒險與市場目前的大咖進行經濟戰。 當一家公司提高價格並賺取壟斷利潤時，會導致經濟資源的利用欠缺效率，最後大幅降低產出，並相應地減少對勞動力和資本支出的投資。粗略估計，壟斷企業的產出和投入可能會減少一半之多。當公司的市場支配力普遍存在時，會導致投資減少、薪資降低和薪資成長率下降。整體結果是收入、消費和資本存量全都跟著下降。 此外，當價格過高時，鮮少消費者能受益於創新的新產品——這情況常見於昂貴的藥品。大量證據顯示，市場影響力會導致廣泛的權力濫用。這可能包括對潛在競爭者設置較高的進入門檻、箝制競爭性創新、強迫競爭對手被收購等。影響所及，國民生產總額（GDP）的成長速度會低於其技術上可達到的速度。（系列二之一） （翻譯：張瑩，責任編輯：楊淑華） © Project Syndicate 《大家論壇》公民視角：贏家通吃壟斷科技　阻撓政策改革不利民主 柯茲（Mordecai Kurz） 2024年03月24日 07:00:00 柯茲（Mordecai Kurz） ●史丹佛大學經濟學名譽教授 政治影響 這些經濟上與市場上的動態具有深遠的政治影響，其一就是高度市場力量直接造成的高度不平等。眾所周知，經濟不平等會讓富人的發言權更大，進而導致政治不平等。 1980年代以來，自由市場政策和市場力量擴大的主要受益者，當屬高收入頂端以及擁有大學文憑的高技能人才，沒上過大學的非技術型人士受害最深。這種現象造成的結果就是社會兩極化，貧富對立，低教育程度與大學畢業生對立。 關鍵在於，這種極度分歧的不平等來自科技和特定的自由市場公共政策。生活無以為繼的人體認到他們是政策選擇下的受害者，付出代價讓其他人受惠、讓某些有錢的人更有錢，自此之後，美國民主持續弱化。證據顯示，2021年1月6日國會山莊暴動事件的參與者，多是一度茁壯成長卻被遺忘的工人。 房間裡的大象 隨著時間推移，技術贏家通吃的經濟，使得大公司、其高階主管和主要股東所認同的一系列相互依存的經濟和政治權力中心崛起。大公司以及一些超級富豪透過遊說和競選捐款呼風喚雨，但他們的權力不止於此，他們還獲得大量資訊，藉此操縱我們的購物行為，控制我們的溝通管道。在人工智慧協助下，他們大概還會更進一步加強控制我們接收的許多資訊。 到這裡所提的所有不良影響，都因為社群媒體的關係更趨惡化，X（前身為推特）與Meta這種由單一億萬富豪完全掌控的公司能左右任何選舉，而這難容於健康的民主。社群媒體對民主運作和公民參與的破壞性影響已有很多文章，因此我要強調的是它們的法律地位。 經驗顯示，社群媒體平台有利於暴徒行為以及假消息、陰謀論、仇恨言論等散播，類似的內容會擴散，是因為這些平台受到1996年《通訊端正法》第230節保護（這項立法並非為了改善大眾福祉，而是為了幫助柯林頓總統連任）。 更糟的是，美國最高法院助長了壟斷勢力的形成，成為改革的一大阻礙。它在2010年聯合公民（Citizens United）的裁決中，無視大量載明財富能大幅左右政策、在政治過程中有額外影響力的文獻，移除了運用企業財富來左右選舉的一切限制。 極端的財富不平等，也對源於富人自認高人一等而應當富有的反民主文化，具有顯著影響。雖然富人與名人的生活方式和態度並非我的研究重點，但我確實認為他們能告訴我財富不平等對民主活力的影響。 回到民主 技術贏家通吃的資本主義造成許多不良影響，大量改變政策於是有了必要。我在《科技的市場力量》一書概述過許多內容，這裡我略提一二。它們分為三類，首先是資料：在壟斷的利益與財富上，我們需要準確的國家和部門級資料，才能發展強大的公共政策。 第二類是對科技市場力量的限制。別的事情不提，我們先應嚴格限制企業取得技術來擴展技術範圍的能力；專利授予上採取更高的標準；透過縮短二級專利（其描述依賴於另一項專利的專利）的期限，減少相互關聯的專利金字塔（用作進入障礙）；修訂勞動法，讓勞工更容易組織和進行集體談判，進而改善市場的權力平衡；對壟斷利潤課徵企業所得稅。 最後，我們需要能鞏固民主的經濟政策，這包括把限制技術市場力量當作反托拉斯法明確目標的改革；提高收入較多者的邊際所得稅率（接近50%）；廢除《通訊端正法》第230節，並考慮把社群媒體改納入受監管公用事業的提案；廣泛投資於低收入家庭兒童早期教育和健康（研究顯示這是長期穩定美國中產階級與民主的最樂觀途徑）。 最後但同樣重要的是，我們應為那些因政策支持的不良事件而受害的人建立「東山再起的權利」，因科技、自動化、全球化甚至聯準會貨幣政策等市場力量而淘汰的勞工，將有獲得協助重新來過、學習新技能或直接補償的合法權利，這能消除現行政策普遍疏於照顧的狀況。斯堪地那維亞半島已採用類似方法，對民主穩定產生了正面影響，相關政策可設計成泛用型，且具有最低的官僚裁量權。 部分激進左派認為，如同馬克思主義者形容，資本主義已死，且被監視資本主義、技術封建主義、數位控制系統或其他東西所取代。然而科技的深遠影響以及國民所得第三索取者的存在，都顯示資本主義一如既往地富有創造力以及強大。 既定事實是，資本主義被科技大幅改變，傅利曼的《資本主義與自由》如今似乎與經濟現實脫節，然而由於許多人緊抓不放，我們所需的政策改革受到阻撓。若不加強動員群眾來支持改革，對民主的威脅會在美國與全球各地繼續擴大。（系列二之二） （翻譯：鄭可妮，責任編輯：楊淑華） © Project Syndicate （原標題為《How Capitalism Became a Threat to Democracy》 How Capitalism Became a Threat to Democracy Mar 15, 2024 MORDECAI KURZ Since the 1980s, American capitalism has been transformed into a winner-takes-all economy in which one or a few technologically dominant firms monopolize each sector at the expense of consumers, workers, and overall growth. And with permanent market power comes the kind of political power that is antithetical to democracy. STANFORD – Does free-market capitalism buttress democracy, or does it unleash anti-democratic forces? This question first emerged in the Age of Enlightenment, when capitalism was viewed optimistically and welcomed as a vehicle of liberation from the rigid feudal order. Many envisioned an equal-opportunity society of small producers and consumers, where no one would have undue market power, and where prices would be determined by the “invisible hand.” Under such conditions, democracy and capitalism are two sides of the same coin. Domestic propaganda in the United States has pushed the same optimistic vision over the past century, aiming to convince voters that free-market capitalism is essential to the “American Way,” and that their liberty depends on supporting unfettered free enterprise and distrusting government. But economic developments in recent decades suggest that we should re-examine such beliefs. To see why, allow me first to clarify some background ideas about what I call technological competition among innovating companies seeking to amass market power. Such competition differs from conventional price competition by producing only one or a few winners, rather than permitting all firms to survive with lower profits. Sign up for our weekly On Point newsletter your@email.com The winners of technology races are uniquely positioned to consolidate their market power through diverse strategies – including issuing periodic technology updates, acquiring competitors, or erecting barriers to entry with patents (often attaining far greater market power than intended by patent legislation). Technological domination thus is the basis for achieving market power over products sold to consumers, which in turn allows a company to extract monopoly profits. In such situations market power becomes so entrenched that potential rivals prefer to cooperate with the top firm rather than compete with it. Laissez-faire policies that permit the growth of monopolies only enhance such power. As a result, market power becomes a permanent feature of a capitalist economy. Technological competition is ineffective, and creative destruction does not restore economic efficiency. Permanent market power alters capitalism by ushering in a winner-takes-all economy in which one or a few technologically dominant firms monopolize each sector. Such an economy not only deploys resources inefficiently; it also produces a concentration of economic and political power that threatens democracy, whose survival then becomes dependent on the creation of new policy tools to protect it. THE SECOND GILDED AGE The First Gilded Age (1870-1914) is an essential reference point for comprehending the current moment, because its anti-democratic worship of business power undermined the optimistic Enlightenment view of markets. True, it was a period of extraordinary technological and economic progress, delivering most of the major twentieth-century innovations. Between 1895 and 1904, however, more than 2,000 firms were merged into 157 large conglomerates, leaving virtually every sector of the US economy dominated by a powerful monopolist. Those who created these trusts believed they were doing God’s work of strengthening the economy by saving it from “ruinous” competition. Supported by the ideas of the eugenicist Francis Galton and Herbert Spencer’s theory of social Darwinism, business leaders saw themselves as the superior, intelligent men who had prevailed in the process of natural selection. haldar27_Carlin StiehlGetty Images_claudiagoldin FREE TO READ Economics 1 “Women’s Economics” Goes Mainstream ANTARA HALDAR shows how Nobel laureate economist Claudia Goldin's work has recentered the discipline. This selection process also applied to their firms, through which they were building a new society in which a few strong men would lead. It followed that small and weak firms must be eliminated or swallowed up within strong monopolies. The latter were seen as superior to all the unfit firms that were going bankrupt in frequent depressions. The big monopolies were also considered progressive organizations. As John D. Rockefeller put it, monopolization was unstoppable because it was “the law of God.” These ideas were rejected by Progressive reformers and those pursuing antitrust enforcement under President Theodore Roosevelt after 1901, and under President Franklin Roosevelt in the New Deal era. Americans in these periods chose democracy and rejected the power-worshiping oligarchy, resulting in a long era of economic growth with shared prosperity. But that story ended in 1981, when renewed laissez-faire economic policy led to the contemporary techno-winner-takes-all economy. In this Second Gilded Age, the worship of power and wealth has returned with a vengeance. Capitalism’s strong incentives for innovation and growth remain, but the survival of democracy hinges on whether the system’s most destructive effects can be contained. In a techno-winner-takes-all economy, the market power conferred by innovation leads to one or a few firms monopolizing each industry. One firm might offer costly products of high quality, while a second may offer low-cost products of adequate quality. All these products are trademarked, and all monopoly profits are considered “innocent” by law, because they result from “spontaneous” innovations and are not subject to antitrust enforcement. In this environment, small firms on the margin are vulnerable to either hostile acts or acquisition by larger firms. Dominant firms find it easy to snatch up competing innovative technologies, because small firms are reluctant to risk losing an economic war against powerful incumbents. When a firm increases its price and earns monopoly profits, that leads to inefficient use of its economic resources, ultimately resulting in significantly lower output and lower demand for labor and capital inputs. As an approximation, a monopoly firm’s output and inputs might be reduced by as much as half. When market power is widespread, this results in lower investment, lower wages, and a lower rate of wage growth. The aggregate outcome is lower levels of income, consumption, and capital stock. Moreover, when prices are too high, too few consumers will benefit from new innovations – as one often sees with costly drugs. There is substantial evidence that market power leads to extensive abuses of power more broadly. These might include the erection of high entry barriers to would-be competitors, suppression of competing innovations, efforts to compel acquisition of competitors, and so forth. The result is a gross national product that grows more slowly than is technologically feasible. CAPITAL INCOME AND MONOPOLY PROFITS The existence of monopoly profits changes business accounting. Under competitive conditions, the income created by a firm is divided into a labor share and a capital share. But with permanent market power, a firm’s income is divided into three shares: labor, capital, and monopoly profits. This distinction between capital income and monopoly profits is central to techno-winner-takes-all capitalism. Net income paid to capital consists of interest payments at the prevailing market rates, whereas monopoly profits extracted by pricing higher than incremental costs are paid to the source of market power: mostly privately owned technology and other intellectual-property rights. PS_Digital_1333x1000_Intro-Offer1 Subscribe to PS Digital Access every new PS commentary, our entire On Point suite of subscriber-exclusive content – including Longer Reads, Insider Interviews, Big Picture/Big Question, and Say More – and the full PS archive. SUBSCRIBE NOW The fact that firms led by technologists “exploit” both labor and capital is the heart of the story, setting techno-winner-takes-all capitalism apart from the socialist view, in which capital always exploits labor. Rising market power has caused most Americans to experience declining or, at best, slowly rising real (inflation-adjusted) incomes. Most monopoly profits originate in innovations, but the proportion of people who invest in risky startups or in companies engaged in risky innovations is small. Those profiting most from an innovation are the innovator and a small circle of financial advisers and early investors who buy the firm’s initial shares at low prices. When an innovation succeeds, the firm’s stock becomes publicly traded, and its value rises sharply, making the owners wealthy within a short time. This explains why most monopoly profits and executive incomes earned today – and the wealth created by those profits since the 1980s – have benefited only a small minority of Americans. Income and wealth inequality have duly risen ever since. The rapid rate of wealth accumulation caused by innovations contrasts sharply with the slow pace of growth attained by the accumulation of capital through savings. An extremely high rate of monopoly profits is the only way one can accumulate unimaginable wealth within one’s lifetime, and it explains why the US has 756 billionaires. In a techno-winner-takes-all economy, conventionally measured profits are divided between capital and market power. Economic theory explains that interest payments compensate owners of capital for their past savings, whereas a patent pays royalties for a monopoly over a technology. These are two different economic functions. Equally, capital income and monopoly profits are different: a retiree with saved wealth is a capitalist who earns capital income, whereas an entrepreneur-inventor who owns a successful Silicon Valley startup makes mostly monopoly profits. The same distinction between capital income and monopoly profits requires markets to differentiate between a firm’s associated assets, capital, and monopoly wealth. While a firm’s capital is the value of the tangible assets it owns (such as equipment, structures, and inventories), monopoly wealth is the current market valuation of future monopoly profits it is expected to earn. In 2019, most capital owned by US corporations was financed by bonds, implying that the value of companies’ capital was expressed mainly in the bond market, leaving the stock market to reflect mostly monopoly wealth. In the same year, monopoly wealth accounted for 75% of the total value of stocks on US exchanges. The stock market has become primarily an arena for trading monopoly wealth, and the main risk of owning a firm’s common stock is the risk to its future earnings of monopoly profits. POLITICAL FALLOUT These economic and market dynamics have far-reaching political implications. One is high inequality, which is a direct result of a high degree of market power. It is well known that economic inequality creates political inequality, by giving the wealthy a stronger voice. In thinking about this issue, I measure market power by the share of monopoly profits in income, and consider data about the domestic corporate sector where market power can be exercised. As the chart below shows, the degree of market power fluctuates with high long-run persistence. In the First Gilded Age, monopoly profits reached 31% of corporate income; in the Second Gilded Age, which began in 1981, their share has reached about 25%. These figures are compatible with other researchresults, showing a sharp corresponding rise in personal inequality. Rising market power will always cause rising inequality, benefiting some and harming others. But a passive free-market policy aggravates such outcomes, because individuals are left to fend for themselves, and public policy neither compensates those harmed nor mitigates what causes it. Innocent citizens’ livelihoods then become society’s price for the collective gains from economic growth – an injustice that has severe political consequences. The main winners from free-market policy and rising market power since the 1980s have been the few in the top income stratum and the technically skilled with a college education, while unskilled workers without a college education have been the most harmed. The result is social polarization, with the poor pitted against the rich, and the less educated against the college educated. The critical point to remember is that this deeply divisive inequality results from technology and a specific free-market public policy. Those who lost their livelihoods recognize that they are the victims of a policy choice. They paid the price for others to benefit, and for some to grow immensely wealthy, and American democracy has been weakened as a result. The evidence shows that most of the participants in the January 6, 2021, attack on the Capitol were former thriving workers who had been left behind. A DANGEROUS TRIFECTA These outcomes reflect the impact of three factors: rising market power, automation, and globalization. Rising market power, as we have seen, has caused the decline or slow growth of all labor compensation. Meanwhile, automation has contributed to rising inequality among labor skills, by replacing some workers while benefiting others (an effect known as “skill-biased technological change”). Consider the assembly line, which was introduced in 1913 to lower the cost of labor. Production was reduced to simple steps that made most of the skilled workers who produced automobiles at that time redundant. To work on the assembly line, one needed only the discipline and mental ability to perform a repetitive task, meaning no long apprenticeship, much less a college degree, was required. The assembly line thus increased the productivity of unskilled workers and raised their wages. It created a class of highly productive, low-educated blue-collar workers whose work experience was their most valuable asset, one that allowed them to enjoy middle-class living standards. Automation and robotics have had the opposite effect, replacing the unskilled workers who perform repetitive tasks, and causing them to lose their valuable work experience. Some found alternate well-paying jobs, but most workers without a college degree were forced to take dead-end, low-paying service jobs. This eviscerated the US middle class, previously populated by well-paid blue-collar workers. Equally important, computers have complemented the work of college-educated skilled workers performing complex tasks that can now be executed more efficiently, increasing these workers’ own productivity and wages. Artificial intelligence, however, is likely to cause another upheaval in the skill composition of the US labor force. The third factor is the wave of globalization that originated with the post-World War II US policy to help Japanese and German manufacturing recover. The same process then enabled China’s growth, much to the detriment of US manufacturing jobs. After the 1980s, information technology permitted more-educated workers to find satisfactory alternative employment, but this was not so for less-educated former blue-collar workers. These three forces created large classes of winners and losers. Although those directly harmed were mainly low-skilled and less-educated workers in manufacturing and mining, the degradation of their lives also eroded the incomes of their immediate and extended families. Because most lived in specific geographic areas, such as the Midwest and Southeast, these regional economies experienced a slow economic death. Depression drove many to alcohol, substance abuse, and suicide, causing life expectancy to decline, while policymakers mostly ignored the problem. Though we lack precise statistics, it is safe to say that these developments degraded the lives of tens of millions of Americans. Those harmed viewed their plight as profoundly unjust. They are angry and have lost faith in the system that betrayed them. This is not surprising. It is essential for the viability of democracy that the public considers the distributive effects of public policy to be just. Without a just policy to tax the winners and help the losers recover their income and dignity, democracy will be weakened. Those harmed have turned against the educated elites who designed the policy, and against immigrants they perceive as taking their jobs and competing for scarce public goods and services. They have found a home in new anti-democratic movements such as Donald Trump’s MAGA, which has now taken control of the Republican Party. ELEPHANTS IN THE ROOM Over time, the techno-winner-takes-all economy has enabled the rise of a collection of interdependent economic and political power centers identified by the large firms, their top managers, and leading shareholders. Large firms – and a few ultra-wealthy individuals – exercise vast power through lobbying and campaign donations, but their power does not stop there. They also acquire vast amounts of information with which to manipulate our purchases and dominate our channels of communication. Armed with AI, their control over much of the information we receive will probably increase further. All the ill effects noted up to now are exacerbated by social media. Firms like X (formerly Twitter) and Meta – each wholly controlled by a single billionaire – can have decisive effects on any election, which is hardly compatible with a healthy democracy. Much has been written about the destructive impact of social media on the functioning of democracy and civic engagement, so the point I would stress concerns their legal status. Experience has shown that social-media platforms are conducive to mob behavior and the spread of fake news, conspiracy theories, hate speech, and much else. This content proliferates because the platforms are protected by Section 230 of the Communications Decency Act of 1996 (which was enacted not to improve public welfare but to aid President Bill Clinton’s re-election). Making matters worse, the US Supreme Court has contributed to the formation of monopoly power and become a major obstacle to reform. In its 2010 Citizens United decision, it removed all restraints on using corporate wealth to influence elections, ignoring extensive literature showing that wealth substantially affects policy and carries extra weight in the political process. Extreme wealth inequality also has significant anti-democratic cultural effects that stem from wealthy individuals’ belief that they deserve to be rich by dint of their superiority. While the lifestyles and attitudes of the rich and famous are not central to my own work, I do think they can tell us something about the impact of wealth inequality on the vitality of democracy. Consider two examples. The first is Andrew Carnegie, who came from humble beginnings but became one of the world’s wealthiest men by building a vast, vertically integrated American steel empire. Intending to promote the idea that rich people should devote their wealth to helping others, he wrote an article in 1889 that was turned into a book entitled The Gospel of Wealth. In reflecting on what had made him wealthy, Carnegie seized on the prevailing ideas of his era. He saw himself as among the strong, superior human specimens naturally selected to be rich. Though he set out to encourage the wealthy to contribute to worthy causes, his conclusions were deduced from an obviously anti-democratic worldview. The false theory of eugenics was popular during the First Gilded Age because it offered the rich an explanation of why they felt superior to those less well-off, thus providing a justification for their opulent lifestyles. Nowadays, with our modern knowledge of genetics, the wealthy cannot openly claim to be more intelligent than others. Nevertheless, many still feel superior, and they have found other ways to express it. In “The Techno-Optimist Manifesto,” published last fall, Netscape co-founder and venture capitalist Marc Andreessen envisages a future in which the march of technology will be led by technologists innovating at an ever-increasing rate, culminating in the creation of a “techno-capital machine” that produces all necessities at vanishing marginal costs. In this telling, technologists are not just wealthy businessmen but messiahs who will guide humanity with their innovations and maintain social order by fighting their “enemies.” The obstacles to be knocked away include social responsibility, risk management, trust and safety, and regulations. Andreessen’s vision combines technologists’ role as civilizational leaders with that of free markets in allocating all resources. The implication is that government should serve no function in the future. This is a decidedly anti-democratic vision – a Silicon Valley oligarchy superimposed on a libertarian society. According to Andreessen, everyone else’s roles and rewards will be determined by how unfettered markets value their skills and economic contributions. Never mind that, in his scheme, the world appears to be converging to an economic system where most people will have virtually no market value. Although Carnegie and Andreessen offer different views, they espouse the same gospel of wealth and power, and thus represent the same kind of threat to democracy. Moreover, their attitude is shared by many in the business community and academia. PayPal co-founder Peter Thiel’s contention that “Competition Is for Losers,” and that monopoly drives progress, amounts to the same old worship of power. So, too, did Joseph Schumpeter’s argument that a strong monopoly firm is superior to a competitive firm. Similar ideas have been invoked since the 1930s to support lower taxes for wealthy Americans, who are said to deserve their hard-earned income and wealth. This sense of entitlement enabled the rich to justify their tax noncompliance and use of foreign tax shelters to hide their wealth, in turn fueling the growth of a sprawling tax-avoidance industry. THE CHICAGO FALLACY But it is the Chicago School’s ideas about monopoly that have had the most impact in recent decades. In the late 1970s, the economist Aaron Director and the legal scholar Robert Bork argued successfully that the Sherman Antitrust Act was designed to protect consumers only by ensuring they pay the best current price, an interpretation that ignores the strategies noted earlier, used to build up monopolies over time, and the other adverse effects of market power. An entire generation of jurists and lawyers then bought in to the fallacy that technological competition can create progressive monopolies that benefit consumers. This idea was laid bare in Supreme Court Justice Antonin Scalia’s statement in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP (2004): “The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system. … the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.” How could a distinguished jurist accept such flawed, simplistic reasoning? The theories of eugenics and social Darwinism had been discredited, but they were replaced by market efficiency as the new anti-democratic “law of God.” The market is held up as a natural-selection mechanism that enables the strong and efficient to survive. If a monopolist triumphs in the market, that means it is the best organization to offer consumers low current prices. With this flawed reasoning, we have come full circle: Thanks to their superior power, monopolists are the best promoters of consumer welfare!1 BACK TO DEMOCRACY The ill effects of techno-winner-takes-all capitalism call for numerous policy changes. I outline many in my book, The Market Power of Technology, but I can mention only a few here. They fall into three categories, starting with data: We need accurate national and sectoral data on monopoly profits and wealth in order to develop robust public policies. The second category concerns restraints on the market power of technology. Among other things, we should place strict limits on firms’ ability to acquire technologies to expand their technological reach; require higher standards for patent issues; reduce interrelated patent pyramids (which are used as entry barriers) by shortening the duration of secondary patents (those whose description depends on another patent); revise labor laws to improve the balance of power in the marketplace by making it easier for workers to organize and bargain collectively; and impose corporate income tax on monopoly profits. Finally, we need economic policies that will strengthen democracy. These include reforms that make restraining technological market power an explicit goal of antitrust law; increase marginal income tax rates (closer to 50%) on higher earners; repeal Section 230 and consider proposals to turn social media into regulated utilities; and invest extensively in low-income families’ children’s early education and health (which research indicates is the most promising path to stabilizing the American middle class and democracy over the long run). Last but not least, we should establish “recovery rights” for those harmed by policy-supported adverse events. Workers displaced by forces such as the market power of technology, automation, globalization, or even the Federal Reserve’s monetary policy would have legal rights to assistance for rehabilitation, the acquisition of new skills, or direct compensation. This would eliminate the neglect that pervades existing policy. A similar approach is already used in Scandinavia with positive effects on democratic stability. Such policies can be designed to be universal and with minimal bureaucratic discretion. Some on the radical left believe that capitalism, as Marxists describe it, is dead and has been replaced by surveillance capitalism, technofeudalism, digitally controlled systems, or something else. And yet, the profound impact of technology and the existence of a third claimant on national income both show that capitalism is as creative and strong as ever. What has happened is that capitalism has been changed drastically by technology. Milton Friedman’s vision of Capitalism and Freedom now seems out of touch with economic reality. Yet because many still cling to it, the policy reforms we need are being blocked. Without greater public mobilization to support them, the threat to democracy will continue to grow, in America and around the globe.