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David Sirota: [00:00:00] Hey, everyone, and welcome to another episode of Lever Time. I'm David Sirota. On today's show, we're going to be talking about Joe Biden and his economic policies, otherwise known as Bidenomics. Unemployment is low, inflation is easing, and some industries are booming. So why are so many Americans feeling negatively about the economy?

Today, I'm going to be joined by the great Matt Stoller, who will help explain why the Biden administration is missing the mark on the economy and its prescribed policies. We also get into the huge antitrust case against Google, which is currently on trial, but receiving relatively little media coverage, and there must be a reason for that.

We also are going to talk about the hidden statistic, the hidden driver of inflation [00:01:00] that isn't necessarily being reflected in the inflation data. It might offer some clues as to why People are so ticked off at the economy for our paid subscribers. We're also always dropping bonus episodes into our lever premium podcast feed.

Coming up this Monday is our interview with the sociologist educator and former senior advisor to Senator Bernie Sanders. Goyal, about his new book, Live to See the Day, Coming of Age in American Poverty. It chronicles the lives of three Puerto Rican teenagers growing up in one of Philadelphia's poorest neighborhoods.

If you're interested in learning about the flaws in the American education and welfare systems, make sure to check out this interview.

If you want access to our premium content, head over to levernews. com and click the subscribe button in the top right to become a supporting subscriber. That gives you access to the Lever Premium podcast feed, exclusive live events, even more in depth reporting, and you'll be directly supporting the investigative journalism that [00:02:00] we do here at The Lever.

I'm here today with Lever Times producer Frank. Hey, Frank.

Frank Cappello: How's it going, David? Um, I'm about to take off for my final two weddings of the year this, this week. It's uh, man, being in your early thirties, that's just like, it feels like a wedding a month, uh, at this point, especially in the post pandemic era. So I'm very glad to get these, to get these finally crossed off the

David Sirota: I've graduated from the wedding circuit to the bar mitzvah circuit now. I'm in the, uh, yeah, everyone, everyone's married, has children, and now I'm on the bar mitzvah circuit. So I feel, I feel you. It's, it's always great to see family, but it's a lot of planning. It's a, it's a, it's a lot of travel. So good luck with that.

Hope it doesn't overwhelm you too much. Before we get into our interview today about Bidenomics, I, I want to take a moment to talk about A really important story we recently published over at The Lever, a story about how two Supreme Court justices have direct financial interests in an upcoming case that the Supreme Court will soon be ruling on.

The [00:03:00] case is called Moore v. United States. It was brought by two people challenging a provision. in the 2017 Republican tax law that imposed a tax on the deferred foreign earnings of some corporations. And it imposed a tax on individuals with substantial stakes in those foreign corporations. Here's the deal.

If the court rules in favor of the challengers, it could create a huge tax windfall for a bunch of multinational corporations. We're talking about tens of billions of dollars. In a tax windfall for these companies, what we reported at the lever is that Supreme Court Justice Sam Alito and Chief Justice John Roberts, they own stock in some of those same companies that will most benefit.

So in essence, two Supreme Court justices could potentially profit depending. on how the Supreme Court rules. Ethics laws [00:04:00] require justices to recuse themselves from cases in which they have a financial interest, but in the Moore case, none of the multinational corporations that could benefit from the court's rulings are directly participating in the case.

So technically, Alito and Roberts can skirt the rule because the rule is written in such a narrow way. Now, look, I know Some people aren't surprised anymore about the corruption plaguing the court, but this is just another example of how deep the rot really goes. And, Producer Frank, I certainly don't expect Sam Alito or John Roberts to recuse themselves.

I mean, they're just gonna, they're just gonna like rule right through it. They're gonna tweet right through this shit. I just feel like they're just gonna, they don't even, they don't even care.

Frank Cappello: No, no, no. They don't even care. And I think you're right. I think they would be hoping, uh, way too much for that. Um, it, it, it's been interesting. You know, I, I, I produced a, uh, uh, a short form video on this [00:05:00] story that we reported that we published on our social media channels and on the Breaking Points channel, uh, one of our partners.

And it was wild. The, the, the biggest refrain that I heard in the comments were people saying. Well, what about Nancy Pelosi? Well, what about the Democrats that own stocks? And, it's, it's what, like, what we're saying is, this is all bad. It's all bad. We, we want it all to stop. So, like, we're just highlighting this one instance here.

David Sirota: I mean, I, I don't understand the, uh, what about this? What about? Yes, none of it is good. It's all corrupt. Like, corruption is bad. How are we not agreeing on this? I don't understand how, how this is not a point of consensus. Now, I should mention, I think In national polls, it actually is a point of consensus.

I think when you actually poll this and you look at macro public opinion data, people across parties are generally disgusted with how flagrantly, unapologetically, and gratuitously corrupt [00:06:00] everything has become. The question is what will be done about it? I mean, you have Democratic senators, as an example, screaming about this case or that case at the Supreme Court, but you have the Democratic Party's leadership not willing in any real way to try to expand the court, limit its power, et cetera, et cetera.

Like they're, they're really. isn't that much of an effort to deal with the court, it almost makes you think that the Democrats actually want the court to remain doing what it's doing so that the Democrats have a foil that they have something to complain about rather than trying to actually fix the problem.

Now, I know that the Democrats no longer control both Houses of Congress and the presidency, but I always think back to the fact that when the Democrats have held Congress in the presidency, whether during Obama or a part of the Biden administration, that they could have passed bills directly challenging the power of the [00:07:00] court.

We had a Yale professor Sam Moyn on this podcast who said there's nothing stopping Congress from on a bill by bill basis. Uh, saying that if the judges want to overturn this or that policy, they have to have a supermajority. Or there's nothing stopping Congress from saying judges simply cannot review this law.

That's called anti judicial review provisions. But the Democrats haven't really done that, uh, in any real serious way. And I'm not saying the Moore v. United States case is the fault of the Democrats. I'm just saying that on top of everything else, on top of the obvious Plague of corruption that is, uh, taken over the Supreme Court and, and that being the fault of the perpetrators of that, the conservative justices and the like.

I'm saying it takes two to tango and we're still not at the point where the Democratic Party is taking seriously, uh, its own complaints about the court to operationalize that in a way to actually limit the [00:08:00] court's power. But maybe, look, maybe it's going to take a lot of these scandals to keep coming out.

over and over and over again for them finally to act and for the public to finally become mobilized around forcing, uh, them and the Republicans to actually act. I mean, I don't think it's in dispute that the Supreme Court is a mess of corruption. It is a, an Obvious garbage fire of corruption. Uh, and, and I think that's kind of indisputable.

The question is what will come of it? And we will continue to report on that, uh, here at the lever. Okay. We're going to stop there cause we should get to our main interview with Matt Stoller about the failures of by dynamics, the huge Google antitrust case currently on trial, and also the secret. Hidden inflation statistic that somehow isn't being counted in how we count inflation.

All of that's coming up after the break.

Welcome back to Lever Time. For our main story [00:09:00] today, we're talking about the economy, stupid. That's a phrase, if you're too young to know, that's a phrase from the Clinton campaign from 1992, and I'm not calling our listeners stupid, to be clear. Uh, but that saying was just so famous when I was growing up.

when I was growing up and had, uh, More of an optimistic outlook on politics, perhaps. While the phrase was originally intended to keep Bill Clinton's staffers on message, it became the unofficial slogan of Clinton's first successful presidential bid aimed at George H. W. Bush's administration during a recession.

Okay, so the reason I bring that up... It's because the slogan, the thrust of it never really went away. It manifests in the way lawmakers and elected officials speak to the public about issues and policies related to the economy. They sort of imply, lately, that maybe you're too stupid to understand how the economy works.

It's really, it's really, really [00:10:00] insulting. Actually, Clinton's message wasn't really insulting at the time. Clinton was saying we have to keep talking about the economy because that's what people care about. In this iteration of it, the political leaders and the pundits seem to be saying it's the economy, you're stupid, you don't understand it.

Which takes us to Bidenomics, or what's the catch all phrase for the economic policies of the Biden administration. In the last several months, unemployment has dropped. The rate of price growth, the inflation rate, has started to slow. There's been an increase in consumer spending, and there's been growth in certain manufacturing sectors.

In a macro sense, the economy... Has been doing not so bad. And the Biden administration has taken every opportunity to tout those economic accomplishments as we should expect, but according to a recent NBC poll, 50 percent of Americans are now saying they are very dissatisfied. With [00:11:00] the economy, 59 percent disapprove of President Biden's handling of the economy.

But rather than meeting people where they are, addressing that, taking it seriously, the Biden administration and corporate pundits seem to be doubling down on their argument that the economy is actually awesome. Like Nobel Prize winning economist Paul Krugman. He claimed in a New York Times column that normal people simply believe the economy is bad, even if it...

According to him, even if it isn't bad, even if it's great, there's clearly a disparity in what the numbers are saying and how people are feeling. And there's a disparity in what the numbers account for and people's lived reality, their material circumstances. So today I'm going to speak with Matt Stoller about where this dissonance comes from, what it's about.

What's, what's generating it and, and what perhaps can be done to correct it? We talk about a hidden [00:12:00] inflation statistic that is driving people's lived experience of the economy, but somehow is not taken into account in the consumer price index metric, the big metric that we use to evaluate inflation.

Matt and I also get into the huge antitrust case against tech giant Google. It's one of the biggest antitrust cases in the last several decades.

You might not have heard much about it But it also relates to people's lived experience of the economy as does The other antitrust case against Amazon, as does another antitrust case against a major agribusiness. All of this stuff intertwines to answer the question, Why are people feeling so negatively about the economy when some of the macro stats seem to be doing so well?

Matt Stoller. Thanks for taking time with us today.

Matt Stoller: For you, anything.

David Sirota: Matt and I have known each other for a very, very, very long time. Uh, so this is a nice, a nice [00:13:00] appointment that we have here. I appreciate you taking the time with us. Um, I am a big fan of your newsletter. Uh, we republished, uh, one of your editions of your newsletter at the lever, uh, about. despite low unemployment, lowering growth of inflation, um, increased consumer spending, growth in certain manufacturing areas, working people still don't seem to be super happy with the economy, according to lots and lots of polls, I guess the first question is, do you think corporate media is correct when they say that regular people Simply don't understand economics, don't just have it wrong, that things are getting better, uh, that people are just misled by, by media, or is there something actually something else going on in the economy that you think is actually making people, genuinely unhappy with their material circumstances?

Matt Stoller: It's a good question, but first I want to reminisce for a second with you, because I think I've known you for 20 years,

David Sirota: Yes. 20 [00:14:00] years.

Matt Stoller: 20 years. And like, I remember you were, you did a newsletter, like when known as doing newsletters at cap

and being like the only person who is being like, Hey, maybe we shouldn't screw working people on the economy.

And you were like, everyone was like, what a weirdo.

David Sirota: Yes. Matt and I have known each other since my, my days on Capitol Hill. He was on Capitol Hill. we, we have periodic text, uh, exchanges in which we're pissed off at the whole world. Uh, so, so yes, I feel like I've asked you this question that I just asked you in many different ways, sometimes profanity laced, in anger.

Matt Stoller: I just, I think that the, the, so the thing is, is like, okay, so I live in dc I'm like a delusional out of touch elite, right? So just like, that's my bias. Um, I have no idea. Like my hands are soft. I am, I am not in touch with any real people per se. But I, so I know, like, and I'm an, I'm a nerd, right, who like looks at the same economic statistics [00:15:00] that all the policymaking elites, you know, we all go into a room and conspire with each other and occasionally I'll write things to be like, Hey, this is, we shouldn't do this, but it's, it's all part of a ruse because I want to make people feel that there's a little bit of hope and then pull it away from them.

David Sirota: You sound like a real Democrat.

Matt Stoller: yeah, no, um, Exactly. Exactly. so, uh, the, the thing is, is that if you're a policymaker, you can't go and ask a hundred million people, how you doing?

Right. You have to have aggregate, and you have to find like shortcuts and the shortcuts that policymakers use are those designed by economists, which are aggregate statistics that sort of give some impression of how the economy is doing. So this is things like disposable income or consumer price index or, you know, all the various statistics you guys go into statistics a lot, right about them.

and there's a lot of the statistics that the statistical aggregates that policymakers look at show that the economy, this thing that is not actually a thing. It's just a compendium of millions of. [00:16:00] Tens of millions of transactions of an hour, I guess, that that that that thing is traditionally doing, you know, like better, um, in the sense that that, you know, people are wealthier, prices are more stable, the things that you would think, according to us, like out of touch nerds make people happier and better off.

Those aggregates are that sort of picture, the not, the dials are saying things are great. And then if you, but if you like ask people right through these other dials that political consultants use, which are these polls, people are like, we're really mad. Nothing is good. Like things are expensive and we don't have enough money and blah, blah, blah, blah, blah.

And so there is the basic contradiction, which is okay. So You know, are the people right through these aggregate statistics or are, are the dials pointing in the right direction and they just haven't noticed yet? [00:17:00] And both, are difficult problems because if the people are right, then like, how do you figure out what dials to look at if you're a policymaker?

And then if the dials are right, then how do you convince the people? That they're wrong, like, or do you just have to wait until they sort of, like, realize things are better? generally speaking, having watched, like, the war debates over war in Iraq, and the financial crisis, and the, all the different, like, crap that we've seen, the monopolization, and so on and so forth, I'm generally skeptical of the dials, the economic dials, that tell us that everything is awesome.

Those are the same dials that said, uh, you know, We're in the great moderation right before the financial crisis or they said, you know, green shoots in 2010 when like it was, you know, years of slow growth joblessness. So I, I tend to think the, the public, you know, they're probably, they're, they're, they're definitely like they got some things wrong.

Like if you ask people, is the stock market doing well, [00:18:00] most people say no, it's doing terribly. It's actually at all time highs. So objectively, it's not, the public doesn't have it all right. Now, if you, if you control for. inflation, I guess you could probably, you know, there are arguments you could make either way.

But like, it's certainly the case that the public has some things wrong. But generally speaking, I trust that the public is more right about their own circumstances than, than the, the dials and stuff that people like, like me, like we would look at.

David Sirota: and, and, and you, you, in your newsletter, you went over dial and how it may be, flawed that, that there actually may be, uh, in the calibration of it, there's something wrong with it. And I found that really, uh, fascinating and super, super important. It's not, it's not a little thing. It's kind of a huge thing.

So why don't you tell us about that?

Matt Stoller: Right. So the dials are broken, right? So the, so the policymakers are flying blind in, in some ways. And so the, the main dial that, that people here use to understand inflation is the consumer price index, [00:19:00] which is a statistical aggregate of a basket of goods that people buy. and, and it's, it's new goods.

So it's not, they don't, they're not like asking, Oh, you bought milk last year. Let's average that with the milk you bought this year. It's like, if you go to the supermarket, you want to buy, right? Right. Milk has that price gone up and how much has it gone up, right? And then the basket of goods and stuff and one of the things that happened like when you look at the CPI It's gone pretty dramatically down from like about 9 percent to about 3 percent in the last year, right?

So inflation is much lower and that's like one of the things that should say, oh, that's good, right? It doesn't mean that prices are coming down. It means that the rate of price increase is going down. So prices are still going up. They're just going up slowly. The 14 sandwich is still 14. It's just not 17.

So in one sense, like people are mad because it's like, well, that's still a 14 sandwich, but there are actually areas where inflation, the price that people pay for stuff is actually going up much faster than the C. P. I. Would suggest.

And those [00:20:00] two areas are housing. And cars, right? The two biggest consumer discretionary purchases that a family has the store of wealth, the house. Those are going up much faster than, uh, than the CPI makes it seem. And the reason is because in 1983 and then in for housing and then in the 1990s for cars, the Bureau of Labor Statistics decided that the price of money did not count in the price of these, uh, these Goods and services, right?

So, so when you buy a house, right, there's the sticker price of the house, whatever it is, 100, 000 house, a 200, 000 house, but then there's your monthly payment and the same thing with a car. It's a 20, 000 car, 30, 000, you know, but it, whatever the monthly payment is, is actually what people pay. Uh, they don't usually pay the sticker price.

Well, uh, the CPI, you know, it's a little more complicated for housing, but the gist of it is correct. Right. Judges like sticker price for [00:21:00] cars and houses, not the amount that people are actually paying and the amount that people are actually paying every month includes the price of money. So when the Federal Reserve increases interest rates and long term interest rates have gone, interest rates have gone up dramatically in the last 22 months.

That really radically increases the amount of money that people are paying, but it doesn't increase the sort of sticker price of the items necessarily. So cars, for example, they went up enormously from 2020 to 2022, right? The sticker price just dramatically increased, and since 2022, That sticker price has gone down a little bit, and so the CPI would say, well, the price of cars is going down, and actually, that's negative inflation, that's deflation, so you would think people would say, oh, that's great, cars are a little bit less expensive this year than they were last year, but if you look at the actual price that people are paying every month, that's gone up about 8%, because the price of the auto loan financing the car has gone up much faster, and [00:22:00] housing, it's similar, it's gone up by about 20%, and that's much more than the, You know, 3 percent CPI says for aggregate goods and the 7 percent that the CPI just puts for the cost of housing.

So it's like , that's I think one of the reasons the dials are broken. I'm guessing there are other areas that the dials are broken. But the fundamental point here is that the price of money is actually a component of inflation. And yet our inflation measures don't consider the price of money as what people pay in their daily lives.

David Sirota: I mean, that's an incredible thing to think about that, that the sticker price of a vehicle may be going down, but somebody who buys that vehicle with a regular auto loan is ultimately going to end up paying more. So, I mean, that's the. That explains why, if politicians are looking at that particular metric that's not including that dynamic, they may be perplexed with, wait a minute, the CPI [00:23:00] is going down, but people perceive that their prices are going up. That's a perfect example of how what they're looking at may be wrong. I want to stay on this point for one more beat here because, because in the piece that you wrote, you talked a little bit about motivation to keep For instance, uh, that out of the CPI. There's a little bit of history there. I guess, give us some of that history, and do you think it was like an accident, like somebody kind of screwed up, or it was there a deliberate political deception going on there?

Matt Stoller: I don't I don't know the history very well. But in the early eighties, when the Reagan administration made the change, there was this that was part of the creation of neoliberalism, right? That era, the late 19 seventies, early eighties, you had inflationary shocks and interest rate shocks.

And we were changing the economy from an economy that like kind of where you could you could make money making things and selling them. Um, [00:24:00] To one where you made money by being a, a, a financial intermediary, and, and or a, or a monopolist. And so there's a whole series of changes that made, that were happening at the time.

Changes in, you know, um, antitrust changes in intellectual property, changes in like, uh, labor relations, like all sorts of changes. And so of course at the same time, you would probably also wanna change the way you measure. prices so that you could kind of like tell a story about why things were actually good, even if people didn't necessarily feel it in their in their pocketbooks.

So I'm guessing that. And then, you know, of course, Clinton always follows on Reagan with something that's like similar or worse or sometimes not quite as bad, but like in the same direction. And that would be like auto the auto loans in the 19 nineties. So I mean, that's my guess as to what happened. I know there's a lot of people that sort of argue that inflation You know, is always like there's one of the problems with dealing with finance and and the Fed and inflation is that a good number of people who think [00:25:00] about this are insane and doesn't make them wrong.

It just makes them insane. And so sometimes it's hard to tell the difference between like the conspiracy theorists and the actual like You know, true things and also the conspiracy theorists and like Larry Summers, because you know, he does it's not like he's any more right than the conspiracy theorists.

but you know, the gist is, is there were significant alterations in the way that we calculate pricing, presumably so that it would be easier to sell the policies the Reagan administration wanted to sell. And the same thing with, with Clinton. and it, and it, you know, and it worked. But the problem is today you have.

Whether you think the Biden administration people are, mean well or mean ill, and I think there's an argument for both, and I, I'm sure that there are factions of both in the administration, it's kind of like, I think the Biden administration is not great, but they are much better than the Obama administration, um, but I think, like, one of the problems is, it's been generations since this kind of, like, these changes happened, and so [00:26:00] these people who are in the administration, but also who are, like, around the administration.

You know, the, um, you know, Larry Summers is still there, right? He's using these metrics or Jason Furman or all these people who think, you know, they they actually believe these numbers are real. Like that's that's the problem is that like You know, the first guy was a con artist and he knew that he was tricking you for money.

The second guy learned from the con artist and was like, I learned that that wasn't, that that was fake. But he didn't totally know it, it was anything, it was what he knew. But now we're several generations in and people actually think the numbers are real. And so that's really the problem. It's not actually like, it's not necessarily malevolence, it's just...

there's a kind of destructive naive naivete to a lot of the, the way the policymakers think. And in order to get over that, you have to kind of like believe in some sense that the public you know, they might be, they, they might misperceive what's happening, but they are probably less delusional than the people who are making policy.

And you have to kind of [00:27:00] correct for that and try to figure out why people think what they think instead of just saying that the. That the public, you know, the public is wrong,

David Sirota: Yeah. I mean, I think, I think ultimately what I hear you saying is that at a kind of macro sense, the public public opinion, there is a bullshit detector in there. Uh, it may not be precise. It may not be, uh, uh, entirely accurate on, uh, individual specific points. But in general, if the public is not happy in polls with, uh, the, the, economy or material circumstances, that can't just be, you know, delusion that there is a bullshit detector there that's going off.

So let's then turn to the question of so called Videnomics, a term that I kind of hate because I'm not sure really what it What it fully encompasses or means, but in in the piece that you wrote, you went over some of the conflicts within by dynamics. Why, in your opinion, [00:28:00] by dynamics, however you define it, isn't working or isn't working as well as it's being built like Talk to us a little bit about what conflicts you see within it and how those conflicts inside of by dynamics undermine, their potential for success.

Matt Stoller: right. So, so the thing about by dynamics is that every administration is always a set. It's like a coalition, right? So the president isn't the guy running everything. He's a bunch of people running things for him. And sometimes they're ideologically coherent. Like Reagan, the people under behind Reagan sort of all believe roughly the same things.

Someone similar with Clinton, you know, FDR Um, some ideological disagreements, but everybody basically was on the same page about certain things like they all thought that banks were a problem. Um, the Biden administration is sort of similar to the Trump administration is kind of incoherent, right? So you have people that I really like, you know, like you have the FTC chair, Lena Khan, you have some of the antitrust enforcers, Jonathan Cantor going after Google, you have, and like meat, meat [00:29:00] packers, price fixing.

And you, you know, you have some bank regulators, Gary Gensler at the SEC and like Rohit Chopra at the CFP, they're doing really good things and like, there's some great stuff happening. And you have some things that make sense, like industrial policy, basically financing of, you know, the government getting involved in industrial sectors to try to have an affirmative public hand to say we are going to participate, we are going to structure markets.

Deliberately. We're not going to let just bankers do it. Like all these things kind of, you know, those things are good, right? They make sense. They really are pushing back on the last 40 years of financial intermediation as the prior primary goal of the United States, which is really the strategy that we were pursuing.

But I would say that's about 10, 5 to 10 percent of the administration thinks that the other 95 percent of the administration either doesn't Have a view or is still enthralled to the kind of America as a financial intermediary philosopher type of vibe. So you have some people [00:30:00] that are saying we need to make things in America again.

Like that's why we passed the Inflation Reduction Act. But then you have Janet Yellen at the same time saying we're going to punch loopholes in the Inflation Reduction Act to make sure that we can import electric vehicles from South Korea from Europe from other places so that we don't upset our allies.

Right. Which just cuts directly against the idea of making things in the United States. And you see that, you know, what Lena Khan brings, brings antitrust cases against, um, big tech firms, uh, or other, other areas. And actually Biden judges are, um, or, you know, it's not just Lena Khan. It's also John, the cancer, the antitrust enforcers are bringing cases and Biden judges are striking them down.

Right. And these are Biden judges. So these are, this is the Biden administrations. Policy framework, which is, you know, kind of crazy. there are other judges that are good, but I mean, I could go down, there's lots of different areas where you see the inconsistency, but the basic dynamic is you have some people that want something.

done that the president wants done, and then other people that don't want it done. And then it just, there's no [00:31:00] one really in charge pushing anything. And so it just feels like we're floating. And I think that's a part of what's happening with when you look at the polling this isn't so much a messaging point is it is a sense of like hopelessness.

Like people don't think anyone's in charge. And the truth is it doesn't feel like anyone's in charge. And there really isn't a sense that anyone is in charge. I think it partly it's an age thing. But partly it's that Biden has always been a procrastinator and doesn't want to make clear decisions.

Um, you had a little bit less of that when Ron Klain was the chief of staff because he was actually kind of a bulldog and would push things. And now Jeff science, he's just like, he's like a smart guy. He's a management consultant. But you know, he reminds me of, um, the guy on anchorman brick tanlon, right?

Who's like, He's like a smart Rick Tandlin. You know, he's like a super nice guy. He's really, he's polite. He, um, he's rarely late. He likes a nice pair of slacks. That's what he does, right? And so [00:32:00] everybody who didn't like Rick Tandlin, right? But like, that's not who you want to be the chief of staff. for a president who is like a little bit indecisive and, and pretty old, but that's the situation we're in.

And so you don't actually have anyone really making decisions. So by dynamics, you can get out there and you can sell it, but like, what is by dynamics? I don't think they've actually made, I don't think they've decided what by dynamics is.

David Sirota: And that's why I've been confused about it. I mean, it's, it's, it's confusing that it's so kind of. As you suggest, it's erratic, like they're doing good things over here, then they're at cross purposes over here and, and, and it doesn't, it doesn't feel cohesive in the way, like when you say, you know, stereotypical example, the new deal, right?

I mean, there was a basic ideological consistency to all of that, or at least most of that, I don't think you can summarize what by dynamics is so, I think, though, speaking of some of the good things and some of the things that you focus on, [00:33:00] I want to talk a little bit about the antitrust case against Google, because you mentioned that some of the stuff that the Biden administration has been doing on antitrust is actually, Not only good, but very new, at least new in the sense of the contemporary modern history of the United States, at least in, in, in our lifetime, and the Google case seems like a pretty big deal.

So let's start on that with just a, a, a summary of why Biden's Justice Department first and foremost decided to pursue an antitrust case and why it's so important.

Matt Stoller: Yeah, I mean, I could do that or I could just go over the last month just like list a couple of things that have happened in the last month. It's just like this is the most extraordinary time. This last month is the most extraordinary time in antitrust in the last 50 years. It's absolutely astonishing.

So if you guys want something good that's going on, like this is the antitrust is where to look because it's [00:34:00] actually something that the Biden administration has a bit of coherence and it is something that they are doing real things and there is some bipartisan support for it. So. On on September 12th, uh, the Google antitrust trial started.

It's a trial, right? It's actually a case that Trump filed along with a bunch of states in 2020, right? He filed it two weeks before the election and it's because Bill Barr really wanted to like do it. And this is a case that says that Google is a monopoly in the search market. And the reason it's a monopoly is because they pay Everyone who preloads search everywhere on the internet.

Um, so this would be like anywhere there's a browser. So Apple, you know, when you open your Apple phone, iPhone, right? And you go to your browser, you search for something. That's just Google. You don't really have, you don't have a choice. It's just Google. And the reason is because Google pays Apple about 20 billion a year.

to be the preloaded search, and that's true for Mozilla and Verizon and Samsung and so on and so forth. [00:35:00] Everywhere there might be distribution of search, Google is paying billions of dollars to the distributor to make sure that Google is preloaded and that no rivals are. That's the essence of the case, saying, you know, the Google controls is the gateway to the internet.

This isn't as, this isn't the open web anymore, it's the Google web. And the way that we deploy AI, generative AI, the way that we deploy all technologies going forward that have to do with Getting into the Internet. Google determines that the deployment and so that's a really serious social problem. It also means Google controls in many ways the future.

And also it's a you know, 300 billion revenue, 2 trillion market cap company that's might be doing engaging in an unlawful activities. That trial started. It's the biggest antitrust trial since Microsoft in the late 1990s. It's along with trials like Standard Oil, American Tobacco, Alcoa, IBM. AT& T, like this is one of the big ones, right?

Huge deal. then there was a, [00:36:00] uh, the Federal Trade Commission filed a case against Amazon. And what they claim, and it's, there's a lot of evidence about this, is that Amazon is essentially cheating consumers through an elaborate scheme that hides the high prices that they are actually charging. So what they do, so Amazon, about 60 percent of the stuff that you buy when you buy from Amazon is coming from independent third party merchants.

And what, what essentially what the case is, is that like if you buy a 5 thing on Amazon, Amazon will charge the merchant another 5 in in fees. And then so the price is 10. And then they will say to that merchant, you can't charge lower than 10 anywhere else online or you don't get to sell through Amazon, which because Amazon is so powerful.

And it's such a big part of the online. Um, has so many online buyers. No one is going to leave Amazon so they can sell cheaper outside of Amazon. So then that 10 becomes the lowest price, even though if [00:37:00] Amazon didn't have these anti discounting measures, they could be selling it for 5 elsewhere. Right? So, so people look at Amazon.

They're like, I love Amazon because it's, it's the cheapest price. It's a 10 thing. I can't find it anywhere else cheaper, but it's because Amazon has forced the price to be inflated everywhere else. And that's the essence of the FTC suit. It's a big deal because Amazon, like Google, controls online commerce.

Google controls, you know, access to the internet. Amazon controls access to online buying and selling. And you essentially can't enter that market and anybody who's trying to sell online has to pay a toll to Amazon. So that's a huge deal. And it was, um, you know, another trillion, 2 trillion corporation that the Biden administration is trying to sue and break up.

so another thing that happened and this was on Friday, the, uh, the interest division. Um, and then the U. S. a lawsuit against all the meatpackers in the [00:38:00] poultry, turkey and pork industry. So they specific target was a company called Agra stats, which is a company that that essentially sells up sells a price fixing product.

What they do is they say. We will. We will give you pricing for everyone else in the industry, and you have to give us your pricing, and then we will consult with you like if you're JBS or your Tysons or your big meatpacker, you subscribe to Agra stats. You pay them money, and then you give them all of your production and wage and pricing data, and then they tell you, here's what you should do.

You should cut your production here, you should raise your prices there, and that's just price fixing. It also is probably wage fixing, because they're telling them how much they pay their employees, and where their plants are and stuff, but that's not the claim that the administration brought. They just said, what Agrisats is doing is unlawful.

It's kind of amazing because in the complaint, it said one of the people from Smithfield, which is a big pork producer, said the Agristats is, advice is always the [00:39:00] same thing. Just raise your prices, right? They even showed that Agristats and the meat processors were, were actually cutting, they were exporting meat at below cost.

So they were losing money on exports. So that they could reduce domestic supply to keep prices up. Right. So this gets to the, to the point about like, quote unquote, readflation, right? This is a big, the big one that we were talking about

David Sirota: Yeah, I definitely want to get into this because this does tie directly to it and, and greedflation that Matt is referring to is, and we've covered it here on this podcast and at the lever, which is the idea that that inflation in prices is being driven in part by greedflation. Corporations using their market power to artificially drive up prices in a way that they wouldn't necessarily be driven up if there was better competition.

So yes, that's a good segue to what do you think this says about that whole debate? You know what's behind inflation,

Matt Stoller: I mean, [00:40:00] so there's two ways to think about it. And one of them is, Oh, yeah. Here's the smoking gun, right? Like why meat prices go up so much and why didn't they come down very quickly? Well, the answer is because they're colluding, right? And like, you know, it's like the guys were like, yeah, I'm doing the crime in the emails in the text messages, right?

And then You know, the by demonstration. It's like they're suing and they found all this amazing information. The antitrust division is like, Oh, yeah, this is what they did. Um, and there's some arguments like, you know, that some of the, um, they've been agro stats has been in class action lawsuits. So some of their practices stopped in 2019.

So there's some legitimate arguments that it's not going on now, although they're still doing consulting and they're still doing it in, I think, in the pork market. They're Statistics service is still happening, but you don't get robust competition after firms have been colluding for many years. That's something that develops over time.

But I think more broadly, you know, aside from the specifics of meat, which is a pretty central thing, food prices really [00:41:00] matter to people and meat prices really matter. It's not as important to say the price of gas, but it's up there when people go to the supermarket and steak is more expensive.

They're like, that's something they notice, right? But one of the interesting things about this case is that it's about information sharing, right? So it's not necessarily about a market that is that consolidated. Meatpacking is very consolidated, but there is some competition. There are four basically meat processors in, in the different, in, in like poultry and, and, uh, and beef and so on and so forth, but they are effectively one or, you know, there's a soft collusion going on, on there because of data sharing.

Now, We see something very similar in, say, rental markets for apartments, where you have this company called RealPage, which makes software called YieldStar for landlords, and they are drawing from the same uh, database, and they're like, well, I guess, I mean, I have a, uh, a I'm not going to keep it high.

I'm not going to keep it high. I can [00:42:00] see what all the prices are in my area. So I'm not and I'm giving told not to lower the price. So I'm going to keep it high. Right. And that soft collusion, you can see that going on there. And if it's going on in those areas. Why wouldn't it be going on in lots of places in the economy?

And I think that's what's important here, which is that the, the DOJ's lawsuit against Agristats has implications for lots of other areas in the economy where you might see this kind of soft collusion in industries that don't necessarily look particularly concentrated or they look, you know, maybe they, they're not a monopoly, but they're like, there's three or four companies or five companies.

And so people say, oh, there's, there's competition, but it's like, if there's If there's unified behavior or, you know, soft collusion, then it is really concentrated. And I think this gets to, you know, part of the problem with the Biden administration, which is when, you know, in 2021 and 22, the, the number of, a number of us were saying, Hey, look, um, On their conference calls, a lot of CEOs are saying, we're, you know, we're colluding [00:43:00] to keep prices up.

Right? Like they were saying it publicly. They weren't like, no, no, no, they weren't like, we have an agreement, but they were like, we're very happy that our industry is so disciplined about capacity. They use all these euphemisms, right? And so we started saying, hey, corporations are pushing up prices. And the whole economics establishment laughed at the idea and said, this is ridiculous.

And the White House economic advisors, they were like, this is ridiculous, which of course, undercuts the ability of the Biden administration antitrust enforcers to bring cases because judges are going to be like, all the economists are laughing at you. we're not gonna like, we can't take this seriously.

So this is another area where like the, in the inconsistency in the Biden administration undercuts their ability to follow through on any clear explanation for what's going on in any policy to address it. Now we have the, like, this is, this is like a really good case and the data is clear and hopefully it will spur economists to start to rethink the way they've been.

You know, I mean, [00:44:00] I'm just kidding. They're not going to rethink anything, but hopefully we'll encourage people to ignore them a little bit more. but like we're seeing, you know, really cool stuff coming out, but also it's an indication of just all the all the political opportunity being left on the table.

David Sirota: Okay, so the last question then on all of this is, moving forward, when we look at the Amazon case, the Google case, the agribusiness, agristats case, are we looking at a situation In which, uh, these things, these cases can go forward and regulations can be tweaked to sort of confine and, uh, uh, better regulate the behavior of huge, giant monopolies and oligopolies.

Or are we at a place where ultimately the only way to really deal with some of these problems that you've outlined is actually breaking up on Amazon or breaking up a Google? And if it's, if it's that, what [00:45:00] does that look like in practice, right? Like, like when people hear that it's, it sounds like something, but I think it's hard sometimes for folks to imagine what is breaking up Google.

So, so is it regulation or breaking up? And if it's breaking up, what is that?

Matt Stoller: I mean, I guess one way to put it is, um, having an open and fair competitive markets is sort of the ultimate goal. And whether it's regulation or whether it's breakups is kind of like debating, um, You know, it's like calling it scalpel surgery. You're thinking about the tool as opposed to like, it's actually heart surgery.

It doesn't matter the tool, right?

David Sirota: Sure, but I'm, what I guess what I'm getting at is, is it's like,

okay, like, like, yeah, like what is an, uh, a broken up Amazon? Like, what does, what

what does that even mean?

Matt Stoller: so Google, um, if you break up Google, right, You could say, all right, you know, you know how you use YouTube and you use Google now there's owned by separate companies, the end, right? That's a breakup. Um, it wouldn't, you wouldn't necessarily [00:46:00] notice a significant difference, but, but in the back end, the advertisers would, or you could have a situation where, you know, all of a sudden there's now an apple search engine and you could use it if you wanted to.

And that, that's a legitimate, like Apple was considering developing a search engine in 2020 when this suit started because if they're not going to get 20 billion a year from Google, they're going to have to do something. So maybe they start their own search engine and all of a sudden, you know, like you have Apple Maps and you have Google Maps.

Um, maybe you'll get an Apple search engine. that's not necessarily a breakup. That's would just be changing contractual arrangements. Maybe Chrome gets spun off. Maybe, um, you know, maybe the, uh, you know, some of their ad software gets spun off the software that you, you know, that newspapers use, publishers used to, to, to sell ads, uh, and manage inventory gets, gets spun off.

Um, these things are not, you know, they, they, the, the, these companies are, are, they're roll ups, they're conglomerates, and so you can just spin these off and it's not that bad. For, for Amazon, I think you could see... You know, you could [00:47:00] see AWS get spun off, um, like the cloud computing division, there's no reason that has to be attached to the rest of it.

You could see, um, changes in how, they're not allowed to do anti discounting provisions. So what, what it might look like to you, or maybe they would have to spin off their like fulfillment division. So to a consumer, what it's going to look like is you're going to see advertisements saying, Hey, this widget that you can buy through Amazon prime for 10.

You can buy it on this other site for 5 and you can still buy it through Amazon prime if you want to, but you can also buy it elsewhere for cheaper and you'll see just more sort of different, different options. If you're a, if you actually are trying to start a business, you'll probably end up having a more opportunity for profit and, and margin.

Um, you'll be able to introduce more, more products. So that's what, that's what it'll look like. Um. It, it's, you know, like Alcoa was an aluminum monopoly and they, [00:48:00] they were broken up because they were controlling not just, they, they like were the only ones who make virgin aluminum ingot, which is very energy intensive.

They also controlled the secondary market. So they would, a lot of aluminum products they would make and there were some other aluminum fabricators, but they had, they were all dependent on Alcoa because they had to buy the virgin aluminum from Alcoa. When aluminum, when Alcoa was split up during world war two and there were, you know, there were different, um, Producers that emerged.

There were there were a lot of fabricators that started to innovate and build different things. And then Alcoa started to innovate. So Alcoa itself actually developed the six pack like beer

for like they actually they were like, we need to sell out. We have to compete. Let's think of new products. And that's one of the things they developed.

And I think you'd see that. Um, I think you'd see a lot more innovation coming from Google. Like Google created generative AI and they didn't deploy it because they didn't see a way to deploy it. That they could profit from. if if they [00:49:00] felt like they were disciplined by competitive forces, they would have had to deploy it.

And so that's the kind of thing that you're going to see. You just see more innovation. You'd see that that the deployment of technology would happen consistent with what the public needed and not consistent with what was good for monopolists. So just be like a it would be subtle at first, but it would be a very consistent with what In over over the course of 10 years, 20 years, it would be a very, very different world.

David Sirota: And what I hear you saying is, it's not some pie in the sky, like, crazy impossibility that there are ways to actually do this. I tend to think some people here break up the banks, break up Google, break up Amazon, and it kind of goes in one ear out the other like it's something that like Never could happen.

There's no practical way to do it. But what you're what you're saying is, is that actually it's not really that complicated. It's certainly not impossible.

Matt Stoller: also happening. [00:50:00] That's what that like. The thing is, is this, this isn't fake. This isn't like, you know, take some random policy that someone will be like, we need to do this, you know, and the fed or whatever it is, right? Like this is, is actually in process, right? We may not get there or we may get there.

I would actually bet on us getting there. I don't think these companies are going to be. They're not going to look the same in 10 years. I think they're going to, they're going to spin off different component parts, partially because Wall Street wants them to, right? I mean, um, but, but also because, you know, they're clearly violating interest law.

And, you know, at some level, when enough businesses are mad, and there are a lot of businesses that are mad at Google and are mad at Amazon, and unions are mad at these companies too for different reasons, it does have an effect, right? And this, this is the traditional Maybe this might be a little controversial on the left, but like anti monopoly thinking is actually the traditional American approach to egalitarianism, right?

The, the idea of [00:51:00] like a large administrative state that provides social welfare and, and runs the economy, that's a European conception of social justice on the left. Because they, they came out of aristocracies and monarchies and we didn't. So we always had a smaller federal state and a much larger set of local institutions.

And our large institutions that we had to deal with were, were, you know, there was the post office, but it was largely like railroads. And so we developed this anti monopoly tradition, and as a way of equalizing opportunity and outcome. And that's why it's so, like, it works for Americans in a way that the, like, The sort of like social welfare stuff sort of doesn't.

It's because the, I mean, I'm for social welfare and everything. And I think most people would are, but like the idea of redistribution is kind of like saying, well, we got to get the bank robbers to give [00:52:00] some of the money back versus let's not have bank robbery in the first place.

David Sirota: Yeah. I think there's also a political reality to it as well, which is which is to to be somewhat blunt about it, which is that If one set of businesses is being, uh, villainized by a set of monopoly or oligopoly businesses, you know, one set of businesses gangs up on the other side, a set of businesses in a, in a campaign finance system in which business basically, you know, buys and sells politicians.

Ultimately, you can have a critical mass, uh, to get some change. And sometimes, uh, oftentimes the money doesn't align. Uh, with the public interest, but sometimes the money and the political power can align with the, with the sort of general public interest. And I think certainly on monopoly stuff, I mean, when you're talking about thousands and thousands, really millions of small businesses, uh, being villainized by an Amazon, uh, you know, in terms of resellers and the like.

You can imagine a politics in which a member of Congress goes home, uh, their [00:53:00] local businesses are being, uh, mistreated by the, the, the monopoly, uh, the local businesses, uh, help organize political support to pressure that member of Congress to do the right thing when it comes to antitrust. I mean, you can imagine that politics in the United States and the way, frankly, I think it's hard to imagine a politics in different, in different policy spheres.

playing out. And I think that's why the anti monopoly movement has such momentum right now. And I should add, uh, part of the reason why the anti monopoly movement has such momentum is because the work you're doing at the American Economic Liberties Project, uh, and, and in, in, and with your book, uh, Goliath, which I encourage everybody to go, uh, buy and read because it really tells the history of this.

And I should add one more plug for Matt. If you like what we're discussing, if you found what we republished on our site from his site, uh, interesting. Go subscribe to his newsletter. It's one of my favorites. It's, uh, you can find it at the big newsletter dot com. Matt Stoller, as always, thank you so much for your time.

Matt Stoller: Thanks so much. Thanks to your whole team. [00:54:00] You guys are awesome.

David Sirota: That's it for today's show. As a reminder, our paid subscribers who get lever time premium, you get to hear next week's bonus episode. Our interview with author Ni Kyle Goyal about his new book, Live to See the Day, Coming of Age in American Poverty.

It chronicles the lives of three teenagers growing up in one of Philadelphia's poorest neighborhoods.

To listen to Lever Time Premium, just head over to levernews. com to become a supporting subscriber. When you do, you get access to all of Lever's premium content, including our weekly newsletters and our live events. And that's all for just 8 a month or 70 for the year. One last favor. Please be sure to like, subscribe, and write a review for Lever Time on your favorite podcast app.

The app you are listening to right now, take 10 seconds and give us a positive review in that app. And make sure to check out all of the incredible reporting our team has been doing over at levernews. com. Until next time, I'm David Sirota. Rock the boat.

The Lever [00:55:00] Time Podcast is a production of the Lever and the Lever Podcast Network. It's hosted by me, David Sirota. Our producer is Frank Capello with help from Lever producer, Jared Jacang Mayor.