In this second installment of his three-part series on antitrust’s recent resurrection, Matt Stoller discusses the legacy of Obama’s presidency. The real policy for which Obama will be known is not Obamacare or Dodd-Frank, but bailing out the banks after the 2008 financial crisis and helping Americans and the rest of the world understand that liberal democratic rhetoric was really an ornamental cover for a system of concentrated financial and political power.

In part one of this series, I described the “End of History” moment in the 1990s and 2000s, when policymakers celebrated a utopian vision of globalization. Ben Bernanke called it the “Great Moderation.” The big question for policymakers was to figure out whether it was deregulation or terrific monetary policy that led to such great economic outcomes. Essentially, “Am I too pretty, too rich, or too thin?”

What jarred this moment was the war in Iraq, and how it restructured the relationship between the American people and the media business. The Iraq War is the first war in which there were mass protests before the war started. Millions of people distrusted what they read and heard on the news, and many of them took to the internet to complain, using organizing tools such as blogs, listservs, and email, whose political import was driven by Howard Dean’s presidential campaign. The war’s opponents were right, which became clear fairly quickly.

At roughly the same time, and consistent with End of History libertarianism, the Federal Communications Commission (which was run by Michael Powell, Colin Powell’s son), sought to loosen local media ownership rules. Deregulation was almost pro forma at this point. But something odd happened: Those same millions who opposed the Iraq War turned their attention to the media, which they perceived as having lied the country into war, and wrote to the regulator of that media. Congress opposed the rule change, and the courts sent them back to the agency for review.

Over the next few years, the FCC became a focal point of public anger, particularly on the liberal side, because the party out of power usually has an energized grassroots. Over the course of the 2000s, the FCC sought to eliminate the common carrier rules for the telecom networks as regarding internet service, consistent with the overall framework laid down in the 1990s, to create a libertarian paradigm online. In 2005, in a complex case called Brand X, the Supreme Court ruled in favor of this move by the FCC, ratifying the policy choice that telecom monopolists could essentially control the information flowing over their wires. This became the net neutrality fight.

A large coalition of small business owners, nonprofits, and musicians joined together, spurred by comments like this one from AT&T CEO Ed Whitacre: “Anybody who expects to use pipes for free is nuts!” Of course, net neutrality wasn’t about letting people get free internet access—it was about arranging internet access on equal terms, a basic common carriage rule for a public utility. This was the first popular fight over an antimonopoly pricing law in decades. (If you want to read the full story, or at least my version of the full story, you can read it here.) The Big Tech giants weren’t giants at this point, they were moderate-sized companies on a rocket ship trajectory. In terms of political pull, it was the telecoms who controlled DC and the states.

At the same time, a scholar named Barry Lynn—then at a think tank called New America—was exploring a different side of the concentration of power: globalization. There had been protests against the World Trade Organization, most significantly the 1999 “Battle in Seattle” over labor and environmental standards. But Lynn in the 1990s wasn’t focused on social justice—he was a business reporter who noticed that supply chains had, for some reason, become increasingly brittle. In particular, he focused on an earthquake in Taiwan that in the late 1990s shut down factories halfway around the world, because an essential microchip was made in an area hit by the quake. There was no redundancy in supply.

Lynn studied this odd situation, first focusing on the problems that monopolization induces on the fragility of supply chains. Then he began to understand all the political consequences of monopolization, tracing the rise of concentration to the intellectual shift engineered by legal scholar Robert Bork in the late 1970s. By 2010, he had written two books, most importantly Cornered: The New Monopoly Capitalism and the Economics of Destruction. The Velvet Underground was a band about which it was said that they didn’t sell a lot of records, but everyone who bought one started a band. Similarly, Lynn didn’t sell a lot of books, but everyone who bought a copy became an advocate.

Lynn’s group published a bunch of different foundational stories about the concentrated political economy, mostly in the Washington Monthly. In 2010, it was monopolization and stagnant job creation. In 2012, Lina Khan wrote about concentration in the chicken industry, one on seeds and Monsanto in 2013, followed up with Lynn on a story about the collapse of entrepreneurship, and one with Phil Longman on the failure of airline deregulation. In 2013, Lynn wrote about productivity, science, patents, and monopolization. In 2015, Phil Longman wrote about regional inequality and monopolization, and the next year discussed the conservative antimonopoly tradition. Brian Feldman focused on the case study of St. Louis, specifically in 2016, and in 2017 published a related story on monopolization and the decline of black business.

These stories created a foundation for a different way of thinking about political economy and paralleled the shift in political organizing techniques. All that was required was a crisis.

Led by Obama, elite policymakers rescued the large banks, and in doing so, crushed the legitimacy of their moral system.”

Enter Lehman Brothers. The 2008 financial crisis was many things, and I’m not going to do a deep dive into what happened and why. Ideologies don’t die because of problems, they die when solving one problem makes another problem worse. From an ideological perspective, the crisis presented policymakers, including Bernanke and new President Barack Obama, with a choice. Obama had presented himself as a fresh face, someone who could take on the entrenched corruption of DC. He was part of a wave: in 2006, Nancy Pelosi used the phrase “drain the swamp” to take back the House from the GOP.

So the choice fell to Obama. In 2006, Obama gave a speech to help launch the Hamilton Project at Brookings, an orthodox gathering of Wall Street Democrats who saw themselves staffing the next administration. It’s a remarkable speech because, in it, Obama gave tantalizing hints of what might have been. He knew there was a choice between adhering to the libertarian globalization framework and addressing social disorder. He even predicted the rise of Trump, should the people in that room fail:

“There are people in places like Decatur, Illinois, or Galesburg, Illinois, who have seen their jobs eliminated. They have lost their health care. They have lost their retirement security. They don’t have a clear sense of how their children will succeed in the same way that they succeeded. They believe that this may be the first generation in which their children do worse than they do. Some of that, then, will end up manifesting itself in the sort of nativist sentiment, protectionism, and anti-immigration sentiment that we are debating here in Washington.”

When Obama took office, he was beset with a choice, as were all policymakers in positions of authority. The End of History types could either adhere to their libertarian framework of free markets and let the banking system and social hierarchies collapse, or they could toss overboard their moral framework and use government power to explicitly rescue banks.

At first, business leaders oriented themselves around restructuring the social contract. Banks and investors thought they would have to write down assets consistent with helping people undergoing foreclosure, as they assumed the administration would push to rewrite bankruptcy laws. The party, most on Wall Street assumed, was over. Small businesses thought they’d get credit. As I noted a few days ago, farmers thought they could speak up without fearing retaliation from Big Agriculture, because that’s what Obama’s antitrust chief Christine Varney told them. But it was an illusion.

Led by Obama, elite policymakers rescued the large banks, and in doing so, crushed the legitimacy of their moral system. They broadly believed that restoring the health of Wall Street would trickle down to the real economy in the form of credit growth, and that protecting the Federal Reserve and a globalized system of finance was necessary to protect democracy. Not everyone thought this way: Elizabeth Warren, then ascending politically with the help of Harry Reid, did not, and neither did Bernie Sanders, Republican FDIC Chair Sheila Bair, prosecutors like Neil Barofsky, or anti-bailout Republicans. There was a motley group of anti-bailout members in both parties. But most technocrats did think this way, and importantly, so did leaders Barack Obama, Nancy Pelosi, Chris Dodd, and Barney Frank.

And so, the real policy for which Obama will be known is not Obamacare or Dodd-Frank, but bailing out the banks and stabilizing the financial system, presiding over a foreclosure wave, arranging an informal policy of amnesty for white-collar misdeeds, and engaging in lax antitrust enforcement, thus fomenting a massive merger wave. These policies were endorsed by Democrats in Congress and Democratic voters. They were done in good faith, but broke the End of History framework.

Everyone in the world, including leaders in China and citizens in every neighborhood in the United States, could now see that finance was highly political and that liberal democratic rhetoric was really an ornamental cover for a system of concentrated financial and political power. Over the course of the next few years, Tea Party Republicans, Occupy Wall Street, Black Lives Matter, and a host of movements all over the world displayed anger at what they perceived as an unjust system. And Chinese elites, as part of a strong authoritarian central government, learned to doubt the superiority of the Western model of governance, becoming far more assertive. So did big tech companies who, in a permissive legal environment, orchestrated a giant merger wave reminiscent of the one that created US Steel in the late 1890s.

Still, by the end of the Obama administration, it seemed as if the crisis has been handled. Big companies like Google and Facebook, gay-friendly bastions of idealistic progressives, were running the world, and the Hillary Clinton administration, likely with Treasury or Commerce Secretary Sheryl Sandberg, was ready to take over and continue the good work of the Obama era.

But in reality, from both the inside and the outside, the End of History was over.

Editor’s note: This article first appeared in Big, Matt Stoller’s newsletter on the politics of monopoly. You can subscribe here. Stoller is a fellow at the Open Markets Institute and the author of the upcoming book Goliath: The Hundred Year War Between Monopoly Power and Democracy. You can follow him on twitter @matthewstoller.

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