Competition drives down prices, makes it hard to collude on prices, and keeps any one company from taking excessive profits, but the fewer players there are in the game of free markets, the more power and control each one has, and consumers are ultimately the ones who lose. 

Thomas Philippon is an economist, a professor at New York University in the Stern School of Business, and the author of the book The Great Reversal: How America Gave Up on Free Markets. In his book, Thomas investigates the paradox of America having trended away from the free market dominance they were once known for, and how while American companies have been consolidating across every sector, European free market forces are very robust and stronger than those in America by a wide margin. 

Thomas and Greg discuss the shifts in the ways America’s markets used to operate versus how they do now, and why. y. Thomas lays out several instances of consolidation in American sectors such as the airline industry, health care, and telecoms over the past 20 years.

Episode Quotes:

The political game of lobbying

39:41: The reason we elect officials is precisely because we don't have the space in our brains to deal with all of the issues. We elect people to take care of it. That's their job, so we can go about our business. But as soon as you do that, you will never have the full information. And therefore, it's possible for players to take advantage of their insider knowledge and insider power to tilt the outcome in their favor. And so the political game of lobbying is always, like any market, trying to find the balance between these two.

45:51: These are the three pillars: a strong competitive market, consumer protection, and antitrust, universities, and one big integrated market. Over the past 20 years, the EU has made very good progress on the first one to the point that today it's at least as good, and in some cases, better than the US, at enforcing consumer protection.

Is lobbying bad?

34:41: There's no reason to think that lobbying is bad in and of itself. And in fact, there is no reason to think that the political system is not operating like any market. We have supply demand, competition, and it's not obvious that the outcome is going to be bad just because we call that politics.

Show Links:Recommended Resources:

• Mancur Olson
• The Third Man
• Joel Mokyr
• Dodd-Frank
• Milton Friedman
• Jean Monnet

Guest Profile:

• Faculty Profile at NYU Stern School of Business
• Professional Profile on National Bureau of Economic Research
• Professional Profile on Centre for Economic Policy Research 
• Contributor’s Profile on World Economic Forum
• Thomas Philippon on LinkedIn
• Thomas Philippon on Twitter

His Work:

• Thomas Philippon on Google Scholar
• Featured Works on Bruegel
• The Great Reversal: How America Gave Up on Free Markets

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