frontrunning trani trani imax kaiser with stacy everett we're looking at the policies and ashes laning up to the election today we're taking a deep dive into anti trust stacy of course one of elizabeth warren's signature policies is that she's going to break up the monopolies break up all of our police and to help us answer the question of whether or not america needs a teddy roosevelt is marshall our back and josh marshall our back do we need a teddy roosevelt well teddy roosevelt would be a good start he is the original trust buster but that name is a bit of a misnomer because in fact roosevelt teddy was not a guy who just broke up companies just because they were big by the end of his time in office in fact he was more concerned with economic efficiency and he did believe in a science neutral national system of regulation as opposed to simply saying let's create you know 8 different entities a little help or a cone economy function better so he broke up standard oil standard oil but he ultimately moved towards a position as did f.d.r. incidentally where the argument was that you regulate by function as opposed to using a size metric and i think that's the one flaw in elizabeth warren's plan she talks about breaking up facebook but for example what difference does it matter if you have 8 facebook's if you still have mark zuckerberg controlling. algorithms to be abuse or privacy that's the real challenge and it's ironic that you have guys on the left you know the open markets people who back a list with warren saying you know let's introduce more competition let's let's have markets be markets as opposed to obsessing about regulation which was really the issue that drove the roosevelt and teddy roosevelt was better betrayed his class it wasn't really revered by his class it was just an outcast because he was going after other rich people he was kind of a rich guy himself do you need a top down approach like that to go after antitrust you need somebody on the inside so to speak to root out these issues i just think you need someone who is less beholden to either big tech or to. the big finance the point is you want to introduce more innovation and competition but i don't think that that's the silly thinking that a metric per se is relevant especially in the context of an international economy where you who are very very large global competitors in places like china for example all of us here have lived overseas and canada and europe and coming back to america from europe the quality of the broadband is way worse but also more expensive cellphone flights according to the f.c.c. they found that almost no broadband competition at all anywhere cross america except for like some places in new york city and san francisco for $100.00 megabytes per 2nd upload speeds and $25.00 megabytes per 2nd they found only 43 percent of consumers had more than one i asked p.c. as an option they also found that u.s. airlines this is another statistic for how little competition there is in america u.s. airlines earn twice as much as european airlines per mile and the internet and cell phone service is twice as expensive is this a problem absolutely. thinks so and so getting back to the original question yes i do believe that something needs to be proactively done from the top which i i guess you know being someone a lover of free markets that's not the typical answer you might hear but i think where i'm coming from is is the underlying system i actually don't think monopolies per se are the problem it's monopolistic access that monopolies have to credit or to politicians and probably both the crony financial ism crony capitalism that's the big problem i mean there's going to be a lot of aspects of the economy that have natural monopolies whether you have you know you know a very you know the best oil field and have a geologic advantage over somebody else or you know there's linde limited spectrum spectrum and broadband so there's only so many people that can go through an information network you know that's changing obviously with the with the internet but you know so you have all these sort of natural monopolies in the economy and if we 1st off don't understand that which it seems like there's a lot there's a lot of lack of you know there's sort of this simplistic free markets so we need to understand how natural competitive advantage forms to begin with and try to figure out distribution issues around that but then on top of that you already had these natural monopolies forming but now with extremely cheap credit you get this this problem where they just get more and more cheap money to defend more and more of their moat whether it's taking out more competition or taking out politicians to take out their competition so and i think that's the bigger problem so no one seems to want to focus on the credit issue you know so if they don't then we now at least do something about the natural monopolies or i said in the banking sector they consolidations been breathtaking over the past decades and the 2008 only exacerbated that and then eric holder under the holder doctrine really made banks above the law and their main objective is to lower their cost of capital and that means and we have now discovered manipulate. during the machinations of the central bank and they've been caught doing so so any talk about breaking anything up you'd have to start with the banks because everything else is a spin off from the banks is there going to be any forward motion in that direction or are are these regulators captured beyond any sense of coming back and acting in the public well i think there's 2 aspects to 2 big issues one is being being captured but the other is i think there's just even the people who devising i just don't think there's enough economic debate of what the problem under the underlying is and so you have this sort of academic you know group think we need to you know keep lowering interest rates take negative interest rates we need to keep you know propping up the financial system so they loan more but they don't realize things like the continuing a fact and and it's just making the problem even worse so so yeah i mean i guess trying to get that into the debate somewhere is the my my biggest frustration because if you don't guarantee of yeah you don't see an incentive to have that in ron paul focused on that a lot so i think that was the 1st time you started to see that happening or get into the mainstream politics but if you look at this round of candidates you know everyone wants to you know even donald trump wants to go negative interest rates i sewed both sides are saying the same thing which doesn't actually solve the problem and the other issue is that the whole focus seems to be that dog frank somehow solve the problem and i've always said you know i mean if you're trying to me it's like say you have a pile of dirt on this carpet that we're now sitting on that but instead of actually hoovering it and cleaning everything up we just swept everything underneath the edges of the rug and now the dirt started to come out again and i think that's why we've we've handled pledge regulation so far and we've done all policy has been directed towards restoring the status quo ante so we're not in a position fundamentally dissimilar to where we were in 2007 where you contrast that to the post great depression era where you fundamentally restructured the banking system through through glass steagall and i think that's. the way we've got to go in not necessarily by going back to glass steagall but certainly considering the range of functions that we allow banks to do you know returning to the theme of our series front running we do believe in we see and observe that there is a divide between the boomer generation on the millennial and the millennial zone generation are young and they're entering the workforce and most people get their 1st job at a small company that provides 85 percent of new jobs so since 20072000 he says the global financial crisis in fact company formation is down by 16 percent so there is a decline in company formation some people do blame it on the ever lower interest rates we've seen that consolidation who gets access to the 0 percent rates or negative race one day that they're the raid dahlias of the world made ballio points this out himself he's a multibillionaire he says he can borrow money for nothing and he can buy up any asset in any company and form into a bigger one and that's an important part of this anger from the younger generation but it's not the necessarily of again a problem of size we had large companies in the 1970 s. we had been very significant to ways of consolidation during that period but we didn't have the fundamental levels of inequality that we've got now you know we also had big unions to counteract that you know and so so there's something to be said for some sort of return to that 1912 tripartite ism you know that you have big companies unions and government working in a cohesive fashion why has company formation collapsed. that's a tough one i don't because because the financial the financial industrial complex is looking for this risk free cemetery you know if you criticize the tree in the system that's where they'll go so that you look at what's getting funded in silicon valley or whatever it's you know it starts off as a ponzi scheme to try to reach a monopoly and that's who's getting funding you know and if you or if you already have you know free cash flow and good bank credit. you know you just keep you know expanding your empire so so these small businesses that are the natural diseconomies of scale the creative destruction are not getting funded so we work it got to $48000000000.00 valuation as a private company and it was exposed as a massive ponzi scheme and it's probably worth 0 they might get a bailout from soft bank etc but behind the scenes these things aren't even in the public sphere to have any kind of examination or transparency whatsoever and there's a multi $100000000000.00 conway in the shallows that feeding into this shadow economy and the shadow equity and the shadow billionaires you know and men are also getting margin loans a new sort of structures on this where where it you know it it's just a big it's a very big house of cards and a lot of these these these cases and even that was a result of post financial crisis right you could have more than 200 shareholders and not have to go public that was a small business forming mechanism and again to have the unintended consequences of going the exact opposite way as where it was intended you know i'm all for you know being able to have private markets and multiple shareholders and not being over regulated but again we have to fix that core problem of some people get cheap money or negative in or get paid to use money asymmetry or saying that in those cases the organizers of these. initiatives have a very appealing the risk reward ratio they're taking almost no risk correct and in a free market capitalism it implies the risk is being taken and even on the interest rate curve you know the longer you go the more risk you're taking you get the higher yield but now the negative interest rates an area what does that mean and they get rates go negative is i mean i'm back we're going to rhyme exactly you know that really is and that's that's that's actually the core issue is we were trying to take out the price of time which is which is the fundamental scarcity in all of economics and all of actual real reality is we have it we all have to. same scarcity of time but if we can sort of manipulate it some people have no time scarcely now others do so if you think about it like i had n.p.v. it up with a negative discount rate that actually says that your customer spending is more valuable in the future than today so as long as you have access to credit i can acquire as many customers as possible i can build the biggest monopoly the biggest network effect except for a without having to pay any consequences or even pay my own you know laborers to do so as long as i have free money and that's that's what's sort of this competitive disadvantage for any small business to try to compete against that is just about impossible all right well unfortunately we have to pay respects to time here on this front running 2020 take a break and when we come back much more coming your way. and a very warm welcome to you you're watching us and. so what we've got to do is identify the threats that we have it's crazy. let it be an arms race off and spearing dramatic probably the only really i'm going to resist i don't see how that strategy will be successful very critical time to sit down and talk. welcome back to running 2020 we're talking about antitrust talk about interest rates or talking about discrimination with interest rates you know you mentioned earlier in the program marshall algorithms and you know one of the ways that bankers like to absolve themselves of from any wrongdoing is to say well the algorithm did it you know we just come from around the computers or do stuff and we don't know what's really going on there's a non accountability algorithm how bad is a serious problem is this there's no accountability in every single aspect of finance with the reality is that we don't throw bankers into jail anymore when they when they break the law in fact that the whole approach to white collar criminality has been pretty lax is it possible that with a negative interest rate bankers can go back in time and steal from customers in the past you should know that you're. always just take care about what. you know how do you know about. your time and entropy and. so you know the minneapolis fed they for every port recently and they found that monopolies forget the pricing a lot of people have always targeted whether or not or not monopoly increases prices but they what they found is that it does indeed destroy productivity but the interesting thing in light of the us talking about this interest rate is that ever lower interest rates is cause and consolidation so the fact is when we have consolidation in. jobs in the industry when companies are getting bigger and bigger the problem with the decline in company formation is that there's nowhere else for potential employees generations e a millennial to go there's no market for their labor their incomes aren't rising this conundrum that nobody can figure out why wages are. not rising despite low unemployment and yet we do have the collapse in company formation so are we had a. standstill here yeah i believe so and if you look at even automation in the economy which is obviously been a big part of you know the presidential debates is the automation comes from having extremely cheap capital where again maybe it's not even economic but if i don't have to pay for that if i'm not painted appreciation for not paying for that capital i can always bring in automation and drive out a worker in an equilibrium that doesn't really work so it's not only are fighting against sort of foreign workers in sort of in a global economy you're also fighting against the capital side of the equation which is which is increasingly getting a greater and greater share of the profits you know most of it will identify their worth with their house and their car and when you talk about rectifying these imbalances you're talking about raising rates which means for most people the costs of their house and car is going to go up and they'll never accept that but there is a donation area aspect to the 0 interest rates and you know you you do reduce the return on investment you also reduce the cost of kerry so it can impart a deflationary bias the economy that's that's actually been the the example in japan as far as housing and all the other things that you mentioned the real problem is and this goes back to josh's point you have a credit based economy rather than incomes based economy and that people actually had higher wages rapidly growing incomes where they weren't reliant on debt to sustain their standard of living then we wouldn't have a lot of these pathologies that you've described and that that goes back to a structural point about how we allocate credit and japanese are afraid to have kids and they're not having kids and there's not replacing the population because i know that the economy is at a dead stand well i mean i'm not going for another 20 or 30 years i'm actually television that you say is benign i don't think it has been particularly bad if you look at the average japanese i mean look 1st of all that the last decade. in japan over the last several decades in japan that's a bit of a misnomer because on the very number of metrics on health care education and i had a way of looking at the us elections what i set out in my i know my only point is that it's not necessarily the 0 rate per se i mean you've got distributional questions which go beyond the question of capital itself and josh larry spawn's yeah exactly on the real estate specifically of where that being or being no wealth again this is one of the problems of the inequality is the real state closer to the center whether it's a tech center political center or an energy center those are really the 3 big ones that were wealth really gets concentrated real estate no centers keep going up and up and up so yes you know it sounds like you have may have a cheaper mortgage and so your monthly payments are lower but if you're the value of your wage you're fixed in a in a sticky wage contract of the value or wage keeps depreciating at a you know at a faster rate than than your house is going up then then you get these these big problems so i actually think higher interest rates in many cases would actually lead to higher wages and again but where is the general theory of negative interest rates where the general theory of negative of nerve and these policies you know i just there's not enough debate to say you know is this actually good for the economy or not it's bizarro capitalism i bring in article about this that you know i mean it's ludicrous that you've got a borrower has to be being paid by by creditors i mean you're seeing this now all across the yield curve and in places like germany and in denmark they're offering negative mortgages on like a yeah let's return to the u.s. economy and antitrust because another big issue for millennial anzhi voters the younger voters and the clash with the neo liberal older boomer voters is health care costs and antitrust in that situation max and i are subjected to obamacare the obamacare marketplace the affordable care act marketplace there's one provider in north carolina there's one provider in many states across. united states that doesn't sound like competition that across the united states you have one hospital or many huge sections of the country where is that competition called competition is one way to go but of course in other countries you deal with that problem by by by by a single payer so. you have a government funded not necessarily government administered health care system and it's arguable that health care doesn't lend itself so readily to the disciplines of the free market if you are going to go for a totally free market approach and obviously you've got to break up the private health insurers insurance all the good the worst of both worlds but they are not single payer and i have a monopoly of that's right with all its competition about competition no exactly i mean obamacare effectively i mean he created bailouts for the big banks he also created bailouts for the private health insurance companies and he created a private all to go please so health insurance companies are not subject to that sherman act yet she has one of the acts that is supposed to end monopolies and antitrust right now what about bernie sanders idea where he's saying let's start enforcing sherman act and especially the criminal permission because we never you know enforce that side of it just the civil what do you think of that just yeah i mean living in canada or canada or currently i'm not supposed to the health care or marketplace so i can't qualify to opine there but yeah i mean there's definitely want a lot of problems are oh look i think he's got a very good health care proposal the media of course doesn't really look at this and they say well how you would pay for it which incidentally never has when it comes to a war zone but what about the sherman act yeah look i have no problem with enforcing the existing provisions that were there for the poor for a reason obviously the insurance companies don't like it but but my my my bigger priority would be moving towards some sort of single payer healthcare system which would eliminate a lot of these problems on the antitrust front so i remember when i was working on last rate we broke up a change into the baby bells and it was a huge boom all those. baby bells became his age and there's a lot of business activity so i understand why they're so unlike market like a burger or some other tech titans don't want to have their kingdoms broken up but the fact is you're going to create more jobs and create more competition related to your g.d.p. growth as a marshall go ahead telecoms is an interesting example because you brought them up and they competed and ultimately they formed as private all to go police so you also mentally they all came back under their deregulation of fame and after a public event at that time the public monopolies became private not all police or private rents if you like so that's a problem so again if you're going to go in that direction you've got to sustain it and make sure that you keep exactly but 2 thirds of americans i most of the youngsters believe that we should break up amazon and google 70 percent of digital ad spending 70 percent of digital ad spending in this important goes to google facebook and amazon so that means there's a lot less money for a new start ups to get some of that and there's 2 there's 2 parts the other part that i think silicon valley does a good job of sort of shifting away from is their monopoly on physical infrastructure and i.t. and that piece you know whether it whether it's the rise of e.w.s. or what's going on with microsoft in the zoo or like they're actually building distributed systems and building infrastructure it's very different than even the roads or the railroads like they're the only companies that actually know how to do that so we're consolidating this knowledge base into these private companies you know fueled with with monopoly credit that just you know is frankly just seems very very dangerous particularly since we've skewed the whole information economy towards this surveillance capitalism and so it's just again it's creating you know unintended consequences after unintended consequence so i think definitely trying to really try to dive deep of how do we how do we break up that that monopoly. would marry monopoly credit for it how do you break up that. free market. interest rates i think that's still still a key thing public bank i've discussed. either that that route or you use what i would call the iowa model where which has i think like 350 different banks and so there are small enough so that if one goes under there's enough redundancy built into the system so they can go under or you to adopt the canadian approach which is that you have a controlled all of gospelly whereby you restrict the range of functions that they could get of things that they are able to do and that's the other way i would go in 2018 we had 4708 f.d.i.c insured commercial banks down from 70612008 so it looks like we're moving away from the iowa model exactly and i think that was the one maybe that was one of the unintended designs of dog frank but yes in fact what's happened is that i think now the big 5 banks control about 60 percent of the total deposit base in the in the u.s. so it seems to me that since we've lost that battle you have to then go back and consider the types of functions that are being undertaken by these banks and whether they should appropriate for deposit taking institutions in particular the course of banks that monopolization often hear this idea that well it's a victimless crime in finance but no one's really getting hurt with all this skullduggery but one that is a genocide at the top and other corporations mimic it and you have like a company boeing going down this path then you do have that dumbs boeing's falling out of the sky because they mimic the banks cut corners and are putting out faulty products i don't actually even take it farther i think it's our democracy that's really you know out risk right here and then you're seeing what the way what it's doing to influence in the media you know so many pieces of what was supposed to be a very decentralized system when it has such centralization you know the pieces aren't working very well so we want to protect the rule of law well if you know mike mark zuckerberg gets to buy half of it. why an island it's very hard to reverse it. to reverse that transaction right you know if he's been fueled with with this economy to do it but maybe stepping back for a 2nd i'm going to very focused on the financial aspect there are some really interesting things happening in decentralized finance whether it's in cryptocurrency or fin tech and i think there's another party nobody beyond just taking the top down approach to the big guys i think if we can do more to foster the innovation that that's happening that would be a better better approach than necessarily just you know regulating and chopping from top down price sell flashed around marshall will we get a teddy roosevelt trust buster i hope so betty and i hope we get an f.d.r. josh i think we will but i'm a little worried with with what's happening right now on the democratic side i think it's going too far we need to find some some sort of center at some point all right well that's going to do it for this desta front running 2020 i remember it could be worse look up this race and headline america robots are losing jobs to asian robots think about it stay tuned for further additions of flooring 2020 of a mass guys or stays there until then by. albert einstein is part of defining insanity as doing the same thing over and over again and expecting a different result this is essentially the argument behind the trumpet ministrations deal of the century aimed at putting an end to these rainy palestinian conflict. is the american president indeed insane or a genius breaking with decades of ruthless mediation. just 2 days out of prison and primed to kill a suspected terrorist is shot and killed by police in london after stabbing 3 people and what authorities are probing as an islamist inspired attack. a peace plan that triggers violence donald trump is accused of taking sides in the middle east as palestinian authorities cut ties with washington and israel and protests break out in the west bank also ahead. of. the u.k. set sail from the e.u. on its post of bragg's a voyage but after 47 years of cooperation there are fears of economic storms and mutiny in the sky.