Richard Posner: “The Real Corruption Is the Ownership of Congress by the Rich”

In a keynote interview during the Stigler Center’s conference on concentration in America, Judge Posner said: “You are not going to have people competing with the Koch brothers.” On antitrust, Posner said: “Antitrust is dead, isn’t it?” 

 

 

 

 

 

 

Left to right: Luigi Zingales, Richard Posner
Left to right: Luigi Zingales, Richard Posner

“The real corruption is the ownership of Congress by the rich,” said Judge Richard A. Posner of the United States Court of Appeals for the Seventh Circuit in Chicago, one of the most prominent legal scholars of the last five decades, during a keynote interview today at the Stigler Center’s conference on concentration in America. 

 

Posner is one of the most influential antitrust scholars of the last 50 years, and one of America’s most prominent legal minds. During a conversation with University of Chicago Booth School of Business professor Luigi Zingales [one of the editors of this blog], Posner harshly criticized the Supreme Court’s 2010 Citizens United ruling, declared antitrust “dead,” and described the American judicial system as “very crappy” and “not well-designed to get good people.”

 

On the Supreme Court’s 2010 Citizens United decision, Posner said: “If you become a member of Congress, you’ll get a card from the head of your party that you will spend five hours [each] afternoon talking to donors. That’s not the only time you spend with donors—they’ll take you to dinner, cocktails—but these five hours are important. The message is clear: You are a slave to the donors. They own you. That’s [the] real corruption, the ownership of Congress by the rich.”

 

Later, remarking on the logic behind Citizens United, Posner said: “The Supreme Court says there’s no such thing as spending too much money to support a political candidate, because your money is actually speech—that’s all nonsense.”

 

The interview began with a review of Posner’s vast experience in government and antitrust, since he started clerking for Supreme Court Justice William J. Brennan in 1962. Posner elaborated on the changes antitrust in the U.S. has gone through in the past three decades: “When I became a judge in 1981, I thought I had a lot of interesting antitrust cases, and I did—for about three years. And then they started to dry up. By the 2000s, there were virtually no antitrust cases left.”

 

Posner then spoke about the legal battle between Apple and Motorola that took place between 2010 and 2012, in which Apple claimed that Android phones were a “rip off” of the iPhone and Motorola claimed Apple had infringed on its patents. Posner dismissed the case “with prejudice.” “That was my last antitrust case, probably forever,” said Posner, before he shocked the audience by remarking: “Antitrust is dead, isn’t it? That was my impression.”

 

Later, Posner discussed antitrust criticisms against digital platforms like Google. “I was surprised to read that there are criticisms being made against Amazon, Microsoft, and Google. That’s blasphemy. Those are the three best companies in the world. Who’s concerned about whether they had monopolies?”

 

The Stigler conference brought together dozens of economists and legal scholars, along with academics from other disciplines, journalists, and public intellectuals to discuss the rise in concentration in the U.S. Posner did not share the concerns expressed by many of the conference’s attendees. “I’m very comfortable with the modern American giant companies,” he said. “Maybe there are real, lurking, serious antitrust problems, but they don’t come to my court.”

 

If there’s a concern about concentration in a certain industry, said Posner, “the Justice Department will have a conversation with the companies and persuade them to modify their actions slightly, and that’s the end of it.”

 

“There’s a reason they don’t come to your court,” said Zingales, who noted that there might be the lack of antitrust enforcement and regulatory capture. In response, Posner said that “there certainly is a problem with capture of regulatory agencies. I think the best example of that is not the Justice Department, but the Securities and Exchange Commission. There’s a particular career pattern: You go to work for a financial firm in Wall Street, and you do well, and then you go to work for the SEC, you get a good job there, and then you go back to Wall Street, where you get a better job. The fear is that in order to have a sure path to returning to Wall Street, you better not be too ferocious as a regulator.”

 

“There are other situations where working for regulatory agencies is just a stage in your career, but you have to be careful to not be too aggressive as a regulator,” he added. “I don’t have a sense that this happens with the Justice Department. I think prosecutors are expected to be aggressive. Aggressiveness is valued by the private sector, and when they’re tired of being prosecutors they’re hired to be tigers for the other side.”

 

Zingales asked if the FTC’s choice not to pursue an antitrust case against Google in 2013, despite the conclusion of its staff that Google had used anticompetitive tactics, can’t be explained as regulatory capture. “At the end of the day, they decided not to do anything, at least not in the United States—in the European Commission they arrived at a different conclusion. Is it just because it’s easier to enforce antitrust on somebody else’s company, or is it because Google has captured the U.S. environment, and not the European one?” Zingales asked. 

 

“What was the worst thing Google had done?” asked Posner.

 

“They diverted searches toward a business they owned directly,” replied Zingales.

 

“I guess that’s bad,” said Posner.

 

Zingales then mentioned the close relationship between Google and the Obama administration—the well-documented revolving door between the two, the rare access provided by the Obama White House to Google executives. “If you are concerned about regulatory capture, this seems to be a source of concern,” said Zingales. “Even if it’s not necessarily a present danger to consumers, it could be a future danger,” he added.

 

“Google is extraordinary,” Posner replied. “Maybe they are playing fast and loose, but I don’t feel it has a serious problem.”

 

Despite his concerns that Congress is “owned by the rich,” Posner said that he sees this as “remote from antitrust concerns.”

 

“Why?” asked Zingales. “Gary Becker developed a model of lobbying that was based on competition in lobbying. I agree with you that the system is very corrupt. It is also true that if there is some industrial fragmentation, at least there is some competition between the people who own you, and competition is better than monopoly—even in that case. If you have just one big player, and you talk for five hours with only one person, you are going to have only one view of the world. To me, that seems much more problematic.”

 

“You’re not going to have people competing with the Koch Brothers. They have too much money. They own a great many Republican officials,” replied Posner. 

 

At this point, Zingales pressed: “My concern is that concentration, even if it leads to competitive prices for some miracles, is worrisome from a political point of view. Clearly, in the early days of antitrust there wasn’t a good understanding of economics and too much intervention, but now my concern is: Has the pendulum swung too far in the opposite direction? Are we only concerned about seeing low prices, and not about other things like capture or having members of the House of Representatives owned by one large company?

 

Posner disagreed, laying the blame on the Supreme Court and on what he described as America’s “very bad” judicial system. “The Supreme Court made it complicated by saying political donations are a form of free speech. There isn’t anything the government can do [about it] now.”

 

“In a sense, this is endogenous,” said Zingales. “The reason why the Supreme Court decided on Citizens United the way it did is because there’s been a dramatic ideological shift in the direction of whatever is good for business is good for America, including money is free speech.”

 

In response, Posner replied: “No, I don’t agree with that at all.”

 

“We have a very crappy judicial system. That’s the the long and short of it. And that contaminates much of government,” said Posner. “In England, judges up to the level of the Supreme Court are appointed by commissions which are composed of judges and professors, not politicians or Parliament. Our federal courts are instead appointed by politicians and the president, and confirmed by the Senate. Those politicians do not care about quality, beyond a very low minimum. They care about other things: tokens, political and religious leanings. So you end up with mediocre courts that are highly politicized. And that’s what we have now in the Supreme Court: extremely reactionary Supreme Court justices, appointed by Bush mainly.”

 

Near the end of the event, Posner was asked by a conference attendee if he had read anything that influenced his favorable opinion of Google. “No,” Posner said, and added that he frequently uses Google searches in his judicial work. “I am often dissatisfied with the way in which the lawyers present a case to us, “he said. “They often don’t tell us the things that we really need to know. If it’s a medical case, they don’t tell us about the nature of the disease and the optimal treatments for it. If it’s a business case, we’ve had cases about workers complaining about harassment by their supervisors where they didn’t even tell us what the business is and what these workers do. So I very frequently Google cases, law firms, individuals in the litigation. I just find that an invaluable source.”

 

This, said Posner, puts him at odds with fellow judges who feel that by using online search engines he is undermining the adversary system. “I am criticized by other judges for doing this, on the ground that it’s inconsistent with the adversary system,” he added. “The theory of our judicial system is that the lawyers pick all the witnesses and make all the arguments, and the judge is just an arbitrator, basically. I find that very unsatisfactory, because I don’t trust the lawyers.”

 

Further reading:

 

How Many Newt Gingrich’s Are There in Washington? Much More Than You Might Think

 

Donald Trump’s Economic Policies: Pro-Business, Not Pro-Market

 

Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy. 

 

4 comments

  1. I agree with Posner on the election/promotion of judges in this country. It’s also stupid that in many/most places, we vote for judges. Most people, myself included, are incredibly uninformed about those judges that show up on ballots.

    I strongly disagree with Posner regarding the Citizens United decision. I consider it an abridgement of speech if I cannot spend my own money on political speech. Corporations are collections of individuals and they should have similar rights surrounding political speech and expression. If I disagree with something being said by a rich person, I should be free to contribute money individually or as part of a corporation toward speech that counters that viewpoint.

  2. freeAgent…..Citizens United is terrible for this country and democracy in general.

    “If I disagree with something being said by a rich person, I should be free to contribute money individually or as part of a corporation toward speech that counters that viewpoint.”

    The problem with this line of thinking is that if money equals speech, then the rich will have a monopoly on speech. If you don’t like what a rich person says and decide to spend $1000 on an ad to counter that point. They, then, spend $5 million on ads burying your opinion. This is not free speech, nor is it what the anti-federalists intended when they pushed to have the bill of rights included with the approval of the Constitution. When Corporations and Unions have the rights of people, Money equals speech and Members of Congress must grovel for money continuously, we have seriously undermined our democracy. When too much power is in the hands of too few, eventually people rise up. Our system was a great system while it lasted. History will write that the rich and powerful got too greedy and took too much from the rest of society just trying to get by… Our strength used to be our middle class. That is rapidly disappearing. When people feel like they are desperate and have nothing to lose, why would they continue to support a game rigged against them?

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