William Black – New Economic PerspectivesNew Economic Perspectives

Trump’s language problems do not end with his double negatives and his endless contradictions of what he has just said or tweeted about Putin’s assault on our democracy. Trump lies about everything, all the time. His lies, however, frequently reveal the greater truth – he lives to betray America, his responsibilities as President, and his base. One classic example is the illegal abuse of monopoly power used against Americans and people globally. Trump has managed to embrace, contemporaneously, polar views on monopoly power – and both views are wrong. That takes some doing. One would think that taking opposite views would help you be right half the time.

Under United States law, the intentional abuse of monopoly power is both illegal and criminal.


Our Department of Justice (DOJ) and Federal Trade Commission (FTC) can bring civil suits to stop the abuse and penalize it – including treble damages and orders to reduce greatly the monopoly power. DOJ can also bring a criminal prosecution. In the European Union (EU), such monopoly power abuses are generally only subject to civil sanctions and orders to reduce monopoly power. (Some EU nations criminalize “hardcore” cartel actions.) DOJ can prosecute either, or both, the firm and the officers involved in abusing the monopoly power. EU nations often do not permit prosecutions of the firm even for cartels.

Economists generally focus on increasing productivity as the driver of development. Among the most troubling economic developments in the West in the last decade is the weak gains in productivity, particularly in a time of rapid technological advances. Neoclassical economics pictures firms as engaged in a fierce, endless battle for survival where failure is certain for firms that are even slightly less efficient that their rivals. This struggle is supposed to produce relentless, rapid advances in productivity. Something has gone very wrong with the neoclassical narrative of competition, productivity, and growth.

Weak productivity and efficiency is supposed to remedy itself. The neoclassical (and Austrian) economics claim is that it creates a profit opportunity for entrepreneurs to enter who either will run a more productive firm or serve as consultant to explain to existing firms’ CEOs the secret of improving efficiency. This series of articles focuses on one of these supposed examples of Austrian “spontaneous order” – executive coaching.

One of the prime myths that white-collar criminologists have to refute repeatedly is that blockchain makes fraud impossible. Blockchain, in some settings, is a costly means of making some frauds much more difficult. Blockchain is useless against the most important frauds. The primitive worship of blockchain as a supposed garlic capable of warding off evil breeds complacency, and complacency produces increased fraud and greatly extends the life of fraud.

The difference between making fraud impossible and (in a few specialized settings) ‘much more difficult’ brings to mind the critical difference explained in The Princess Bride between ‘dead’ and ‘mostly dead.’ Blockchain is useless in stopping, for example, any or the three epidemics of ‘control fraud’ that drove the 2008 financial crisis and the Great Recession. Lenders’ executives extorted appraisers to inflate appraised values of homes, creating a Gresham’s dynamic in which bad ethics tends to drive good ethics out of the markets and professions. The second fraud epidemic in loan origination was ‘liar’s’ loans, which were designed to aid lenders and their agents to inflate the incomes of borrowers. Note that both of these primary fraudulent loan origination schemes involve lenders deliberately seeking to provide false (inflated) data designed to inflate the market value of homes. The third fraud epidemic that drove the U.S. financial crisis was the fraudulent sale of these mortgages to the secondary market through false “reps and warranties” about loan underwriting – principally the fraudulently inflated appraisal values and borrowers’ incomes.