Reihan Salam’s piece on hospitals over in Slate last week felt strangely familiar.  The piece, titled “Hospitals Are Robbing Us Blind” was ostensibly about how hospitals are gouging everyone on medical services.  He described a market with limited competition made up of politically powerful incumbents.  Competition has been reduced by a slew of regional mergers, further consolidating the players.  Although Salam details a number of hospital-specific problems, he concludes that there are essentially two solutions to this problem: recognize that hospitals often have near monopolies and regulate them as such, or use antitrust law in the short term and reduced barriers to entry in the long term to increase competition.

Abstracted out a half level, those are essentially the solutions that were being debated around net neutrality for the past year (there was also the third “let ISPs do whatever they want” option pushed by ISPs, but let’s ignore that).  Problem: a combination of market forces and regulatory acquiescence has allowed large concentrations of power in a critical industry.  Solution 1: regulate those concentrations of power like the concentrations of power that they are.  Solution 2: break up those concentrations through both regulatory and  market mechanisms.

There are criticisms to both of these approaches.  Critics of solution 1 will raise concerns that concentrations of economic power are often also politically powerful. Therefore strong regulatory oversight will not work because the regulated entities will simply use their political power to undermine the oversight.  Critics of solution 2 will point to the relative weakness of antitrust law at this point in our history, worrying that “break them up” in practice is a lot harder than the theory would suggest.

But set those criticisms aside for the moment.  The more interesting question may be: is this a trend?  The antitrust laws that came out of the trust-busting era have gotten us a long way and continue to do good work.  However, we are now seeing an increasing concentration of power in a number of areas of our economy and society even with those laws in place.  These concentrations have real negative effects on everyday people.  The solutions to these concentrations can work (regulate them like a monopoly, break them up), but are imperfect and probably not ideal at scale: regulating an industry like a monopoly should be something of a last resort, and if current antitrust law made it easy to break these concentrations up we probably wouldn’t have these problems.  (As an aside, this article by Tim Wu describes some of the challenges that antitrust law is currently facing in the context of innovating sectors of the economy).

Salam ends his piece with the observation that “curbing the power of big hospitals isn’t a left-wing or a right-wing issue. Getting this right will make solving all of our health care woes much easier, regardless of where you fall on the wisdom of Obamacare. Let’s get to it.”  The same could be (and has been) said for net neutrality.  

How many more of these issues are there?  And will their existence force us to develop a bipartisan framework for addressing them?  I suspect there are more, and I hope that it does.  For now the best thing may be to just keep our eyes open for them.

Clearing Rights for a 'Non-Infringing' Collection of AI Training Media is Hard

In response to [a number of copyright lawsuits about AI training datasets](… Continue reading