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The Great Reversal: How America Gave Up on Free Markets

4.26  ·  Rating details ·  394 ratings  ·  64 reviews
In this much-anticipated book, a leading economist argues that many key problems of the American economy are due not to the flaws of capitalism or the inevitabilities of globalization but to the concentration of corporate power. By lobbying against competition, the biggest firms drive profits higher while depressing wages and limiting opportunities for investment, innovati ...more
Hardcover, 368 pages
Published October 29th 2019 by Belknap Press
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Apr 28, 2020 rated it it was amazing
This is a must-read for all Americans who believe or reject "free markets." The truth is that we do not have one. Our economy is controlled by rent-seeking monopolies and the legislatures and regulators who love them. Our healthcare system is a private cabal that suffers 0 competition. Our cell phone companies, airlines, and other large industries have enough market share that they've stopped trying to compete on price. Philippon is not ideological and he's not here to sell you a theory of or ag ...more
Jason Furman
Nov 23, 2019 rated it it was amazing
A great read on an important topic that advances a bold thesis about the United States economy, a counterintuitive re-thinking of the economic institutions of the European Union, and a synthesis of a lot of Thomas Philippon's research.

The bold thesis about the U.S. economy is that that concentration has risen across the economy with a smaller number of businesses dominating in each industry, an idea that a number of economists have advanced in recent years with Thomas Philippon among the leading
Peter Tillman
WSJ review: (Paywalled. As always, I'm happy to email a copy to non-subscribers)
Excerpt: ‘The idea that US markets are the most competitive in the world has been widely accepted in economics for several decades,” economist Thomas Philippon writes in “The Great Reversal.” The thrust of his argument is that this idea is largely a myth. Even before the financial crash of 2007-08, he says, many Americans felt that there was something not right about the econ
Jan 09, 2020 rated it it was amazing
Philippon is an academic financial economist who actually looked at empirical data and spent about 300 hours researching and writing this book. It is not a book written based on ideology. He had spent equal amounts of time in his native France and America and was surprised when he looked at competition between the 2 regions. Europe used to have less competition, higher prices and lower growth. Those have been reversed since the 21st century.

1. There is more market concentration in America than
Nov 19, 2019 rated it liked it
Shelves: monetary
I agreed with the thesis of this book before I read it, so I am clearly biased. The thesis is that competition in the USA has been declining in the USA since the late 1990s. There are too many mergers that increase pricing power and too many barriers to entry. As the author puts it, there is a measured increase in market concentration in many industries. This means that payouts to shareholders and managers is increasing while the consumer is not seeing the benefit through lower relative prices.

Jan 14, 2020 rated it really liked it
Shelves: politics, economics
It turns out it takes a lot of work to keep markets free and competitive, and over the last twenty years Europe has been doing a better job in this regard than the US, as evidenced by lower prices on air travel and cellular service. Economist Philippon gets a little deep in the wonky weeds, but he shows why the US should be more aggressive on antitrust, reduce the power of lobbyists, remove barriers to market entry, and not be afraid to regulate the big internet companies.
Athan Tolis
Dec 15, 2019 rated it it was amazing
This has been the year when the reading public was deemed ready to deal with the topic of market power. A wide variety of great books have come out, like Tim Wu’s treatise on Bigness, Uwe Reinhardt’s posthumous book on American health care, a full legal manual on antitrust by Jonathan Baker and of course the two books that hatched from Barry Lynn’s Open Market Institute: Rana Faroohar’s polemic against the FANGs, “Don’t be Evil” and Matt Stoller’s very readable and comprehensive history of 20th ...more
Dec 10, 2019 rated it really liked it
Shelves: economics, politics
The thesis is interesting--the US has become less competitive over the past 20 or so years while the EU has become more competitive. My anecdata suggests this is true.

The majority of the book is a theoretical analysis, with a lot of data. Philippon does as good a job as you can do with this; he explains economics clearly for the layperson. It makes a lot of the book a little dry, though; the more narrative sections, such as the discussion of EU politics and how the EU has developed a more indep
Jan 01, 2020 rated it it was amazing
Shelves: favorites
If you read a single book in 2020, it should be this one.
Soumaya Keynes
Dec 22, 2019 rated it it was amazing
When Thomas Philippon first arrived in America, he noted how much cheaper things like flights and phone connections were than in Europe. But now, he says, the situation is reversed. The Great Reversal is about how competition in America has declined, or at least is not as stiff as it should be. He explores the various causes of this phenomenon, including swampish lobbying, lacklustre enforcement of antitrust rules, and uncompetitive practices from big incumbents. As a Brit arriving in America it ...more
Sep 26, 2020 rated it it was amazing
Shelves: antitrust
A thorough analysis of the US and EU economies over the last 2 decades. He presents LOTS of compelling data to show how many US markets have concentrated in the absence of antitrust enforcement, to the detriment of consumers compared to the EU. He covers a lot of angles, including concentration, profit, productivity, entry of new firms, M&A, and corporate lobbying & campaign financing. The first 3 sections of the book are very high level analyses of the different economic factors, and the last s ...more
Jul 17, 2020 rated it really liked it
Not exactly pleasure reading, but just the same this macroeconomic argues that the US has become laggard to the European model. In the last twenty years US has become less competitive resulting in higher costs to its people. Example-Average monthly cell service is $65 in US. The same service in Germany/ France is $35....
US medical services are very expensive, and the quality compares unfavorably to most of Europe/ Japan / New Zealand / Australia. US life expectancy is among the lowest in the adv
Jan 28, 2020 rated it really liked it
Shelves: economics-etc
The approach Philippon uses in this book is really to be commended: he sets out clearly that he doesn't have all the answers and states his priors (he is an economist who believes markets are usually good solutions to provide welfare, albeit with a strong government as regulator), and takes you on his quest for answers to a couple of straightforward questions: how come phone and internet subscriptions are so expensive in the US? What could be the reason for market concentration in the US? How co ...more
Yannick M
Jun 25, 2020 rated it really liked it
I would give this 5 stars as it is very well written and incredibly insightful, but I'm not familiar enough with the literature to check most of his claims. ...more
John Calhoun
Jul 12, 2020 rated it really liked it
This book argues that American markets have become increasingly concentrated over the last 20 years due chiefly to the rise in lobbying and the resulting skewing of the playing field in terms of lax M&A enforcement and increases in costly market entry-related regulations.

The book begins by pointing out how many of our daily tasks are done via services/products from dominant companies. It also points out some well-known stats about profits in key industries in the US vs. abroad (e.g., airlines i
Feb 09, 2020 rated it really liked it
Shelves: economics, nonfiction
This book started with a question - why are cell phone plans in the United States so expensive? - and the result was a broad study of the United States economy, what's causing so many problems and proposes some solutions about how it can be resolved.

While it is easy to point out that the United States has been in a period of economic expansion since June 2009, systemic issues remain - rising income and asset inequality, the high market share of a small number of companies, weak levels of invest
Marcus Cervantes
Apr 27, 2020 rated it really liked it
I thoroughly enjoyed The Great Reversal by Thomas Philippon. This book is a must read for everyone wondering why their wages are stagnant, why the cost of living is astronomical, why healthcare is such a mess and so forth. The book offers great data and deep economic theories for those that love data. However, if you're not a fan of reading data (or like me, can't really make sense of it) then don't worry. Thomas leaves a ton of meat to let your mind chew on while you read the book.

I thought my
Jan 10, 2020 rated it it was amazing  ·  review of another edition
Shelves: finance
This is a thought provoking book on the state of market competition in USA and Europe. Contrary to conventional wisdom, Europe has now more competitive markets than U.S. as a result, European consumers enjoy lower internet prices and air fare and better heath services, among other things. Thomas Philippon traces the roots of this surprising development. The main culprits are lax anti trust policies and lobbying. The book is written in a relaxed fashion, providing facts without being preachy. I r ...more
Wick Welker
Mar 09, 2021 rated it it was amazing
Free markets are the exception, not the rule.

With incredible expertise and data, Philippon makes a compelling argument that US market has become not only incredibly concentrated over at least the last 20 years but that they are historically anti-competitive. Philippon goes on to argue that the EU now outpaces the U.S. in terms of competitive markets. Traditional metrics used to show how the economy are doing don't show the full picture. People talk about GDP and not GDP-per capita. They talk abo
Peter Allum
Jul 08, 2020 rated it really liked it
Shelves: nonfiction, 2010s
A hugely important book. Philippon is a leading academic studying industrial structures and their economic implications. His findings for the US are sobering. Whereas the US was formerly a global leader in promoting free markets, there has been a sea change since around 1995.

—Industries now have fewer companies, leading to monopoly power for those that remain;
—Monopoly power results in higher prices (costly medical bills, higher cable fees, steep mobile phone plan costs);
—Higher prices boost co
Raymond Xu
May 16, 2020 rated it really liked it
Shelves: reviewed

I love this book's topic and how it was approached. The best topics to talk about for the source of American corporate concentration are antitrust legislation, political lobbying, and the recent rise of technology companies and barriers for entry of various fields.

The effects of corporate concentration and defining the problem was done by doing macroeconomic comparisons of the US over the past 4 decades, with a lot of the main reasoning coming from comparisons to Europe. Philippon goes through
TJ Hedin
Jan 20, 2020 rated it it was amazing
Shelves: econ
I learned a *lot* from this book.

You may have seen a graph about how productivity has been increasing over time, but wages have not, leading to a divergence between the two. This graph may have (rightfully) made you mad. This book will help explain trends in the US economy which lead to some groups doing exceptionally well, while others are no better off than they were a decade ago.

Phillippon's thesis is as follows:
"US markets have become less competitive,
Richard Marney
Dec 23, 2019 rated it it was amazing
Shelves: economics
A must read.

The author presents the material in a manner that permits the non-economist to follow the discussion with ease.

Why are prices higher in the US for internet and prescription drugs than in Europe? The author addresses this and other related questions by moving from “impressions and anecdotes” to rigorous data-supported proofs of hypotheses of what is happening and why.

The book provides compelling support to the argument that political polarization, lobbying, bought elections, and exc
Feb 28, 2020 rated it it was amazing  ·  review of another edition
If you watch US business shows a common trope is to tout the dominance of US businesses over their other global competitors. However, as The Great Reversal shows conditions in the US from a competitive standpoint have actually gotten much worse and now lag behind their peers in spite of the dominance of highly touted behemoths that are part of the FAANGs. This doesn’t seem to be all that bad from the standpoint of Joe Sixpack, but the reality is that it has actually impacted prices and costs for ...more
Larkin H
May 06, 2021 rated it it was amazing
Philippon works through his examples with a brilliant simplicity so this book should be accessible to readers without any prior economics knowledge. Some basic level of understanding helps but shouldn’t be necessary to grasp the argument, which is clear and honest.

He openly discusses the issues with certain measurements or the objections to specific assumptions. As he says at the beginning of the book, he is not attempting to give the reader answers, rather give the reader the needed data and d
Holly Dolezalek
Mar 13, 2020 rated it really liked it
This is a pretty decent book. "Popular" economics is a tough genre, and the author does a good job of explaining the economic concepts that undergird his assessment that America has given up on free markets (without necessarily knowing it has).

I probably genuinely understood more than half of it, but followed along and kept up with his reasoning. I don't have any expertise, let alone enough to evaluate his reasoning and know whether it's sound. But because he shows his work and uses a lot of gra
El C
Jan 26, 2020 rated it really liked it
A five star book, that I still recommend, a generational book if only this book had not had given me an enormous research hangover:

Is technological progress the most important factor in long-term growth?

Ironically Dr.Philippon appears to contradict this, his own claim that tech is the most important, at the beginning of his chapter on health care! He claims that technological progress is lost to bad public policy. Therefore we might syllogistically infer public policy is ultimately in control o
Mark Kelley
Aug 09, 2020 rated it really liked it  ·  review of another edition
Clear analysis of the mutliple-decade transformation of Europe vs. the U.S. in commercial competitiveness. My interest was in the huge change in telecom services - why broadband is cheaper in Europe - even accounting for differences in population density - than in the U.S. This lived up to the billing and illustrated the reasoning behind this shift.

I listened to this on audible and the endless attributions to every single author (even when there were >5) who contributed to every single paper re
Oct 01, 2020 rated it really liked it
This is an important and interesting book, but I somehow couldn't get into it. I kept thinking, "I should read this, I should know this," but for whatever reason I couldn't get a reading rhythm. I will give the author the benefit of the doubt and place that on me.

As for the content, it's a pretty compelling case that US markets are becoming less competitive for whatever reasons. Some of those whatever reasons are political, though the world is becoming a lot more complex, so I don't know. Profes
Keith Wheeles
Refreshing critical look at the state of the American 'free market' in the age of concentration. Contrasts Europe (which has progressed from a schlerotic state to an improved functioning social democracy) with the US (which has regressed from trust-busted dynamic markets to a point of state capture by the titans of industry). The arguments are supported by interesting regressions to tease out difficult economic relationships. This gives them a more rigorous basis than anecdotal musings, but does ...more
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Thomas Philippon is the Max L. Heine Professor of Finance at the Stern School of Business, New York University. He was named one of the top 25 economists under 45 by the IMF and won the Bernácer Prize for Best European Economist. He currently serves as an academic advisor to the Financial Stability Board and to the Hong Kong Institute for Monetary Research. He was previously an advisor to the New ...more

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