THE GREAT REVERSAL

Why are cellphone plans so much more expensive in the United States than in Europe? It seems a simple question. But the search for an answer took Thomas Philippon on an unexpected journey through some of the most complex and hotly debated issues in modern economics. Ultimately he reached his surprising conclusion: American markets, once a model for the world, are giving up on healthy competition. Sector after economic sector is more concentrated than it was twenty years ago, dominated by fewer and bigger players
who lobby politicians aggressively to protect and expand their profit margins. Across the United States, the results are higher prices, lower wages, lower investment, lower productivity, lower growth, and more inequality. Meanwhile, Europe—long dismissed for competitive sclerosis— is beating America at its own game.

Philippon, one of the world's leading financial economists, did not expect these conclusions in the age of Silicon Valley start-ups and teenage millionaires. But the data from his cutting-edge research proved undeniable. In this compelling tale of economic detective work, we follow him as he works out the basic facts and consequences of industry concentration in the US and Europe, shows how lobbying and campaign contributions have defanged antitrust regulators, and considers what all this means for free trade, technology, and innovation. For the sake of ordinary Americans, he concludes, government needs to return to what it once did best: keeping the playing fields level for competition. It's time to make American markets great again.

THOMAS PHILIPPON is Professor of Finance at the Stern School of Business, New York University, and sits on the Monetary Policy Advisory Panel of the Federal Reserve Bank of New York. He is Scientific Committee Director and a Board Member of the French Prudential Regulator (ACPR), charged with preserving the stability of the French financial system, and previously served as Senior Economic Advisor to the French Finance Minister.