Monopoly II: The Doer-Describer Problem — Muckrakers, The Standard View & Buffett (the Opioid Profiteer?)

The following is an excerpt from a larger work in progress, tentatively titled Intelligence Hath No Party. I plan to post a working draft at in the near future.

“the basis of popular government during a revolution is both virtue and terror; virtue, without which terror is baneful; terror, without which virtue is powerless. Terror is nothing more than speedy, severe and inflexible justice; it is thus an emanation of virtue… applied to the most pressing needs of the patrie [nation].”

— Maximilien Robespierre [1a]

Image for post
Image for post
Image for post
Image for post

The ever-present (and presently escalating temptation) to vilify the most prosperous among us, primarily because they are prosperous, carries with it myriad of unintended and, for the perpetrators, unforeseeable consequences. Exceedingly poor arguments deployed past and present display ignorance on a grand scale. I presume naïveté because experience tells me the lot of working folks are good and decent people, and not so insincere. Such devious arguments are nonetheless thrust upon them in compelling and innovative ways. Before the wreck is laid bare, the promoting schemers — having had their fill, having received their kickbacks, and having learned Maximilien’s lesson (do not linger) — will be long gone. The same bad arguments used by one party today will be adopted by their foes tomorrow. The consequences will be for the populous to deal with.

From Rockefeller to Bezos, U.S. Steel to Google — what is the reason they are so evil? I do not deny there are reasons, but what are they? Shall we go on charging private firms and citizens with oppressive, totalitarian, and greedy motives? This is hollow and meaningless babble. Surely people can move beyond the inclination to blindly defile a character they cannot possibly know. The answer is sticking to what can be known. Be not taken by envy. Rather, impugn those parties who presently or potentially harm others, particularly if knowingly or intentionally. Even if they are unaware, the result is the same and should be directly addressed. That is, the material actions. Not speculative fervor rooted in resentment.

To be sure, there are historical justifications for why people look upon the uber-wealthy with suspicion and envy.[a] For most of history they were often dubious characters, acquiring great wealth not by adding societal value but by pillaging, deceiving, and intimidating. In this statement, I am not referring to well-known rulers but to more subtle, deceptive bad actors. It is not the enemy you know that poses the greatest threat. These clever looters were more shrewd, more secretive. As time went on, they learned to disguise themselves in various cloqué. Their costumes ranged from clergy even as far back as the Egyptian empire to soothsayers in the time of Christ to alchemists in Medieval Europe.[1b]

The question today is how to distinguish real from faux problems—the latter promoted by masters of the concealed arts. Current rhetoric does little to clarify reasonable methods for assessing such situations, conveniently diverting public attention away from rent-seeking bureaucrats and corporate socialists. Or precisely those who in modern times subtly pillage, deceive, and intimidate. Because some party is wealthy, and that wealth is visible to all, is a juvenile and mischievously convenient reason to attack. Meanwhile the real wolves, with their wealth concealed from public view, meander in the background.

[a] Though, as Munger stated, envy is most idiotic of the deadly sins as it is the only one where the sinner gets not even momentary enjoyment. They are first upset by and fixated upon their chosen object of scorn. And after the guillotine, themselves.

The Standard (Oil) View

Image for post
Image for post
Image for post
Image for post
Image for post
Image for post

Frequently used as a point against monopoly is the precedent-setting case of Standard Oil. Nearly a century after Rockefeller’s death, legal authorities and commentators still presume the original antitrust case’s talking points were pure in motive and accurate in substance. Quoting United States Assistant Attorney General Makan Delrahim from July 2019 (by way of Ben Thompson of Stratechery[1c]):

“Refiners that would not sell [to Standard Oil] were underpriced and driven out of the market. Price-cutting is the essence of competition, of course, but the Standard Oil case and later Supreme Court cases helped establish what would become settled law: there are some things that a monopolist cannot do. A company does not ordinarily violate the antitrust laws for merely exercising legitimately gained market power. But even if a company achieves monopoly position through legitimate means, it cannot take actions that do not advance plausible business goals but rather are designed to make it harder for competitors to catch up.”

Assistant AG Delrahim’s statement is made as if there is no question as to the validity of Standard Oil’s forcing competitors to sell. That was the accepted view early in the 20th century, yet most available accounts of the time lead to a vastly different picture. The prevailing view of Rockefeller as an autocratic bully was driven almost exclusively by two narratives which later proved tenuous — Henry Demarest Lloyd’s Wealth Against Commonwealth and Ida Tarbell’s series for McClure’s Magazine.[b] Each had family members (Lloyd’s cousin and Tarbell’s father) who had failed in the oil business and blamed Rockefeller. Troublesome realities in these prevailing narratives are conveniently skipped over. Foremost that most of the oilmen were bankrupt, or headed there, well before Rockefeller came on the scene. A devout Baptist, overly forgiving of slights, and prone to anonymous charity, it is difficult to imagine a young John D. Rockefeller — who would later fund Hellen Keller’s education without her knowledge[c] and decline to pursue legal action, counter to the wishes of his business associates, against people who stole from him — steamrolling competitors mafia-style.

Image for post
Image for post

Oil markets were new and volatile. Burton Folsom wrote three decades ago,[d] “In 1862, a barrel (42 gallons) of oil dropped in value from $4.00 to 35 cents… Those few who struck oil often wasted more than they sold. Thousands of barrels of oil poured into Oil Creek, not into tanks…the Allegheny River smelled of oil and glistened with it for many miles toward Pittsburgh. Gushers of wasted oil were bad enough; sometimes a careless smoker would turn a spouting well into a killing inferno. Other wasters would torpedo holes with nitroglycerine, sometimes losing the oil and their lives.” Folsom also noted what Rockefeller wrote in his private letters: “We must ever remember we are refining oil for the poor man and he must have it cheap and good.” He wanted to produce “the best illuminator in the world at the lowest price.” An early partner said Rockefeller “was methodical to an extreme, careful as to details and exacting to a fraction.”[2] Those with experience in entrepreneurial endeavors will recognize these are vital traits rarely found in managers, but without which a business cannot thrive.

Rockefeller intuited before his competitors that the burgeoning oil industry could not support unlimited small players. Directly in opposition to the belief it would benefit customers, this dynamic created a never-ending glut of poorly run, money-losing concerns who were destined to fail. And they were failing when Rockefeller stepped in. His message: “We will take your burden…utilize your ability…give you representation…unite together and build a substantial structure on the basis of cooperation.” According to one of those oilmen, Rockefeller “treated everybody fairly…he gave us a fair price. Some refiners tried to impose on him and when they found they could not do it, they abused him. I remember one man whose refinery was worth $6,000, or at most $8,000. His friends told him, ‘Mr. Rockefeller ought to give you $100,000 for that.’ Of course Mr. Rockefeller refused to pay more than the refinery was worth, and the man…abused Mr. Rockefeller.”[3] He realized, according to a Standard Oil successor, “aggregations of plant and capital, with the one aim of an orderly flow of products from the producer to the consumer. That orderly, economic, efficient flow is what we now, many years later, call ‘vertical integration’ I do not know whether Mr. Rockefeller ever used the word ‘integration’. I only know he conceived the idea.”[4] As he noted in his autobiography, inadequate business skills led to the oil operators’ problems in the 1870s. There wounds were at least partly self-inflicted due to excessive waste of oil and capital. Adequate records were sparse. Few could determine their cost of production. Those with good bookkeeping understood the situation well and many were impressed by Rockefeller’s well-run operation, which he displayed for them in the firm’s accounting ledgers.[5]

The issue was not, as Assistant Attorney General Delrahim stated, about supposed forced mergers. Though that was what Tarbell wrote about, it was hearsay with no legal ground. The government’s case was about rebates. Even academia has acknowledged Standard Oil’s evils were not quite what they were purported to be. Law Professor Daniel Crane of the University of Michigan has stated rebates were at the core of the antitrust case against Rockefeller’s Standard Oil. He also noted in 2012 that pro-Standard Oil voices (sic) have long observed that “far from exhibiting a rapacious strategy to destroy rivals, the rebates and drawbacks were simply a reflection of Standard Oil’s superior efficiency.” He then makes two conclusions. First:

“The cost-justification question is central to the entire case and its acquired and evolving historical meaning… I conclude that there is evidence that Standard Oil passed along significant cost savings to the railroads and that these savings could have justified a portion of the rebates and drawbacks.”[6]

In other words, the government’s foundational argument — and the far-reaching consequences of a rash, politically driven decision — largely or completely ignored the legitimate, value-added characteristics of rebates within Standard Oil’s structure.

Crane’s second conclusion: there was “little or no evidence that the rebates were proportional to the magnitude of savings” passed through to customers — to which I ask, would not passing along proportional (all) savings eliminate the incentive to acquire them in the first place? As their largest customer, railroad executives were more than willing to give Standard Oil rebates. Vanderbilt’s people “gladly promised the same rebate to anyone else who would give him the same volume of business.”[7] Today we would call this practice “volume discounting.” In the 19th century that term, and its acceptance as common practice, was non-existent. Hence in his effort to use good sense, Rockefeller came up with it on his own when he argued larger customers added more to the railroad’s incremental margins.

Professor Crane in no way attempts to absolve Standard Oil of all transgression. Standard Oil’s sins were more likely those of concealment — secret deals with the railroads and getting in the pockets of politicians. In our day, these actions call into question integrity if it is not noted that what is now called “lobbying” or “fundraising” was once called “bribing.”

[b] Aside from Rockefeller’s brief autobiography “Random Reminiscences of Men and Events” (1909), historical inquiry on this subject has been mostly performed in the past few decades, well after the Supreme Court’s ruling in 1911.

Indecently S.S. McClure, founder of McClure’s Magazine where Tarbell’s articles were published, fell victim to what I call the “Citizen Kane Problem”, named after the film’s creator Orson Welles:

When a person publicly asserts some conclusion [1] rooted in fuzzy or distorted thinking (often due to inexperience, lack of context, perverted intentions, or partisanship), then [2] fails to adjust the view to new info over time; hence [3] they box themselves into an inauspicious corner only to later face the repercussions.

Most often shorter-range consequences, even when intense, are too faint to overtake what holds the view in place. In the case of both Welles and McClure, disparaging decent financial management and capital allocation (i.e. what most people call investing and Welles called “the acquisitive culture”).

[c] Only Keller’s teacher was privy to this information. She broke her vow of silence later in life to counter commonly misinformed claims against Rockefeller.

[d] 1988

A Magnificent Counter-Role Model

It may be more important to have counter-role models than role models. These are people who show you the inverse, what not to do. Not long ago, a friend forwarded me a transcript of an interview between two fellows who served as exemplary counter-models: Matt Stoller and David Dayen, author of a recent book titled Monopolized: Life in the Age of Corporate Power.[8] The interview and Dayen’s book turned out to be a great blessing in disguise as it provided so many examples of that which is the precursor to numerous problems — foundationally poor arguments. Chief among them, the imbecilic presumption that complex issues can be laid at the doorstep of a single cause. They seem to be writing in the style of Tarbell, but without her gusto and integrity. She leaped to some shaky conclusions, but most of the underlying information was accurate or, at minimum, well researched. On this point Dayen and Stoller fall flat.

The interview begins with Dayen’s stating that people inherently know “something is terribly wrong.” Though they cannot describe it, he says, “they understand the system is rigged.” In Monopolized, he laments how “we toil in this age of monopoly…of plutocrats…of soaring inequality and broken democracy…of middle-class despair and sawed-off ladders to prosperity” before proclaiming that a minority of firms controlling “most economic sectors today helps explain virtually all the challenges America faces.”[9] All the challenges, every single one? He does not seek to avoid sensationalism, nor is he hesitant to overstate his case.

He goes on in the interview to describe a woman in Tennessee who needs access to internet for her husband’s health, “Turns out there was a gap in her wifi conductivity, because she lives out in this rural area and they are literally forbidden from getting broadband by a law that the telecom industry got passed.” This appeal to heartstrings is said without reference to where or what law. There is no discussion of why telecom firms would want to ban broadband. There are many cases where local authorities and incumbents make it overly difficult for new internet service providers to enter a market, but the presumption that rural areas want to ban broadband or that adequate connections would otherwise be inevitable would be difficult to support.

Dayen wholly undermines his argument by pointing to Berkshire’s holding of Teva Pharmaceuticals as proof of monopolistic evils. He alleges “Buffett has had a huge investment [in Teva]… one of the manufacturers of generic opioid based products. Buffett knows well that there’s no better way to put a moat around your business than to sell an addictive product.” Aside from the repulsively disingenuous assertion about why Berkshire purchased Teva shares, the author fundamentally misunderstands how Berkshire works and impressively misattributes both the purchaser and timing of the Teva investment.

What people say tells us more about them than what they’re trying to get across.† In this case it tells us the author shouldn’t be trusted as far as he can be thrown.

Wittgenstein’s Ruler as defined by Taleb and championed by Paul Portesi.

First, Teva was purchased by Buffett’s portfolio managers, to whom he gives free reign because of his investment philosophy — the investment manager should be given a ‘free hand.’ Which is to say, the lack of a ‘free hand’ is a detrimental to the manager’s ability to deploy his/her competence. Second, the size of the investment was miniscule relative to Berkshire’s portfolio, never amounting to more than roughly half a percent of assets. Third, and most egregious, the opioid crisis came to the forefront in 2016–17, when in mid-2017 President Trump declared it a national emergency.[x] Berkshire started buying in the fourth quarter of 2017, after Teva’s stock price had already lost eighty percent of its value, declining from ~$69 in July 2015 to ~$14 in October 2017.

Compounding the error, Dayen refers to Buffett as a “large investor in Amazon” because “he understood the monopoly that Amazon was putting together, so he purchased a large share of their stock.” Again, a non-ambiguous detail (made clear by Buffett himself) is that Amazon shares were purchased made by one of the two associates.[xi]

Dayen’s arguments have no identifiable basis in reality. To say Berkshire’s Teva and Amazon investments were “large” would generously be called a stretch. More accurately, utterly false. At the time of purchase, each made up less than half of one percent of Berkshire’s total portfolio. This fellow wrote a book and never bothered to question the premises and assumptions that held up his view. He either (a) gained surface level knowledge and understanding, which was taken out of context without pause, or (b) writes without regard to sincerity.

The common theme it seems is a lack of respect for entrepreneurs and good operators, a trait that can only be found in those who have done neither. At least not well. This is the “Doer-Describer” problem. Most doers don’t have time to describe. Most describers are describing something they’ve never done.

Everyone wants to be the next Tarbell but they don’t know how to do the work— how to get down in the mud to figure out what’s really going on. All they’re doing is shooting arrows at the backs of those ahead. They say corruption. I will not disagree. But let’s talk about who, what, when, and where. If they can’t support their allegations and if they can’t discuss them without devolving into a wholesale degradation of entrepreneurship and risk-taking, they are grasping at straws with words that will not last.

Of Systemic Importance

The legitimate question is, can a firm become too large, too ingrained in the regular goings on of the population or government, or otherwise take actions that come to pose a regional or national systemic risk? This came to me when my friend Jaffer Ali, an entrepreneur with vast retail and e-commerce experience, raised something along these lines. For instance, as Amazon’s e-commerce and web services divisions have become increasingly relied upon by civilians and governments, is there a point at which they become too important? That is, a threshold where that single point of failure engenders unacceptable system-wide fragility. Similarly, with Google, how much transparency is needed about their dealing with foreign powers? Or what about their ad practices?

This type of inquiry requires no fallacious presupposition about Jeff Bezos’s secretly oppressive intent. As the reader can see, it gets at a substantive potential problem without diluting the case with unjustifiable accusations.

[1a] Halsall, Paul (1997). “Maximilien Robespierre: On the Principles of Political Morality, February 1794”. Fordham University. Retrieved 5 March 2016.

[1b] Durant, Will. Heroes of History : A Brief History of Civilization from Ancient Times to the Dawn of the Modern Age. Simon & Schuster, 2012.


[2] Folsom, Burton W. “John D. Rockefeller and the Oil Industry.” Fee.Org, Foundation for Economic Education, Oct. 1988,‌

[3] Ibid. 2.

[4] Yergin, Daniel (1992). The Prize: The Epic Quest for Oil, Money & Power. ISBN 978–1–4391–1012–6.

[5] Nevins, Rockefeller, 1:183–85, 197–8

[6] Crane, Daniel A. “Were Standard Oil’s Railroad Rebates and Drawbacks Cost Justified?” S. Cal. L. Rev. 85, no. 3 (2012): 559–72.

[7] Ibid. 2.

[8] Warren Buffett: America’s Folksiest Predator. Dave Dayen’s new book “Monopolized” shows how Buffett has normalized monopoly power. (August 2020)

[9] Monopolized. Dayen, David. (The New Press, 2020)



Investor and entrepreneur. Founder of Canterbury Tollgate.

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store