In the early 1900s, the biggest monopolists of the day had virtually complete control of their markets. Standard Oil. US Steel. The American Sugar Refining Company.

Today we don’t so much have single companies dominating an entire industry as much as a handful of extremely powerful ones. Over the past few decades, the number of markets consolidated by a few mega-companies has skyrocketed, according to Columbia law professor Tim Wu.

“It’s almost like global warming: You can just look out and say, ‘The economy is way more concentrated,’ for almost any given thing,” says Wu, a former senior adviser to the Federal Trade Commission, on the latest interview of The Ezra Klein Show. Wu has written widely on the problem of America’s burgeoning oligopoly — or the control of major industries by a handful of companies. “You go industry by industry, count the numbers of players there are — and it’s just much more concentrated.”

Wu points to the beer industry as a perfect example. “People may not realize this, but domestically, there are two companies that sell 75 percent of the beer in the United States — Molson Coors and Anheuser Busch, both owned by foreign companies,” he says. “That is an industry that used to have five or six actors and now has two.”

On the one hand, it’s better that there’s at least some competition in these areas than none at all. But because antitrust laws in the middle of the 20th century were written to deal with solitary monopolies, our government is also less equipped to respond to the current threat.

“One hundred years ago you tended to have one big fat trust ... so we wrote the antitrust law to deal with that problem,” Wu says. “Today we usually have something more like the big two, the big three, or the big four. Antitrust is less good at dealing with that kind of situation.”

On the latest episode of The Ezra Klein Show, Wu and Klein also discuss how Wu came to coin the term “net neutrality,” Wu’s time clerking for the Supreme Court, and his newest book, The Attention Merchants, which is about how new technologies were designed to zap our concentration.

A lightly edited transcript of the portion of their conversation about rising oligopoly and antitrust legislation follows. (You can listen to the episode above, or subscribe to the show on iTunes.)

America’s markets are more consolidated than any point since the early 1900s

Ezra Klein

I want to talk about how monopolists can and do interact with new technologies, particularly technologies where the boundaries of it are confusing and uncertain for some time — so it’s not clear if they’re a monopolist.

There’s always this argument that Google has a monopoly over the search market — but is Google in the search market? Or is Google in competition with Facebook, in which case they’re not a monopolist?

These questions of monopolies are becoming pretty central to a segment of the left — you see it with Sen. Elizabeth Warren, [former Labor Secretary] Robert Reich, Matt Stoller in the Atlantic. How would you urge people to think of the question of monopolies right now?

Tim Wu

I would urge them to go back to the Progressive Era, the 1910s, and realize we’re in a very similar state of affairs, where the levels of concentration are at historically high levels. And that’s married with historically high profits.

The right way to think about this is to understand that we have allowed the economy to become concentrated to a degree we haven’t seen since the early 20th century. And to understand the interest in doing something about it is a very natural reaction to economic power.

People wonder why there hasn’t been wage growth. Maybe it’s because the markets are so consolidated that they don’t feel the need to pay anybody because employers aren’t competing enough. It’s the time to be concerned about this issue.

Ezra Klein

When you say the economy hasn’t been this concentrated since 1910, what’s the measurement you’re using?

Tim Wu

Well, you would use the HHI measurement — the Herfindahl-Hirschman Index. You draw a line and say, “These are all the industries that compete in this market,” and you figure out how large they are. And then you sum the squares of their market share and compare it to this index. So we have ideas of what counts as highly concentrated and what’s medium concentrated.

A lot of industries’ HHI indexes have gotten higher and higher and higher. It’s almost like global warming; you can just look out and say, “The economy is way more concentrated,” for almost any given thing.

Let’s look at beer. People may not realize this, but domestically, there are two companies that sell 75 percent of the beer in the United States — Molson Coors and Anheuser Busch, both owned by foreign companies. That is an industry that used to have five or six actors and now has two. If you look at airlines, it’s the same story. You go industry by industry, count the numbers of players there are, and it’s just much more concentrated.

One difference between now and 100 years ago is that 100 years ago you tended to have one big fat trust. Like one steel trust, one sugar trust. One company controlling everything. So we wrote the antitrust law to deal with that problem.

Today we usually have something more like the big two, the big three, or the big four. Antitrust is less good at dealing with that kind of situation.

How should the government break up monopolies?

Ezra Klein

I think people’s intuitions about whether an anti-merger lawsuit should go forward are typically connected to their sentiments of the companies being discussed.

Comcast is pretty unpopular with the public. So when it comes up that they want do a major merger, people think, “Fuck that, no merger.” But you do have a company like Google, which people do like, which in its market is probably more powerful.

But people’s intuition is that Google is “a good company,” that they’re trying to invent cool stuff. So that’s a question for you: How much are arguments about antitrust about companies versus how much are they about ideal functionings of markets applied irrespective of how we feel about them?

Tim Wu

You have put your finger on the central question that has obsessed antitrust for the last 100 years.

It is essentially a battle between the economists and the lawyers. The economists do believe we should have no sense of right and wrong, but that it’s about economic performance. The champion of this view was [conservative legal scholar] Robert Bork, and his basic argument was that a lot of what looks like evil or malicious conduct — the so-called “bad guys” — may be very economically efficient and therefore good for the economy. So [to Bork] antitrust lawyers should get out of the business of calling good or evil.

The opposite tradition I’d associate with [Supreme Court Justice] Louis Brandeis, who took the antitrust law not as merely an economic tool — though it was that — but a promotion of certain values he thought were central to the American public, like decentralization and a certain kind of virtue in business. Brandeis believed business could be a profession and pursued in a virtuous way. He also thought that the whole goal of the American Republic was to inculcate virtue and good character in people.

So that is the question. And it manifests itself in a merger like AT&T with Time Warner — how do you decide that? Is it just about the numbers and what happens to customers, or is there a deeper concern about whether this company is predatory, a Standard Oil of its time, run by a ruthless monopolist?

In the law — in the doctrine — Bork has won. If you hung out at an FTC meeting or a merger review meeting, you wouldn’t have people saying, “This is an evil company that needs to be stopped.” You’d have arguments about the numbers.

In the end, it’s the lawyers that make the final call. And I think they have intuitions that shade their views. Maybe that’s why Google has gotten a pass and AT&T and Comcast have the egg thrown in their face.

Is there a Trumpian danger in giving the government discretion to punish unpopular companies?

Ezra Klein

But what do you think? I try to track emergent arguments in politics, and this feels like a big one. Are you saying that the central demand of this movement should be — in a completely rules-based way, that no market should have more than three players with more than X share of the market? Which one of those theories do you think is right?

Tim Wu

I’m on the side of Brandeis, and I don’t agree with Robert Bork.

My views are nuanced here. I don’t believe in a flat rule — that an industry reaches 65 percent concentration and is automatically broken up. There was a bill in Congress and a series of 1950s economists who believed in a series of automatic trip wires to break them up. It was called “no-fault” deconcentration.

I think that’s a fairly crude device. Antitrust and private power have such a big effect on our daily lives that it’s too important to be left to the economist and the raw numbers. The influence of how we are as a people and what we are as a country — particularly in sensitive sectors like the media — it’s wrong to think we can run the math and get the right answers.

The founders were concerned about concentrated power in all aspects; they didn’t have concentrated private power. You need an eye on this question, and the character of the firm should matter.

We should do more breakups. Sometimes they have incredibly salutary effects. The company doesn’t like it, but we should never forget that we’re not talking about a person here. We’re not dismembering an individual — that would be immoral!

Some of these dismemberments led to some of the most incredible economic growths and innovations int he history of the United Staes — whether AT&T, Standard Oil — there are moments where big breakups had important consequences for this country. We shouldn’t be afraid to pull the trigger. And you need a mix of economic and moral-driven, maybe political, sense of what this company is doing to us as a country.

Ezra Klein

What are some companies that if broke them up we’d have more innovation and more growth?

Tim Wu

I’ll give you my criteria. You need to look for a monopolist who has been in charge of an industry for a very long time with no signs of competition. We’re talking about stagnant industries.

I’m less excited about breaking up companies under growth that just got there and are doing things. Google in 2010, 2011, was still on the make and innovating wildly. Think of someone who has been there for a very long time — someone like Microsoft and the monopolies it’s had for some time over [Microsoft] Office. It would have been better for the company at the time. It’s a little late now to come back and break them up.

The airline industry — we might consider retroactively breaking up parts of it. We allowed American Airlines and US Airways (to merge) — the effects have been so pernicious for customers, the profits are through the roof, that it’s clearly an error. We need to say, “We blew that.”

There’s been a long story of hospital mergers. They’re not famous, but the price of care after the merger goes up, and the mortality rates also go up. More people die, and they cost more. Those mergers were a mistake.

We should not be afraid to use that power when it’s called for.

Ezra Klein

Let me ask a question about the trip wire approach versus the impressionistic/moralistic approach to company breakups.

The moralistic approach feels like an invitation to crony capitalism. If the decision is made based on the sentiments of the political class toward these companies, that’s an incentive to invest dramatically in lobbying.

Look at Trump. He wants to use anti-trust — not because he is concerned about consolidation in industry, but as a method of punishment and hurting your industries. If companies have this much to fear from the government not liking them, I could really imagine taking us further down that dangerous path.

Tim Wu

Those are arguments Bork made. But Justice (John Paul) Stevens made it a different way. He had this phrase, “Anti-trust is like the law of the Wild West. Sometimes the sheriff feels like you should go pistol-whip a few bad guys.”

I share with you a belief in the rule of law as opposed to political whims and enemies lists. The question is how far you’re erring. I’m not saying politicians should sit around and say, “My phone bill is outrageous let’s break up AT&T.”

The balance has gone too far into a purely economic driven, “what are the numbers,” kind of story. The trip-wire approach is completely insensitive to whether that would be good. It requires judgment calls and we shouldn’t be pretending that we don’t have judgements.

People look at Amazon and the anti-trust people look at it and say, “They have lowered prices.” How can we break them up if they’ve accomplished one of the main goals of this law, which is to keep prices down for customers?