Elizabeth Warren, Countess of Sandwich, Schmears the Market

One day, according to lore, the British Labour Party leader Clement Attlee was doing his business at a urinal in a House of Commons bathroom when Winston Churchill walked in. Rather than taking a spot near Atlee, Churchill walked as far down the row of urinals as possible. Atlee said, “Feeling standoffish today, are we Winston?” 

Churchill shot back: “That’s right. Every time you see something big, you want to nationalize it.”

Now, I should say there are many, many, different versions of this story, and they’re all probably apocryphal. I kind of like the one, recounted by Dean Acheson, in which Churchill said, “Whenever you see a means of production in good working order you want to nationalize it.” But you get the point. 

But the story came to mind when I saw that Sen. Elizabeth Warren is pushing the Federal Trade Commission to go after the sinister forces of Big Sandwich. I don’t mean Dagwoods. You see, a private equity firm, Roark Capital, is trying to buy the sandwich chain Subway. Roark already owns Jimmy John’s, McAlister’s Deli, and Schlotzsky’s. Acquiring Subway, according to Warren, would create a “sandwich shop monopoly.”

Don’t worry, I learned my lesson from my “Toobin Missile Crisis” G-File, which caused some readers to cancel their own damn subscriptions. I’m not going to indulge in endless sophomoric wordplay about prurient matters—even though a tale about the most famous member in Parliament offers so many opportunities. Unlike Churchill, after his midday nap, I will not rise to the occasion. 

Now if, say, Robert Redford were directing a movie about antitrust fights in Washington, you’d need a scene in which Warren—bleary-eyed after a night pouring over spreadsheets and staring at red threads on her murder board connecting all the elements of this all-we-can-eat conspiracy for sandwich domination—looks up from the narrow roll of paper coming out of her 1930s-style tabulating machine and says, “My God. This could lead to a sandwich shop monopoly. Get me the president.”

Anyway, why did this remind me of the Churchill story? Because say what you will about the old-school socialists, when they encountered someone trying to dominate anything like a footlong, they sought to nationalize it for everyone. Now, they want to chop it up.  

From the New Deal to New Deli.

The theory behind this effort goes by several different names, “neo-Brandeisianism” (or “new Brandeis movement,” “new structuralism,” or  “hipster antitrust”). I don’t mean to be too glib given the somber and serious tone I’ve established here, but I think the best way of understanding this movement is, “If we don’t like it, it’s bad.” 

Actually, I did write some more serious stuff about monopolies and antitrust, but I worried that my eggheady tone might convey a false sense of respect for the idea of a “sandwich shop monopoly” or even neo-Brandeisianism, and that’s no fun. On the other hand, if I don’t address the “serious” stuff, some readers might think I’m trying to hide the fact I don’t understand it, just like Subway conceals the gamey tomatoes under the lettuce. So, for those of you interested in my brief take on antitrust and monopolies, I’ve brought back the old sidebar feature. Click here to read the digression that I thought distracted from the flavor of this G-File like a used Band-Aid in a Subway tuna sub. 

The problem with Monopoly is that the game, much like Swedish cinema, almost always ends with bitter adults or crying children. But when talking about monopolies in an economic sense, they have different problems. The first is that there are very few of them. In fact, true monopolies, unlike marrying your cousin, have mostly been banned for more than a century. I say “mostly” because there are a few exceptions and all of them exist because the government wants them to (often defensibly). Power and water utilities, some regional telecom providers, etc. Patents granted by the government provide a temporary monopoly, and that’s a good thing. 

This is relevant because when Warren types call something a monopoly they try to sound like they mean it literally—because people vaguely understand that monopolies are bad—but when pressed they have to concede they mean it more figuratively. So while “Mono Polly” becomes the nickname for one unfortunate girl who was always home sick in ninth grade, monopoly becomes a label for the “big thing we don’t like.” Why they don’t like something varies. The priority in the war on bigness for most of the 20th century was, ostensibly, making things either more competitive to foster innovation or to make things better for consumers by keeping prices low. More recently, people like Elizabeth Warren and FTC chair Lina Khan care more about workers (who, spoiler alert, are also consumers). But the one great constant, like that weird oily sheen on Subway’s ham, was the idea that the government was better at figuring out what was best for everyone—consumers, producers, workers, innovation, Basselopes, etc. 

But here’s The Thing: The only argument behind the idea that some private equity outfit’s purchase of Subway will create a “sandwich shop monopoly” is that it will own more sandwich shops than Warren & Co. find aesthetically pleasing. The actual availability of alternative sandwich shops will not really be impaired. Indeed, I challenge you to type into your Google Maps, or the old Speak-n-Spell in your attic, “Sandwiches near me.” Now, I should have told you that only the Google Maps thing will provide relevant results rather than auditory nostalgia, but that’s okay. I bet you’ll find a lot of places that A) sell sandwiches and B) aren’t owned by Roark Capital. 

But here’s another Thing: If I come up with a cold fusion reactor or, an even bigger boon to humanity—at least for people who record podcasts at home—a silent leaf blower, the government will give me a patent which, again, is a good form of monopoly because it encourages innovation. But you know who doesn’t have a patent? Sandwich makers. 

You see, while most of us don’t know how to make a cellphone or a diabetes drug, the genie of sandwich-making know-how is out of the bottle now. It’s an open-source technology that has really shattered the barrier to entry for sandwich-making: Buy some bread and some stuff to put between two slices of it. Boom! You’ve achieved sandwichness. Or, if you prefer, you can take one piece of bread and put some stuff on top of it and you’ve got an open-faced sandwich. (Though golfers know that if you’re in a sand trap, you should use an open-faced club sand wedge, which is not a sandwich). And, if you widen your conception of bread—buns, pita, brioche, tortillas, even some lettuces—the possibilities really are endless. I mean, Americans eat an estimated 300 million sandwiches per day (that’s collectively, not individually). 

No federal sandwich czar, or earl, can dictate to America its sandwichy desires or habits and neither could some private sector sandwich baron. 

Which brings me to yet one more Thing: The whole idea of a “sandwich shop monopoly” assumes normal human beings might care that Subway and Jimmy John’s are owned by the firm started by the guy in the white suit from Fantasy Island. But, as Mr. Roark told a guest who dreamed of being the world’s sexiest cave diver, let’s go deeper. It also assumes that a hungry human being who wants a sandwich but doesn’t want to line the pockets of Big Sandwich is incapable of substituting some other fast food. Their hands will be tied! Tied, I tell you. 

Look, I love sandwiches, but they’re not exactly the only cure for iocaine powder. You can accept substitutes.

No, seriously, the only way this “theory” about the potentially monopolistic dominance of the sandwich industry works is if you define sandwiches very narrowly. As our own Scott Lincicome has noted, if you define hamburgers as sandwiches, then Roark’s supposedly massive market share shrinks because, all of a sudden, Ronald McDonald, the Burger King, a CGI of Dave Thomas, whoever does those “we got the meats” narration for Arby’s, and all the rest come pouring in like the various news teams in the Anchorman fight scene. Get ready for Grimace and the Hamburglar to open a 20-piece carton of whoop-ass on the five guys from Five Guys. And, if you expand the definition of sandwiches to include stuff wrapped in a tortilla, cheesy stuff on-top of a bread product, hoo boy. Dominos will come tumbling in like a line of uh, things that line up. Little Caesar’s legions will cross the Rubicon. The Chipotle gang will come roaring in with their surprisingly fresh ingredients and high quality fighting techniques while Team Taco Bell will run back from the border, gas station bathroom toilet paper still stuck to their shoes, to give as many people as possible the unique brand of explosive and effulgent diarrhea they’ve come to be known for. 

Now, I want to be very clear: I do not think burritos are sandwiches any more than I think hot dogs are. But you know what they can be classified as? Lunch. So let’s just say for laughs that Warren is right that with this acquisition, Roark Capital will finally be able to implement its dastardly scheme to Control All Sandwiches and jack up prices. Given that you’d have to pay me to eat at Subway, it really doesn’t matter what price they set for their corpse-colored turkey or tuna-adjacent “tuna.” But some people are, in fact, price-sensitive. And if Jimmy John’s, Subway, and Schlotsky’s—which, by the way, sell different kinds and qualities of sandwiches, these are not undifferentiated commodities or widgets—form some kind of OPEC-like sandwich cartel and charge crazy prices, very few people will say, “Damn, I can only eat sandwiches. So I will have no choice but to pay $75 for a roast beef hoagie from Schlotsky’s.” Most will say, screw that. Let’s get pizza, or a burger, or tacos, or if they’re Europeans, a salad. And some people will utilize their yeoman ingenuity and bring a sandwich to work. Cue Oscar Goldman voice: “Gentlemen, we can rebuild a fast-food sandwich. We have the technology. We can make the world’s 500 trillionth homemade sandwich …”

Oh, and just to be clear, Subway franchises—like many, many, many other franchises—are independently owned and operated. Indeed, Subway has gotten grief in the past for selling franchises very close to other Subway franchises. This is why when you walk down the street in some parts of New York, the smells alternate between skunky weed, baking sugar bread, and despair. 

My only point is that even if this Sandwich Monopoly thing became a thing, you’d still have individual shop owners with powerful incentives to undercut their competition—even if it was owned by the same private equity firm where the little dude never gets tired of pointing at planes.