Last week, in part one of this series, we heard about the long and strange history of eyeglasses. What we often see in early art are representations of the devil wearing spectacles. And we learned how. Today, the $150 billion eyewear industry has one dominant player, a french italian conglomerate called essilor Luxottica.

They have full control over prices, and that's just a license to mint money for them.

We also heard how challengers like Warby Parker are trying to change the economics of the industry. When we had this idea to sell eyewear for a fraction of the cost.

People loved that idea.

Today on Freakonomics radio, in part two of our series, we learn about the massive rise of myopia, the even more massive rise of China as an eyeglass market. And what an eye doctor knows that you don't know.

I always tell people you don't compromise on parachutes or eyeglasses.

Oh, yeah, one more thing. We ask whether intense consolidation in an industry like eyewear could be a threat to democracy itself.

If people feel that a tiny group of consolidated industries and their beneficiaries make all the money, it tends to create a lot of widespread anger.

The surprising economics of the eyeglass industry, part two, beginning now, this is Freakonomics.

Radio, the podcast that explores the hidden side of everything, with your host, Stephen Dubnere.

Tim Wu is a law professor at Columbia. He has also been in both the Obama and Biden administrations. An advocate of stronger antitrust legislation, Wu argues that too many industries have just one or two dominant players which can push up prices. This would include the eyeglass industry.

It has to compare itself with other obscene margin takers, like the pharmaceutical drug industry.

The specific target of Wu's criticism here is Essilor Luxottica, which controls a massive portion of the global industry, from eyeglass retailers to optical labs, from luxury partnerships to vision insurance.

Some of the worst abuses of market power are in medical industries, where you can't really go without the thing. You need glasses, right? If you want to see things that are far away. There is something particularly offensive when you take advantage of an essential need that people have.

To be fair, I'm extremely grateful to the whole history of science, of eyecare, because if I were born in an era before puzzle that we hadn't solved. I personally had done everything in the optical business, from opticianry optometry, to working with frames. But we would purchase our lenses from various lens vendors, the essilors of the world.In what form were they? Are they purchased finished, essentially, or are they kind of like a hockey puck that you grind down?They're called finish blanks. You can buy lenses finished, and then you just edge them locally in your lab, which means cutting them to the frame, proper size, and all of that.The degree of magnification is already set, you're saying?Yeah, the prescription is ground by surfacing equipment that grinds into the surface of the lens, the front and back surface, so that the prescription is accurate.But a couple years ago, Moscat took a page out of Esselor Luxottica's playbook by incorporating a bit of vertical integration. Instead of buying lenses from a supplier, Moscat started to make their own.It was something that we wanted to migrate to and focus on and learn about.How come?Because at the end of the day, prices were rising, costs continued to rise. We don't sacrifice on quality, and we would never, for example, buy less expensive screws or wire templates. I think it speaks to the fact that we're control freaks, and not being able to control certain aspects of what you do was bothersome to me. Relying on others to do your work is always problematic for us. So now we surface our own lenses. We don't have to buy them from the essels of the world, and we actually grind the prescription in and control it. But it wasn't about profit. It was more about service levels in our shops and controlling the quality of the lenses that we were producing, understanding how they were made, modifying them in a way that would optimize vision for our customers.So you opened this lab just a few years ago, and this is on Long island, correct?Correct. Yes. We started it from scratch. A very gray as a result of it.So you're investing in your lens operation, you're investing in expanding around the world. A couple dozen shops. Have you taken any outside money, or is this all Moscow reinvestment?The latter. Credit facilities for banks and our own money.I don't want to sound like your depression era great grandfather, but does it keep you up at night sometimes?Sure. We expand the brand thoughtfully. We do things for the right reasons, not just for hitting targets and numbers. So that's why it's taken us 109 years to have 27 shops.I told Harvey Moscott about the complaints that Tim Wu had raised that eyeglass firms didn't invent eyeglass technology any more than American Airlines invented the airplane. And that technologies usually get cheaper over timelot of widespread anger, particularly if there's an economic crash. I think our best example is the 1930s, where there was a ton of anger. Obviously, after the crash of the world's economies, countries weathered it in different ways. But most famously in Germany, this widespread economic discontent fed into the hands of a certain leader, who I don't always like to mention, but obviously the nazi party rose during that period. On the backs of it, I think you see this across history, these aggregations of economic wealth and power, big crashes leading to the rise of a populace. We've had obviously a taste of that ourselves over the last ten years or so. I don't think we're entirely exempt from these tendencies.You write that excessive concentration of economic power will breed anti democratic political pressures. I could understand you saying they could breed those pressures, but will breed. Do you really feel there is an inevitable connection between that kind of economic concentration and bad political outcomes?I think it depends on the critical question of how the democratic government deals with the inequality and inequities. Will might be a strong word in that sentence, which I predict is from my introduction. But I think the more nuanced view is if there's a democratic failure, if people feel that they haven't done anything, or worse, are facilitating unfairness in the economy, then the demand rises for the strongman who can really do what the people want. Ive studied the messaging of all these figures who come to power. Its always like you have this democracy, but they dont really serve you. You need someone who has a direct line to the people, and thats me. I read a lot of Hugo Chavezs speeches. Ive read the speeches of our former president, or heard them. Ive read the speeches in the 1930s. It is basically the same, usually coupled with some identity politics and other sweeteners.I mean, the american situation is not as drastic as Weimar Germany, certainly, at least not yet, and hopefully never will be. But we have already been seeing the impact of consolidation in the form of corporate capture or crony capitalism, whatever you want to call it, over the past 20 or 30 years. It strikes me that this has had a pretty significant cost for american society.Yeah, I think it is a significant cost, and it may ultimately be measured in the threat to democracy, but also measured in the economic well being of many people. If you spend any time near Congress, you realize that they will never really take a stand against a powerful industry. I mean, in the last 20 years, you can count on the fingers of one hand the times they've done something that industry really doesn't like. And that was including after a major economic crash. I agree. We're not obviously where the 1930s are, but in some ways, we're a more stable country. Other countries are already flipped. I mean, I don't know what Hungary is going to be like or many other countries all across Central America, but if you haven't noticed, authoritarianism, dictatorship is on the rise, and I think it's almost always played on the back of, well, the democracy failed. But yes, it's a huge cost to the american situation to have corporate control of government.Do you think that the eyeglass industry is important enough to worry about consolidation posing an actual danger to democracy?I wouldn't put it that way. I'd put it in combination with a lot of other frustrations that people feel. The eyeglass industry is a somewhat small but potent symbol of what happens when you allow corporate consolidation to get out of control. Obviously, it's not the largest industry in the country, and it's not Google or Amazon, but it is literally in your face or on your face. It's kind of a test case of an industry which has been allowed to by most of its competitors. Luxottica has been allowed to vertically integrate itself both in the manufacture of lenses and in retail, and also insurance, and therefore find itself in a market position where it can regularly charge margins that would make even Apple computers jealous.What do you think of Tim Wu's argument that the kind of dominance exercised by Esselora Luxottica is a threat to democracy? Or what do you think about anything else you heard in this series? I'd love to hear from you. Our email is radioreakonomics.com. coming up next time on the show, if modern capitalism is a problem, how about this as a solution? Time is an interesting commodity. I'm like, why are people not talking about it?You can imagine it being a time barter system on steroids enabled by modern technology.Are we at the point where time dollars can challenge real dollars? That's next week on the show. Until then, take care of yourself, and if you can, someone else too. Free economics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app. Also@freeconomics.com where we publish transcripts and show notes. This episode was produced by Morgan Levy. Our staff also includes Alina Cullman, Augusta Chapman, Dalvin Abuji, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Greg Ripon, Jasmine Klinger, Jeremy Johnston, Julie Kanfer, Lyric Bowditch, Neal Carruth, Rebecca Lee Douglas, Sarah Lilly, Teo Jacobs, and Zach Lipinski. Special thanks this week to John Schnarz and Ellen Frankman. Our theme song is Mister Fortune by the Hitchhikers. Our composer is Luis Guerra. As always, thank you for listening.Steven. We're just trying to solve world peace one lemtosh at a time.The Freakonomics radio network the hidden side of everything Stitcher.

puzzle that we hadn't solved. I personally had done everything in the optical business, from opticianry optometry, to working with frames. But we would purchase our lenses from various lens vendors, the essilors of the world.

In what form were they? Are they purchased finished, essentially, or are they kind of like a hockey puck that you grind down?

They're called finish blanks. You can buy lenses finished, and then you just edge them locally in your lab, which means cutting them to the frame, proper size, and all of that.

The degree of magnification is already set, you're saying?

Yeah, the prescription is ground by surfacing equipment that grinds into the surface of the lens, the front and back surface, so that the prescription is accurate.

But a couple years ago, Moscat took a page out of Esselor Luxottica's playbook by incorporating a bit of vertical integration. Instead of buying lenses from a supplier, Moscat started to make their own.

It was something that we wanted to migrate to and focus on and learn about.

How come?

Because at the end of the day, prices were rising, costs continued to rise. We don't sacrifice on quality, and we would never, for example, buy less expensive screws or wire templates. I think it speaks to the fact that we're control freaks, and not being able to control certain aspects of what you do was bothersome to me. Relying on others to do your work is always problematic for us. So now we surface our own lenses. We don't have to buy them from the essels of the world, and we actually grind the prescription in and control it. But it wasn't about profit. It was more about service levels in our shops and controlling the quality of the lenses that we were producing, understanding how they were made, modifying them in a way that would optimize vision for our customers.

So you opened this lab just a few years ago, and this is on Long island, correct?

Correct. Yes. We started it from scratch. A very gray as a result of it.

So you're investing in your lens operation, you're investing in expanding around the world. A couple dozen shops. Have you taken any outside money, or is this all Moscow reinvestment?

The latter. Credit facilities for banks and our own money.

I don't want to sound like your depression era great grandfather, but does it keep you up at night sometimes?

Sure. We expand the brand thoughtfully. We do things for the right reasons, not just for hitting targets and numbers. So that's why it's taken us 109 years to have 27 shops.

I told Harvey Moscott about the complaints that Tim Wu had raised that eyeglass firms didn't invent eyeglass technology any more than American Airlines invented the airplane. And that technologies usually get cheaper over timelot of widespread anger, particularly if there's an economic crash. I think our best example is the 1930s, where there was a ton of anger. Obviously, after the crash of the world's economies, countries weathered it in different ways. But most famously in Germany, this widespread economic discontent fed into the hands of a certain leader, who I don't always like to mention, but obviously the nazi party rose during that period. On the backs of it, I think you see this across history, these aggregations of economic wealth and power, big crashes leading to the rise of a populace. We've had obviously a taste of that ourselves over the last ten years or so. I don't think we're entirely exempt from these tendencies.You write that excessive concentration of economic power will breed anti democratic political pressures. I could understand you saying they could breed those pressures, but will breed. Do you really feel there is an inevitable connection between that kind of economic concentration and bad political outcomes?I think it depends on the critical question of how the democratic government deals with the inequality and inequities. Will might be a strong word in that sentence, which I predict is from my introduction. But I think the more nuanced view is if there's a democratic failure, if people feel that they haven't done anything, or worse, are facilitating unfairness in the economy, then the demand rises for the strongman who can really do what the people want. Ive studied the messaging of all these figures who come to power. Its always like you have this democracy, but they dont really serve you. You need someone who has a direct line to the people, and thats me. I read a lot of Hugo Chavezs speeches. Ive read the speeches of our former president, or heard them. Ive read the speeches in the 1930s. It is basically the same, usually coupled with some identity politics and other sweeteners.I mean, the american situation is not as drastic as Weimar Germany, certainly, at least not yet, and hopefully never will be. But we have already been seeing the impact of consolidation in the form of corporate capture or crony capitalism, whatever you want to call it, over the past 20 or 30 years. It strikes me that this has had a pretty significant cost for american society.Yeah, I think it is a significant cost, and it may ultimately be measured in the threat to democracy, but also measured in the economic well being of many people. If you spend any time near Congress, you realize that they will never really take a stand against a powerful industry. I mean, in the last 20 years, you can count on the fingers of one hand the times they've done something that industry really doesn't like. And that was including after a major economic crash. I agree. We're not obviously where the 1930s are, but in some ways, we're a more stable country. Other countries are already flipped. I mean, I don't know what Hungary is going to be like or many other countries all across Central America, but if you haven't noticed, authoritarianism, dictatorship is on the rise, and I think it's almost always played on the back of, well, the democracy failed. But yes, it's a huge cost to the american situation to have corporate control of government.Do you think that the eyeglass industry is important enough to worry about consolidation posing an actual danger to democracy?I wouldn't put it that way. I'd put it in combination with a lot of other frustrations that people feel. The eyeglass industry is a somewhat small but potent symbol of what happens when you allow corporate consolidation to get out of control. Obviously, it's not the largest industry in the country, and it's not Google or Amazon, but it is literally in your face or on your face. It's kind of a test case of an industry which has been allowed to by most of its competitors. Luxottica has been allowed to vertically integrate itself both in the manufacture of lenses and in retail, and also insurance, and therefore find itself in a market position where it can regularly charge margins that would make even Apple computers jealous.What do you think of Tim Wu's argument that the kind of dominance exercised by Esselora Luxottica is a threat to democracy? Or what do you think about anything else you heard in this series? I'd love to hear from you. Our email is radioreakonomics.com. coming up next time on the show, if modern capitalism is a problem, how about this as a solution? Time is an interesting commodity. I'm like, why are people not talking about it?You can imagine it being a time barter system on steroids enabled by modern technology.Are we at the point where time dollars can challenge real dollars? That's next week on the show. Until then, take care of yourself, and if you can, someone else too. Free economics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app. Also@freeconomics.com where we publish transcripts and show notes. This episode was produced by Morgan Levy. Our staff also includes Alina Cullman, Augusta Chapman, Dalvin Abuji, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Greg Ripon, Jasmine Klinger, Jeremy Johnston, Julie Kanfer, Lyric Bowditch, Neal Carruth, Rebecca Lee Douglas, Sarah Lilly, Teo Jacobs, and Zach Lipinski. Special thanks this week to John Schnarz and Ellen Frankman. Our theme song is Mister Fortune by the Hitchhikers. Our composer is Luis Guerra. As always, thank you for listening.Steven. We're just trying to solve world peace one lemtosh at a time.The Freakonomics radio network the hidden side of everything Stitcher.

lot of widespread anger, particularly if there's an economic crash. I think our best example is the 1930s, where there was a ton of anger. Obviously, after the crash of the world's economies, countries weathered it in different ways. But most famously in Germany, this widespread economic discontent fed into the hands of a certain leader, who I don't always like to mention, but obviously the nazi party rose during that period. On the backs of it, I think you see this across history, these aggregations of economic wealth and power, big crashes leading to the rise of a populace. We've had obviously a taste of that ourselves over the last ten years or so. I don't think we're entirely exempt from these tendencies.

You write that excessive concentration of economic power will breed anti democratic political pressures. I could understand you saying they could breed those pressures, but will breed. Do you really feel there is an inevitable connection between that kind of economic concentration and bad political outcomes?

I think it depends on the critical question of how the democratic government deals with the inequality and inequities. Will might be a strong word in that sentence, which I predict is from my introduction. But I think the more nuanced view is if there's a democratic failure, if people feel that they haven't done anything, or worse, are facilitating unfairness in the economy, then the demand rises for the strongman who can really do what the people want. Ive studied the messaging of all these figures who come to power. Its always like you have this democracy, but they dont really serve you. You need someone who has a direct line to the people, and thats me. I read a lot of Hugo Chavezs speeches. Ive read the speeches of our former president, or heard them. Ive read the speeches in the 1930s. It is basically the same, usually coupled with some identity politics and other sweeteners.

I mean, the american situation is not as drastic as Weimar Germany, certainly, at least not yet, and hopefully never will be. But we have already been seeing the impact of consolidation in the form of corporate capture or crony capitalism, whatever you want to call it, over the past 20 or 30 years. It strikes me that this has had a pretty significant cost for american society.

Yeah, I think it is a significant cost, and it may ultimately be measured in the threat to democracy, but also measured in the economic well being of many people. If you spend any time near Congress, you realize that they will never really take a stand against a powerful industry. I mean, in the last 20 years, you can count on the fingers of one hand the times they've done something that industry really doesn't like. And that was including after a major economic crash. I agree. We're not obviously where the 1930s are, but in some ways, we're a more stable country. Other countries are already flipped. I mean, I don't know what Hungary is going to be like or many other countries all across Central America, but if you haven't noticed, authoritarianism, dictatorship is on the rise, and I think it's almost always played on the back of, well, the democracy failed. But yes, it's a huge cost to the american situation to have corporate control of government.

Do you think that the eyeglass industry is important enough to worry about consolidation posing an actual danger to democracy?

I wouldn't put it that way. I'd put it in combination with a lot of other frustrations that people feel. The eyeglass industry is a somewhat small but potent symbol of what happens when you allow corporate consolidation to get out of control. Obviously, it's not the largest industry in the country, and it's not Google or Amazon, but it is literally in your face or on your face. It's kind of a test case of an industry which has been allowed to by most of its competitors. Luxottica has been allowed to vertically integrate itself both in the manufacture of lenses and in retail, and also insurance, and therefore find itself in a market position where it can regularly charge margins that would make even Apple computers jealous.

What do you think of Tim Wu's argument that the kind of dominance exercised by Esselora Luxottica is a threat to democracy? Or what do you think about anything else you heard in this series? I'd love to hear from you. Our email is radioreakonomics.com. coming up next time on the show, if modern capitalism is a problem, how about this as a solution? Time is an interesting commodity. I'm like, why are people not talking about it?

You can imagine it being a time barter system on steroids enabled by modern technology.

Are we at the point where time dollars can challenge real dollars? That's next week on the show. Until then, take care of yourself, and if you can, someone else too. Free economics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app. Also@freeconomics.com where we publish transcripts and show notes. This episode was produced by Morgan Levy. Our staff also includes Alina Cullman, Augusta Chapman, Dalvin Abuji, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Greg Ripon, Jasmine Klinger, Jeremy Johnston, Julie Kanfer, Lyric Bowditch, Neal Carruth, Rebecca Lee Douglas, Sarah Lilly, Teo Jacobs, and Zach Lipinski. Special thanks this week to John Schnarz and Ellen Frankman. Our theme song is Mister Fortune by the Hitchhikers. Our composer is Luis Guerra. As always, thank you for listening.

Steven. We're just trying to solve world peace one lemtosh at a time.

The Freakonomics radio network the hidden side of everything Stitcher.