AI transcript
0:00:03 [MUSIC PLAYING]
0:00:06 Last week in part one of this series,
0:00:10 we heard about the long and strange history of eyeglasses.
0:00:14 What we often see in early arts are representations
0:00:17 of the devil wearing spectacles.
0:00:20 And we learned how today, the $150 billion
0:00:23 eyewear industry, has one dominant player,
0:00:27 a French-Italian conglomerate called Esselor Luxorica.
0:00:29 They have full control over prices,
0:00:31 and that’s just a license to mint money from them.
0:00:34 We also heard how challengers like Warby Parker
0:00:37 are trying to change the economics of the industry.
0:00:40 When we had this idea to sell eyewear
0:00:44 for a fraction of the cost, people loved that idea.
0:00:47 Today on Freakonomics Radio, in part two of our series,
0:00:50 we learn about the massive rise of myopia,
0:00:54 the even more massive rise of China as an eyeglass market,
0:00:58 and what an eye doctor knows that you don’t know.
0:01:00 I always tell people, you don’t compromise
0:01:03 on parachutes or eyeglasses.
0:01:05 Oh yeah, one more thing.
0:01:08 We ask whether intense consolidation in an industry
0:01:13 like eyewear could be a threat to democracy itself?
0:01:16 If people feel a tiny group of consolidated industries
0:01:19 and their beneficiaries make all the money,
0:01:22 it tends to create a lot of widespread anger.
0:01:25 The surprising economics of the eyeglass industry,
0:01:27 part two, beginning now.
0:01:30 (upbeat music)
0:01:42 – This is Freakonomics Radio,
0:01:46 the podcast that explores the hidden side of everything
0:01:48 with your host, Stephen Dubner.
0:01:51 (upbeat music)
0:01:53 (upbeat music)
0:01:59 Tim Wu is a law professor at Columbia.
0:02:03 He has also been in both the Obama and Biden administrations
0:02:06 an advocate of stronger anti-trust legislation.
0:02:09 Wu argues that too many industries
0:02:11 have just one or two dominant players
0:02:13 which can push up prices.
0:02:16 This would include the eyeglass industry.
0:02:18 – It has to compare itself with other obscene margin takers
0:02:20 like the pharmaceutical drug industry.
0:02:23 The specific target of Wu’s criticism here
0:02:24 is S.L.O.R. Luxottica,
0:02:28 which controls a massive portion of the global industry
0:02:31 from eyeglass retailers to optical labs,
0:02:34 from luxury partnerships to vision insurance.
0:02:36 – Some of the worst abuses of market power
0:02:37 are in medical industries
0:02:40 where you can’t really go without the thing.
0:02:41 You need glasses, right?
0:02:44 If you wanna see things that are far away.
0:02:46 There is something particularly offensive
0:02:48 when you take advantage of an essential need
0:02:49 that people have.
0:02:52 – To be fair, I’m extremely grateful
0:02:54 to the whole history of science of eye care.
0:02:58 ‘Cause if I were born in an era before eyeglasses,
0:03:01 I would have been like Viking food.
0:03:01 They would have chopped me up
0:03:03 to feed to the horses or something.
0:03:04 I would have been useless.
0:03:07 So if I have to pay $1,000 for a pair of glasses
0:03:10 that let me see really well, I don’t love it,
0:03:11 but I am grateful.
0:03:13 I guess the story I’ve always told myself
0:03:15 is just think of all that technology
0:03:16 that has gone into that.
0:03:19 – Yeah, if Luxottica employed a team of crack scientists
0:03:22 who had invented eyeglasses five years ago,
0:03:23 I would be singing their praises and saying,
0:03:26 “Wow, look, these guys invented this thing.
0:03:27 “We’ll give them a break.”
0:03:30 I don’t know who invented the idea of a prism,
0:03:31 but certainly they didn’t.
0:03:33 That’s like giving American Airlines credit
0:03:35 for inventing the airplane.
0:03:36 They’re the one who’s throwing you
0:03:39 in the middle seat and charging you for overhead baggage.
0:03:40 They’re not the right brothers.
0:03:41 I think you got the wrong guys.
0:03:45 – One thing about the airline industry,
0:03:48 their product has gotten cheaper,
0:03:49 adjusted for inflation,
0:03:51 airline tickets have fallen by at least a third
0:03:53 over the past 40 years.
0:03:57 As for eyeglasses, there are some inexpensive ones out there.
0:04:00 Zeni Optical sells glasses online
0:04:02 for an average of $44 a pair.
0:04:05 Glasses at Warby Parker start at $95,
0:04:09 but the industry average is around $350.
0:04:11 What’s driving these prices?
0:04:14 Let’s talk to someone who knows the details.
0:04:17 – A regular single vision lens can start at $150.
0:04:20 That is Harvey Mascot.
0:04:23 He is an optometrist and the fourth generation
0:04:26 of his family to run the Mascot eyeglass chain,
0:04:28 which started in New York.
0:04:31 – And I both fixer upper, I like to consider myself.
0:04:33 I work in the family business my whole life,
0:04:35 summers for beer money.
0:04:37 So I was always introduced and exposed
0:04:38 to the optical business.
0:04:39 – When you grow up in a family business,
0:04:43 it’s what all of the generations talk about at dinner.
0:04:44 It’s a part of your culture.
0:04:47 – And that’s Zachary Mascot, Harvey’s son.
0:04:49 He’s the firm’s chief design officer.
0:04:51 That covers the design of their glasses,
0:04:53 as well as the Mascot shops,
0:04:56 which have some distinctive touches.
0:04:58 – Walking into a Mascot shop,
0:05:00 it’s like walking into my grandmother’s living room.
0:05:03 I don’t know if I can recreate the smell,
0:05:04 but it’s certainly-
0:05:06 – Would you want to recreate the smell?
0:05:07 – I’m not gonna answer that,
0:05:09 but it’s certainly a warm feeling.
0:05:13 There’s knickknacks, there’s random items at the cashier,
0:05:15 a little bunny rabbit holding a business card,
0:05:17 things that were collected by my grandfather
0:05:18 when he would bring it home.
0:05:19 And my grandmother said,
0:05:22 that’s not staying here, bring it back to the shop.
0:05:24 And that became the aesthetic of our brand.
0:05:26 – The story starts out in 1899
0:05:28 when my great-grandfather, Hyman,
0:05:30 who I’m named after, Harvey,
0:05:33 came to America with a classic story of coming to America
0:05:36 to pursue your dreams and escape oppression.
0:05:37 In Eastern Europe at the time,
0:05:40 he was an optician from the old country
0:05:42 and set up his wares on the Lower East Side,
0:05:43 Orchard Street,
0:05:46 and sold ready-made glasses from a push cart.
0:05:49 And then his son, Saul, was born in America in 1910,
0:05:51 and Saul was pretty entrepreneurial,
0:05:54 and they set up a brick and mortar shop.
0:05:56 And we sat on the corner of Orchard and Delancey
0:05:57 for 78 years.
0:06:01 My dad followed his father into the business as an optician.
0:06:03 They took their craft seriously.
0:06:04 They loved opticianry.
0:06:07 They loved taking care of clientele and customers.
0:06:10 – The Moscow aesthetic today is Old World New York
0:06:13 with a dash of nouveau cool.
0:06:15 We are at the, I would say the lower end
0:06:17 of the high-end segment.
0:06:20 We’re really positioned as a fashion brand
0:06:22 that of course offers medical functions
0:06:24 and the expertise of opticians,
0:06:27 but we’re really positioning ourselves
0:06:29 in the luxury brand side of things.
0:06:33 – The names of the frames at Moscow are memorable.
0:06:36 The Boy Chick, the Frankie, the Neb,
0:06:37 their best-selling frame,
0:06:40 worn by David Beckham and Johnny Depp
0:06:43 and Rashida Jones is called the Lemtosh.
0:06:45 I asked where that name came from.
0:06:48 – It was actually a made-up family word,
0:06:49 kind of like a Yiddish slang
0:06:51 that they would use when picking on one another.
0:06:52 – You’re such a Lemtosh.
0:06:54 – Stop being a Lemtosh.
0:06:56 – We never take ourselves too seriously, Stephen,
0:06:57 and we like to have fun.
0:06:59 And these were just words that were used in the family
0:07:01 that I heard growing up.
0:07:04 – So what is it about the Lemtosh
0:07:06 that makes it universally appropriate
0:07:08 or so widely appropriate at least?
0:07:11 Can you describe, you know, whether it’s the shape,
0:07:13 the textures, the way it sits?
0:07:15 Just what is it about that frame?
0:07:18 – It’s the perfect balance of square and round.
0:07:19 It is not perfectly round.
0:07:22 It is not perfectly square.
0:07:23 Because of that shape,
0:07:25 it inadvertently fits super well
0:07:27 on different types of noses
0:07:29 or as we call in the industry, bridges.
0:07:32 – What are you wearing right now, Harvey?
0:07:34 I mean, glasses-wise.
0:07:38 – I am wearing my Lemtosh in a champagne color,
0:07:39 which we call flesh.
0:07:43 – The fact is, while speaking to the Mascots,
0:07:47 I too was wearing a pair of Lemtosh frames.
0:07:49 I’ve been a Mascot customer for a few years now,
0:07:51 and that’s one reason I wanted to hear from them.
0:07:53 I started buying my glasses at Mascot
0:07:55 not because of how the frames look,
0:07:57 although I do like them.
0:07:59 I wound up there because the glasses I was getting
0:08:02 at other places just didn’t work very well.
0:08:05 The lenses, I mean, they were a little imprecise
0:08:08 or had too small of a sweet spot.
0:08:10 They scratched too easily.
0:08:13 I now told Harvey Mascot my eyeglass history,
0:08:15 and I asked him to walk me through the pricing.
0:08:17 – I don’t want to get too technical, but–
0:08:19 – No, I want the technical.
0:08:20 – Well, we have to start with,
0:08:21 are you wearing progressives?
0:08:22 – I am, yes.
0:08:25 – And is your prescription over a minus four?
0:08:26 – Yes.
0:08:27 – Sounds like you’re pretty nearsighted.
0:08:29 Highly myopic prescriptions
0:08:31 with high astigmatic corrections,
0:08:34 a lot of competitors have trouble
0:08:36 with these more complex prescriptions
0:08:38 that we take pride in providing,
0:08:39 and we’re comfortable doing,
0:08:42 and our licensed personnel understand.
0:08:43 Do you have prism?
0:08:44 – Yes.
0:08:46 So once I get into that fairly complicated lens,
0:08:49 and also let’s say I want my lens to be nice and thin,
0:08:51 ’cause I don’t want it to look like I’m looking through
0:08:52 the bottom of a Coke bottle.
0:08:54 What does that lens cost?
0:08:57 – You can add $100, $200 for higher indexes,
0:09:00 which is just increased density of the material
0:09:02 that makes the lens thinner.
0:09:06 You check all the boxes for a very complicated patient
0:09:08 and customer that Moscow loves to serve.
0:09:11 So you’re probably upwards of $1,000.
0:09:12 – Yes, I am, yeah.
0:09:15 And now, what would you say to someone who hears this
0:09:17 and maybe who doesn’t wear glasses yet,
0:09:20 who might once they hit 40 or whatnot,
0:09:22 and say $1,000 for a pair of glasses?
0:09:24 Come on, that’s absurd.
0:09:26 – Well, usually before 40, you don’t need progressives,
0:09:29 so they won’t be that expensive.
0:09:32 But if you’re over 40, I would say you have two eyes.
0:09:36 You want the best possible vision you can get.
0:09:38 Vision is a precious sense.
0:09:41 You don’t compromise on parachutes or eyeglasses.
0:09:46 – The Moscow brand has been growing,
0:09:47 especially over the past decade.
0:09:49 They have more than two dozen shops around the world,
0:09:53 many in the U.S., but also in Japan, South Korea,
0:09:55 and spread around Europe.
0:09:57 Compared to Estelar Luxotica,
0:10:00 they are a minnow, and for a long time,
0:10:03 they didn’t even make their own lenses.
0:10:06 – It was the one piece of the puzzle that we hadn’t solved.
0:10:08 I personally had done everything in the optical business,
0:10:12 from opticianry, optometry, to working with frames,
0:10:14 but we would purchase our lenses
0:10:18 from various lens vendors, the Estelars of the world.
0:10:19 – In what form were they,
0:10:21 are they purchased finished essentially,
0:10:24 or are they kind of like a hockey puck that you grind down?
0:10:25 – They’re called finished blanks.
0:10:26 You can buy lenses finished,
0:10:29 and then you just edge them locally in your lab,
0:10:31 which means cutting them to the frame proper size,
0:10:32 and all of that.
0:10:35 – The degree of magnification is already set, you’re saying.
0:10:39 – Yeah, the prescription is ground by surfacing equipment
0:10:41 that grinds into the surface of the lens,
0:10:42 the front and back surface,
0:10:44 so that the prescription is accurate.
0:10:46 – But a couple of years ago,
0:10:49 Moscow took a page out of Estelar Luxotica’s playbook
0:10:53 by incorporating a bit of vertical integration.
0:10:55 Instead of buying lenses from a supplier,
0:10:58 Moscow started to make their own.
0:11:00 – It was something that we wanted to migrate to
0:11:02 and focus on and learn about.
0:11:03 – How come?
0:11:06 – Because at the end of the day, prices were rising,
0:11:09 costs continued to rise, we don’t sacrifice on quality,
0:11:11 and we would never, for example,
0:11:15 buy less expensive screws or wire templates.
0:11:17 I think it speaks to the fact that we’re control freaks,
0:11:21 and not being able to control certain aspects
0:11:23 of what you do was bothersome to me.
0:11:27 Relying on others to do your work is always problematic for us.
0:11:29 So now we service our own lenses,
0:11:31 we don’t have to buy them from the Estelars of the world,
0:11:34 and we actually grind the prescription in and control it,
0:11:35 but it wasn’t about profit,
0:11:37 it was more about service levels in our shops
0:11:40 and controlling the quality of the lenses
0:11:41 that we were producing,
0:11:43 understanding how they were made,
0:11:45 modifying them in a way that would optimize vision
0:11:47 for our customers.
0:11:50 – So you opened this lab just a few years ago,
0:11:51 and this is on Long Island, correct?
0:11:52 – Correct, yes.
0:11:54 – We started it from scratch,
0:11:56 a very gray as a result of it.
0:11:59 – So you’re investing in your lens operation,
0:12:02 you’re investing in expanding around the world,
0:12:04 a couple dozen shops,
0:12:05 have you taken any outside money,
0:12:08 or is this all mascot reinvestment?
0:12:12 – The latter, credit facilities for banks and our own money.
0:12:14 – I don’t wanna sound like your depression era
0:12:15 great-grandfather,
0:12:18 but does it keep you up at night sometimes?
0:12:20 – Sure, we expand the brand thoughtfully,
0:12:22 we do things for the right reasons,
0:12:24 not just for hitting targets and numbers.
0:12:28 So that’s why it’s taken us 109 years to have 27 shops.
0:12:33 – I told Harvey Mascot about the complaints
0:12:34 that Tim Woo had raised,
0:12:38 that eyeglass firms didn’t invent eyeglass technology
0:12:41 any more than American Airlines invented the airplane,
0:12:44 and that technologies usually get cheaper over time.
0:12:47 So why aren’t eyeglasses getting cheaper?
0:12:50 – The eyewear business requires licensed personnel
0:12:51 on the retail level.
0:12:55 It’s a unique specialty retail industry.
0:12:58 So licensed opticians are licensed by states.
0:13:02 You need to be licensed in order to open an optical shop
0:13:04 in New York, California, most of the states.
0:13:07 Doctors of optometry are the vision specialists
0:13:10 that provide prescriptions along with eye health exams.
0:13:12 So the cost structures are very different.
0:13:14 Doctors aren’t making what a gap employee
0:13:16 is making selling apparel.
0:13:20 So when you combine all these costs and laboratory costs
0:13:23 and specialized skilled costs, it’s very different.
0:13:28 And to just apply that to like a straight retail profit analysis
0:13:30 would be a little bit inaccurate.
0:13:33 – So you think Tim Woo is misunderstanding
0:13:35 the complexity of the industry a little bit?
0:13:36 – Most people do.
0:13:42 – I went back to the eyeglass industry analyst
0:13:44 we heard from in the first part of this series,
0:13:48 Cedric Rossi, who works for a European investment bank.
0:13:50 He is an expert in S-Lore Luxatica
0:13:53 but also knows a great deal about Warby Parker
0:13:56 and every other eyewear brand I could name.
0:14:00 I asked Rossi if he’s familiar with mascot.
0:14:01 – Yeah, a little bit.
0:14:02 It’s starting to expand in Europe.
0:14:05 It was a brand that was almost nonexistent
0:14:07 outside New York, if I’m correct.
0:14:08 – Yes, you’re right.
0:14:11 – Even in the US, actually it was not very well known
0:14:14 until now the owners are starting to realize
0:14:17 that there is some opportunities not only in the US
0:14:19 but also internationally.
0:14:21 Moscott is a very interesting brand
0:14:24 to differentiate yourself from competition.
0:14:27 And that’s why I think optical retailers in Europe
0:14:29 are offering a mascot into the stores
0:14:33 to attract new customers that are used to buying
0:14:35 a Reban and Oakley for years and years.
0:14:38 And now they also want to discover new brands.
0:14:40 – If you were Moscott and you’re trying to take
0:14:45 a relatively small New York retro fashion brand
0:14:48 that’s not inexpensive, where would you look
0:14:52 to expand particularly in the next five or 10 years?
0:14:54 – When you are a US brand, the obvious international markets
0:14:56 are the Anglo-Saxon markets.
0:15:00 It’s very convenient to start with the UK,
0:15:01 Australia, New Zealand.
0:15:03 The consumer behavior is pretty much similar
0:15:05 to what you have in the US.
0:15:07 And then Europe is also a market
0:15:10 which is quite relevant for Moscott.
0:15:13 Also because people are highly attracted by fashion.
0:15:15 Then Asia, but it’s a tough market
0:15:17 because you have a lot of intermediaries,
0:15:19 sometimes in Japan to exist.
0:15:22 You need to be distributed by department store chains
0:15:24 in South Korea, same story.
0:15:25 – Why is that?
0:15:27 Why can’t I have a standalone eyeglass store there?
0:15:30 – That’s how the market is structured.
0:15:32 – Is it because of the medical component or no?
0:15:33 – No, no, no.
0:15:36 Even for luxury companies, when they started
0:15:40 to expand in Japan or in South Korea in the 80s,
0:15:43 they were distributed into department store chains
0:15:46 because it was really hard to just have a freestanding store
0:15:48 in a very popular street.
0:15:50 – Is that because South Korea and Japan,
0:15:54 let’s say, want to constrain foreign direct investment?
0:15:56 They don’t want firms to come in
0:15:59 and basically manage the real estate.
0:16:01 They want to keep the real estate management more local
0:16:03 for taxes and ownership and so on.
0:16:04 – That could be part of the answer,
0:16:07 but the other reason is that department store chains
0:16:11 own a big chunk of the fashion market.
0:16:13 And so if you want to address a new market,
0:16:16 it’s more convenient to be distributed into department stores
0:16:18 because you rely on a distribution
0:16:19 that is already well-established.
0:16:24 – Rossi says that everyone in the eyeglass industry
0:16:28 is looking to Asia-Pacific for the next big growth spurt.
0:16:30 He says the most attractive target,
0:16:34 especially to a global giant like S. Laura Luxartica,
0:16:35 is China.
0:16:39 China is only 4% to 5% of S. Laura sales.
0:16:41 As a comparison, China already accounts
0:16:44 for more than 20% or 25% of some luxury groups
0:16:47 like Hermès or Moncler, for instance.
0:16:50 In the optical industry, it’s quite difficult
0:16:52 to penetrate in emerging markets
0:16:54 because to exist, you need to have
0:16:55 often monogists and opticians.
0:16:58 – So does S. Laura Luxartica
0:17:02 or any other eyewear manufacturer actually fund the education
0:17:06 or the business practices of optometrists in these countries?
0:17:07 – Exactly.
0:17:08 – They do, ah.
0:17:10 – Exactly, S. Laura Luxartica
0:17:13 opened a few schools to train opticians
0:17:16 because they know that if they want to develop
0:17:17 their business in those countries,
0:17:20 they also need to help the local governments
0:17:22 create from scratch the eyewear market.
0:17:24 And so that’s why the Chinese government
0:17:27 was highly supportive to the initiatives
0:17:29 implemented by S. Laura Luxartica at that time.
0:17:31 It’s because, you know, the welfare state
0:17:33 does not exist in China.
0:17:35 And so if they have some Western companies
0:17:38 helping to create the local eyewear market,
0:17:41 they were highly supportive to these initiatives.
0:17:43 – Does S. Laura Luxartica see that
0:17:45 as a cost center or a profit center?
0:17:47 They’re charging tuition or are they subsidizing
0:17:49 or somewhere in the middle?
0:17:51 – I would say it’s even more than that.
0:17:53 It’s an investment for the long-term growth.
0:17:56 (dramatic music)
0:17:57 – That makes sense, doesn’t it?
0:18:00 That S. Laura Luxartica would be willing
0:18:04 to invest in schools to train Chinese opticians
0:18:07 because the Chinese eyeglass market is growing fast
0:18:10 and it’s growing differently.
0:18:11 Coming up after the break.
0:18:13 – In China, I do see the commercial side
0:18:15 moving too quickly.
0:18:18 – A new treatment for myopia is big business
0:18:21 in China right now and S. Laura Luxartica
0:18:25 has positioned itself once again to take advantage.
0:18:25 I’m Stephen Dubner.
0:18:27 This is Freakonomics Radio.
0:18:28 We’ll be right back.
0:18:31 (gentle music)
0:18:41 – Maria Lu is a professor and researcher
0:18:42 in the Optometry School
0:18:44 at the University of California Berkeley.
0:18:48 She, like me and many, many, many other people,
0:18:52 has myopia, also known as nearsightedness.
0:18:53 – I’m fully convinced,
0:18:56 at least for my own nearsightedness,
0:19:00 this is heavily driven by my early introduction
0:19:03 of pretty intense academic stress.
0:19:06 – And just how intense was her academic stress?
0:19:10 – I skipped two years in primary school,
0:19:13 one year in middle school and one year in high school.
0:19:14 – Lu grew up in China
0:19:17 and was diagnosed with myopia at age 13.
0:19:19 She got a medical degree in ophthalmology
0:19:21 and practiced there for several years
0:19:23 before moving to the U.S.,
0:19:26 where she acquired several more degrees,
0:19:29 a doctor of optometry, an MBA,
0:19:32 a master’s in public health, and a PhD.
0:19:34 For many years, Lu says,
0:19:37 myopia was thought to be a purely genetic condition,
0:19:40 but she was of the school that thought otherwise,
0:19:43 that it can also be driven by environmental factors,
0:19:47 like long stretches of reading or other close-up work
0:19:50 or too much time focused on screens
0:19:52 or not getting enough sunlight.
0:19:54 Here’s one piece of evidence in her argument
0:19:57 that genetics aren’t the only driver.
0:20:01 She is the only near-sighted person in her family.
0:20:02 Here’s another piece of evidence.
0:20:05 The rate of myopia around the world
0:20:08 has been going bonkers over the past few decades.
0:20:11 – We know for any common condition,
0:20:14 if you see a drastic change in the disease prevalence,
0:20:19 this cannot be explained by the human genetic mutation
0:20:21 because human genetic makeup
0:20:24 simply do not mutate at this rate.
0:20:28 – In the US, 42% of the population has myopia.
0:20:32 In the 1970s, the rate was just 25%.
0:20:34 Several countries in Asia,
0:20:36 including China, Singapore, and Japan,
0:20:40 have myopia rates of 80% to 90%.
0:20:42 In Seoul, South Korea,
0:20:47 96.5% of 19-year-old men have myopia.
0:20:50 – Not only were seeing a very rapid increase
0:20:51 in the overall prevalence,
0:20:54 we’re also seeing a rapid change
0:20:57 in terms of the age of onset.
0:21:00 We’re seeing kids started developing myopia
0:21:02 at a younger and younger age.
0:21:04 This is very concerning
0:21:08 because the earlier the age of onset,
0:21:10 the faster the progression.
0:21:14 – As infants, our eyeballs grow to a round shape.
0:21:17 Myopia occurs when the eyeball elongates
0:21:20 past the round shape to more of an oval.
0:21:23 The environmental argument says that this elongation
0:21:26 is the eyes way of adapting to the demand
0:21:28 of focusing on something close to your face,
0:21:31 a book maybe, or perhaps more likely,
0:21:33 a smartphone or a computer screen.
0:21:37 It is now estimated that 30% of the global population
0:21:40 has myopia and researchers expect that number
0:21:43 to hit 50% by 2050.
0:21:46 Maria Lu thought that something should be done about that.
0:21:51 So at Berkeley, she started the myopia control clinic.
0:21:55 – When I was trying to start the clinic back in 2013,
0:21:59 our previous clinical director was not very convinced
0:22:02 that number one, myopia is even controllable
0:22:05 and number two, a commercial potential
0:22:07 for this type of service.
0:22:11 So I volunteered my Sundays to get the clinic started
0:22:13 just to really show that yes,
0:22:16 we have a huge demand for this kind of service
0:22:21 and yes, this is evidence-based practice, not some voodoo.
0:22:23 – And it isn’t just a matter of seeing better.
0:22:25 Myopia, left untreated,
0:22:29 can lead to a variety of severe eye conditions.
0:22:32 There are treatments to help slow the progression of myopia,
0:22:36 including eye drops, contact lenses, and surgery,
0:22:40 but there is a newer, perhaps more promising treatment.
0:22:42 – The use of the novel spectacles.
0:22:45 – The novel spectacle is a pair of glasses
0:22:48 designed to slow the elongation of the eyeball.
0:22:51 The lens includes thousands of micro dots
0:22:54 that diffuse the light that hits the eye.
0:22:57 – Novel spectacles will become, in the future,
0:23:02 in my personal opinion, the first line treatment globally
0:23:04 for progressive myopia.
0:23:07 Unfortunately, this is the type of treatment
0:23:10 that has not been approved by US FDA,
0:23:13 so we don’t have such treatment available
0:23:14 in our clinic yet,
0:23:17 but in China, novel spectacles,
0:23:20 based on those micro lens technology,
0:23:24 are becoming the first line defense for myopia control.
0:23:28 – And the Chinese market for novel spectacles is booming.
0:23:32 Liu sees this firsthand in her practice in California.
0:23:36 – Not only Chinese families going back to China
0:23:38 and getting those glasses,
0:23:41 but many families fly to Canada.
0:23:45 Canada offers a couple of those devices or designs already.
0:23:49 I’ve had multiple patient families flying to Canada,
0:23:52 specifically just to get those glasses.
0:23:56 – But Liu is concerned that some of these novel spectacles
0:23:58 won’t do what people are hoping they’ll do.
0:24:02 – To my knowledge, there are over 200 different designs
0:24:04 of those novel spectacles,
0:24:07 specifically for myopia control.
0:24:10 Out of these 200 plus designs,
0:24:12 there are about 10% of them
0:24:16 that actually underwent any sort of clinical testing.
0:24:18 In China, I do see the commercial side
0:24:20 is moving too quickly,
0:24:22 but in the rest of the world,
0:24:26 all of these major players are playing a vital role
0:24:28 in advancing the research side
0:24:31 for us to better understand and better manage myopia.
0:24:35 – One of those major players helping advance the research
0:24:39 is, as you may have guessed, Esalor Luxotica.
0:24:42 They’re one of the major manufacturers
0:24:45 that invested a lot in clinical testing.
0:24:48 The sample size, the rigorousness
0:24:52 of the clinical study designs are very, very different.
0:24:55 We’ve seen some designs being tested
0:24:57 with a sample size of 30,
0:25:01 but Esalor has pretty good clinical data,
0:25:05 not only in terms of the years of observation,
0:25:07 but also the diversity of the children
0:25:09 being recruited for the study.
0:25:12 – As an investment for Esalor Luxotica,
0:25:13 this makes a lot of sense.
0:25:16 The management of myopia is already big business
0:25:18 and we’ll be getting much bigger.
0:25:21 – This is gonna be the next major wave
0:25:25 in either revenue boosting or profit boosting.
0:25:29 The retail price range for novel spectacles
0:25:33 can be anywhere from a couple of hundred dollars
0:25:35 up to 1500 US dollars.
0:25:39 – Esalor Luxotica’s model is called the Stellist.
0:25:42 – Because of their upfront investment in R&D
0:25:44 and the clinical testing,
0:25:48 Esalor Stellist definitely is on the higher price range.
0:25:50 – There’s another design in the US
0:25:51 that’s currently making its way
0:25:53 through the FDA’s approval process.
0:25:58 It’s called Diffusion Optics Technology Lens or DOT.
0:25:59 It is a joint venture
0:26:04 between the American firm Cooper Vision and Esalor Luxotica.
0:26:06 Interestingly, the two designs,
0:26:09 the Stellist versus the DOT design
0:26:13 are based on very different design principles.
0:26:18 And so they are not just a copycat of one another.
0:26:22 So it’s good to see novel spectacle industry
0:26:25 offering designs based on different principles
0:26:29 so that in case a patient is a non-responder to one design,
0:26:32 we may be able to try a totally different design
0:26:35 rather than trying another copycat.
0:26:36 – And how does Lou feel about
0:26:39 the relatively high cost of novel spectacles?
0:26:40 – So the question is,
0:26:45 do I see a high price of these novel spectacles justifiable?
0:26:49 I would say yes and no.
0:26:54 The yes part is to manage pediatric myopia,
0:26:56 even just simply with glasses,
0:26:58 it takes a lot more chair time
0:27:01 for the practitioners to explain
0:27:04 why we’re prescribing those devices,
0:27:07 how frequent we need to see your child back
0:27:10 and there are a lot more auxiliary testing
0:27:14 that’s required to accurately evaluate the safety
0:27:17 and the efficacy of the treatment.
0:27:22 In the US, we’re able to charge more for the service fee,
0:27:25 but in China, there is no way
0:27:29 the doctors can charge for their chair time.
0:27:32 So all of the time they spend in patient
0:27:33 and parent education,
0:27:37 in making sure these devices are properly used,
0:27:41 are built into the overall cost of the lenses.
0:27:42 In China market,
0:27:46 a lot of the manufacturers are still very profit-driven,
0:27:49 it’s not evidence-based,
0:27:54 and it’s causing confusion more than helping the advancement.
0:27:56 – And how about the US market?
0:27:59 We’ve had patients asking for novel spectacles
0:28:01 on a daily basis,
0:28:04 so it’s whoever is doing the most heavy lifting,
0:28:08 being the first product approved in US market,
0:28:11 certainly deserve to have the momentum,
0:28:13 at least for the first two, three years.
0:28:15 – And a lot of that heavy lifting has been done
0:28:17 by Esalar Luxatica.
0:28:19 – I really respect their effort
0:28:23 in trying to help on the more basic research side,
0:28:25 not just something that’s immediately translatable
0:28:27 to a commercial profit.
0:28:30 – And so, on balance,
0:28:34 Maria Lu believes that Esalar Luxatica is a force for good
0:28:37 in the fight against myopia.
0:28:41 Using the billions of dollars they earn selling Prada
0:28:43 and Chanel branded glasses,
0:28:45 by selling Ray-Bans and Oakleys,
0:28:47 to invest in new optical treatments.
0:28:50 But again, we are living through an era of capitalism
0:28:53 where consolidation is the norm.
0:28:56 So, is it a problem that one player
0:29:00 in the eyeglass industry has so much global leverage?
0:29:03 Tim Wu says yes,
0:29:07 and not just for the reasons you may think.
0:29:08 That’s coming up after the break.
0:29:11 I’m Stephen Dubner, and this is Freakonomics Radio.
0:29:19 (dramatic music)
0:29:22 As we’ve noted throughout this series,
0:29:25 the French-Italian eyewear firm, Esalar Luxatica,
0:29:28 has a dominant position in the global industry.
0:29:31 Just last week, they bought the streetwear brand Supreme,
0:29:35 which doesn’t even make eyeglasses, at least not yet.
0:29:37 They were also reported to be in talks with Meta,
0:29:39 the parent company of Facebook,
0:29:41 that would have the software giant
0:29:45 taking on a minority stake in Esalar Luxatica.
0:29:47 Those two firms have already partnered
0:29:49 on a pair of Ray-Ban smart glasses,
0:29:52 Ray-Ban being a property that Esalar Luxatica
0:29:54 bought in 1999 and turned into
0:29:58 the biggest eyewear brand in the world.
0:30:03 So, Esalar Luxatica is very big and getting bigger.
0:30:06 This is the kind of thing that makes Tim Wu nervous.
0:30:09 He is the Columbia University legal scholar
0:30:12 who has spent time in two presidential administrations.
0:30:17 In 2018, he published a book called The Curse of Bigness,
0:30:20 Anti-Trust in the New Gilded Age.
0:30:23 I went back to Wu for a final word.
0:30:29 So, you argue that corporate or industrial concentration
0:30:31 can lead to a variety of bad outcomes,
0:30:33 but especially bad political outcomes,
0:30:37 including extreme nationalism, even fascism.
0:30:39 Give me an example of what you mean by that.
0:30:41 – I think the real road to serfdom
0:30:46 often goes through unmanaged aggregations of private power.
0:30:49 And what I mean by that is if you have
0:30:51 no active anti-monopoly policy,
0:30:56 if people feel a tiny group of consolidated industries
0:30:58 and their beneficiaries make all the money,
0:31:02 it tends to create a lot of widespread anger,
0:31:04 particularly if there’s an economic crash.
0:31:07 I think our best example is the 1930s,
0:31:09 where there was a ton of anger, obviously,
0:31:13 after the crash of the world’s economies.
0:31:14 Countries weathered it in different ways,
0:31:17 but most famously in Germany,
0:31:19 this widespread economic discontent
0:31:22 fed into the hands of a certain leader
0:31:24 who I don’t always like to mention,
0:31:26 but obviously the Nazi party rose during that period
0:31:28 on the backs of it.
0:31:30 I think you see this across history,
0:31:34 these aggregations of economic wealth and power,
0:31:37 big crashes leading to the rise of a populist.
0:31:39 We’ve had, obviously, a taste of that ourselves
0:31:41 over the last 10 years or so,
0:31:44 so I don’t think we’re entirely exempt from these tendencies.
0:31:47 You write that excessive concentration of economic power
0:31:51 will breed anti-democratic political pressures.
0:31:53 I could understand you saying
0:31:56 they could breed those pressures, but will breed.
0:31:59 Do you really feel there’s an inevitable connection
0:32:02 between that kind of economic concentration
0:32:04 and bad political outcomes?
0:32:09 – I think it depends on the critical question
0:32:11 of how the democratic government deals
0:32:14 with the inequality and inequities.
0:32:17 Will might be a strong word in that sentence,
0:32:20 which I predict is from my introduction,
0:32:23 but I think the more nuanced view
0:32:25 is if there’s a democratic failure,
0:32:28 if people feel that they haven’t done anything
0:32:32 or worse are facilitating unfairness in the economy,
0:32:35 then the demand rises for the strong man
0:32:37 who can really do what the people want.
0:32:39 I’ve studied the messaging of all these figures
0:32:40 who come to power.
0:32:43 It’s always like, you have this democracy,
0:32:46 but they don’t really serve you.
0:32:48 You need someone who has a direct line to the people,
0:32:49 and that’s me.
0:32:51 I’ve read a lot of Hugo Chavez’s speeches.
0:32:54 I’ve read the speeches of our former president or heard them.
0:32:56 I’ve read the speeches in 1930s.
0:32:57 It is basically the same,
0:32:59 usually coupled with some identity politics
0:33:00 and other sweeteners.
0:33:02 – I mean, the American situation is not as drastic
0:33:05 as Weimar Germany certainly, at least not yet,
0:33:07 and hopefully never will be,
0:33:11 but we have already been seeing the impact of consolidation
0:33:15 in the form of corporate capture or crony capitalism,
0:33:18 whatever you wanna call it over the past 20 or 30 years.
0:33:22 It strikes me that this has had a pretty significant cost
0:33:24 for American society.
0:33:26 – Yeah, I think it is a significant cost,
0:33:29 and it may ultimately be measured in the threat to democracy,
0:33:34 but also measured in the economic wellbeing of many people.
0:33:36 If you spend any time near Congress,
0:33:40 you realize that they will never really take a stand
0:33:43 against a powerful industry.
0:33:44 I mean, in the last 20 years,
0:33:46 you can count on the fingers of one hand
0:33:47 the times they’ve done something
0:33:49 that industry really doesn’t like,
0:33:54 and that was including after a major economic crash.
0:33:57 I agree, we’re not obviously where the 1930s are,
0:33:59 but in some ways we’re a more stable country.
0:34:01 Other countries are already flipped.
0:34:04 I mean, I don’t know what Hungary’s gonna be like,
0:34:07 or many other countries all across Central America,
0:34:09 but if you haven’t noticed authoritarianism,
0:34:11 dictatorship is on the rise,
0:34:13 and I think it’s almost always played on the back of,
0:34:14 well, the democracy failed.
0:34:17 But yes, it’s a huge cost to the American situation
0:34:19 to have corporate control of government.
0:34:21 – Do you think that the eyeglass industry
0:34:24 is important enough to worry about consolidation,
0:34:27 posing an actual danger to democracy?
0:34:30 – I wouldn’t, but that way I’d put it in combination
0:34:33 with a lot of other frustrations that people feel.
0:34:35 The eyeglass industry is somewhat small,
0:34:38 but potent symbol of what happens
0:34:40 when you allow corporate consolidation
0:34:41 to get out of control.
0:34:44 Obviously, it’s not the largest industry in the country,
0:34:46 and it’s not Google or Amazon,
0:34:49 but it is literally in your face or on your face.
0:34:52 It’s kind of a test case of an industry
0:34:56 which has been allowed to buy most of its competitors.
0:35:01 Luxotica has been allowed to vertically integrate itself,
0:35:04 both in the manufacture of lenses and in retail,
0:35:05 and also insurance,
0:35:08 and therefore find itself in a market position
0:35:10 where it can regularly charge margins
0:35:12 that would make even Apple computers jealous.
0:35:16 – What do you think of Tim Woo’s argument
0:35:20 that the kind of dominance exercised by Esalora Luxotica
0:35:23 is a threat to democracy?
0:35:25 Or what do you think about anything else
0:35:27 you heard in this series?
0:35:29 I’d love to hear from you.
0:35:33 Our email is radio@freakonomics.com.
0:35:36 Coming up next time on the show,
0:35:39 if modern capitalism is a problem,
0:35:43 how about this as a solution?
0:35:46 – Time is an interesting commodity.
0:35:48 – I’m like, why are people not talking about it?
0:35:50 – You can imagine it being a time barter system
0:35:54 on steroids enabled by modern technology.
0:35:56 – Are we at the point where time dollars
0:35:59 can challenge real dollars?
0:36:01 That’s next week on the show.
0:36:02 Until then, take care of yourself.
0:36:05 And if you can, someone else too.
0:36:09 Freakonomics Radio is produced by Stitcher and Renbud Radio.
0:36:12 You can find our entire archive on any podcast app
0:36:14 also at freakonomics.com
0:36:16 where we publish transcripts and show notes.
0:36:19 This episode was produced by Morgan Levy.
0:36:21 Our staff also includes Alina Cullman,
0:36:23 Augusta Chapman, Dalvin Abouaji,
0:36:26 Eleanor Osborne, Elsa Hernandez, Gabriel Roth,
0:36:29 Greg Rippen, Jasmine Klinger, Jeremy Johnston,
0:36:31 Julie Canfer, Lyric Boudic, Neal Karuth,
0:36:33 Rebecca Lee Douglas, Sarah Lilly,
0:36:35 Teo Jacobs, and Zac Lipinski.
0:36:37 Special thanks this week to John Schnars
0:36:39 and Ellen Frankman.
0:36:42 Our theme song is “Mr. Fortune” by the Hitchhikers.
0:36:44 Our composer is Luis Guerra.
0:36:46 As always, thank you for listening.
0:36:51 – Steven, we’re just trying to solve world peace
0:36:53 with Lentosh at a time.
0:36:55 (laughing)
0:36:58 (electronic beeping)
0:37:01 – The Freakonomics Radio Network,
0:37:03 the hidden side of everything.
0:37:06 (upbeat music)
0:37:07 Stitcher.
0:37:09 (upbeat music)
0:37:11 you
0:00:06 Last week in part one of this series,
0:00:10 we heard about the long and strange history of eyeglasses.
0:00:14 What we often see in early arts are representations
0:00:17 of the devil wearing spectacles.
0:00:20 And we learned how today, the $150 billion
0:00:23 eyewear industry, has one dominant player,
0:00:27 a French-Italian conglomerate called Esselor Luxorica.
0:00:29 They have full control over prices,
0:00:31 and that’s just a license to mint money from them.
0:00:34 We also heard how challengers like Warby Parker
0:00:37 are trying to change the economics of the industry.
0:00:40 When we had this idea to sell eyewear
0:00:44 for a fraction of the cost, people loved that idea.
0:00:47 Today on Freakonomics Radio, in part two of our series,
0:00:50 we learn about the massive rise of myopia,
0:00:54 the even more massive rise of China as an eyeglass market,
0:00:58 and what an eye doctor knows that you don’t know.
0:01:00 I always tell people, you don’t compromise
0:01:03 on parachutes or eyeglasses.
0:01:05 Oh yeah, one more thing.
0:01:08 We ask whether intense consolidation in an industry
0:01:13 like eyewear could be a threat to democracy itself?
0:01:16 If people feel a tiny group of consolidated industries
0:01:19 and their beneficiaries make all the money,
0:01:22 it tends to create a lot of widespread anger.
0:01:25 The surprising economics of the eyeglass industry,
0:01:27 part two, beginning now.
0:01:30 (upbeat music)
0:01:42 – This is Freakonomics Radio,
0:01:46 the podcast that explores the hidden side of everything
0:01:48 with your host, Stephen Dubner.
0:01:51 (upbeat music)
0:01:53 (upbeat music)
0:01:59 Tim Wu is a law professor at Columbia.
0:02:03 He has also been in both the Obama and Biden administrations
0:02:06 an advocate of stronger anti-trust legislation.
0:02:09 Wu argues that too many industries
0:02:11 have just one or two dominant players
0:02:13 which can push up prices.
0:02:16 This would include the eyeglass industry.
0:02:18 – It has to compare itself with other obscene margin takers
0:02:20 like the pharmaceutical drug industry.
0:02:23 The specific target of Wu’s criticism here
0:02:24 is S.L.O.R. Luxottica,
0:02:28 which controls a massive portion of the global industry
0:02:31 from eyeglass retailers to optical labs,
0:02:34 from luxury partnerships to vision insurance.
0:02:36 – Some of the worst abuses of market power
0:02:37 are in medical industries
0:02:40 where you can’t really go without the thing.
0:02:41 You need glasses, right?
0:02:44 If you wanna see things that are far away.
0:02:46 There is something particularly offensive
0:02:48 when you take advantage of an essential need
0:02:49 that people have.
0:02:52 – To be fair, I’m extremely grateful
0:02:54 to the whole history of science of eye care.
0:02:58 ‘Cause if I were born in an era before eyeglasses,
0:03:01 I would have been like Viking food.
0:03:01 They would have chopped me up
0:03:03 to feed to the horses or something.
0:03:04 I would have been useless.
0:03:07 So if I have to pay $1,000 for a pair of glasses
0:03:10 that let me see really well, I don’t love it,
0:03:11 but I am grateful.
0:03:13 I guess the story I’ve always told myself
0:03:15 is just think of all that technology
0:03:16 that has gone into that.
0:03:19 – Yeah, if Luxottica employed a team of crack scientists
0:03:22 who had invented eyeglasses five years ago,
0:03:23 I would be singing their praises and saying,
0:03:26 “Wow, look, these guys invented this thing.
0:03:27 “We’ll give them a break.”
0:03:30 I don’t know who invented the idea of a prism,
0:03:31 but certainly they didn’t.
0:03:33 That’s like giving American Airlines credit
0:03:35 for inventing the airplane.
0:03:36 They’re the one who’s throwing you
0:03:39 in the middle seat and charging you for overhead baggage.
0:03:40 They’re not the right brothers.
0:03:41 I think you got the wrong guys.
0:03:45 – One thing about the airline industry,
0:03:48 their product has gotten cheaper,
0:03:49 adjusted for inflation,
0:03:51 airline tickets have fallen by at least a third
0:03:53 over the past 40 years.
0:03:57 As for eyeglasses, there are some inexpensive ones out there.
0:04:00 Zeni Optical sells glasses online
0:04:02 for an average of $44 a pair.
0:04:05 Glasses at Warby Parker start at $95,
0:04:09 but the industry average is around $350.
0:04:11 What’s driving these prices?
0:04:14 Let’s talk to someone who knows the details.
0:04:17 – A regular single vision lens can start at $150.
0:04:20 That is Harvey Mascot.
0:04:23 He is an optometrist and the fourth generation
0:04:26 of his family to run the Mascot eyeglass chain,
0:04:28 which started in New York.
0:04:31 – And I both fixer upper, I like to consider myself.
0:04:33 I work in the family business my whole life,
0:04:35 summers for beer money.
0:04:37 So I was always introduced and exposed
0:04:38 to the optical business.
0:04:39 – When you grow up in a family business,
0:04:43 it’s what all of the generations talk about at dinner.
0:04:44 It’s a part of your culture.
0:04:47 – And that’s Zachary Mascot, Harvey’s son.
0:04:49 He’s the firm’s chief design officer.
0:04:51 That covers the design of their glasses,
0:04:53 as well as the Mascot shops,
0:04:56 which have some distinctive touches.
0:04:58 – Walking into a Mascot shop,
0:05:00 it’s like walking into my grandmother’s living room.
0:05:03 I don’t know if I can recreate the smell,
0:05:04 but it’s certainly-
0:05:06 – Would you want to recreate the smell?
0:05:07 – I’m not gonna answer that,
0:05:09 but it’s certainly a warm feeling.
0:05:13 There’s knickknacks, there’s random items at the cashier,
0:05:15 a little bunny rabbit holding a business card,
0:05:17 things that were collected by my grandfather
0:05:18 when he would bring it home.
0:05:19 And my grandmother said,
0:05:22 that’s not staying here, bring it back to the shop.
0:05:24 And that became the aesthetic of our brand.
0:05:26 – The story starts out in 1899
0:05:28 when my great-grandfather, Hyman,
0:05:30 who I’m named after, Harvey,
0:05:33 came to America with a classic story of coming to America
0:05:36 to pursue your dreams and escape oppression.
0:05:37 In Eastern Europe at the time,
0:05:40 he was an optician from the old country
0:05:42 and set up his wares on the Lower East Side,
0:05:43 Orchard Street,
0:05:46 and sold ready-made glasses from a push cart.
0:05:49 And then his son, Saul, was born in America in 1910,
0:05:51 and Saul was pretty entrepreneurial,
0:05:54 and they set up a brick and mortar shop.
0:05:56 And we sat on the corner of Orchard and Delancey
0:05:57 for 78 years.
0:06:01 My dad followed his father into the business as an optician.
0:06:03 They took their craft seriously.
0:06:04 They loved opticianry.
0:06:07 They loved taking care of clientele and customers.
0:06:10 – The Moscow aesthetic today is Old World New York
0:06:13 with a dash of nouveau cool.
0:06:15 We are at the, I would say the lower end
0:06:17 of the high-end segment.
0:06:20 We’re really positioned as a fashion brand
0:06:22 that of course offers medical functions
0:06:24 and the expertise of opticians,
0:06:27 but we’re really positioning ourselves
0:06:29 in the luxury brand side of things.
0:06:33 – The names of the frames at Moscow are memorable.
0:06:36 The Boy Chick, the Frankie, the Neb,
0:06:37 their best-selling frame,
0:06:40 worn by David Beckham and Johnny Depp
0:06:43 and Rashida Jones is called the Lemtosh.
0:06:45 I asked where that name came from.
0:06:48 – It was actually a made-up family word,
0:06:49 kind of like a Yiddish slang
0:06:51 that they would use when picking on one another.
0:06:52 – You’re such a Lemtosh.
0:06:54 – Stop being a Lemtosh.
0:06:56 – We never take ourselves too seriously, Stephen,
0:06:57 and we like to have fun.
0:06:59 And these were just words that were used in the family
0:07:01 that I heard growing up.
0:07:04 – So what is it about the Lemtosh
0:07:06 that makes it universally appropriate
0:07:08 or so widely appropriate at least?
0:07:11 Can you describe, you know, whether it’s the shape,
0:07:13 the textures, the way it sits?
0:07:15 Just what is it about that frame?
0:07:18 – It’s the perfect balance of square and round.
0:07:19 It is not perfectly round.
0:07:22 It is not perfectly square.
0:07:23 Because of that shape,
0:07:25 it inadvertently fits super well
0:07:27 on different types of noses
0:07:29 or as we call in the industry, bridges.
0:07:32 – What are you wearing right now, Harvey?
0:07:34 I mean, glasses-wise.
0:07:38 – I am wearing my Lemtosh in a champagne color,
0:07:39 which we call flesh.
0:07:43 – The fact is, while speaking to the Mascots,
0:07:47 I too was wearing a pair of Lemtosh frames.
0:07:49 I’ve been a Mascot customer for a few years now,
0:07:51 and that’s one reason I wanted to hear from them.
0:07:53 I started buying my glasses at Mascot
0:07:55 not because of how the frames look,
0:07:57 although I do like them.
0:07:59 I wound up there because the glasses I was getting
0:08:02 at other places just didn’t work very well.
0:08:05 The lenses, I mean, they were a little imprecise
0:08:08 or had too small of a sweet spot.
0:08:10 They scratched too easily.
0:08:13 I now told Harvey Mascot my eyeglass history,
0:08:15 and I asked him to walk me through the pricing.
0:08:17 – I don’t want to get too technical, but–
0:08:19 – No, I want the technical.
0:08:20 – Well, we have to start with,
0:08:21 are you wearing progressives?
0:08:22 – I am, yes.
0:08:25 – And is your prescription over a minus four?
0:08:26 – Yes.
0:08:27 – Sounds like you’re pretty nearsighted.
0:08:29 Highly myopic prescriptions
0:08:31 with high astigmatic corrections,
0:08:34 a lot of competitors have trouble
0:08:36 with these more complex prescriptions
0:08:38 that we take pride in providing,
0:08:39 and we’re comfortable doing,
0:08:42 and our licensed personnel understand.
0:08:43 Do you have prism?
0:08:44 – Yes.
0:08:46 So once I get into that fairly complicated lens,
0:08:49 and also let’s say I want my lens to be nice and thin,
0:08:51 ’cause I don’t want it to look like I’m looking through
0:08:52 the bottom of a Coke bottle.
0:08:54 What does that lens cost?
0:08:57 – You can add $100, $200 for higher indexes,
0:09:00 which is just increased density of the material
0:09:02 that makes the lens thinner.
0:09:06 You check all the boxes for a very complicated patient
0:09:08 and customer that Moscow loves to serve.
0:09:11 So you’re probably upwards of $1,000.
0:09:12 – Yes, I am, yeah.
0:09:15 And now, what would you say to someone who hears this
0:09:17 and maybe who doesn’t wear glasses yet,
0:09:20 who might once they hit 40 or whatnot,
0:09:22 and say $1,000 for a pair of glasses?
0:09:24 Come on, that’s absurd.
0:09:26 – Well, usually before 40, you don’t need progressives,
0:09:29 so they won’t be that expensive.
0:09:32 But if you’re over 40, I would say you have two eyes.
0:09:36 You want the best possible vision you can get.
0:09:38 Vision is a precious sense.
0:09:41 You don’t compromise on parachutes or eyeglasses.
0:09:46 – The Moscow brand has been growing,
0:09:47 especially over the past decade.
0:09:49 They have more than two dozen shops around the world,
0:09:53 many in the U.S., but also in Japan, South Korea,
0:09:55 and spread around Europe.
0:09:57 Compared to Estelar Luxotica,
0:10:00 they are a minnow, and for a long time,
0:10:03 they didn’t even make their own lenses.
0:10:06 – It was the one piece of the puzzle that we hadn’t solved.
0:10:08 I personally had done everything in the optical business,
0:10:12 from opticianry, optometry, to working with frames,
0:10:14 but we would purchase our lenses
0:10:18 from various lens vendors, the Estelars of the world.
0:10:19 – In what form were they,
0:10:21 are they purchased finished essentially,
0:10:24 or are they kind of like a hockey puck that you grind down?
0:10:25 – They’re called finished blanks.
0:10:26 You can buy lenses finished,
0:10:29 and then you just edge them locally in your lab,
0:10:31 which means cutting them to the frame proper size,
0:10:32 and all of that.
0:10:35 – The degree of magnification is already set, you’re saying.
0:10:39 – Yeah, the prescription is ground by surfacing equipment
0:10:41 that grinds into the surface of the lens,
0:10:42 the front and back surface,
0:10:44 so that the prescription is accurate.
0:10:46 – But a couple of years ago,
0:10:49 Moscow took a page out of Estelar Luxotica’s playbook
0:10:53 by incorporating a bit of vertical integration.
0:10:55 Instead of buying lenses from a supplier,
0:10:58 Moscow started to make their own.
0:11:00 – It was something that we wanted to migrate to
0:11:02 and focus on and learn about.
0:11:03 – How come?
0:11:06 – Because at the end of the day, prices were rising,
0:11:09 costs continued to rise, we don’t sacrifice on quality,
0:11:11 and we would never, for example,
0:11:15 buy less expensive screws or wire templates.
0:11:17 I think it speaks to the fact that we’re control freaks,
0:11:21 and not being able to control certain aspects
0:11:23 of what you do was bothersome to me.
0:11:27 Relying on others to do your work is always problematic for us.
0:11:29 So now we service our own lenses,
0:11:31 we don’t have to buy them from the Estelars of the world,
0:11:34 and we actually grind the prescription in and control it,
0:11:35 but it wasn’t about profit,
0:11:37 it was more about service levels in our shops
0:11:40 and controlling the quality of the lenses
0:11:41 that we were producing,
0:11:43 understanding how they were made,
0:11:45 modifying them in a way that would optimize vision
0:11:47 for our customers.
0:11:50 – So you opened this lab just a few years ago,
0:11:51 and this is on Long Island, correct?
0:11:52 – Correct, yes.
0:11:54 – We started it from scratch,
0:11:56 a very gray as a result of it.
0:11:59 – So you’re investing in your lens operation,
0:12:02 you’re investing in expanding around the world,
0:12:04 a couple dozen shops,
0:12:05 have you taken any outside money,
0:12:08 or is this all mascot reinvestment?
0:12:12 – The latter, credit facilities for banks and our own money.
0:12:14 – I don’t wanna sound like your depression era
0:12:15 great-grandfather,
0:12:18 but does it keep you up at night sometimes?
0:12:20 – Sure, we expand the brand thoughtfully,
0:12:22 we do things for the right reasons,
0:12:24 not just for hitting targets and numbers.
0:12:28 So that’s why it’s taken us 109 years to have 27 shops.
0:12:33 – I told Harvey Mascot about the complaints
0:12:34 that Tim Woo had raised,
0:12:38 that eyeglass firms didn’t invent eyeglass technology
0:12:41 any more than American Airlines invented the airplane,
0:12:44 and that technologies usually get cheaper over time.
0:12:47 So why aren’t eyeglasses getting cheaper?
0:12:50 – The eyewear business requires licensed personnel
0:12:51 on the retail level.
0:12:55 It’s a unique specialty retail industry.
0:12:58 So licensed opticians are licensed by states.
0:13:02 You need to be licensed in order to open an optical shop
0:13:04 in New York, California, most of the states.
0:13:07 Doctors of optometry are the vision specialists
0:13:10 that provide prescriptions along with eye health exams.
0:13:12 So the cost structures are very different.
0:13:14 Doctors aren’t making what a gap employee
0:13:16 is making selling apparel.
0:13:20 So when you combine all these costs and laboratory costs
0:13:23 and specialized skilled costs, it’s very different.
0:13:28 And to just apply that to like a straight retail profit analysis
0:13:30 would be a little bit inaccurate.
0:13:33 – So you think Tim Woo is misunderstanding
0:13:35 the complexity of the industry a little bit?
0:13:36 – Most people do.
0:13:42 – I went back to the eyeglass industry analyst
0:13:44 we heard from in the first part of this series,
0:13:48 Cedric Rossi, who works for a European investment bank.
0:13:50 He is an expert in S-Lore Luxatica
0:13:53 but also knows a great deal about Warby Parker
0:13:56 and every other eyewear brand I could name.
0:14:00 I asked Rossi if he’s familiar with mascot.
0:14:01 – Yeah, a little bit.
0:14:02 It’s starting to expand in Europe.
0:14:05 It was a brand that was almost nonexistent
0:14:07 outside New York, if I’m correct.
0:14:08 – Yes, you’re right.
0:14:11 – Even in the US, actually it was not very well known
0:14:14 until now the owners are starting to realize
0:14:17 that there is some opportunities not only in the US
0:14:19 but also internationally.
0:14:21 Moscott is a very interesting brand
0:14:24 to differentiate yourself from competition.
0:14:27 And that’s why I think optical retailers in Europe
0:14:29 are offering a mascot into the stores
0:14:33 to attract new customers that are used to buying
0:14:35 a Reban and Oakley for years and years.
0:14:38 And now they also want to discover new brands.
0:14:40 – If you were Moscott and you’re trying to take
0:14:45 a relatively small New York retro fashion brand
0:14:48 that’s not inexpensive, where would you look
0:14:52 to expand particularly in the next five or 10 years?
0:14:54 – When you are a US brand, the obvious international markets
0:14:56 are the Anglo-Saxon markets.
0:15:00 It’s very convenient to start with the UK,
0:15:01 Australia, New Zealand.
0:15:03 The consumer behavior is pretty much similar
0:15:05 to what you have in the US.
0:15:07 And then Europe is also a market
0:15:10 which is quite relevant for Moscott.
0:15:13 Also because people are highly attracted by fashion.
0:15:15 Then Asia, but it’s a tough market
0:15:17 because you have a lot of intermediaries,
0:15:19 sometimes in Japan to exist.
0:15:22 You need to be distributed by department store chains
0:15:24 in South Korea, same story.
0:15:25 – Why is that?
0:15:27 Why can’t I have a standalone eyeglass store there?
0:15:30 – That’s how the market is structured.
0:15:32 – Is it because of the medical component or no?
0:15:33 – No, no, no.
0:15:36 Even for luxury companies, when they started
0:15:40 to expand in Japan or in South Korea in the 80s,
0:15:43 they were distributed into department store chains
0:15:46 because it was really hard to just have a freestanding store
0:15:48 in a very popular street.
0:15:50 – Is that because South Korea and Japan,
0:15:54 let’s say, want to constrain foreign direct investment?
0:15:56 They don’t want firms to come in
0:15:59 and basically manage the real estate.
0:16:01 They want to keep the real estate management more local
0:16:03 for taxes and ownership and so on.
0:16:04 – That could be part of the answer,
0:16:07 but the other reason is that department store chains
0:16:11 own a big chunk of the fashion market.
0:16:13 And so if you want to address a new market,
0:16:16 it’s more convenient to be distributed into department stores
0:16:18 because you rely on a distribution
0:16:19 that is already well-established.
0:16:24 – Rossi says that everyone in the eyeglass industry
0:16:28 is looking to Asia-Pacific for the next big growth spurt.
0:16:30 He says the most attractive target,
0:16:34 especially to a global giant like S. Laura Luxartica,
0:16:35 is China.
0:16:39 China is only 4% to 5% of S. Laura sales.
0:16:41 As a comparison, China already accounts
0:16:44 for more than 20% or 25% of some luxury groups
0:16:47 like Hermès or Moncler, for instance.
0:16:50 In the optical industry, it’s quite difficult
0:16:52 to penetrate in emerging markets
0:16:54 because to exist, you need to have
0:16:55 often monogists and opticians.
0:16:58 – So does S. Laura Luxartica
0:17:02 or any other eyewear manufacturer actually fund the education
0:17:06 or the business practices of optometrists in these countries?
0:17:07 – Exactly.
0:17:08 – They do, ah.
0:17:10 – Exactly, S. Laura Luxartica
0:17:13 opened a few schools to train opticians
0:17:16 because they know that if they want to develop
0:17:17 their business in those countries,
0:17:20 they also need to help the local governments
0:17:22 create from scratch the eyewear market.
0:17:24 And so that’s why the Chinese government
0:17:27 was highly supportive to the initiatives
0:17:29 implemented by S. Laura Luxartica at that time.
0:17:31 It’s because, you know, the welfare state
0:17:33 does not exist in China.
0:17:35 And so if they have some Western companies
0:17:38 helping to create the local eyewear market,
0:17:41 they were highly supportive to these initiatives.
0:17:43 – Does S. Laura Luxartica see that
0:17:45 as a cost center or a profit center?
0:17:47 They’re charging tuition or are they subsidizing
0:17:49 or somewhere in the middle?
0:17:51 – I would say it’s even more than that.
0:17:53 It’s an investment for the long-term growth.
0:17:56 (dramatic music)
0:17:57 – That makes sense, doesn’t it?
0:18:00 That S. Laura Luxartica would be willing
0:18:04 to invest in schools to train Chinese opticians
0:18:07 because the Chinese eyeglass market is growing fast
0:18:10 and it’s growing differently.
0:18:11 Coming up after the break.
0:18:13 – In China, I do see the commercial side
0:18:15 moving too quickly.
0:18:18 – A new treatment for myopia is big business
0:18:21 in China right now and S. Laura Luxartica
0:18:25 has positioned itself once again to take advantage.
0:18:25 I’m Stephen Dubner.
0:18:27 This is Freakonomics Radio.
0:18:28 We’ll be right back.
0:18:31 (gentle music)
0:18:41 – Maria Lu is a professor and researcher
0:18:42 in the Optometry School
0:18:44 at the University of California Berkeley.
0:18:48 She, like me and many, many, many other people,
0:18:52 has myopia, also known as nearsightedness.
0:18:53 – I’m fully convinced,
0:18:56 at least for my own nearsightedness,
0:19:00 this is heavily driven by my early introduction
0:19:03 of pretty intense academic stress.
0:19:06 – And just how intense was her academic stress?
0:19:10 – I skipped two years in primary school,
0:19:13 one year in middle school and one year in high school.
0:19:14 – Lu grew up in China
0:19:17 and was diagnosed with myopia at age 13.
0:19:19 She got a medical degree in ophthalmology
0:19:21 and practiced there for several years
0:19:23 before moving to the U.S.,
0:19:26 where she acquired several more degrees,
0:19:29 a doctor of optometry, an MBA,
0:19:32 a master’s in public health, and a PhD.
0:19:34 For many years, Lu says,
0:19:37 myopia was thought to be a purely genetic condition,
0:19:40 but she was of the school that thought otherwise,
0:19:43 that it can also be driven by environmental factors,
0:19:47 like long stretches of reading or other close-up work
0:19:50 or too much time focused on screens
0:19:52 or not getting enough sunlight.
0:19:54 Here’s one piece of evidence in her argument
0:19:57 that genetics aren’t the only driver.
0:20:01 She is the only near-sighted person in her family.
0:20:02 Here’s another piece of evidence.
0:20:05 The rate of myopia around the world
0:20:08 has been going bonkers over the past few decades.
0:20:11 – We know for any common condition,
0:20:14 if you see a drastic change in the disease prevalence,
0:20:19 this cannot be explained by the human genetic mutation
0:20:21 because human genetic makeup
0:20:24 simply do not mutate at this rate.
0:20:28 – In the US, 42% of the population has myopia.
0:20:32 In the 1970s, the rate was just 25%.
0:20:34 Several countries in Asia,
0:20:36 including China, Singapore, and Japan,
0:20:40 have myopia rates of 80% to 90%.
0:20:42 In Seoul, South Korea,
0:20:47 96.5% of 19-year-old men have myopia.
0:20:50 – Not only were seeing a very rapid increase
0:20:51 in the overall prevalence,
0:20:54 we’re also seeing a rapid change
0:20:57 in terms of the age of onset.
0:21:00 We’re seeing kids started developing myopia
0:21:02 at a younger and younger age.
0:21:04 This is very concerning
0:21:08 because the earlier the age of onset,
0:21:10 the faster the progression.
0:21:14 – As infants, our eyeballs grow to a round shape.
0:21:17 Myopia occurs when the eyeball elongates
0:21:20 past the round shape to more of an oval.
0:21:23 The environmental argument says that this elongation
0:21:26 is the eyes way of adapting to the demand
0:21:28 of focusing on something close to your face,
0:21:31 a book maybe, or perhaps more likely,
0:21:33 a smartphone or a computer screen.
0:21:37 It is now estimated that 30% of the global population
0:21:40 has myopia and researchers expect that number
0:21:43 to hit 50% by 2050.
0:21:46 Maria Lu thought that something should be done about that.
0:21:51 So at Berkeley, she started the myopia control clinic.
0:21:55 – When I was trying to start the clinic back in 2013,
0:21:59 our previous clinical director was not very convinced
0:22:02 that number one, myopia is even controllable
0:22:05 and number two, a commercial potential
0:22:07 for this type of service.
0:22:11 So I volunteered my Sundays to get the clinic started
0:22:13 just to really show that yes,
0:22:16 we have a huge demand for this kind of service
0:22:21 and yes, this is evidence-based practice, not some voodoo.
0:22:23 – And it isn’t just a matter of seeing better.
0:22:25 Myopia, left untreated,
0:22:29 can lead to a variety of severe eye conditions.
0:22:32 There are treatments to help slow the progression of myopia,
0:22:36 including eye drops, contact lenses, and surgery,
0:22:40 but there is a newer, perhaps more promising treatment.
0:22:42 – The use of the novel spectacles.
0:22:45 – The novel spectacle is a pair of glasses
0:22:48 designed to slow the elongation of the eyeball.
0:22:51 The lens includes thousands of micro dots
0:22:54 that diffuse the light that hits the eye.
0:22:57 – Novel spectacles will become, in the future,
0:23:02 in my personal opinion, the first line treatment globally
0:23:04 for progressive myopia.
0:23:07 Unfortunately, this is the type of treatment
0:23:10 that has not been approved by US FDA,
0:23:13 so we don’t have such treatment available
0:23:14 in our clinic yet,
0:23:17 but in China, novel spectacles,
0:23:20 based on those micro lens technology,
0:23:24 are becoming the first line defense for myopia control.
0:23:28 – And the Chinese market for novel spectacles is booming.
0:23:32 Liu sees this firsthand in her practice in California.
0:23:36 – Not only Chinese families going back to China
0:23:38 and getting those glasses,
0:23:41 but many families fly to Canada.
0:23:45 Canada offers a couple of those devices or designs already.
0:23:49 I’ve had multiple patient families flying to Canada,
0:23:52 specifically just to get those glasses.
0:23:56 – But Liu is concerned that some of these novel spectacles
0:23:58 won’t do what people are hoping they’ll do.
0:24:02 – To my knowledge, there are over 200 different designs
0:24:04 of those novel spectacles,
0:24:07 specifically for myopia control.
0:24:10 Out of these 200 plus designs,
0:24:12 there are about 10% of them
0:24:16 that actually underwent any sort of clinical testing.
0:24:18 In China, I do see the commercial side
0:24:20 is moving too quickly,
0:24:22 but in the rest of the world,
0:24:26 all of these major players are playing a vital role
0:24:28 in advancing the research side
0:24:31 for us to better understand and better manage myopia.
0:24:35 – One of those major players helping advance the research
0:24:39 is, as you may have guessed, Esalor Luxotica.
0:24:42 They’re one of the major manufacturers
0:24:45 that invested a lot in clinical testing.
0:24:48 The sample size, the rigorousness
0:24:52 of the clinical study designs are very, very different.
0:24:55 We’ve seen some designs being tested
0:24:57 with a sample size of 30,
0:25:01 but Esalor has pretty good clinical data,
0:25:05 not only in terms of the years of observation,
0:25:07 but also the diversity of the children
0:25:09 being recruited for the study.
0:25:12 – As an investment for Esalor Luxotica,
0:25:13 this makes a lot of sense.
0:25:16 The management of myopia is already big business
0:25:18 and we’ll be getting much bigger.
0:25:21 – This is gonna be the next major wave
0:25:25 in either revenue boosting or profit boosting.
0:25:29 The retail price range for novel spectacles
0:25:33 can be anywhere from a couple of hundred dollars
0:25:35 up to 1500 US dollars.
0:25:39 – Esalor Luxotica’s model is called the Stellist.
0:25:42 – Because of their upfront investment in R&D
0:25:44 and the clinical testing,
0:25:48 Esalor Stellist definitely is on the higher price range.
0:25:50 – There’s another design in the US
0:25:51 that’s currently making its way
0:25:53 through the FDA’s approval process.
0:25:58 It’s called Diffusion Optics Technology Lens or DOT.
0:25:59 It is a joint venture
0:26:04 between the American firm Cooper Vision and Esalor Luxotica.
0:26:06 Interestingly, the two designs,
0:26:09 the Stellist versus the DOT design
0:26:13 are based on very different design principles.
0:26:18 And so they are not just a copycat of one another.
0:26:22 So it’s good to see novel spectacle industry
0:26:25 offering designs based on different principles
0:26:29 so that in case a patient is a non-responder to one design,
0:26:32 we may be able to try a totally different design
0:26:35 rather than trying another copycat.
0:26:36 – And how does Lou feel about
0:26:39 the relatively high cost of novel spectacles?
0:26:40 – So the question is,
0:26:45 do I see a high price of these novel spectacles justifiable?
0:26:49 I would say yes and no.
0:26:54 The yes part is to manage pediatric myopia,
0:26:56 even just simply with glasses,
0:26:58 it takes a lot more chair time
0:27:01 for the practitioners to explain
0:27:04 why we’re prescribing those devices,
0:27:07 how frequent we need to see your child back
0:27:10 and there are a lot more auxiliary testing
0:27:14 that’s required to accurately evaluate the safety
0:27:17 and the efficacy of the treatment.
0:27:22 In the US, we’re able to charge more for the service fee,
0:27:25 but in China, there is no way
0:27:29 the doctors can charge for their chair time.
0:27:32 So all of the time they spend in patient
0:27:33 and parent education,
0:27:37 in making sure these devices are properly used,
0:27:41 are built into the overall cost of the lenses.
0:27:42 In China market,
0:27:46 a lot of the manufacturers are still very profit-driven,
0:27:49 it’s not evidence-based,
0:27:54 and it’s causing confusion more than helping the advancement.
0:27:56 – And how about the US market?
0:27:59 We’ve had patients asking for novel spectacles
0:28:01 on a daily basis,
0:28:04 so it’s whoever is doing the most heavy lifting,
0:28:08 being the first product approved in US market,
0:28:11 certainly deserve to have the momentum,
0:28:13 at least for the first two, three years.
0:28:15 – And a lot of that heavy lifting has been done
0:28:17 by Esalar Luxatica.
0:28:19 – I really respect their effort
0:28:23 in trying to help on the more basic research side,
0:28:25 not just something that’s immediately translatable
0:28:27 to a commercial profit.
0:28:30 – And so, on balance,
0:28:34 Maria Lu believes that Esalar Luxatica is a force for good
0:28:37 in the fight against myopia.
0:28:41 Using the billions of dollars they earn selling Prada
0:28:43 and Chanel branded glasses,
0:28:45 by selling Ray-Bans and Oakleys,
0:28:47 to invest in new optical treatments.
0:28:50 But again, we are living through an era of capitalism
0:28:53 where consolidation is the norm.
0:28:56 So, is it a problem that one player
0:29:00 in the eyeglass industry has so much global leverage?
0:29:03 Tim Wu says yes,
0:29:07 and not just for the reasons you may think.
0:29:08 That’s coming up after the break.
0:29:11 I’m Stephen Dubner, and this is Freakonomics Radio.
0:29:19 (dramatic music)
0:29:22 As we’ve noted throughout this series,
0:29:25 the French-Italian eyewear firm, Esalar Luxatica,
0:29:28 has a dominant position in the global industry.
0:29:31 Just last week, they bought the streetwear brand Supreme,
0:29:35 which doesn’t even make eyeglasses, at least not yet.
0:29:37 They were also reported to be in talks with Meta,
0:29:39 the parent company of Facebook,
0:29:41 that would have the software giant
0:29:45 taking on a minority stake in Esalar Luxatica.
0:29:47 Those two firms have already partnered
0:29:49 on a pair of Ray-Ban smart glasses,
0:29:52 Ray-Ban being a property that Esalar Luxatica
0:29:54 bought in 1999 and turned into
0:29:58 the biggest eyewear brand in the world.
0:30:03 So, Esalar Luxatica is very big and getting bigger.
0:30:06 This is the kind of thing that makes Tim Wu nervous.
0:30:09 He is the Columbia University legal scholar
0:30:12 who has spent time in two presidential administrations.
0:30:17 In 2018, he published a book called The Curse of Bigness,
0:30:20 Anti-Trust in the New Gilded Age.
0:30:23 I went back to Wu for a final word.
0:30:29 So, you argue that corporate or industrial concentration
0:30:31 can lead to a variety of bad outcomes,
0:30:33 but especially bad political outcomes,
0:30:37 including extreme nationalism, even fascism.
0:30:39 Give me an example of what you mean by that.
0:30:41 – I think the real road to serfdom
0:30:46 often goes through unmanaged aggregations of private power.
0:30:49 And what I mean by that is if you have
0:30:51 no active anti-monopoly policy,
0:30:56 if people feel a tiny group of consolidated industries
0:30:58 and their beneficiaries make all the money,
0:31:02 it tends to create a lot of widespread anger,
0:31:04 particularly if there’s an economic crash.
0:31:07 I think our best example is the 1930s,
0:31:09 where there was a ton of anger, obviously,
0:31:13 after the crash of the world’s economies.
0:31:14 Countries weathered it in different ways,
0:31:17 but most famously in Germany,
0:31:19 this widespread economic discontent
0:31:22 fed into the hands of a certain leader
0:31:24 who I don’t always like to mention,
0:31:26 but obviously the Nazi party rose during that period
0:31:28 on the backs of it.
0:31:30 I think you see this across history,
0:31:34 these aggregations of economic wealth and power,
0:31:37 big crashes leading to the rise of a populist.
0:31:39 We’ve had, obviously, a taste of that ourselves
0:31:41 over the last 10 years or so,
0:31:44 so I don’t think we’re entirely exempt from these tendencies.
0:31:47 You write that excessive concentration of economic power
0:31:51 will breed anti-democratic political pressures.
0:31:53 I could understand you saying
0:31:56 they could breed those pressures, but will breed.
0:31:59 Do you really feel there’s an inevitable connection
0:32:02 between that kind of economic concentration
0:32:04 and bad political outcomes?
0:32:09 – I think it depends on the critical question
0:32:11 of how the democratic government deals
0:32:14 with the inequality and inequities.
0:32:17 Will might be a strong word in that sentence,
0:32:20 which I predict is from my introduction,
0:32:23 but I think the more nuanced view
0:32:25 is if there’s a democratic failure,
0:32:28 if people feel that they haven’t done anything
0:32:32 or worse are facilitating unfairness in the economy,
0:32:35 then the demand rises for the strong man
0:32:37 who can really do what the people want.
0:32:39 I’ve studied the messaging of all these figures
0:32:40 who come to power.
0:32:43 It’s always like, you have this democracy,
0:32:46 but they don’t really serve you.
0:32:48 You need someone who has a direct line to the people,
0:32:49 and that’s me.
0:32:51 I’ve read a lot of Hugo Chavez’s speeches.
0:32:54 I’ve read the speeches of our former president or heard them.
0:32:56 I’ve read the speeches in 1930s.
0:32:57 It is basically the same,
0:32:59 usually coupled with some identity politics
0:33:00 and other sweeteners.
0:33:02 – I mean, the American situation is not as drastic
0:33:05 as Weimar Germany certainly, at least not yet,
0:33:07 and hopefully never will be,
0:33:11 but we have already been seeing the impact of consolidation
0:33:15 in the form of corporate capture or crony capitalism,
0:33:18 whatever you wanna call it over the past 20 or 30 years.
0:33:22 It strikes me that this has had a pretty significant cost
0:33:24 for American society.
0:33:26 – Yeah, I think it is a significant cost,
0:33:29 and it may ultimately be measured in the threat to democracy,
0:33:34 but also measured in the economic wellbeing of many people.
0:33:36 If you spend any time near Congress,
0:33:40 you realize that they will never really take a stand
0:33:43 against a powerful industry.
0:33:44 I mean, in the last 20 years,
0:33:46 you can count on the fingers of one hand
0:33:47 the times they’ve done something
0:33:49 that industry really doesn’t like,
0:33:54 and that was including after a major economic crash.
0:33:57 I agree, we’re not obviously where the 1930s are,
0:33:59 but in some ways we’re a more stable country.
0:34:01 Other countries are already flipped.
0:34:04 I mean, I don’t know what Hungary’s gonna be like,
0:34:07 or many other countries all across Central America,
0:34:09 but if you haven’t noticed authoritarianism,
0:34:11 dictatorship is on the rise,
0:34:13 and I think it’s almost always played on the back of,
0:34:14 well, the democracy failed.
0:34:17 But yes, it’s a huge cost to the American situation
0:34:19 to have corporate control of government.
0:34:21 – Do you think that the eyeglass industry
0:34:24 is important enough to worry about consolidation,
0:34:27 posing an actual danger to democracy?
0:34:30 – I wouldn’t, but that way I’d put it in combination
0:34:33 with a lot of other frustrations that people feel.
0:34:35 The eyeglass industry is somewhat small,
0:34:38 but potent symbol of what happens
0:34:40 when you allow corporate consolidation
0:34:41 to get out of control.
0:34:44 Obviously, it’s not the largest industry in the country,
0:34:46 and it’s not Google or Amazon,
0:34:49 but it is literally in your face or on your face.
0:34:52 It’s kind of a test case of an industry
0:34:56 which has been allowed to buy most of its competitors.
0:35:01 Luxotica has been allowed to vertically integrate itself,
0:35:04 both in the manufacture of lenses and in retail,
0:35:05 and also insurance,
0:35:08 and therefore find itself in a market position
0:35:10 where it can regularly charge margins
0:35:12 that would make even Apple computers jealous.
0:35:16 – What do you think of Tim Woo’s argument
0:35:20 that the kind of dominance exercised by Esalora Luxotica
0:35:23 is a threat to democracy?
0:35:25 Or what do you think about anything else
0:35:27 you heard in this series?
0:35:29 I’d love to hear from you.
0:35:33 Our email is radio@freakonomics.com.
0:35:36 Coming up next time on the show,
0:35:39 if modern capitalism is a problem,
0:35:43 how about this as a solution?
0:35:46 – Time is an interesting commodity.
0:35:48 – I’m like, why are people not talking about it?
0:35:50 – You can imagine it being a time barter system
0:35:54 on steroids enabled by modern technology.
0:35:56 – Are we at the point where time dollars
0:35:59 can challenge real dollars?
0:36:01 That’s next week on the show.
0:36:02 Until then, take care of yourself.
0:36:05 And if you can, someone else too.
0:36:09 Freakonomics Radio is produced by Stitcher and Renbud Radio.
0:36:12 You can find our entire archive on any podcast app
0:36:14 also at freakonomics.com
0:36:16 where we publish transcripts and show notes.
0:36:19 This episode was produced by Morgan Levy.
0:36:21 Our staff also includes Alina Cullman,
0:36:23 Augusta Chapman, Dalvin Abouaji,
0:36:26 Eleanor Osborne, Elsa Hernandez, Gabriel Roth,
0:36:29 Greg Rippen, Jasmine Klinger, Jeremy Johnston,
0:36:31 Julie Canfer, Lyric Boudic, Neal Karuth,
0:36:33 Rebecca Lee Douglas, Sarah Lilly,
0:36:35 Teo Jacobs, and Zac Lipinski.
0:36:37 Special thanks this week to John Schnars
0:36:39 and Ellen Frankman.
0:36:42 Our theme song is “Mr. Fortune” by the Hitchhikers.
0:36:44 Our composer is Luis Guerra.
0:36:46 As always, thank you for listening.
0:36:51 – Steven, we’re just trying to solve world peace
0:36:53 with Lentosh at a time.
0:36:55 (laughing)
0:36:58 (electronic beeping)
0:37:01 – The Freakonomics Radio Network,
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0:37:07 Stitcher.
0:37:09 (upbeat music)
0:37:11 you
That’s the worry. Even the humble eyeglass industry is dominated by a single firm.
We look into the global spike in myopia, how the Lemtosh got its name, and what your eye doctor knows that you don’t. (Part two of a two-part series.)
- SOURCES:
- Maria Liu, professor of clinical optometry at the University of California, Berkeley.
- Harvey Moscot, C.E.O. of MOSCOT Eyewear and Eyecare.
- Zachary Moscot, chief design officer of MOSCOT Eyewear and Eyecare.
- Cédric Rossi, equity research analyst at Bryan Garnier.
- Tim Wu, professor of law, science and technology at Columbia Law School.
- RESOURCES:
- “Meta in Talks to Buy Stake in Eyewear Giant EssilorLuxottica,” by Salvador Rodriguez and Lauren Thomas (The Wall Street Journal, 2024).
- “The Story Behind Soaring Myopia Among Kids,” by Manoush Zomorodi, Katie Monteleone, Sanaz Meshkinpour, and Rachel Faulkner White (Body Electric, 2024).
- “Why So Many People Need Glasses Now,” by Christophe Haubursin (Vox, 2023).
- “Eyes on World Sight: Taking Action to Advance Eye Health in China,” by EssilorLuxottica (2022).
- “Global Prevalence of Myopia and High Myopia and Temporal Trends from 2000 through 2050,” by Brien A. Holden, Timothy R. Fricke, Serge Resnikoff, et al. (Ophthalmology, 2016).
- “Increased Prevalence of Myopia in the United States Between 1971-1972 and 1999-2004,” by Susan Vitale, Robert D. Sperduto, and Frederick L. Ferris (Archives of Ophthalmology, 2009).
- EXTRAS:
- “The Economics of Eyeglasses,” series by Freakonomics Radio (2024).