Biden quietly reverses decades of antitrust policy
A schoolteacher friend from the Boston area once dismisssed the “Taxachusetts” smear. She liked the services Massachusetts provided for her and her child. She did not mind paying for them. Imagine that.
Franklin Foer examines the fetish — for fetish it is — behind making efficiency the highest good in setting business policy and practice. There is more to life than low, low prices. Not that federal policy since the Reagan era recognizes that. Or the Chicago school of economics.
The Joe Biden administration has been quietly resetting federal policy on mergers, on antitrust and economic concentration. Since the Reagan administration stopped enforcing antitrust laws, Foer explains, “the American economy has grown dangerously concentrated, dominated by a shrinking number of airlines, banks, tech companies, and pharmaceutical firms (to name just a few examples). Corporate titans have amassed outsize influence over the political process, smothered start-ups, and often treated consumers with shocking indifference.”
Readers don’t need this explained to them. They’ve lived it.
Foer goes on (The Atlantic):
Why did the Reaganites do this? They were in thrall to the idea that the highest, in fact the only, valid goal of economic policy is efficiency—defined narrowly as the maximum output for the lowest prices. And they believed that Big Business was inherently efficient. They were devastatingly successful at entrenching that view. For two generations, their version of efficiency became the driving logic of competition policy (and other areas, including trade), regardless of the party in power. Concern for how monopoly power might affect workers, small-town businesses, or even democracy itself dropped out of the analysis. The Obama administration’s 2010 guidelines, for example, exempted even more mergers from review and praised corporate deals for their “potential to generate significant efficiencies and thus enhance the merged firm’s ability and incentive to compete.”
But a small merger here and a small merger there and pretty soon you have “monopoly power over time.” It both limits consumer choice and places a heavy thumb on the legislative scale. The result is even more clout for corporate oligarchs and less for workers and consumers. Democrats’ acceding to the Reagan efficiency agenda left workers feeling betrayed.
I’ve written before that “efficiency” is like “shareholder value.” When the word starts cropping up around the office, flesh-and-blood consumable resources had better update their resumes, stock up on antacid, and learn to get by with even less sleep.
Like my teacher friend, Bidenomics understands that there is more to life than efficiency.
One of the most overlooked features of the Biden administration has been its willingness to challenge the efficiency fetish. The merger guidelines are its most frontal assault to date. In the view of Biden’s antitrust officials, Washington’s turn toward efficiency—a word that doesn’t appear in any antitrust statute—substituted the preferences of libertarian economics professors for the laws that Congress actually passed. The new guidelines seek to undo that. They don’t reject economic analysis. But their guiding theory is that corporations ought to be prevented from acquiring the kind of power that enables abuses, even if econometric models promise some sort of efficiency gain.
More-to-life guidelines issued by the Biden administration suggest that “government scrutinize how mergers might hurt workers, not just consumers.”
The weakness in steering policy by executive-branch decisions rather than through legislation is that guidelines issued by one administration may be overturned by the next. On the other hand, “bureaucratic policies also have the potential to stick, if skillfully conceived. They can manage not just to survive legal challenges, but to become enmeshed in the culture of the civil service.”
We’ll see if that happens with Biden’s changes. Another four years would help. It might almost be enough for workers to notice the difference.
Foer concludes:
Critics will also argue that the new framework is divorced from economic reality and warn that it will result in higher prices. In fact, efficiency-focused antitrust appears to have failed under its own terms: The leading analysis to date finds that mergers have been more likely to raise consumer prices than lower them. But on some level, to focus on price effects is to miss the point. Efficiency was the coldest metric for evaluating a merger. It reduced Americans into the stylized economic caricature known as the “consumer,” treating cheap goods as our highest and only aspiration. The new guidelines inject a bit of humanity back into the calculus. And they suggest that the ultimate question for government shouldn’t be whether something is efficient, but whether it’s right.
Last summer in The American Prospect, Sen. Sherrod Brown called for Democrats to champion workers again. I summarized:
Brown calls out the greed that drove American companies there to relocate first to the South, then to Mexico, then offshore in the name of “efficiency”—business-school-speak for “pay workers less.” What businesses became more efficient at was destroying people’s lives and desiccating once-thriving towns. This, especially for “people outside big coastal cities and people without college degrees or inherited wealth.”
Once again: the economy should serve people, not the other way around. Humans should be holding the corporate leash, not wearing the collar. But that’s not how our corporate overlords see things.
“We are supposed to be the workers’ party. Democrats must be that party again,” Brown wrote. “We must sharpen the difference between us—historically, America’s party of workers—and the party of big business.”
“Scranton Joe” is making that happen. Problem is, will anyone notice?