Biden’s Antitrust Revolution | The New Yorker


Tim Wu helped draft a broad antitrust decree, which Joe Biden signed on Friday.Photograph by Valerie Chiang / NYT / Redux

In 2018, Columbia law professor Tim Wu published a book claiming that giant corporate monopolies were not only an economic burden on the U.S. economy, but a serious threat to democracy. The golden age of a century ago showed how “extreme economic concentration breeds glaring inequality and material suffering, fueling an appetite for nationalist and extremist leadership,” Wu wrote, in “The curse of greatness.“If we have learned one thing from the Golden Age, it should have been this: the road to fascism and dictatorship is paved with failures of economic policy to meet the needs of the general public. “

Last Friday I spoke on the phone with Wu, who is now an advisor to President Joe Biden. He had just attended a White House event in which Biden signed a Executive Decree aimed at promoting competition throughout the economy. The aim of the ordinance was “to lower prices, raise wages and take another crucial step towards an economy that works for everyone”, Biden said at the ceremony. He added: “More tolerance for abusive actions by monopolies. No more bad mergers that lead to massive layoffs, higher prices, fewer options for workers and consumers. “

Since joining the Administration in early March, Wu has been working full time on the order, which is long and detailed. “There is an intellectual revolution here, which the president has embraced,” Wu told me. “Part of that effort is to bring antitrust back as a grassroots movement, rather than an abstract academic thing. I think we’ve been through a long time where it has become more distant and abstract. But, as the President said, ultimately it’s about creating an economy that works for everyone. “

The order contains seventy-two directives to more than a dozen federal agencies, ranging from the Federal Trade Commission to the Department of Agriculture to the Department of Defense. When I asked Wu to cite guidelines that could have an immediate impact, he cited one that directs the Secretary of Health and Human Services to “promote the wide availability of low-cost hearing aids” by posting a new rule authorizing the sale of over-the-counter devices, as required by a 2017 bill passed by Congress. Right now, people with hearing loss must obtain a prescription for their hearing aids, which are manufactured by a handful of specialist suppliers who dominate the market. A pair of devices can cost up to five thousand dollars.

It’s fair to say that when Americans think of corporate gigantism and abusive monopolies, they generally don’t think of hearing aid manufacturers. Discussions of competition policy tend to focus on tech giants such as Amazon, Google and Facebook. “Big tech is everywhere, seems to know too much about us, and seems to have too much power over what we see, hear, do and even feel,” Wu wrote in “The Curse of Bigness.” The new executive decree does not neglect the tech giants. It orders the Federal Trade Commission to review technology mergers, establish rules for the collection of user data and create other measures “prohibiting unfair competition methods in Internet markets.” Overall, what is most striking about the decree is its breadth. Targeted industries include agriculture, finance, healthcare, and transportation. And some of the more important proposals, such as reducing non-competition agreements, would apply to many different industries.

Wu and his colleagues say this broad approach reflects the reality of the American economy today. “There is evidence that. . . markets have become more concentrated and perhaps less competitive in a wide range of industries, ”wrote Heather Boushey and Helen Knudsen of the Council of Economic Advisers in an article released Friday by the White House. “Four beef packers now control over 80% of their market, domestic air travel is now dominated by four airlines, and many Americans have only one choice of reliable broadband service provider. While competition is stifled in many markets, policies designed to promote it must also address many different areas. In addition to reducing the price of hearing aids, the objectives of the decree include lowering the cost of prescription drugs; facilitate the change of bank account; prevent broadband service providers from charging high early termination fees; restrict sales agreements that prohibit farmers from repairing their own equipment; and prevent employers from imposing non-competition agreements even on low- and middle-wage workers.

The way the decree names specific issues also reflects an effort by Wu and his colleagues to get the most out of a limited tool. Barack Obama issued a pro-competition executive order in the last year of his second term, but he stepped down before it had much impact. Donald Trump has signed all kinds of executive orders, most of which are no longer in effect – either the courts struck them down or Biden struck them down after he took office. Wu and his colleagues are all too aware that this order is also susceptible to challenge in the courts, where many judges have taken a restrictive view of the government’s power to promote economic competition. Thus, in developing it, they tried to deal with specific problems which are very visible and subject to existing laws. “The whole approach of this executive order is to focus on areas where there is strong congressional authority, often given during the New Deal or the 1950s and 1960s, but which is not fully utilized,” Wu explained. .

His statement goes to the heart of the militant approach to economic competition represented by Wu and other Biden officials, including Lina Khan, the new head of the Federal Trade Commission, and Bharat Ramamurti, a former aide to Senator Elizabeth Warren. , who is now the deputy director of the National Economic Council. Their approach dates back to the economic philosophy of Louis D. Brandeis, the bane of the progressive era of industrial monopolies and big banks, who became a Supreme Court judge, and to the opinions of some of Brandeis’ proteges at court, including Felix. . Frankfurter, who played an important role in the Second New Deal of 1935-1936. During this period, the Roosevelt administration took a number of steps to restructure the economy and promote fair competition, including separating large electric utilities; the adoption of the Wagner Act, which strengthened the bargaining power of workers; and the passage of the Banking Act of 1935, which gave the Federal Reserve more power over the banking system.

Wu and other Brandeis successors envision a political regime that is sometimes called “the new Brandeisism”. They are calling on federal agencies created to promote competition, including the Federal Trade Commission and the Department of Justice’s antitrust division, to do more than bring occasional court cases against the most egregious corporate monopolies. Supporters of the new brandism argue that these agencies should act proactively, carrying out broad investigations, publishing reports and establishing rules of conduct for companies with great market power, including the platforms. -technological forms and broadband providers. “To fulfill its mandate, the US antitrust must both return to its broader objectives and improve its capabilities,” Wu wrote in “The Curse of Bigness.”

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