Earlier this month, as Americans finished up the 4-day work week to enjoy midsummer weather, President Biden unveiled an executive order on promoting competition in our economy.
While it contains several aspects that could negatively impact consumers, there are also some bright spots that could help spark new innovations, remove red tape, and help reduce prices.
For one, Biden’s executive order creates a new White House Competition Council, made up of various department and agency heads. The council will address “overconcentration, monopolization, and unfair competition,” hoping to empower consumers and better police powerful industries.
It aims to reduce barriers to entry for new market competitors. This will be a key forum for changing laws, regulations, and taxes that all too often restrict competition and consumer choice. That is a positive step.
Also laudable are rules on hospital price transparency, easing occupational licensing, and the prospect of open banking. But removing harmful subsidies that raise prices for consumers, including for farmers, airlines, and Amtrak, would help bolster competition even more.
Unfortunately, too much of Biden’s focus is on regulating business rather than freeing up outdated rules.
One example is the focus on antitrust provisions that seek to break up monopolies and redefine 21st-century antitrust actions.
This is commendable, but only if agencies uphold the legal principle of the consumer welfare standard, ensuring that antitrust focuses on how consumers, not markets, are impacted. Ideological trustbusting could end up harming consumers and small businesses that rely on those companies.
Lately, lawsuits against various tech giants have been rejected because states and agencies have not been able to prove that certain mergers and acquisitions — such as Facebook’s 2011 purchase of Instagram, once deemed as laughable — were monopolistic.
Rather than trying to break up companies, the administration should focus on areas where regulations are propping up companies and bad regulations at the expense of you and me.
Large airlines like American Airlines have received bailouts for decades, while low-budget airlines without sway in Washington are essentially regulated out of contention. Allowing bankruptcies and consolidation would actually help improve services offered to passengers while saving taxpayers money.
Scrapping fossil fuel subsidies, high permit fees for electric vehicles, and repealing cabotage laws such as the Jones Act to allow foreign ships and airlines to serve American ports and airports, could also help reduce prices and improve consumer choice.
Though Biden is an Amtrak fan, his administration should welcome competition. That would mean allowing private railway firms to use existing rail lines, and scrapping the planned $80 billion in subsidies in the massive infrastructure bill currently sitting in Congress. In 50 years of service, the quasi-public Amtrak has failed to turn a profit at least once. Getting out of the way so private competitors could compete would be a huge boon to consumers and innovators.
For the alcohol market, Biden is on track. He outlines “unnecessary trade practice regulations” that artificially raise the prices of our favorite beers, wines, and spirits. But state monopolies on the sale of spirits, as well as uneven taxation between classes of alcohol, are classic cases where consumers would benefit from a more competitive market.
Promoting the interests of consumers, especially those who benefit from market innovations and smart policy, is a bold and needed change from our federal government. If they are to succeed, however, it will require wholesale retooling of outdated rules and regulations, not just increased scrutiny on big business.