When inflation last emerged in a major way on the American economic scene in 1974, President Gerald Ford’s Administration decided to fight it largely through a public relations campaign – Whip Inflation Now (WIN). It urged Americans to wear WIN buttons, save, and refrain from spending on high-priced items.
WIN failed miserably and humiliated the Ford Administration. But at least President Ford took a shot at doing something.
The current administration seems intent on avoiding the issue. Congress is more focused on punishing U.S.-based tech companies, which have driven economic growth and vitality for the past two decades, than fighting inflation.
Among those acknowledging that tech companies keep the overall inflation rate in check is Federal Reserve Chairman Jerome Powell. He talked of “the Amazon effect” on keeping inflation low during 2018 testimony to the U.S. Senate Banking Committee.
For decades, tech companies have made their products more powerful and less expensive while transforming previously inefficient businesses. Some, like Google and Facebook, provide significant benefits for free.
On January 20, the U.S. Senate Judiciary Committee took aim at some of America’s biggest tech companies by approving the American Innovation and Choice Online Act (AICO). Washington’s political class presumes it can lecture some of America’s most creative companies on innovation in our rough and tumble, ever-changing economy. Talk about chutzpah.
AICO is a misnomer and government intrusion at its worse.
It would penalize tech companies with market caps of more than $550 billion, that is Microsoft, Amazon, Alphabet (Google), Apple, and Meta (Facebook), if they use their control over online platforms to unfairly advantage their products and services.
While Amazon and Apple come under the stringent provisions, large companies like Oracle and PayPal do not. If Berkshire Hathaway were to purchase a provider of tech services, then the company would come under the provisions. But large retailers like Walmart, Costco, and Target are exempt from AICO. So are powerful, fast-growing online platforms like Etsy, Shopify, and Squarespace.
Much of the value of the “Big Five” comes from enabling other companies and even individuals to conduct business and make money. Urging companies to do business with Amazon is even a common suggestion made by the financiers on Shark Tank.
Among those helped by the Big Five are tens of millions of Americans in Middle America and those undergoing major life transitions due to COVID, family responsibilities, or other changes in American society.
This includes:
- The elderly and disabled who do not want to, or cannot, work full-time but want to find ways to be productive and earn a living;
- Those living in rural areas who do not want to move from their comfortable homes simply to make money;
- Stay-at-home parents and corporate professionals looking to supplement their incomes.
Compounding the concerns about AICO is that it passed the Senate Judiciary Committee without a single hearing. Imagine if the big tech companies just foisted their ideas on America without testing out concepts and making refinements.
It would be one thing if Congress were using that time to look at ways to rein in inflation. But it is not. There is an emerging bipartisan alliance of Democrats who want to bash tech companies because they are successful and Republicans who want bash them due to perceived anti-conservative basis.
AICO, though, does not address these issues. Furthermore, it is tech companies that are doing more than politicians to address the pernicious effects of inflation on working Americans.
Tech companies’ track records of growth and value creation has led to unprecedented opportunities and lower prices, helping America maintain its economic strength even during the worse public health crisis in a century.
Rather than bashing tech companies, politicians should be listening to them so that America can continue to thrive economically in the years to come.
