Remember domestic issues? The American people do.
An analysis of YouGov data by The Economist shows that the number one issue for Americans is (still) inflation. Number two: jobs and the economy. Three: health care. After that, taxes and government spending, civil rights, and civil liberties. National security is in tenth place.
After months of setting the agenda, President Donald Trump is suddenly on his back foot on the issue of affordability. Even in Texas, Trump’s net approval is down -17.2 points.
So, what to do?
The main drivers of affordability are big ticket items – the high cost of housing, health care, cars, and higher education. Free market think tanks have long advocated deregulation and competition to bring down the costs of these must-haves. It is astonishing that neither this administration nor the president’s Republican allies in Congress have pulled any of these ready-made consumer-friendly plans off the shelf to put the Democrats on their back foot.
One of these policies has proved to be one of the most consumer-friendly policies ever. It is known, appropriately, as the Consumer Welfare Standard. This was the policy developed by free-market experts in law and economics in the 1970s and articulated in depth by my father, Robert Bork, in his book, The Antitrust Paradox. It made so much sense that one year after that book’s publication, its arguments were enshrined by conservative and liberal Supreme Court justices alike as the North Star of antitrust jurisprudence.
It was sorely needed.
For eight decades after the passage of the Sherman Antitrust Act, antitrust enforcement was a hodge-podge of doctrines imposed by the whims and prejudices of judges and regulators. Antitrust was variously predicated on a vague desire to protect “small dealers and worthy men,” to crack down on “big is bad,” and on the nonsensical Supreme Court opinion, Brown Shoe (1962), which saw an incipient monopoly in the combination of two American shoe companies whose stores, together, had only 5 percent of the U.S. shoe market.
The Consumer Welfare Standard scrapped away vague standards and subjective nonsense and replaced them with one clear standard – if a business deal would harm consumers in terms of price, availability, choice, or innovation, courts should block it. If a business deal was neutral or foreseeably beneficial to consumers, it should be cleared. Once inflation cooled in the early 1980s, the United States under the Consumer Welfare Standard enjoyed an unprecedented rise in income, living standards, and affordability – social wealth. This continued until the arrival of COVID-19 and the Biden Administration.
President Biden and his regulators demonized the Consumer Welfare Standard as being focused solely on price at the expense of workers and business concentration. They saw the standard’s interest in promoting business efficiency as heartless. But proponents of the standard saw the emphasis on efficiency as anything but heartless. It created growth, which helps consumers and workers – really, everybody. Above all, the proponents of the standard wanted a clear standard to curb the unfettered power of the greatest monopoly in history – the one in Washington, D.C.
The Biden regulators scrapped the standard and targeted mergers and acquisitions even when they advanced competition that would have helped consumers. The resulting excessive regulation prompted 17 former FTC and DOJ economists to jointly criticize the Biden-era antitrust guidelines as lacking evidence-based “consensus economic understanding.” In the world of academic economics, that was a bitch slap.
So you would think that restoring the Consumer Welfare Standard would be priority one for the pro-market Trump Administration. Instead, Federal Trade Commission Chairman Andrew Ferguson and Justice Antitrust chief Gail Slater have wholly adopted the Biden antitrust guidelines that barely mention “consumers” – in footnotes! – while restoring Brown Shoe to center stage.
Worse, the Trump Administration is continuing to press the Biden Administration’s nonsensical antitrust cases. Consider the current antitrust suit against Amazon for using its discounting strategy to rip off consumers and foment inflation. How does discounting promote unaffordability? You would have to be an expert to understand that.
Meanwhile, a Harris/Harvard poll showed what consumers understand. The nation’s second most trusted institution was Amazon, after the military. Consumers, however, are not sentimental. They always gravitate to the best deal. Amazon is currently struggling to maintain market share in online retail against Walmart and Target, which are transforming the logistics of their superstores to challenge Amazon in home delivery. Such competition is good for consumers, and it did not take a regulatory edict to happen.
As President Trump grapples with continuing inflation and consumer anger, he would do well to seize the easiest way to jump-start a better deal for Americans. President Trump should restore the Consumer Welfare Standard, call off the legacy Biden antitrust suits, and liberate business to do what it does best – promote growth and consumer optimism.
