11 Jul The Biden Executive Order on promoting competition
Here is the text, I won’t attempt a summary but here are some running comments:
2. Industry concentration has not driven wages down by “as much as 17%” — that’s a porky! OK, they say “advertised wages,” but come on…
3. I am happy to see the document take on occupational licensing.
4. Contra to the recommendation, we should not ban non-compete agreements outright. Many non-compete agreements are perfectly normal institutions designed to protect corporate assets against IP theft, client lists for instance. We should restrict non-compete agreements in some more sophisticated manner, still to be determined.
5. Lower prescription drug prices? Maybe. Do they estimate the elasticity of supply? No. Thus this discussion would fail my Econ 101 class. We do know, however, that prescription drugs are one of the very cheapest ways our health care system saves lives, so this is not obviously a good idea.
6. Right to repair laws? Again, maybe. But show me the trade-off and cite a cost-benefit analysis. If software gives more consumer surplus to consumers (again, a maybe), should we be wanting to tax it with contractual restrictions? Should we be wanting to tax Tesla right now?
7. Portability of bank account information is a good idea.
8. “Empower family farmers…” — do you even need to know what comes next? Aarghh!!!
9. The order “encourages” the DOJ and FTC to take various actions. I won’t blame Biden for this, but we’ve way overstepped what executive orders should be doing, some time ago. The net feeling the honest reader of this section receives is that our antitrust policies toward the large tech companies are not based in much of a notion of rule of law.
10. Should HHS “standardize plan options” in the NHIM to make price shopping easier? Makes me nervous — diverse market offerings can be good.
11. Lots of tired and not typically true claims and insinuations about concentration in airline markets; see my book Big Business or read Gary Leff. And shouldn’t airlines charge for bags? Maybe yes, maybe no, but prices per item are not in general a bad thing.
12. We are warned that farmers and ranchers take in an ever-smaller share of the food dollar spent — thank goodness! And there are a bunch of other selective, scattered observations about food prices (“corn seed prices have gone up as much as 30% annually…”), but nothing close to systematic or showing an actual market failure (corn prices by the way have been plummeting since 2012).
13. Broadband policy should indeed be improved, but this section reads as messy, should do more to emphasize the notion of competition and common carrier platforms, and how about a mention of StarLink?
14. There’s not really any point in marching through a discussion of the “Big Tech” section.
15. Is there a problem with bank concentration in this country? Not where I live. Maybe in some rural areas?
16. YIMBY > NIMBY would do more to limit market power than just about anything else, by the way.
17. Is there even a peep about this country’s biggest and worst-performing monopoly in K-12? Of course not. It is Amazon you have to worry about!
So overall this is not great economics. It is good to see the Biden administration pick up on a few pro-competition issues, but much of the document is not clearly pro-competition either. The reasoning and evidence are pretty much politicized from start to finish.
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