The Congressional Democrats’ new economic agenda elevates antitrust policy to a stature it has not attained in many decades, and it questions the consensus that has governed antitrust policy while it has been out of the public eye. Antitrust must be a core component of any agenda that would address the slow economic growth, rising inequality, and wage stagnation that are our most pressing economic problems. At the root of all of these is the consolidation of corporate power. Corporate profits now account for over 15% of the economy’s gross value-added, up from 5% in the early 1980s.
This has happened because the shareholders and managers of dominant companies use their advantaged position to decide who gets to earn a living and how good that living is, to decide which consumers get to purchase which goods at which prices, to determine whose start-up thrives and whose is cut off from the market, and to pick which city and which neighborhood gain access to the modern economy and which ones wither and die.
Several specific planks in the new platform are particularly noteworthy:
1. There’s good reason to abandon the consumer welfare standard for merger review and for antitrust enforcement against anticompetitive conduct. Under the consumer welfare standard, only outcomes to consumers ‘count’ as indications of market power, and in practice the only market outcome that gets litigated is whether prices go up or down. If a company can show that its behavior reduces prices for consumers, or at least raise the possibility that it will, then the antitrust authorities have no further grounds to object.
The debate over Net Neutrality, the threat of monopsony power in an increasingly stratified labor market, and increasing geographic inequality are all strong signs that looking only at outcomes for consumers is insufficient to protect a competitive marketplace that serves all of its stakeholders. All of these phenomena are due to the abuse of market power to squeeze upstream suppliers and workers and to charge them a toll for the privilege of earning a living. Current antitrust policy has very little to say about any of this anticompetitive behavior. It’s evident that Standard Operating Procedure is not getting the job done, so it’s time for a major change.
2. The United States has the strongest antitrust laws in the world, but we have the weakest antitrust enforcement of any major country. That’s because decades of adverse judicial precedents and enforcement decisions have whittled away at what counts as anticompetitive behavior, and hence expanded the self-dealing that powerful corporations and their shareholders can get away with.
3. Flipping the presumption that large mergers will be approved makes sense, since we know that declining competition is responsible for declining corporate investment—instead corporations are increasingly using their profits to pay off shareholders, or just sitting on the money. That absent investment has become macroeconomically significant and may be a cause of Secular Stagnation and low growth.
4. I’m happy to see the Democrats take heed of the insufficiency of existing merger review and propose that it be revisited and potentially undone ex-post by an independent authority. That would constitute a major departure from the conduct of antitrust policy since the 1980s, if not before. And revisiting merger approvals ex-post points to further departures from business-as-usual that could be contemplated as part of a comprehensive bid to make the economy more dynamic:
- Renewed scrutiny for anti-competitive behavior throughout supply chains, including by dominant platforms in tech and telecommunications.
- Including monopsony explicitly in statute as a harm to competition.
- Directing antitrust enforcement attention to the labor market.
- Restoring private litigation to the pillar of federal competition policy that it once was.
- Investigating new ways to examine and undo excessive and anti-competitive shareholder control over corporate decision-making.
All of these would be significant departures from past policy, but ones that are justified by recent empirical research into the state of competition throughout the economy.
5. The agenda also proposes a new consumer advocate who would be empowered to collect evidence and complaints from the public and propose enforcement actions on their behalf, to which the regulators would be obliged to respond. That model has worked well in the Consumer Financial Protection Bureau, and it would finally start to cleave open the closed room of credentialed experts who have dominated this space for too long. It’s unacceptable to have such consequential decisions about who’s rich and who’s poor made behind closed doors, with the only input coming from those with specialized knowledge and connections. Someone to represent and protect the public in those spaces couldn’t be more welcome.
In short, this is a promising development for a policy area of rising importance and public interest, and I look forward to much more.