A Pro-Competition Economic Agenda: How Government Can Build on Recent Progress
May 14, 2024
By Bharat Ramamurti
Failure by the government to prioritize competition and antitrust policy in recent decades has harmed consumers, workers, and the American economy.
By strengthening enforcement authorities and funding, emphasizing competition across federal agencies, enacting progressive tax policy, and addressing competitive issues in the fields of information technology and artificial intelligence, future administrations can build on recent progress in promoting competitive markets and deliver real gains to American consumers and workers.
(Photo by Kevin Dietsch / Getty Images)
Introduction
The July 2021 Executive Order on Promoting Competition in the American Economy was a watershed moment in the American government’s approach to competition policy. For decades, the federal government had largely taken a hands-off approach to antitrust enforcement and to deploying regulatory authority to promote competition, based on the theory that consolidation could produce greater efficiencies that would flow through to lower prices for consumers.
Reflecting a growing body of theoretical and empirical research that cast doubt on the benefits of that laissez-faire approach, the executive order—along with the nomination of aggressive antitrust enforcers to key positions at the Department of Justice (DOJ) and the Federal Trade Commission (FTC)—signaled a return to the more robust competition policy approach of the first half of the 20th century.
The DOJ, FTC, and other federal agencies have since delivered major reforms that are starting to reverse the trends of the past 50 years.
This brief explores how the federal government can build on these recent successes. The July 2021 executive order included 72 specific steps federal agencies should take to promote competition in the areas they regulate, and some of those steps remain unfinished. But beyond completing that work, there are several areas—most notably, in strengthening enforcement tools and the federal judiciary, in institutionalizing a focus on competition across agencies, in reforming tax policy, and in tackling new challenges in the fields of information technology and artificial intelligence—where the government can push further in encouraging fair and competitive markets.
This brief starts by explaining why promoting competition matters: why competitive markets deliver better economic outcomes, and why the failure to prioritize competition in recent decades has harmed consumers, workers, and the American economy overall. It then describes some of the recent progress in swinging the pendulum back toward a more competitive economy. Finally, it describes a handful of areas in which further action could build on these recent advances.
Key Takeaways
Takeaway #1
The decades-long trend toward greater consolidation in most US industries benefited a small number of large incumbent firms at the expense of consumers, workers, and the American economy.
Takeaway #2
More robust federal government role in enforcing antitrust laws and in promoting competition across a variety of industries could help bring more innovation and dynamism to the American economy, along with lower prices for consumers and higher wages for workers.
Takeaway #3
Consumers, workers, and entrepreneurs can all benefit from a system where large incumbent firms are subject to more sustained competition and consistent pressure to either improve their products or lose ground to competitors.
Related Resources
Author
Bharat Ramamurti
Guest AuthorBharat Ramamurti is senior adviser for economic strategy at the American Economic Liberties Project. He served as deputy director of the National Economic Council and advisor for strategic economic communications in the Biden administration from 2021 through 2023.