Pres. Biden plans measures to increase market competition. David Leonhardt reports Biden’s New Push (‘The U.S. economy suffers from a lack of competition. President Biden wants to change that’):
The U.S. economy has been less dynamic in the 21st century, by many measures, than it was in the late 20th century.
Fewer new businesses are starting. Existing businesses have slowed the pace at which they hire new workers (as the chart here shows). Workers are less likely to switch jobs or move to a new city. Companies are investing in new buildings and equipment at a lower rate. And small businesses make up a shrinking share of the economy.
Together, these trends suggest that the economy suffers from a lack of fair competition, many economists believe. Large corporations are often able to increase profits not by providing better products than their rivals but instead by being so big that they exercise power over workers and consumers. The government also plays a role, through policies that protect existing companies at the expense of start-ups and new entrants into an industry.
The technical term for excess profits from a lack of competition is “monopoly rents.” Just think about how frustrated you may have been by the customer service from an airline, cable-television provider or health insurer. And then imagine how frustrating it may be to work there. Despite the problems at these companies, consumers and workers don’t always have good alternatives.
The lack of competitive dynamism plays a role in many of the U.S. economy’s biggest problems: the disappointing economic growth of the past two decades; the declining share of output going to workers; and rising income inequality. It also helps explain the new concern — among both Republicans (like Josh Hawley and Ken Buck) and Democrats (like Elizabeth Warren and Amy Klobuchar) — about the power of big business.
We’ve a national, state, and local lack of competition.
If only incumbent businesses mattered to individual or community prosperity, then monopoly rents would be a regrettable necessity. Yet prosperity doesn’t depend only on incumbent businesses, but on a competitive marketplace where new private options emerge. Monopoly rents are both consequence and cause of uncompetitive markets. (That they are a consequence of weak competition should be clear, but their imposed costs also impair future economic opportunities.)
It’s so easy – and self-serving – for development men to say they want to help business. They say as much, but what they mean is that they want to help their preferred private businesses against competition and that they’re willing to bend public boards, commissions, agencies, and legislatures to their narrow personal ends.
A marketplace – a community, a society – is more than a few men manipulating public rules for private appetites.
Biden is right to push toward more competitive markets (in capital, labor, goods, and services).