Nearly the entire federal government seems afflicted with an antitrust fever not seen since the early 1900s. The Biden administration, along with Sen. Elizabeth Warren, preposterously claims that using antitrust on the food and energy industries somehow lowers inflation, despite protestations to the contrary from serious economists. Rohit Chopra, Warren’s protege, sees himself as some sort of Great Regulator or Leveler for banks and financial technology companies from his perch as director of the Consumer Financial Protection Bureau. Even Republicans see antitrust as the solution to the so-called terror of “Big Tech.” Rather than protect consumers or mitigate the problems they are intended to solve, these misguided antitrust crusades instead limit ingenuity and threaten to exacerbate inflation.
For the third time in 12 months, the federal government
hopes
to make price-fixing charges stick against 10 chicken industry executives. U.S. District Judge Philip Brimmer
requested
that Assistant Attorney General Jonathan Kanter explain why a third trial was necessary after the previous trials yielded hung juries. One juror in the second trial
told
Bloomberg Law that there wasn’t enough evidence to convict anymore. She was in a group of five who voted not guilty on all 10 executives.
The chicken trial is just part of a pattern by the Biden administration. It uses antitrust as a bludgeon against companies it blames for rising inflation and reduced competition. The New York Times
reported
last December that the White House believed antitrust would be a major factor in bringing down costs. National Economic Council chief Brian Deese crowed at the time that antitrust “will deliver lower prices for Americans right away.” Kanter later
told
the Spring Enforcers Summit in May that the Justice Department no longer limited itself in the merger review process. “We are ramping up efforts to identify violations across the broader economy, and we will not hesitate to bring … cases to break up interlocking directorates,” he said.
Progressives see these moves as long-needed and desired. Democratic Sen. Warren
declared
in a January Senate hearing that market concentration led to higher prices via a corporate sleight-of-hand game involving claims of rising costs. She brushed away Fed Chairman Jerome Powell’s point that incredibly strong demand caused the price hikes. Ignoring the basics of University of Edinburgh professor Fleeming Jenkin’s axiom of supply and demand, Warren swore that corporations are just “raising prices because they can” instead.
This continued antitrust push alarms those who fear that it might further stifle the American economy. “Antitrust is not aimed at inflation,” said Alden Abbott, senior research fellow at the Mercatus Center and former Federal Trade Commission general counsel, in an interview looking at the current economy. “Inflation [means] that basically too much spending supported by too much money entering the money supply is behind it. It’s like the old example that said, if you have a lot of money created and a lot of new spending by government, that is inevitably going to lead to changes in price levels. Inflation is not increased in the price in a particular industry, it’s an average change in price levels. It’s a process over time.”
Abbott believes that the latest round of inflation hit because of a big increase in the money supply as part of COVID recovery spending. Add in skyrocketing demand and supply chain problems throughout the global economy, and inflation, along with prices, massively jumped. Abbott notes that gas prices went up because the Biden administration put more focus on renewable energy, thus disincentivizing further refinery investments. “Also, there was an increase in demand. People started driving more at the end of the pandemic. None of this is anything to do with collusion or any competitive behavior among petroleum companies.”
The Biden administration also faces criticism from traditional allies, including former Clinton Treasury Secretary Larry Summers. He
warned
last year that using it as a tool on inflation goes nowhere. “To start, increases in prices and profit margins are what happens when competitive industries experience increases in demand,” Summers scornfully tweeted last December while professing agreement with Joe Biden’s competition agenda. “That is what calls forth increased supply. This is how a market system operates. … There is no basis whatsoever thinking that monopoly power has increased during the past year in which inflation has greatly accelerated.” He further defended bigger companies, saying prices would be higher if “Walmart had been stopped from expanding, or Amazon had been kept from entering new markets.”
Another defense came from Doug Melamed and Carl Shapiro, previous heads of the Justice Department’s antitrust division. Both attorneys
signed
a letter to U.S. senators saying antitrust efforts would harm innovation and make things harder on consumers. Melamed led the Clinton administration’s failed antitrust case against Microsoft. Shapiro served in the Obama administration.
Such warnings are still not sufficient for some Democrats and Republicans looking to use antitrust against American businesses. The U.S. Senate Agriculture Committee recently passed the Meat Packing Special Investigator Act. It creates a new office with prosecutorial powers designed to look at whether there’s collusion in the meatpacking industry. Two of its primary sponsors were Republican Sens. Chuck Grassley of Iowa and Mike Rounds of South Dakota. “Unfortunately, packer concentration in the beef industry is more consolidated today than it was when the Packers and Stockyards Act was first signed into law over 100 years ago,”
said
Rounds, who portrayed the bill as a way to protect consumers and ranchers. “It’s long past time to address this problem. I thank my colleagues on the committee for their bipartisan support of our legislation and look forward to working across the aisle to get this bill signed into law.”
Grassley
vowed
his own victory over so-called Big Cattle is almost complete. “Iowa cattle producers have struggled to receive a fair price for years — long before inflation hit a 40-year high. It’s past time for Congress to stand with independent cattle producers and put an end to the cozy relationship between large meat packers and big cattle feedlots.”
Inflation is not the only item on the antitrust agenda. The other major congressional fight involves regulation of “Big Tech.” Grassley teamed up with Minnesota Democratic Sen. Amy Klobuchar on the American Innovation and Choice Online Act. It’s currently stalled in the Senate, but Grassley
remains
confident the bill will eventually pass. “It’s past time these companies are held accountable for manipulating algorithms that control what Americans see online, including in their email inboxes.”
Free market advocates see this Republican dalliance with antitrust as misguided. “Many are angry with tech companies over content moderation issues such as bias, censorship or deplatforming,” commented Dr. Wayne T. Brough, technology and innovation director at the R Street Institute, via email. “None of these are antitrust questions, and the antitrust laws were not made to handle these issues. Unfortunately, frustration with Big Tech has led some Republicans to join forces with Democrats who see antitrust as a way to rein in Big Tech. In the end, passing sweeping new antitrust laws is a threat to innovation, a hindrance to global competition, and an expansion of government interventions in the marketplace.”
Abbott agrees that the antitrust proposals fail in accomplishing their stated goals and raise concerns that more regulatory involvement will lead to fewer innovations. He pointed out that American technology companies made major advancements in smartphones and internet economic activities versus European companies. Abbott believes that America’s lighter regulatory and antitrust framework allowed many of these improvements to be possible. His fear is that the current greater push toward antitrust stifles growth and the economy.
The good news is that some of these congressional efforts seem to be failing due to academic and political resistance. This includes
a letter
from more left-leaning internet law scholars warning that Big Tech antitrust does the opposite of what advocates claim will happen. The scholars, who include Georgetown law and technology professor Anupam Chander, worry that Grassley and Klobuchar’s proposal might enable headline-seeking politicians to drain larger companies of revenue. They add that the legislation might force Big Tech to reach settlements in various lawsuits to avoid lengthy court battles, regardless of their merits. Kentucky Republican Sen. Rand Paul decried the use of antitrust against Big Tech, pointing out that consumers have the ultimate say on the websites they use. Paul wrote at FoxNews.com that his office started uploading content to Rumble after YouTube removed one of his videos.
Whether such pushback is enough to prevent further antitrust efforts remains to be seen. Consumer Financial Protection Bureau chief Chopra remains a staunch supporter of antitrust efforts and has been a driving force within the Biden administration. Chopra seems to believe that active, expansive intervention, on antitrust and elsewhere, is the purpose of his job,
telling
the Wall Street Journal that regulatory crackdowns on businesses are necessary and that regulators “shouldn’t just decide that we’re not going to enforce.”
Abbott disagrees, noting there was a previous bipartisan agreement in the 1990s focused on making sure the customer benefited from big business. It’s based on the consumer welfare standard theory developed by Robert Bork in the 1970s. “We want to help consumers: Even if some aggressive business action incidentally harms particular businesses, we’re not concerned unless this is really harming, raising prices, restricting output, reducing quality for consumers.” Abbott is one of the many experts who do not believe the current push for stronger antitrust measures will help consumers. He’d prefer that the FTC, Justice Department, and government as a whole take a more “Do no harm” stance on antitrust, much like medical doctors’ Hippocratic Oath.
R Street’s Brough fears that this renewed antitrust fever will keep running wild across both major parties on Capitol Hill and in the White House. “Even if legislation doesn’t pass this year, the momentum gained this year suggests that there will be a continued push for reform. In that sense, the political theater has been effective in mobilizing those seeking to break up Big Tech.”
As with antitrust efforts on tech companies, there’s no evidence that antitrust fixes inflation, the issue people care about the most today. But even as costs continue to rise and household economic concerns become more dire, the White House and congressional Democrats seem dedicated to pursuing their own, anti-business course under the guise of fighting inflation (and climate change). What they fail to consider are the obvious economic consequences should they succeed and end up raising prices even further.
Taylor Millard is a freelance journalist.
