The American economy has been less dynamic in the twenty-first century, by many measures, than it was in the late twentieth century.
Fewer new businesses started. Existing companies have slowed the pace of hiring new workers (as the graph shows here). Workers are less likely to switch jobs or move to a new city. Companies invest in new buildings and equipment at a lower rate. Small businesses make up shrinking share of the economy.
together, These directions It indicates that the economy suffers from a lack of fair competition, many economists believe. Large companies are often able to increase profits not by offering better products than their competitors but instead by being so large that they exercise their power over workers and consumers. The government also plays a role, with policies protecting established companies at the expense of start-ups and new entrants to the industry.
The technical term for excess profits from lack of competition is “monopolistic rents”. Just think how frustrated you are with customer service from an airline, cable TV provider, or health insurance company. Then imagine how frustrating working there is. Despite the problems in these companies, consumers and workers do not always have good alternatives.
The lack of competitive dynamism plays a role in many of the biggest problems in the US economy: Disappointing economic growth in the past two decades; dwindling share of the output goes to the workers; And the Increasing income inequality. It also helps explain the new anxiety – among Republicans (such as Josh Hawley and Ken Buck) and Democrats (such as Elizabeth Warren and Amy Klobuchar) – about the power of large companies.
Expensive hearing aids
Today, President Biden is issuing an executive order trying to address the problem of competition in the economy. It directs regulators to take specific steps to reduce monopoly rents in many industries. Among other things, the arrangement:
“Having healthy competition is vital to an efficient capitalist system,” Brian Dies, Biden’s chief economic adviser at the White House, told me. “It’s a driver of higher wages, lower prices, more innovation, and more business creation.”
Can Biden change things?
Is the executive order sweeping enough to be significant? Perhaps, although it is not clear how much.
The problem of monopoly rents has grown so great that a simple reduction in them can be substantial. Thomas Philippon, an economist at New York University, has estimated that the economy’s lack of fair competition costs the typical American family More than 5000 dollars a yearThrough high prices and low wages.
A hearing aid policy alone, for example, can save affected families a few thousand dollars a year. It could also lead to innovation in the industry and help many hard-of-hearing Americans Now you can’t afford the help.
As news broke this week that Biden was planning an executive order on the competition, analysts across the ideological spectrum have praised the idea. Gary Winslet of the conservative R Street Institute call The moves are ‘fantastic’. Zephyr Tekott, progressive legal scholar, He said They were “just huge”.
Jason Furman, the Obama administration’s chief economic adviser, Tell my colleague Neil Irwin: “I don’t think addressing competition issues will miraculously transform inequality in this country, but it will help. The government should be on your side when it comes to wages.”
The matter will undoubtedly receive more specific criticism once its details are clear, especially from the industries it is targeting. (There is also no doubt that CEOs and lobbyists from those industries will claim that it will actually hurt workers and consumers, but you don’t need to take these claims at face value.)
A more serious question may be how much the executive order – as opposed to the new legislation – will affect. Biden administration officials have written this order narrowly, targeting specific industries, to reduce the chances of business-friendly judges overturning any federal regulations that stem from the order.
Of course, this also means that the system will have only a modest impact on the biggest causes of economic rigidity and inequality, such as corporate consolidation And the Workers’ inability to bargain.
However, Biden’s advisers argue that it is a first step toward getting the federal government to care about competition again. “A lot of this goes back to the American antitrust tradition that Roosevelts established — TR and FDR,” Bharat Ramamurti, a Biden adviser who previously worked with Warren, told me. “Highly concentrated industries are basically in a state of tension with American capitalism.”
Standard year for American gardens
Do you dream of a trip to a national park? Better plan ahead: Americans flock to parks in record numbers, resulting in long lines and crowded facilities. The Times sent photographers to four parks over the Fourth of July weekend to capture the sights.
In Maine’s Acadia National Park, Cadillac Mountain is the perfect spot from which to watch the sunrise. To reduce congestion and protect the area, the park has set up a reservation system for all vehicles heading to the summit.
In Joshua Tree National Park, California, visitors spill beyond the boardwalk to take in the stunning views. In Yellowstone, people crowded boardwalks while waiting for the eruption of Old Faithfull volcano, one of the park’s biggest draws. See pictures of the parks. Sanam Yar is a morning writer