For the past 40 years in the United States, competition policy has revolved around consumers.This is partly a legacy of legal scholars Robert Bork, 1978 Book Antitrust paradox He argued that the main goal of antitrust law should be to promote “business efficiency,” which has been measured by consumer prices since the 1980s. These are considered the basic measures of consumer well-being, which in turn were at the heart of economic well-being.
But things are changing. The White House Executive Order on competition policy, signed last month, includes about 72 prudent measures designed to eradicate anti-competitive practices in almost every part of the US economy. But it’s not about lower prices as it is about higher wages.
Like the Reagan Thatcher Revolution in power from unions, unleashed markets and businesses, Biden’s Executive Order may well be remembered as a major economic turning point. This time around, we’re moving away from consumer-focused neoliberalism and heading towards workers as a major interest group in the US economy.
In a sense, this is more important than the details of a particular part of the order. Many commentators suggest that these measures alone cannot achieve much. However, the executive order is not necessarily about the details, but about the direction of the government. And this keeps us completely away from the Balk era by focusing on the relationship between market power and wages. This is something the president of the last century has not so clearly acknowledged.
“If there are few employers in the town, workers have less opportunity to negotiate for higher wages,” Biden said in an announcement of the order. Note that in more than 75% of US industry, fewer large companies manage more businesses than they did 20 years ago.
His solutions include everything from reducing annoying licensing requirements over half the private sector to banning and / or limiting non-compete agreements. Companies in many industries use such contracts to prevent top employees from working for competitors, making it difficult for employees to share wage and benefits information with each other. Silicon Valley has gone in a malicious way.
This is at the heart of the American myth that employees and employers are on an equal footing. This is a falsehood reflected in Orwell’s labor market terms such as “labor rights.” In the United States, this does not refer to workplace equality of all kinds, but to the ability of a particular state to prevent unions from representing all workers in a particular company.
But beyond explicit labor-related measures, the president’s order also reaches a greater relationship between monopoly power and price, as well as corporate concentration and labor share.
As economist Jan Eeckhout explains in his new book Profit paradoxRapid technological changes since the 1980s have improved business efficiency and dramatically improved corporate profitability. But it also led to an increase in market power that was detrimental to workers.
As his study shows, companies in the 1980s made an average profit of one-tenth of their salary costs. By the mid-2000s, that ratio had jumped to 30% and in 2012 it had risen to 43%. Meanwhile, the “markup” of profit margins from market power has also risen dramatically (although it may be confusing).this In part of the digital economy performed in barter transactions of personal data rather than dollars).
Technology can ultimately lower prices and benefit everyone, but this “works only when the market is competitive. That’s the paradox of profit,” says Eeckhout. increase. He argues that if a company has market power, it can keep out competitors who may offer better products and services. They can also pay workers less wages than they can, as fewer and fewer employers are hiring.
The latter issue is called Monopsony Power and is the issue that the White House is paying particular attention to.
“What’s happening to the workers [corporate] Concentration, and what that means in an era of union power, is something we need to hear more, “said Heather Bowsey, a member of the Council of Economic Advisers, who recently told the Financial Times. increase. How the White House views the country’s economic challenges.
According to the Biden administration, a key challenge is to shift the balance of power between capital and labor. It explains new ideas on how to tackle competition policy. Many consider breaking away from consumer interests as a dangerous socialist as the focus of antitrust law. This reflects Marxist claims that a shortage of demand is inevitable when the labor force declines.
However, this approach may be viewed in the same way as a return to the origins of modern capitalism. As Adam Smith observed two centuries ago, “labor was the first price, the first purchase, the money paid for everything. All the wealth of the world was first purchased. It wasn’t gold or silver, it was the workforce. ”It’s good to re-prioritize.
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