When President Biden signed an executive order (EO) this month promoting competition in the American economy, he was swearing off his Senate identity as a defender of corporate interests and embracing his “Scranton Joe” roots as a fighter for workers and small businesses. While this competition viewpoint may not be reflective of ordinary voters, it speaks to a push among Democratic elites to rethink and push the envelope on antitrust and competition as part of the broader agenda to reshape the role government plays in a market-based economy.
Biden Channels the Roosevelts
In citing both Presidents Teddy Roosevelt and Franklin Roosevelt as antitrust pioneers when signing the competition executive order (EO), President Biden continues to view his presidency as more transformational rather than transitional.
- With competition, Biden is attacking the “Antitrust Paradox” spearheaded by President Regan’s Solicitor General Robert Bork (who was later denied a seat on the Supreme Court after being unfavorably reported out of the Senate Judiciary Committee that then Senator Joe Biden chaired in 1987). That paradox states that antitrust intervention often ends up raising prices and thus going against a “consumer welfare standard.” At the EO signing ceremony, Biden said, “Forty years ago, we chose the wrong path, in my view, following the misguided philosophy of people like Robert Bork, and pulled back on enforcing laws to promote competition.” Biden is embracing his “Scranton Joe” roots in pushing for a competition policy to focus more on workers and small businesses.
- Biden is continuing his “whole-of-government” approach with an overarching theme that the government, in fact, may know better than the market. From climate change to industrial policy to corporate taxation, this EO is the latest action to question the wisdom of the “invisible hand” of a free-market economy. At the same time, Biden hopes to show that a democratic guiding hand to a market-based economy can compete with the heavy hand of a communist China. At the end of his EO signing ceremony, Biden said, “In the competition against China and other nations of the 21st century, let’s show that American democracy and the American people can truly outcompete anyone.”
- FDR was not the prototype progressive icon. He was a New York patrician. LBJ was not the prototype Civil Rights champion. He was a Southern Democrat. Biden is not the prototype 21st-century progressive fighter (see Sanders, B and Warren, E). He is the consummate DC institutionalist who for 36 years represented the “corporate state of Delaware.” But in each case, the outsiders to the progressive and Civil Rights movements brought institutional credibility and ethos that could produce results.
Finding the Middle of the Democratic Party
As goes the Democratic Party, so goes Joe Biden. While this EO is a reflection of a new thinking of competition among Democratic Party figures, Biden is also emphasizing that the paradigm shift doesn’t mean he’s a newfound democratic socialist.
- The EO was developed by Tim Wu, a special assistant to the president for technology and competition policy, who is one of the founding fathers of the “Neo-Brandeis” movement that’s a counterweight to the consumer welfare standard. Instead of focusing on just prices, Neo-Brandeisians argue that antitrust regulators should also focus on the impact to small business, workers, and democratic norms. This is named after the early 20th-century legal scholar and Supreme Court Justice Louis Brandeis who coined the phrase “the curse of business” in reference to monopoly power (Wu wrote a book in 2018 titled “The Curse of Bigness”). Biden has also empowered another prominent Neo-Brandeisian, Lina Khan, to lead the Federal Trade Commission.
- But it’s not just the progressives who are on board with a change in competition policy. The EO has its foundation in a 2016 EO from President Obama that was the work of Jason Furman, then the chair of the White House Council of Economic Advisers. Furman is very much seen as a mainstream Democratic economist, who has recently voiced concerns similar to another Democratic economist, Larry Summers, on the precarious nature of inflation right now. Then there’s the likes of Senator Amy Klobuchar (D-MN), a more moderate Democrat, who chairs the Senate Judiciary Committee’s competition and antitrust subcommittee and is ramping up antitrust scrutiny of big business.
- Gen Zers have a more favorable view of socialism than capitalism but every other generation does not agree. Biden is relying on his granddaughters and Olivia Rodrigo for Gen Z cultural insights and outreach but is sticking with a capitalist credo. “I’m a proud capitalist,” Biden said this month. “But let me be very clear, capitalism without competition isn’t capitalism. It’s exploitation.” Last week, Biden went out of his way to criticize socialism, calling it not a “very useful substitute” to the “universally failed system” of communism.
Is This Really Populism?
Populism by definition is popular and appeals to the masses rather than the elites. However, it’s not clear whether the Biden and Democratic embrace of a new competition approach is taking a cue from the masses or elite progressive circles.
- American satisfaction about the state of big business has declined. According to a Gallup tracking poll, 26 percent of Americans today are very/somewhat satisfied with the size and influence of major corporations compared to 73 percent who are very/somewhat dissatisfied. Twenty years ago, 48 percent were very/somewhat satisfied and 48 percent were very/somewhat dissatisfied.
- Yet American dissatisfaction with big business does not translate into a desire for greater government intervention. The same Gallup tracking poll showed that just 27 percent of Americans last year thought there was “too little” government regulation of business and industry compared to 36 percent who thought there was the “right amount” and 36 percent who thought there was “too much” regulation.
- Americans may not like the concept of big business but they may be okay with specific ones. Amazon has been attacked by the likes of Senator Elizabeth Warren (D-MA) (break up Amazon), Senator Bernie Sanders (I-VT) (unionize Amazon workers), Rep. Alexandria Ocasio-Cortez (D-NY) (no Amazon HQ2 in NYC), Lina Khan (Amazon’s Antitrust Paradox), and even Biden (Amazon paying more taxes). But ordinary Americans actually like the Amazon brand. A Harvard/Harris poll from last month showed that Amazon had a 72 percent favorability rating among registered voters, including an 80+ percent favorability rating among Democrats. Amazon has a higher favorability rating among Democrats than even Sanders and the Black Lives Matters movement.
- This provides a roadmap for big business in the DC ecosystem. It’s not about defending big business but finding champions of the individual brand and associating big business to more popular institutions. That’s why when big business fights against certain legislation and regulations, they are most effective when focusing on how it would harm workers and small businesses, two brands that are much more popular among Americans (and thus the elected-members whose jobs are determined by American voters).