The 72 initiatives in the executive order President Joe Biden signed Friday – an effort to ensure that capitalism in the U.S. is based on ‘open and fair competition,’ he said – did not specifically name any companies.
Its impact, however, has the potential to be felt greatly by many who do business in New Jersey.
The executive order lists a number of industry sectors that Biden feels need to be changed to ensure more competition. Biden seemingly has set his sights on big tech, including Amazon, which is the state’s largest employer. And also health care, long a huge sector in the state.
Tech appears to top the list. Biden is encouraging the Federal Trade Commission to create new rules on data collection and user surveillance practices. Biden also said he wants to reduce broadband providers’ market control by restoring net neutrality rules that were dropped during President Donald Trump’s administration.
The order asks the FTC to establish new rules on online surveillance and the accumulation of users’ data – with the White House fact sheet saying “many of the large platforms’ business models have depended on the accumulation of [extraordinary] amounts of sensitive personal information and related data.”
Health care is prominent, too. Biden instructs the Food and Drug Administration to make it easier for cheaper drugs from Canada to be sold in the U.S. – something the New Jersey pharma industry has long fought against.
And while many of the initiatives seemingly are aimed at the biggest companies, there are plenty that appear to be aimed at breaking down monopolies smaller companies may have, too. For instance, there is a push to allow hearing aids to be sold over the counter – something the White House says will dramatically reduce their cost.
The overall goal, however, does not appear to take down big companies or sectors but rather to re-open competition.
There is a growing sense among economists favored by Democrats that big mergers and big companies not only have stifled competition, they have hurt employees’ ability to share in the success. Fewer companies mean fewer chances to sell your skills to others.
In fact, a 2016 study by the University of Chicago said corporate consolidation has hurt workers – estimating the median salaries for middle-class workers would be as much as $10,000 higher if there was more competition.
The executive order says that 75 percent of U.S. industries are more consolidated than they were 20 years ago. This consolidation has helped triple prices for many household necessities, but limited workers ability to use the bargaining power of going to a rival company to increase their wages.
This is not the way capitalism is supposed to work, Biden said.
“Rather than competing for consumers, [companies] are consuming their competitors,” he said. “Rather than competing for workers, they are finding ways to gain the upper hand on labor.
“And too often, the government has actually made it harder for companies to break in and compete.”
Biden even signaled an interest in undoing ‘bad mergers’ which he feels have helped a company take too great a share of the market, such as the acquisitions of Instagram and WhatsApp by Facebook.
The executive order was praised by Main Street Alliance, a Washington D.C.-based organization that supports small business.
Its co-executive directors, Chanda Causer and Stephen Michael, said the order addresses key concerns on competition that they hear from small business owners across the country.
“This important action moves us closer to real solutions to combat increased corporate consolidation and levels the playing field against monopolistic market practices.
“In addition to the focus on Big Tech, we are encouraged by initiatives to expose and limit monopoly control in health care and prescription drug pricing and small business lending – two critical issues for small business owners.”
Neil Bradley, chief policy officer for the U.S. Chamber of Commerce, voiced opposition, saying government interference in business does not bring good results.
“The Chamber always will applaud efforts to promote small business, and we will vigorously oppose calls for government-set prices, onerous and legally questionable rulemakings, efforts to treat innovative industries as public utilities, and the politicization of antitrust enforcement,” he said in a statement.
To be clear, unlike other executive orders, nothing will immediately change.
Biden only requested federal agencies begin the work on making recommendations on their rules.
Those recommendations – which could take up to a year to make – then figure to be challenge in courts. And executive orders are not laws, meaning they easily can be overturned by a new administration – and any recommendations are sure to be challenged in the courts by big corporations.