The State Of The Union Is Weakened By Targeting Leading American Companies
As eyes turn to this week’s State of the Union address, it’s important to remember arbitrarily punishing the success of a select few companies could have negative consequences for inflation, national competitiveness, and the products consumers enjoy. Here’s what you need to know:
— Anti-tech measures are not the solution to inflation concerns and could actually make the problem worse
— Damaging America’s world-leading tech industry poses risks and would put the U.S. at a competitive disadvantage on the global stage
— Targeting leading tech companies could break the products that consumers love
Anti-tech measures are not the solution to inflation concerns and could actually make the problem worse.
Antitrust as an anti-inflation policy reflects “science denial,” and neo-Brandesian antitrust is more likely to raise than lower prices, explains Former Treasury Secretary Larry Summers. “The emerging claim that antitrust can combat inflation reflects ‘science denial’. There are many areas like transitory inflation where serious economists differ. Antitrust as an anti-inflation strategy is not one of them.”
— Summers continues: “However, as described, hipster Brandesian antitrust, with which the Admin and its appointees flirt, is more likely to raise than lower prices.”
In reply to Summers’ tweets, former OMB and CBO Director Peter Orszag tweeted: “Count me on @LHSummers’ side here.”
Antitrust reformers in Washington are too focused on corporate size and outdated ideas that punish lower prices and embrace higher prices for their preferred cartel, explain FTC Commissioner Noah Joshua Phillips and Former Commissioner Josh D. Wright. “Antitrust laws protect competition. Competition benefits society—and consumers—by spurring innovation, improving quality and lowering prices. Companies and industries rise and fall, but the competitive process ensures that American consumers benefit.”
— They continue: “President Biden’s July Executive Order on Competition suggests reviving enforcement of a law that took money out of the pockets of American consumers. The Robinson-Patman Act of 1936 sought to protect small retail businesses from larger, more efficient chain stores. As the Justice Department concluded in 1977, the unfortunate result was that American consumers paid more for groceries and household goods.”
Digital inflation is low, and growth in the tech sector is rapid, yet proposed antitrust measures would hurt this vital industry, explains Progressive Policy Institute’s Michael Mandel. “It can’t be denied: The anti-tech antitrust legislation led by Senator Klobuchar will hurt American consumers and American middle-class jobs, and impede American technological leadership. The digital economy should be a source of pride for Democrats. Digital inflation is low, wage growth in the tech-ecommerce sector is extremely rapid, and digital job creation is strong – especially in pivotal swing states. Instead, if this bill is passed, it will undercut the tech and ecommerce industries – which are vital to our 21st century economy – and give China the edge in leadership and the digital economy.”
Damaging America’s world-leading tech industry poses security risks and would put the U.S. at a competitive disadvantage on the global stage.
Undermining American tech would damage a “critical counterweight to Chinese R&D efforts,” writes former U.S. Senator and Director of National Intelligence, Dan Coats in the Washington Post. “Congress and the Biden administration agree on the need to address one of the biggest challenges facing our country — China’s efforts to develop or steal advanced technologies to further its authoritarian agenda. Yet the House is considering legislation that could inadvertently weaken U.S. efforts to combat malicious tech activity by China and other foreign adversaries because it would undermine one of our strongest assets: the U.S. technology industry.”
— Coats continues: “While the House bills assume that big equals bad, the fact is that size matters when it comes to our national security. Large integrated tech firms play a vital role in protecting our nation from a variety of threats.”
Recent anti-tech legislation would put foreign competitors in a “better position to assume global preeminence” added 12 former U.S. national security officers in their letter to Congress. “Provisions in these bills that target a narrow group of U.S. companies without requiring similar oversight of Chinese tech giants such as Huawei, Tencent, Baidu, and Alibaba would place these already formidable competitors in a better position to assume global preeminence.”
Targeting leading tech companies could break the products that consumers love.
The bill would ban services that Americans value, limiting consumer choice and convenience, reminds Carl Szabo of NetChoice. “This bill [AICOA] puts the interests of corporations ahead of consumers by banning useful services that Americans value because competitors say those services are difficult to compete against. By banning choices we rely on, Americans would be left with fewer services and conveniences right when they need them most.”
— Szabo continues: “Many vulnerable Americans rely on accessible products to stay safe and independent, but this radical bill could ruin those smart tools we take for granted like same-day contactless delivery and voice integration.”
Proposed anti-tech legislation would effectively “ban or degrade tech services used by millions of voters,” says Chamber of Progress CEO Adam Kovacevich. “Senator Amy Klobuchar plans to soon introduce her own version of House Democratic legislation that would ban or degrade tech services used by millions of voters. Based on a leaked draft of Klobuchar’s legislation, here’s what we know about what her bill is — and is not.”
Kovacevich explains: “It would break tech products that millions of Americans use every day.” The measures would:
— “Block Amazon from offering its low-cost Basics brand products”
— “Ban Amazon from offering free shipping on select products through Amazon Prime”
— “Prevent Google from showing Google Maps in search results”
— “[Put] limits on U.S. products that don’t apply to those companies’ foreign competitors”
“There would be plenty of consumer aggravation, and no consumer benefits,” says Ryan Young of Competitive Enterprise Institute. “How would the bill work in practice? It would not ban online companies from selling their private brand products, but it would ban them from giving their own products special treatment. Google, for example, would probably not be able to show Google Maps in its search engine, or at least not as a leading search result, which could lead to a lot of frustrated drivers. Amazon’s Prime program might go away entirely. At the very least, Amazon’s house brands would become harder to find and might not qualify for free shipping. There would be plenty of consumer aggravation, and no consumer benefits.”