NEWSFLASH: Former Treasury Secretary Larry Summers Warns Populist Antitrust Will Make Inflation Worse
Former Treasury Secretary and National Economic Council Director Larry Summers issued a dire warning about recent attempts to push populist, Brandeisian antitrust enforcement, saying that this type of policy “will make the US economy more inflationary and less resilient.”
Brandeisian antirust will make the U.S. economy “more inflationary and less resilient,” warned Summers. “I am very concerned that we may be headed into a new era of Brandeisian populist antitrust policy that will make the US economy more inflationary and less resilient.”
FTC and DOJ recent policy statements reflect a “non analytic approach” and ignore “economic understandings of the last two decades.” “The statements on policy coming from @FTC & @TheJusticeDept better reflect legal doctrines of the 1960s than economic understandings of the last two decades. An Administration that prides itself on factual analysis and ‘looking at the science’ is taking a non analytic approach.”
Attacks on bigness are “presumptively problematic.” “[A]ttacks on ‘largeness on its own terms’, increases in the market share of industry leaders without regard to their efficiency, shrinkage of small business market shares, private equity ownership, or destruction of communities are presumptively problematic.”
Policies that prevent economies of scale, “limit superstar firms,” or focus on protecting competitors are “likely to raise costs & prices.” “There are real risks. Policies that attack bigness can easily be inflationary if they prevent the exploitation of economies of scale or limit superstar firms. Likewise, policy focused on protecting competitors or communities or limiting layoffs are likely to raise costs & prices[.]”
Policies that “attack vertical integration” may reduce “efficiency” and “resilience.” “Policies that attack vertical integration or limit contracting between firms and their suppliers and distributors may reduce efficiency and, by lengthening supply chains, reduce resilience.”
See what other leading economists have to say about progressive antitrust enforcement being the wrong fix for inflation here, here, here, and here.