Senate’s antitrust bill would raise consumer prices and lower our competitiveness
Sens. Amy Klobuchar (D-Minn.) and Tom Cotton (R-Ark.) are co-sponsors of an antitrust bill that would put new clamps on the growth of American companies — not just Big Tech but potentially financial services firms, and even online and in-store retailers like Amazon and Walmart. The Senate committee markup of the bill is expected over the days ahead, to be followed by a potential vote later this year.
The coming together of Klobuchar from the left and Cotton from the right is a result of different motivations. Democrats are suspicious of companies that are too successful and powerful, while Republicans hate the influence of big-tech media platforms, which they say have openly discriminated against conservatives.
It seems sad and ironic that the more America’s Big Tech companies have contributed to keeping America’s economy afloat during the coronavirus lockdown, the louder the voices get to break them up or to tie them up into regulatory knots.
The purpose of the antitrust bill, according to Klobuchar, is to beef up antitrust enforcement so “we can effectively promote competition and protect American consumers” from companies worth hundreds of billions of dollars using their market power to thwart competition.
The bill would limit the size of mergers and acquisitions, outlaw firms from using their own platforms to advantage their own products, and give more enforcement powers to federal regulators.
The bill effectively penalizes American firms for being too successful and plays into the hands of Asians and Europeans who make the same claims against U.S. companies and want to penalize them financially because their own firms can’t compete.
Instead of protecting American companies and jobs from such bogus foreign claims of monopolistic behavior, the Klobuchar-Cotton bill would legitimatize them.
The premise of the bill — that consumers and workers are somehow being harmed — is false. The superiority and global market dominance of American high-tech firms benefits consumers (by lowering prices), shareholders (by raising stock values by trillions of dollars) and American workers (by creating highly paid jobs).
The Googles and Apples and Amazons have become globally dominant players because they pioneered extraordinary products with ruthless efficiency through unprecedentedly successful and visionary management. They didn’t gain market power by stealing, and they didn’t use nefarious tactics like the Mob to push out competition. With a few exceptions, they didn’t get handouts or subsidies from the government in order to gain an upper hand. They simply created great products that people want at a price they are willing to pay.
If ever there were a true victimless crime, this would be it.
Here’s the evidence of that statement: In almost every product and industry that these senators allege are illegal exercises of monopoly power, prices are falling — fast.
Let’s look at the inflation numbers. The overall consumer price index rose 7 percent in 2021 — but tech product prices continue to fall. For the last three decades, in fact, tech companies have reduced prices by 50, 60 and in some cases 90 percent, when adjusting for quality improvements. Google provides internet searches for free. The first cell phones cost nearly $4,000; today, an iPhone can be purchased for less than $400 at ten times the functionality.
And yet, Congress’s response is, “How dare they do that?”
Or take financial services: Those costs have plummeted, and financial instruments like credit cards are now more available and more affordable to masses of consumers than ever before. If Visa is a monopolist, why do millions more Americans sign up for plastic every year?
Is there anyone who believes that Walmart and Amazon are monopolists? The “everyday low prices” blood-war between these behemoths is benefitting consumers in the hundreds of billions of dollars each year. Amazon will deliver groceries, toothpaste and toilet paper to your door in 24 to 48 hours at bargain prices that the local grocer can’t match. Consumers don’t seem to be complaining.
The antitrust bill will assuredly raise prices for consumers, not cut them — just as price controls and the heavy hand of antitrust regulations in the 1970s kept prices high and limited rather than enhanced competition. As Robert Crandall of the Brookings Institute — hardly a conservative think tank — proved many years ago, it was only after airline, energy, trucking, financial services and other economic regulations were lifted at the end of the 1970s and into the 1980s that prices fell, and markedly so.
The alternative to big business is big government —if you think prices are high now, wait until Sens. Klobuchar and Cotton get their way.
Stephen Moore is a senior fellow at FreedomWorks and a former economic adviser to Donald Trump. His latest book is “Govzilla: How the Relentless Growth of Government Is Devouring the American Economy.”
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