Joe Biden’s Economic Daring

The American president has launched a large program to promote competition. In an economy driven by certain dominant groups, he has thereby made pledges to the left of his party and positioned himself as the defender of workers.

Joe Biden certainly continues to prove wrong those who saw his election as the beginning of a third term for Barack Obama. The pupil has surpassed his master. The White House’s most recent initiative to reestablish competition within American capitalism corrupted by a concentration of huge companies confirms a boldness unseen during the eight years of the Obama-Biden Democratic twosome.

In signing the executive order on Friday, July 9, the president explained that his goal is to improve the functioning of an economic system whose development has ended up penalizing consumers for the past two decades. “Capitalism without competition isn’t capitalism; it’s exploitation. Big players can change and charge whatever they want and treat you however they want,” he said. Biden’s executive order, which contains 72 specific measures, instructs federal regulation authorities to promote competition in their sectors. It applies to the business of airlines just as it does opticians and hearing aid manufacturers; telecom companies just as much as diaper manufacturers. The real test obviously lies in how the order will be implemented.

Everyone anticipated an offensive against the all-powerful tech giants; Biden went further, attacking excessive monopolies in the whole economy. The appointment of 32-year-old legal expert Lina Khan, known for her antitrust work, as chairperson of the Federal Trade Commission was a sign. The 78-year-old Democratic president has surrounded himself with a young team capable of leading an attack to regulate the economy, which he wants to make fairer for consumers. It’s the same approach he’s using for his initiative on taxing multinational corporations. On the political scene, Biden has killed two birds with one stone: He is making commitments to the left of his party, and has attacked Donald Trump’s populism from behind by positioning himself as the defender of workers.

Political Influence

The decline of competition in the American economy has been the subject of intense debate in academic circles. Biden’s executive order aligns with the analysis of French economist Thomas Philippon of New York University, whose 2019 book “The Great Reversal: How America Gave Up on Free Markets,” explained how the United States had finally abandoned the principle of free competition. Until the end of the 1990s, competition, sometimes ferocious in nature, worked to the benefit of the consumer, who reaped the rewards in the form of lower prices or increased quality of service.

However, over time, the most powerful groups have reached a level of profitability and a dominant position such that they have formed lobbies, influencing political power and blocking the path for new entry to the market. Antitrust legislation has lost any substantive meaning. The consumer’s buying power has plummeted while airplane tickets and phone prices have exploded.

The European Union, meanwhile, has taken the opposite approach. Competition authorities put in place by the European Commission have continued to assert their power over member states in recent years in order to preserve an open and competitive economy that protects the consumer. The Biden administration is finally becoming increasingly European. There’s one more effort he can make. Perhaps, will Biden open up the American market to European competition one day?