Despite an excessive degree of regulatory intervention, American-style free market economics remains the gold standard for organizing an economy. Unfortunately, one of Uncle Sam’s favored tools with which to attack the business sector – antitrust power – is being considered by both major parties in the U.S. Congress to undercut that advantage.
American innovators have improved the lives of generations of citizens. Consider, just among recent success stories, the invention of the Apple iPhone, the Twitter method of communication, the Google search engine, Uber’s ride-sharing concept and the use of Facebook to keep up with family and friends. Amazon is a company that was critical in moving goods to people everywhere during the recent pandemic.
While none of these companies are perfect, all are miracles of free market economics and rewards in a nation that embraces entrepreneurs.
Now, those same wildly successful companies are under attack by liberals who have a profound distaste for private enterprise and success, fueled by a deep skepticism of free market capitalism.
There is an emerging effort to give Washington power players even more power to attack so called “Big Tech,” under the pretext of antitrust law. This attack emanates from both major political parties — the populist right and progressive left, in a way that will greatly harm a struggling national economy.
Giving more power to government bureaucrats to micromanage the economy has never been a good idea, but it is especially bad at this juncture.
The current centerpiece of this attack on “Big Tech” is S.2992, mistitled the “American Innovation and Choice Online Act,” which singlehandedly will stifle innovation and limit consumer choice. Worse, it will empower federal government agencies to initiate attacks on business in a way that shifts the burden of proof to companies so they will be presumed guilty of violating the new proposed law.
According to the U.S. Chamber of Commerce, the bill is “designed to empower unelected officials at the Department of Justice and the Federal Trade Commission to make critical decisions regarding the organization and function of the American economy.” The major concern is that this will allow government, not market forces, to manage “competitive outcomes in the market instead of promoting competition.”
As always, it will be the American consumer who will be hurt, with higher prices and more limited choices. Companies will pull back from innovation, justifiably fearful of being punished by politically motivated bureaucrats if they vertically integrate services.
Senate Majority Leader Chuck Schumer and his colleagues know their plan to grant new and sweeping regulatory and prosecutorial powers to the executive branch would not be on the GOP’s agenda when, as expected, they regain control next January. Hence, as The Wall Street Journal reports, “the bill has received little debate, yet Majority Leader Chuck Schumer wants to hold a vote pronto.”
Cleverly, Democrats have used GOP anger towards “Big Tech” to secure a number of Republicans to support their effort. There is a well-documented history of a faction of Republicans slipping away from the defense of free markets for short term political gain.
After all, it was a Republican president, Richard Nixon, who once said, “we are now all Keynesians.” This anti-free market sentiment reflected a tacit agreement between the Republican and Democratic Parties that it is acceptable for the federal government to micromanage the economy. In furtherance of this warped perspective, Nixon infamously ordered the end to the gold standard in 1971 and imposed wage and price controls, creating problems that haunt us even today.
Simply consider the Federal Reserve’s free money policies that have helped cause today’s high inflation numbers as but one outcome of Nixon’s ill-advised removal of the dollar from the gold standard.
A few decades later, there was another offensive against the free market in the form of Wall Street bailouts. Another Republican, President George W. Bush, provided a taxpayer insured bailout of insurance giant AIG followed by a subsequent TARP program that had the support of a significant number of members of both parties. That use of the federal government to bail out bad private sector decisions was an example of crony capitalism at its worst.
If Republicans join hands with progressive Democrats on this legislation to empower the FTC and the Justice Department to control the tech sector of the economy, what little “free” the free market now enjoys will be smothered to virtual nonexistence.