White House NEC Director Brian Deese Says Mergers Have Cost Families
The White House estimates that consolidation across industries means American households pay an extra $5,000 a year.
Bloomberg, July 19, 2021
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Industry consolidation and market concentration costs the average U.S. family about $5,000 per year, according to Brian Deese, the Director of the White House National Economic Council under President Joe Biden. Deese, the newly appointed Chairman of the President’s Council on Competitiveness created by Biden’s Executive Order on Promoting Competition in the American Economy, blames decades of lax anti-trust enforcement, a build-up of excessive regulations and increasing industry concentration for the rising costs to families.
The fallout from lessened competition has been stark: higher prices, lower wages and less innovation. To address these issues, the new competitiveness council will rely on existing legislative authority to reinvigorate antitrust enforcement, while taking a closer look at mergers and acquisitions that could lead to anti-competitive behavior, Deese explained in an interview.
The White House notes that the number of mergers and acquisitions has increased significantly the last 20 years, increasing five-fold in about 75% of industries. The problem is that none of the promised benefits have found their way to consumers, according to Deese. “We haven’t seen the attendant benefit in terms of, lower prices, or more innovation in the economy,” he said. Deese cited a growing body of economic research that has identified harms across numerous sectors from consolidation, namely the November 2020 paper “Restoring competition in the United States” co-authored by his White House colleague Tim Wu.
Cutting “regulatory frictions” will enhance the ability of workers to find employment, according to the new council. As an example, Deese notes that 30% of jobs in the U.S. require a license, up from 5% in the 1950s. Licensing requirements used to be focused on highly skilled and high-risk jobs, such as aircraft pilots and surgeons. Today, some states require licenses to be an interior decorator or a hairdresser. This red tape is seen as reducing economic mobility and limiting competition.
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