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Brian Deese on Unleashing Competition (Podcast) · Masters in Business

0:00
Speaker 1: M This is Mesters in Business with Very Results on
0:06
Speaker 1: Bloomberg Radio. Here. I know I say it every week,
0:11
Speaker 1: but really this week I have an extra special guest
0:15
Speaker 1: straight from the White House. Brian Deese is the Director
0:19
Speaker 1: of the National Economic Council. He is essentially the chief
0:23
Speaker 1: economic advisor to the President of the United States, and
0:29
Speaker 1: we spent a lot of time discussing the President's new
0:32
Speaker 1: Council on Competition, which is a very, very big deal.
0:38
Speaker 1: It's going to be a big driver of policy from
0:41
Speaker 1: the executive branch over the next four years. And we
0:45
Speaker 1: really got deep into the weeds. We talked about everything
0:48
Speaker 1: from farmers to employee contracts, to net neutrality UH, to
0:54
Speaker 1: the right to repair your own um products that you buy,
0:58
Speaker 1: to you know everything, any trust enforcement. It really was
1:03
Speaker 1: a policy wonks delight. If you're remotely interested in economic competition,
1:09
Speaker 1: any trust enforcement, employee contracts, well you're gonna find this
1:14
Speaker 1: to be absolutely fascinating. With no further ado, my conversation
1:19
Speaker 1: with the National Economic Council's director, Brian Diese, this is
1:26
Speaker 1: Mesters in Business with Very Results on Bluebird Radio. This week,
1:34
Speaker 1: I have an extra special guest. His name is Brian
1:37
Speaker 1: dies He is the Director of the National Economic Council
1:42
Speaker 1: at the White House and essentially the chief economic advisor
1:46
Speaker 1: to President Biden. Previously, he was the global head of
1:50
Speaker 1: Sustainable Investing at black Rock, and he was President Obama's
1:54
Speaker 1: Senior advisor for Climate and energy policy. Brian Diese, welcome
1:59
Speaker 1: back the Master's in Business. Thanks Erry, It's great to
2:03
Speaker 1: be here. So, so let's start with your role in
2:06
Speaker 1: this new administration. You are the thirteenth director of the
2:10
Speaker 1: National Economic Council. I think most people are more familiar
2:14
Speaker 1: with the Council of Economic Advisors. Tell us a little
2:17
Speaker 1: bit about this group, what it does, and how it
2:20
Speaker 1: differs from the c e A. So the National Economic
2:25
Speaker 1: Council was created by executive order in the early nine
2:28
Speaker 1: nineties with the goal of having a White House entity
2:33
Speaker 1: that could coordinate economic policy on behalf of the president
2:38
Speaker 1: the Some people think about the c A, but I
2:41
Speaker 1: think that the more natural analog is the National Security Council.
2:44
Speaker 1: So the National Security Council existed in the White House
2:48
Speaker 1: as a way of coordinating policy on national security and
2:51
Speaker 1: foreign policy issues. The National Economic Council was modeled to
2:54
Speaker 1: do the same for UH for both domestic and international
2:58
Speaker 1: economic uh priorties. So if you go back and you
3:01
Speaker 1: read the executive order that was creating early the early
3:04
Speaker 1: it founds pretty true to today. So what does that mean?
3:07
Speaker 1: Number One, have an effective way to coordinate and aggregate
3:11
Speaker 1: the views of all of the key economic policy principles.
3:15
Speaker 1: The Secretary of the Treasury, the Chair of the Council
3:17
Speaker 1: of Economic Advisors are Commerce Secretary or Labor Secretary, and
3:22
Speaker 1: down the line, create a common table around which we
3:25
Speaker 1: can debate and discuss and provide the president clear policy
3:30
Speaker 1: recommendations and clear economic advice, and at the same time
3:33
Speaker 1: have a coordinated way to take the direction from the
3:36
Speaker 1: President about his views and his his direction on the
3:40
Speaker 1: economy and drive that across the broad inter agency of
3:44
Speaker 1: the executive branch. To your question about the Council of
3:47
Speaker 1: Economic Advisors, the Council of Economic Advisors is designed as
3:51
Speaker 1: a almost an internal think tank of economists and experts,
3:58
Speaker 1: many of whom came out of academia and spend one
4:02
Speaker 1: or two years at the Council and provide an analytical
4:06
Speaker 1: base and an economic base to think through issues, to
4:10
Speaker 1: provide analysis um and really be a kind of thoughts center.
4:15
Speaker 1: Nash Economic Council is really designed to coordinate bringing those
4:18
Speaker 1: views to the table, but also um connecting them to
4:22
Speaker 1: the legislative and political realities that we're operating in to
4:25
Speaker 1: try to get the best outcomes possible in service of
4:28
Speaker 1: the president schools. So, so let's talk a little bit
4:30
Speaker 1: about your boss, the President and some of his goals.
4:34
Speaker 1: Last week, he signed an executive order to quote, promote
4:38
Speaker 1: competition in the American economy. We've kind of become used
4:42
Speaker 1: to these sort of one page or photo ops for
4:46
Speaker 1: executive orders, but that was not what this was. It's
4:49
Speaker 1: a seven thousand word, seventy two bullet point document and
4:54
Speaker 1: and it's very serious policy initiative. Tell us what was
4:57
Speaker 1: the thinking behind rolling out this new policy this way? Well,
5:03
Speaker 1: I appreciate you counting words and actions, because we're we're
5:06
Speaker 1: certainly focused on that as well. But we're really excited
5:11
Speaker 1: about this executive order, and it's based on a kind
5:14
Speaker 1: of very simple but important intuition, which is that having
5:19
Speaker 1: fair and open competition is a fundable, fundamental ingredient of
5:23
Speaker 1: a healthy capitalist economy. It's what actually drives better outcomes,
5:28
Speaker 1: lower prices, higher wages, more innovation, more economic growth, and
5:33
Speaker 1: so the core goal of this executive order is to
5:36
Speaker 1: reset across the entire executive branch a focus on where
5:41
Speaker 1: and in what ways can we encourage healthy competition in
5:45
Speaker 1: service of achieving those outcomes lower prices, higher wages, more innovation.
5:50
Speaker 1: And what we've seen across time is that our economy
5:54
Speaker 1: has gotten less competitive. UM. We have a larger umber
6:00
Speaker 1: of our industries that are now more concentrated than they
6:03
Speaker 1: were twenty or thirty years ago. We've seen the rate
6:07
Speaker 1: of new business formation, particularly small business formation, fall by
6:11
Speaker 1: almost since the nineteen seventies. And if you look across industries,
6:16
Speaker 1: whether it's you know, in in me packing or in
6:19
Speaker 1: broadband internet, UM, consumers choices have been constrained and we
6:25
Speaker 1: haven't seen that kind of the follow through benefit that
6:29
Speaker 1: at least has been argued by folks who say, you know,
6:32
Speaker 1: more consolidation will actually generate lower prices for consumers. We
6:35
Speaker 1: haven't seen that either. In fact, if you aggregate up
6:38
Speaker 1: the impact of consolidation to an American household in terms
6:43
Speaker 1: of prices and wages and other attending costs, you know
6:46
Speaker 1: the best estimates so that it's costing about five thousand
6:48
Speaker 1: dollars a year for the typical household. So the goal
6:52
Speaker 1: of this executive Order is to say, how can we
6:53
Speaker 1: start to get at that? And fundamentally, this is this
6:57
Speaker 1: is it's it's this is not about being pro business
7:00
Speaker 1: or anti businesses about being pro competition. A lot of
7:03
Speaker 1: the ideas in this Executive Order are actually deregulatory in nature,
7:08
Speaker 1: trying to remove some barriers to entry that actually keep
7:14
Speaker 1: workers from more effectively moving and competing for jobs or
7:17
Speaker 1: new businesses to enter into new markets and grow and
7:21
Speaker 1: gain market share as a result. So that's the that's
7:24
Speaker 1: that's the at a high level, that's our goal. But
7:27
Speaker 1: you're right, um, we we wanted to take a really
7:29
Speaker 1: serious effort to go agency by agency and look where
7:33
Speaker 1: where the challenges, what are the tools that we have,
7:36
Speaker 1: and how could we advance the ball. It looks different
7:38
Speaker 1: in different agencies. There's a lot uh to unpack here,
7:42
Speaker 1: but that's the goal at the high level. And I
7:44
Speaker 1: have to tell you that's a shocking number. The lack
7:47
Speaker 1: of competition caused by industry consolidation and concentration plus the
7:54
Speaker 1: average American family five thousand dollars a year, that that's
7:57
Speaker 1: a giant number. Yeah, and you when you just strow
8:00
Speaker 1: it down. You know. That's that's a if you you know,
8:03
Speaker 1: but I also would say embedded in that is a
8:05
Speaker 1: big opportunity because if we can actually break down some
8:08
Speaker 1: of those barriers and we can encourage better competition, what
8:11
Speaker 1: that means is that we have a way of, um
8:14
Speaker 1: actually boosting economic outcomes for the typical family in a
8:20
Speaker 1: significant way. But that sounds pretty esoteric, but you break
8:23
Speaker 1: it down into very practical things. Um, something like hearing.
8:27
Speaker 1: It's today, you need to get a prescription. You need
8:30
Speaker 1: to go to a doctor and get a prescription. You
8:32
Speaker 1: can't buy hearing it's over the counter. There's almost fifty
8:35
Speaker 1: million people in the country who have some form of
8:38
Speaker 1: hearing loss. Um. A lot of those are older, but
8:40
Speaker 1: a lot of younger people as well. UM. And that
8:44
Speaker 1: requirement operates, you know, as economists say, as a barrier
8:48
Speaker 1: to entry. And so what that means is that it
8:51
Speaker 1: just costs a lot more. It's also a hassle, but
8:53
Speaker 1: it costs a lot more to get hearing. It's so
8:56
Speaker 1: one of the things that this executive order directs is
8:59
Speaker 1: to plement a rule to allow hearing aids to be
9:02
Speaker 1: bought over the counter. What that's gonna do is it's
9:04
Speaker 1: going to make it easier for those fifty million people
9:07
Speaker 1: to get hearing aids more cheaply. But we also hope
9:10
Speaker 1: it will spur innovation by reducing that barrier to entry. Now,
9:13
Speaker 1: new companies, new market entrance, can come in and innovate
9:16
Speaker 1: in providing hearing aid products at a lower price point,
9:20
Speaker 1: and so that that that's just one example. Could you
9:23
Speaker 1: think about how that five thousand dollars aggregates up. That's
9:26
Speaker 1: one very practical example, but HiT's a lot of people
9:29
Speaker 1: in their daily life not only can you not only
9:32
Speaker 1: can you you know you have a little less hassle
9:33
Speaker 1: that you can just go to the pharmacy and buy
9:36
Speaker 1: a pair of hearing aids. But overwhelmingly we know that
9:39
Speaker 1: room removing a barrier like that will make it cheaper
9:42
Speaker 1: and hopefully we'll generate more innovation and more opportunity for
9:45
Speaker 1: new business entrance to you know, succeeded. That's really interesting.
9:50
Speaker 1: Let's let's talk a little bit about part of this
9:54
Speaker 1: executive order, which is the formation of the President's Council
9:58
Speaker 1: on Competitiveness, beginning with the Council membership. This is this
10:03
Speaker 1: is quite a list. It's the Secretary of Treasury, the
10:05
Speaker 1: Secretary of Defense, the Attorney General, Chair of the FTC,
10:09
Speaker 1: Chair of the Consumer Financial Protection Board FCC, Agriculture, Commerce,
10:13
Speaker 1: on and on. It's practically the full cabinet. Why so
10:17
Speaker 1: broad a membership? What what's the thinking behind that? While
10:22
Speaker 1: you're making me realize, I'm gonna have to get a
10:23
Speaker 1: bigger office to get everybody around the table, particularly now
10:26
Speaker 1: that we can um start to do these convenings in person. Look,
10:33
Speaker 1: the idea of this was pretty simple, which is over
10:35
Speaker 1: the last several months, where we have done is we've
10:37
Speaker 1: run a process of going out to agencies and understanding
10:42
Speaker 1: from the agencies where the where their authority exists in
10:45
Speaker 1: terms of competition policy or antitrust um and how they
10:49
Speaker 1: think it could be better deployed in service of encouraging
10:52
Speaker 1: competition that will be good for consumers and families. And
10:55
Speaker 1: what we found in that process is there's the breadth
10:59
Speaker 1: of acts and the breath breath of tools and authorities
11:02
Speaker 1: really runs across um often climes. This conversation starts and
11:07
Speaker 1: centers around the core antitrust statutes UH and the core
11:11
Speaker 1: antitrust enforcement agencies, the Department of Justice and the FTC.
11:15
Speaker 1: Their role is critical and they operate into independently when
11:18
Speaker 1: it comes to enforcement matters, but in fact the actual
11:21
Speaker 1: tools and authorities are much broader. So in U s
11:24
Speaker 1: d A, for example, we just had the UM hundred
11:27
Speaker 1: year anniversary of the Packers and Stockyards Act, which is
11:30
Speaker 1: the antitrust statute that that applies to UM to food UH,
11:36
Speaker 1: food and agricultural commodities meat packing in others UM we
11:41
Speaker 1: have at the Department of Transportation authorities to look at
11:45
Speaker 1: competition in the airline industry, in the railroad industry, in
11:48
Speaker 1: the shipping industry UM and across the board. So what
11:53
Speaker 1: we realized in putting this executive work together is that
11:56
Speaker 1: the actual coordination across these different parts of our government
12:01
Speaker 1: is really important for two reasons. One because it's important
12:05
Speaker 1: for the agencies to understand how when they're taking action
12:08
Speaker 1: to encourage competition in a particular segment of the market,
12:11
Speaker 1: like when HHS finalizes this rule to make hearing aids
12:15
Speaker 1: available over the counter, how does that fit into a
12:18
Speaker 1: broader economic strategy to encourage competition in UH, in the
12:24
Speaker 1: railroad industry, or in the shipping industry. And the second
12:27
Speaker 1: is to make sure that we are we are effectively
12:31
Speaker 1: coordinating and not getting across purposes. So if if if
12:34
Speaker 1: one agency is moving out in a certain way, and
12:36
Speaker 1: try to make sure that it's consistent and that the
12:39
Speaker 1: and that businesses and other stakeholders that are actually having
12:42
Speaker 1: to operate within these rules of the road have as
12:45
Speaker 1: clear as possible guidance from the executive branch um on
12:50
Speaker 1: on what our policies and what our intentions are. So
12:53
Speaker 1: that's the goal of the Council. It's been a long time,
12:56
Speaker 1: uh in American economic policy that we've really priority tized
13:00
Speaker 1: competition policy in this way, and we're going to need
13:03
Speaker 1: a structure to have that ongoing focus across time and
13:07
Speaker 1: where we hope that this Council will serve that purpose.
13:10
Speaker 1: So let's stay with that structure a little bit. I
13:12
Speaker 1: mentioned all the members of this council. I didn't mention
13:17
Speaker 1: the chairperson that would happen to be you. How big
13:22
Speaker 1: of a job is this going to be relative to
13:24
Speaker 1: your role as as director of the National Economic Council.
13:29
Speaker 1: How large of a priority is this and what do
13:31
Speaker 1: you hope to accomplish with it? Well, I think you
13:34
Speaker 1: saw from the President's speech and announcement last week. The
13:38
Speaker 1: priority that he and that we and as administration are
13:41
Speaker 1: putting on this effort, which is very high. UM. That
13:45
Speaker 1: we are obviously very focused on the immediate economic challenges UM,
13:51
Speaker 1: the rescue plan and the impact that has had on
13:54
Speaker 1: the economy over the last couple of months. The effort
13:56
Speaker 1: we have a Congress right now working on an infrastructure
13:59
Speaker 1: pack it and on a human infrastructure element as well. UM.
14:04
Speaker 1: But but but equally in that category is this effort
14:10
Speaker 1: to try to lower prices for consumers, increased wages, generate
14:15
Speaker 1: more innovation by encouraging competition. So I would say that, look,
14:19
Speaker 1: it's a big priority and part of why we wanted
14:22
Speaker 1: to move out early. UM. This is relatively early in
14:25
Speaker 1: administration to put on an executive order that is this
14:28
Speaker 1: this broad in terms of directives to different agencies. Was
14:31
Speaker 1: to make sure that we were getting going because some
14:34
Speaker 1: of these things, UM, appropriately will take some time. The
14:38
Speaker 1: rulemaking process, uh, you know explicitly builds in time for
14:42
Speaker 1: notice and comment and engagement. UM. So we know that
14:45
Speaker 1: these things will take some time. But we wanted to
14:48
Speaker 1: get the ball rolling and as a result, our focus
14:51
Speaker 1: on this council and my role in in in trying
14:54
Speaker 1: to lead and coordinate that will be a big piece
14:56
Speaker 1: of business. But we're really excited about being out of
14:59
Speaker 1: the game um early and uh and and aggressively here.
15:04
Speaker 1: And I think what you're gonna see, hopefully is that
15:07
Speaker 1: for a lot of end uh end recipients, typical families, businesses,
15:13
Speaker 1: this is going to be a real welcome uh, real
15:16
Speaker 1: welcome opportunity because whether you're a small family farmer who
15:19
Speaker 1: has been struggling under the sense that you know, costs
15:22
Speaker 1: keep going up and your choices are are going down
15:25
Speaker 1: because you keep seeing consolidation in the market, or you're
15:28
Speaker 1: just you know, somebody who is looking for the best
15:32
Speaker 1: job possible and realizing that there are restrictions on you know,
15:36
Speaker 1: moving from job to job that you didn't even know existed.
15:39
Speaker 1: These are kinds of things that could help people in
15:40
Speaker 1: their daily lives. But if we're going to get to
15:43
Speaker 1: helping in at that end point, we really got to
15:46
Speaker 1: be organized and coordinated as a federal government. So we
15:49
Speaker 1: gotta you know, it's gonna be a big piece of business,
15:51
Speaker 1: but one that we're very excited about. So we're going
15:53
Speaker 1: to drill down into some of the specifics on a
15:56
Speaker 1: sector by sector basis. But before we get that, Granu Lare,
16:00
Speaker 1: I want to just discuss briefly the genesis of this.
16:04
Speaker 1: Your White House colleague Tim Woo, along with a bunch
16:07
Speaker 1: of others, published a large research paper back in November,
16:12
Speaker 1: right right after the election, and their analysis identified that
16:17
Speaker 1: pretty much since the Microsoft anti trust case in the
16:20
Speaker 1: ninety nineties, the US has kind of given up on
16:25
Speaker 1: um anti trust enforcement and the result has been huge
16:30
Speaker 1: industry consolidation, reduction of competition, increase pricing power, and higher
16:36
Speaker 1: costs two consumers. So that leads to the question what
16:41
Speaker 1: happened to anti trust enforcement in the United States. Yeah,
16:48
Speaker 1: it's it's an important question and and also one that
16:50
Speaker 1: I think is helpful to put in historic context, because
16:55
Speaker 1: if you look at the arc of competition policy and
16:58
Speaker 1: any trust enforcement in the U s. It really you
17:01
Speaker 1: do see ebbs and flows, you know, going back as
17:04
Speaker 1: far as the passage of the Sherman Anti Trust Act
17:07
Speaker 1: in the eighteen nineties, right, that was a reaction to
17:11
Speaker 1: thee both the political corruption but also the sort of
17:14
Speaker 1: behavior that of monopolies in the in the in the
17:18
Speaker 1: Gilded Age, and laid the groundwork for of course, you know, UH,
17:22
Speaker 1: President Teddy Roosevelt becoming famous in in trust busting and
17:26
Speaker 1: UH and and the activities in the early nineteen hundreds UM.
17:29
Speaker 1: And then you saw another acceleration on the back end
17:32
Speaker 1: of the UM in the in the nineteen thirties, on
17:35
Speaker 1: the back end of the First World War UM, and
17:37
Speaker 1: then coming out of the Second World War with with
17:40
Speaker 1: FDR UM reflecting that as well, you then saw a
17:45
Speaker 1: different a different approach that emerged in the nineteen seventies
17:49
Speaker 1: and a new school of thought that was very was
17:53
Speaker 1: was very narrowing of the view of competition policy UM,
17:57
Speaker 1: and that led to a multi decade approach, as you say,
18:02
Speaker 1: limiting enforcement of antitrust and a view that kind of
18:07
Speaker 1: all things equal, UH, letting consolidation occur would generate economic
18:15
Speaker 1: benefits and so therefore at the margin we should be
18:17
Speaker 1: sort of accommodating of consolidation unless there was radically clear
18:23
Speaker 1: that it was bad for bad for UH consumers, or
18:28
Speaker 1: bad for prices. And so we've seen the implications of that,
18:31
Speaker 1: and to your point, we've seen over the last couple
18:33
Speaker 1: of decades the number of annual mergers has increased by
18:36
Speaker 1: five or six folds UM, and we have seen in industry.
18:43
Speaker 1: The measure of industry consolidation has increased significantly over the
18:49
Speaker 1: last twenty years, and we haven't seen the attendant benefit
18:53
Speaker 1: in terms of lower prices um or or more innovation
18:57
Speaker 1: in the economy. And so over the last five years
19:01
Speaker 1: or so, there's been a growing body of economic research
19:05
Speaker 1: to try to identify the fact the harms that have
19:08
Speaker 1: come from this consolidation UH, and that work started. Some
19:14
Speaker 1: of that work started and was really put on the
19:16
Speaker 1: map at the end of the Obama administration UM, including
19:20
Speaker 1: by UM Tim Woo who you mentioned, Jason Furman, others
19:24
Speaker 1: of my former colleagues, who really started to pinpoint this
19:29
Speaker 1: decline in any trust enforcement and the decline and focus
19:32
Speaker 1: on competition policy as one thing that has added to
19:35
Speaker 1: the stagnancy a small business formation, the inequality that we
19:38
Speaker 1: have seen UM, and in the academic realm, we've seen
19:42
Speaker 1: that that work only accelerate over the course the last
19:45
Speaker 1: five years. And so certainly the executive order here and
19:48
Speaker 1: the actions and the work that is embedded here is
19:50
Speaker 1: really building on that framework and building on the findings
19:53
Speaker 1: that have come out over that and we certainly we
19:56
Speaker 1: do view it in historic perspective of now trying to
19:59
Speaker 1: really shift back to a focus on prioritizing UM. The
20:03
Speaker 1: enforcements of anti trust statutes focus on competition and a
20:08
Speaker 1: focus on the end outcome and the end benefit to
20:11
Speaker 1: the end consumer and worker. And and for those people
20:14
Speaker 1: who may not be familiar with Tim Woo, not only
20:16
Speaker 1: is he the person who coined the phrase net neutrality,
20:20
Speaker 1: he is the author of a couple of books, The
20:22
Speaker 1: Curse of Bigness, Anti Trust in the New Gilded Age
20:26
Speaker 1: as well as The Master Switch, where he describes how
20:30
Speaker 1: eventually these information systems they become consolidated, they become closed
20:34
Speaker 1: and less and less competitive until some disruptive innovation comes along.
20:39
Speaker 1: And my sense is this council is trying to encourage
20:44
Speaker 1: less of that concentration and more of the disruptive innovation. Yeah,
20:50
Speaker 1: that's exactly right. And uh and Kim as Kim works
20:53
Speaker 1: for Obvious here at the NBC and has been a
20:55
Speaker 1: thought leader on these issues for some time. And you characterize,
21:00
Speaker 1: you know, accurately, the one of the key objectives of
21:03
Speaker 1: this council is to try to get toward how we
21:07
Speaker 1: can encourage that type of innovation. UM. And one thing
21:10
Speaker 1: I would say is that This really is something that
21:14
Speaker 1: I think we've increasingly seen cuts across traditional um lines
21:20
Speaker 1: or dividing lines in economic thought, and it cuts across
21:23
Speaker 1: to traditional political dividing lines to I mean, some of
21:25
Speaker 1: the things we're talking about here are really about getting
21:29
Speaker 1: rid of regulations that stand in the way of that
21:31
Speaker 1: kind of innovation. You know, one of the examples that's
21:34
Speaker 1: in the Executive Order is around is in them is
21:38
Speaker 1: in uh fear and line the the the the alcohol market,
21:43
Speaker 1: and you've got some incumbent rules on bottle size and
21:48
Speaker 1: bottle labeling that when you really unpack them and say,
21:51
Speaker 1: what why is it that you know, to operate in
21:54
Speaker 1: a market you have to meet certain bottle size requirements
21:58
Speaker 1: because maybe you've got an idea to ring a product
22:00
Speaker 1: to market that just looks different and that's going to
22:02
Speaker 1: be your you know, that's going to be your branding edge. Well,
22:05
Speaker 1: you know, when you unpack and and look at the
22:07
Speaker 1: reason why those regulations exist, you know some of them
22:10
Speaker 1: are because they're just protecting incumbents. Uh and uh. You
22:15
Speaker 1: know the similar to a number of these occupational licensing
22:18
Speaker 1: requirements where you have requirements to get a license to
22:23
Speaker 1: be um to braid hair or to cut hair um
22:27
Speaker 1: or you know, to do all manner of jobs, particularly
22:31
Speaker 1: at the m in different states where you know, if
22:34
Speaker 1: you if you're moving from one state to another, you've
22:37
Speaker 1: got to go through a whole process of getting a
22:38
Speaker 1: new license. UM. And you know, look, having licensing requirements
22:43
Speaker 1: for uh, you know, for jobs that require you know
22:46
Speaker 1: that are that where they're safety or there's other things
22:48
Speaker 1: involved obviously make a lot of sense. But in a
22:51
Speaker 1: lot of cases, when you unpack it, rules like that
22:54
Speaker 1: are have been put in place to favor incumbents and
22:57
Speaker 1: make it harder for new entrance to get into the market.
23:01
Speaker 1: And so we're really you know, we we think this
23:03
Speaker 1: real opportunity both to be disruptive in terms of the
23:06
Speaker 1: economic slock, but also disruptive in terms of some of
23:09
Speaker 1: the embedded political realities of this we've had. You know,
23:12
Speaker 1: a lot of these items have strange bedfellows in terms
23:16
Speaker 1: of the support behind them, and that's part of what's
23:19
Speaker 1: exciting about it for us as well. Right, clear clearly
23:21
Speaker 1: a lot of these licensing rules are anti competitive. UM.
23:25
Speaker 1: Before we dig down and get granular into the individual sectors,
23:30
Speaker 1: I have one last broad overview question and it's on
23:34
Speaker 1: anti trust enforcement. There has been a deeply embedded sort
23:39
Speaker 1: of less a fair doctrine at both the Department of
23:44
Speaker 1: Justice and the FTC. Obviously, Lena Khan and Marrick Garland
23:48
Speaker 1: represent a break from that philosophy. But how do you
23:53
Speaker 1: turn around two decades of I was gonna say lacks enforcement,
23:57
Speaker 1: but it's really a skepticism about anti trust law. How
24:01
Speaker 1: do you reverse that? Well, I think you start by
24:07
Speaker 1: doing what we did in the Executive Order, which is
24:10
Speaker 1: to articulate that it is the policy of the executive
24:13
Speaker 1: branch to vigorously enforce our antitrust laws, and more than that,
24:21
Speaker 1: UM to enforce them in the context of a um
24:25
Speaker 1: UH an economic policy that views increasing competition as a
24:30
Speaker 1: key way of improving lives and economic outcomes for the
24:34
Speaker 1: American people. So part of it is you start by
24:37
Speaker 1: articulating a clear economic strategy and economic crossoity behind why
24:42
Speaker 1: it is that we need greater UM and more vigorous
24:46
Speaker 1: enforcement of our antitrust statutes. And you know some of
24:49
Speaker 1: the some of the work that UH in the nineteen
24:53
Speaker 1: seventies and early eighties that led to this kind of
24:56
Speaker 1: multi decade effort to try to undermine it. For orsman
25:00
Speaker 1: of antitrust started from articulating a similarly articulating a philosophy,
25:05
Speaker 1: but a philosophy to very different ends. So that's you know,
25:09
Speaker 1: one important step is I think what we're trying to
25:12
Speaker 1: do is to articulate clearly the policy of the government.
25:14
Speaker 1: A second I do want to be clear is that
25:16
Speaker 1: the actual enforcement appropriately and necessarily operates independently, independently at
25:22
Speaker 1: the Department of Justice and the FTC. But I think
25:26
Speaker 1: getting high quality personnel in that will do that effectively.
25:31
Speaker 1: UM is a is a second important step, and so
25:37
Speaker 1: we're you know, we're moving on that front as well.
25:40
Speaker 1: And then you know, we we do you know, we
25:43
Speaker 1: do have an issue, which is that ultimately these things,
25:47
Speaker 1: the antitrust doctrine gets UM gets developed in the context
25:53
Speaker 1: of the judicial branch and and and challenges to decisions.
25:57
Speaker 1: And we've seen that obviously over the course of decades
25:59
Speaker 1: as and so you know, there are also some places
26:03
Speaker 1: where we may need to change the law, We may
26:06
Speaker 1: need to clarify or strengthen uh, the UM the antitrust authorities,
26:12
Speaker 1: and there's bipartisan work in Congress that's going on on
26:16
Speaker 1: that front right now. Particularly it relates to the tech industry,
26:20
Speaker 1: and so that's something that we are engaged on as well.
26:22
Speaker 1: But we we feel quite good about the fact that
26:24
Speaker 1: even within the existing authorities that we have across the
26:27
Speaker 1: federal government, we can make a lot of progress. And
26:29
Speaker 1: that's where we're focused for the time being. All Right,
26:32
Speaker 1: So let's dive into some of these sectors and and
26:35
Speaker 1: really this executive order covers everything from healthcare to financial
26:40
Speaker 1: products to net neutrality, data farmers labeling. Let's start with
26:45
Speaker 1: labor and employee contracts. I recall a couple of years ago, UM,
26:50
Speaker 1: a bunch of reports sort of surfaced about various tech
26:55
Speaker 1: companies Google, Apple, Facebook that had these anti poaching agreements
27:00
Speaker 1: they wouldn't hire each other's senior personnel. Obviously illegal and
27:05
Speaker 1: a restrictive um comminence amongst them. But but less obvious
27:10
Speaker 1: are some of the basic restrictive contracts, non competes, non disclosures,
27:17
Speaker 1: other onerous clauses uh that are common in Silicon Valley
27:22
Speaker 1: but have spread out to the rest of the country.
27:25
Speaker 1: What can this council do to allow greater competition for uh,
27:31
Speaker 1: those sort of employees who want to switch jobs. Yeah,
27:34
Speaker 1: so this is an incredibly important issue. You know, our
27:38
Speaker 1: our our labor market will work more effectively when workers
27:44
Speaker 1: are competing for jobs, but also employers are competing for workers.
27:49
Speaker 1: And when we have you know, fewer frictions and better
27:52
Speaker 1: matching between the workers and the jobs that they will
27:56
Speaker 1: be most successful in, we have better you know, outcomes
27:59
Speaker 1: over um. But to your point, we've got some real
28:03
Speaker 1: frictions and we have real opportunities to address them. So
28:06
Speaker 1: this executive order and the work through the Council, we're
28:09
Speaker 1: gonna go at three of those. The first is which
28:11
Speaker 1: you refer to as non compete agreements, and it's striking today,
28:16
Speaker 1: about one in three employers require that an employee will
28:21
Speaker 1: sign a noncompete agreement. So you're talking about about sixty
28:24
Speaker 1: million people in the workforce. UM. And it's not just
28:28
Speaker 1: as you say in Silicon Valley, and it's not just
28:30
Speaker 1: in uh, those circumstances where there's an obvious uh or
28:37
Speaker 1: or clear um competitive reason why you need it. So,
28:41
Speaker 1: you know, the President joking, not jokingly, but you know,
28:44
Speaker 1: illustratively pointed out to the fact that you know, you're
28:46
Speaker 1: if you're the scientist who owns the secret recipe for coke. Um.
28:50
Speaker 1: You know you may need to sign a noncompete to
28:52
Speaker 1: not just go to PEPSI and give away that trade secret,
28:55
Speaker 1: right um, when the um and so so clearly these
28:58
Speaker 1: these noncompete operate as a as a as a legitimate tool.
29:03
Speaker 1: But when you got to sixty million people and one
29:06
Speaker 1: of free employers, this goes much broader. Construction workers, hotel workers, um.
29:11
Speaker 1: You know you work in a restaurant and hospitality, fast
29:14
Speaker 1: food um. And also for the for low wage jobs,
29:18
Speaker 1: entry level jobs, not just more senior jobs where you'd
29:21
Speaker 1: be access to more sensitive information. And so you know this,
29:25
Speaker 1: the executive order is operating from a pretty basic principle
29:29
Speaker 1: that if particularly if you're operating in those sectors and
29:31
Speaker 1: someone offers you a better job, you should be able
29:33
Speaker 1: to take it. And if your existing employer wants you
29:37
Speaker 1: to stay, they should compete for your talent. Um. And
29:41
Speaker 1: so the order uh UM is is directing the FTC
29:48
Speaker 1: to look at either modifying or banning non compete clauses.
29:53
Speaker 1: So that's number one. The second is what I mentioned earlier,
29:56
Speaker 1: which is about the licenses required to operate in a job.
30:00
Speaker 1: So again about one in three jobs, about jobs in
30:02
Speaker 1: the us also require a license, and so that spans
30:06
Speaker 1: the uh you know that that spans the horizon. Obviously,
30:09
Speaker 1: you know you need a pilot's license to be to
30:11
Speaker 1: to operate an aircraft, but you also need a license
30:14
Speaker 1: to be on accountant, and interior decorator, a hairdresser, and
30:18
Speaker 1: importantly one in free today need that. That was five
30:23
Speaker 1: in the nineteen fifties. So we've seen a significant increase
30:26
Speaker 1: in the number of jobs that require a license, and
30:30
Speaker 1: so likewise disorder goes out. Saying in those cases where
30:35
Speaker 1: unnecessary licensing is actually reducing mobility, um that we should
30:39
Speaker 1: put limits or restrictions on them. At one point, I was,
30:42
Speaker 1: how light here is? You know some some people really
30:45
Speaker 1: need to be mobile. Uh that you know, it's part
30:48
Speaker 1: of how our economy works. You take military families, for example,
30:52
Speaker 1: you have to move every couple of years in order
30:54
Speaker 1: to do your job. Well, if you're a spouse of
30:57
Speaker 1: if you have a you know a one one one
31:00
Speaker 1: member of a partnership is in the military and moving.
31:03
Speaker 1: The other person works in a job where state by
31:07
Speaker 1: state you have different licensing requirements. Then you know, every
31:10
Speaker 1: time they move, that could be free six months of
31:13
Speaker 1: friction in terms of getting into the labor market and
31:15
Speaker 1: finding a job. The last thing we're focused on here
31:18
Speaker 1: is about wage data. And one of the things that
31:21
Speaker 1: that is true today is that employers can share detailed
31:25
Speaker 1: wage data between employers without having to share it to employees.
31:29
Speaker 1: And again this is just what the concern that is
31:32
Speaker 1: raised is that if you know, if employers can share
31:34
Speaker 1: wage data without sharing it to employees, that it makes
31:37
Speaker 1: it easier for them to um to you know, either
31:41
Speaker 1: explicitly colluded or just implicitly reduce uh, you know, competition
31:45
Speaker 1: and not have to compete as vigorously on on on
31:47
Speaker 1: wages and so and you could end up, you know,
31:50
Speaker 1: putting downward pressure on wages. So it all three of
31:54
Speaker 1: those days. We think we can make some progress by
31:57
Speaker 1: either eliminating or restricting um uh non competes, licensing, uh,
32:03
Speaker 1: you know, wage data sharing, and so that's that's our
32:06
Speaker 1: real focus on the labor market, and we think if
32:08
Speaker 1: we can make some progress on all free, what you
32:10
Speaker 1: end up with again is a more competitive labor market,
32:13
Speaker 1: actually reducing regulation and making it easier for people to
32:17
Speaker 1: move from job to job. So so I get the
32:19
Speaker 1: idea of leveling the playing fields, increasing mobility. It would
32:23
Speaker 1: be great if states had reciprocity on various licensing UM.
32:29
Speaker 1: But a lot of these non competes and a lot
32:31
Speaker 1: of these employee contracts are governed by state law. What
32:36
Speaker 1: is the authority for the FDC or or the federal
32:38
Speaker 1: government to come in and say, hey, this, UH, this
32:43
Speaker 1: very weak permissive state statute allowing these restrictive employee agreements
32:49
Speaker 1: is going to be bypassed by the federal government. From
32:52
Speaker 1: whence does that authority come? So in a lot of
32:57
Speaker 1: these cases, UH, these are lawyer contracts or they are
33:01
Speaker 1: employer agreements. UH. And even in cases where U states
33:06
Speaker 1: have UM, the states have authorities UH the employers are
33:11
Speaker 1: making UH contracts where there is a a federal nexus,
33:15
Speaker 1: and and that that extends to FTC authorities to UH
33:20
Speaker 1: to limit or ban UH anti competitive practices. So the
33:26
Speaker 1: FTC does have UM pretty broad authority in these areas,
33:30
Speaker 1: even in cases where the you know, the the a
33:34
Speaker 1: state rule or a state requirement UM is comes into play.
33:39
Speaker 1: So we're gonna gonna we're gonna do it we can
33:41
Speaker 1: at the federal level, we think we have UM some
33:44
Speaker 1: real scope here. Obviously, the FTC will sort through that
33:48
Speaker 1: UM and and make its determinations ultimate determinations on how
33:52
Speaker 1: to use that authority independently. But also, you know, part
33:56
Speaker 1: of what we're doing and part of what we're trying
33:58
Speaker 1: to encourage here is a consideration of this at the
34:01
Speaker 1: state level as well. So one of the things we
34:03
Speaker 1: will be doing is reaching out and engaging with um
34:08
Speaker 1: UH state and UH municipal actors as well, because you know,
34:13
Speaker 1: one of the things that we found is that there's
34:14
Speaker 1: appetite to try to address this at the state level too.
34:18
Speaker 1: So you know, where where the ultimate authority actually is
34:22
Speaker 1: not a federal authority, we also have a certain ability
34:26
Speaker 1: to convene and use the bully pulpit to encourage action
34:29
Speaker 1: of the state as well. So let's switch over to
34:32
Speaker 1: real estate. UH. Many people may not be aware that
34:36
Speaker 1: the United States has a much higher real estate Transaction
34:40
Speaker 1: Commission than many other countries. The prior administration had cut
34:45
Speaker 1: a bit of a sweetheart deal with the National Association
34:48
Speaker 1: of Realtors. You guys, this administration put the n a
34:52
Speaker 1: R unnoticed that that deal was off the table, and
34:56
Speaker 1: you want to do something about how they're maintaining high
35:00
Speaker 1: real estate prices. Tell us about what the Competitive Council
35:04
Speaker 1: can do about excessive real estate commissions. Well, look, I
35:08
Speaker 1: think it's a very you know, it's it's it's a
35:10
Speaker 1: it's a very similar uh dynamic. But again, you know,
35:15
Speaker 1: operating in a different industry, which is, you know, can
35:20
Speaker 1: we bring more transparency uh and can we also bring
35:25
Speaker 1: more more competition into into a market with the with
35:32
Speaker 1: the goal of trying to ultimately identify what's good for
35:35
Speaker 1: the uh, you know, for the for the for the
35:38
Speaker 1: end consumer. So you know, the the the Justice Department
35:43
Speaker 1: UH did um uh did take take action independently to
35:49
Speaker 1: try to um uh to try to take another look
35:55
Speaker 1: at this question. UM and you know, the a real
36:00
Speaker 1: question at issue here is whether this sort of the
36:06
Speaker 1: structure of commissions is going to advance competition, encourage more
36:13
Speaker 1: competition with better outcomes for uh, for consumers. And this
36:18
Speaker 1: question of whether you have very high and also uniform
36:23
Speaker 1: commissions across an industry, what is is the question of
36:26
Speaker 1: whether that's actually you know, that's that is the result
36:30
Speaker 1: of a competitive outcome, or whether that is the result
36:34
Speaker 1: of a lack of competition. So ultimately, you know, this
36:39
Speaker 1: is a this falls in the category of an enforcement
36:42
Speaker 1: action that the Department of Justice will operate independently. But
36:45
Speaker 1: I think lifting up what you see is again an
36:49
Speaker 1: important question being asked, right, which is that um, if
36:53
Speaker 1: you if you have it, if you have history, if
36:56
Speaker 1: you have if you have high commissions UM and UNI
37:00
Speaker 1: warm commissions UM. It is you know, it's appropriate to
37:03
Speaker 1: ask that question of is that the result of a
37:05
Speaker 1: competitive outcome or is that the result of lack of competition?
37:08
Speaker 1: And you know, I anticipate that that's what will that's
37:11
Speaker 1: what we'll see and hopefully that's that's the outcome that
37:14
Speaker 1: we will uh that will will arrive will arrive at.
37:17
Speaker 1: But ultimately the Department of Justice full will independently navigate
37:20
Speaker 1: that m consistent with their enforcement role. And let's stay
37:24
Speaker 1: with real estate a minute. One of the things that
37:26
Speaker 1: I was shocked by in the Executive Order and surprised
37:29
Speaker 1: to learn very often landlords of rental buildings or even
37:33
Speaker 1: condos sell exclusive rights to the building to a cable company,
37:38
Speaker 1: meaning no competition between fiber optic cable satellite for customers.
37:44
Speaker 1: I had no idea this existed. I can't imagine it's legal.
37:48
Speaker 1: It has to be anti competitive and make things so
37:51
Speaker 1: much more expensive for consumers, tell us a little bit
37:54
Speaker 1: about what you want to do with that. I'm glad
37:56
Speaker 1: you picked up on that. And it goes to a
37:58
Speaker 1: broader issue, which is, how do we actually achieve the
38:02
Speaker 1: goal of affordable high speed internet access for all Americans?
38:08
Speaker 1: UM And that's a big goal, um and there's big
38:11
Speaker 1: challenges for us as a country to get to there.
38:14
Speaker 1: But part of getting there is actually not only creating
38:19
Speaker 1: UM access. You know, people in rural America live in
38:25
Speaker 1: a jurisdiction where there isn't even access to high speed internet,
38:29
Speaker 1: but also creating competition where the fiber has been laid
38:33
Speaker 1: and the um uh and the the access is there,
38:37
Speaker 1: but it's unaffordable and unaffordable in part because there isn't
38:42
Speaker 1: sufficient competition. So, you know, a a really strikingly high
38:48
Speaker 1: share of Americans live in jurisdictions where there is only
38:51
Speaker 1: one uh one reliable broadband provider. And this gets to
38:57
Speaker 1: your point. Many people live in circumstance is where they
39:00
Speaker 1: are themselves restricted to only accessing one uh one internet
39:05
Speaker 1: provider UM and and yeah it's um, it's not it's
39:09
Speaker 1: not as well known, but it is the case that
39:11
Speaker 1: in some cases you have these agreements these landlord provider
39:14
Speaker 1: agreements where UM, just by dint of deciding to live
39:17
Speaker 1: in a particular building you you then lose access to
39:20
Speaker 1: a competitive market for for broadband services. I would say,
39:25
Speaker 1: you know, anecdotally, one of the things that I think
39:27
Speaker 1: you hear a lot is that I mean is that
39:31
Speaker 1: people can't really understand what it is, why what they're
39:34
Speaker 1: paying for, and why they're paying with respect to UM
39:37
Speaker 1: internet providers UM. And I think that you know, the
39:41
Speaker 1: opportunity here is to say, if we can create more competition,
39:46
Speaker 1: this is a place where ultimately consumers will end up
39:52
Speaker 1: with with with more options and that I could drive
39:56
Speaker 1: lower prices and better and better outcomes as well. So
40:02
Speaker 1: that particular issue of landlords and tenants is a particularly
40:08
Speaker 1: evocative example of the challenge, as you've noted, But the
40:12
Speaker 1: challenge is actually much broader than that, which is at
40:15
Speaker 1: the end of the day, every American you know, high
40:19
Speaker 1: speed internet today is like electricity was a hundred years ago.
40:24
Speaker 1: It is the power by which you interact with the
40:28
Speaker 1: twenty one century economy. And if you don't have access
40:30
Speaker 1: to high speed internet, you really can't be a full
40:32
Speaker 1: participant in the nation's economy today. UM, and we need
40:37
Speaker 1: to make sure that everybody has that access. Some of
40:39
Speaker 1: that is, you know, about building out more fiber and
40:43
Speaker 1: building out more actual access, but encouraging healthy competition in
40:48
Speaker 1: this sector is a big part of this as well.
40:51
Speaker 1: And something else I found in the Executive Order that
40:54
Speaker 1: I never heard of and kind of blew my minds
40:57
Speaker 1: paid a delay big Farmer paying Janet eric drug companies
41:01
Speaker 1: to not make cheaper generics. How on earth could that
41:05
Speaker 1: be allowed? Well, look, you know, UH, there is a
41:12
Speaker 1: we we have a uh, we have a set of
41:15
Speaker 1: challenges in the market for prescription drugs UM and UH
41:22
Speaker 1: and and that I think is is is well known. UM.
41:27
Speaker 1: And you know, there's a there's a obviously, there is
41:30
Speaker 1: a legitimate issue here about UM, the upfront investment needed
41:35
Speaker 1: to innovate and identify prescription and and the the um
41:40
Speaker 1: innovations that go into prescription drugs and making sure that
41:43
Speaker 1: companies can recoup those. But there's a lot of elements
41:47
Speaker 1: of how that market operates that go well beyond that
41:50
Speaker 1: and actually end up just driving up prices for consumers. UM.
41:56
Speaker 1: And you're you're raising one of them, which is you know,
41:59
Speaker 1: there's one of the one of the strategies that manufacturers
42:02
Speaker 1: have used in the past is if you're the UM,
42:07
Speaker 1: if you're the brand name drug manufacturer, you encourage generic
42:12
Speaker 1: manufacturers to to stay out of the market by providing
42:16
Speaker 1: them UH incentive payments and UH and that you know,
42:20
Speaker 1: at the end of the day, there's no there's a
42:24
Speaker 1: there's to two negative impacts the economy. One is less
42:28
Speaker 1: innovation UM, but the other is higher prices for and consumers.
42:33
Speaker 1: And we see in the evidence of these pay for
42:36
Speaker 1: delay UH schemes that it produces both of those outcomes,
42:41
Speaker 1: less innovation and higher prices. So that's the kind of
42:44
Speaker 1: thing that we want to work to try to reduce
42:48
Speaker 1: or eliminate and also just encourage more competition in the
42:52
Speaker 1: market for generics as well. So the other, you know,
42:55
Speaker 1: another element that UM that the Executive Order directs is
43:01
Speaker 1: for the FDA to work with states to allow them
43:05
Speaker 1: to import prescription drugs from UH Canada UM consistent with
43:10
Speaker 1: safety standards. And this is again something that a number
43:13
Speaker 1: of states have expressed an interest in doing because it
43:18
Speaker 1: would create more competition and lower prices for their UM
43:24
Speaker 1: there for consumers in their states. And the federal government
43:28
Speaker 1: has been operated traditionally as a barrier to that, and
43:32
Speaker 1: we want to change that. We want to have a
43:34
Speaker 1: federal government again consistent with safety standards, encouraging that kind
43:39
Speaker 1: of UH state action to increase competition UM in the
43:44
Speaker 1: In the prescription drug market as well, It's always seemed
43:47
Speaker 1: weird to me that US consumers are the one subsidizing
43:52
Speaker 1: drugs for the rest of the world than U S
43:54
Speaker 1: consumers were paying so much more. It's not just Canada,
43:58
Speaker 1: but it's throughout Europe and in the UK. It just
44:01
Speaker 1: seems so weird to me that Americans pay a much
44:05
Speaker 1: higher price for the same exact drug, including those made
44:10
Speaker 1: by American drug companies. Yeah, look at striking right, if
44:16
Speaker 1: you're a U S consumer, you are likely to pay
44:19
Speaker 1: two and a half times as much for the same
44:21
Speaker 1: prescription drug than your international counterpart. Obviously it's varies from
44:26
Speaker 1: country to country, but on average, that's uh, that's the reality.
44:32
Speaker 1: And we think that there's a lot that could be done,
44:34
Speaker 1: common sense things that could be done, you know, banning
44:37
Speaker 1: a pay for delay arrangement that reduces innovation drives the prices,
44:42
Speaker 1: lighting states imports safely from Canada. There's also some steps
44:46
Speaker 1: we're gonna need to work with Congress to do as well, though,
44:48
Speaker 1: and that's one of the things that we're working on
44:51
Speaker 1: right now, in fact, is to try to finally give
44:55
Speaker 1: Medicare the ability to negotiate UM as the largest bulk
44:59
Speaker 1: purchase of prescription drugs in the market, UM, give Medicare
45:04
Speaker 1: the ability to use that market position to actually negotiate
45:07
Speaker 1: for lower prices, which would not only increase reduced prices
45:12
Speaker 1: for UM the end participants in Medicare, but also it
45:16
Speaker 1: would have a downward pressure on prices across the industry
45:18
Speaker 1: because Medicare is the sort of the the benchmark rate
45:22
Speaker 1: UH in in many cases, So you know, we just
45:27
Speaker 1: you're right, it's the kind of thing that it's also
45:29
Speaker 1: the kind of thing that so many Americans know and
45:32
Speaker 1: uh understand and actually feel on their daily lives, and
45:36
Speaker 1: they know that it just doesn't make a lot of sense.
45:38
Speaker 1: Why is it that we're paying so much UM. But
45:41
Speaker 1: at the same time, it's hard to pinpoint, well, how
45:43
Speaker 1: can we fix that. We're trying to break that down
45:44
Speaker 1: and say there's some really concrete, practical things we could
45:47
Speaker 1: do and we and in doing so, where this is
45:51
Speaker 1: this is about government eliminating rules, eliminating regulations that just
45:55
Speaker 1: don't make a lot of sense um, using market power
45:58
Speaker 1: to actually bargain for better prices. These are the kinds
46:03
Speaker 1: of things that we think make a lot of sense
46:05
Speaker 1: and kind of make intuitive sense to the American people
46:08
Speaker 1: as well. I want to talk about big tech and
46:13
Speaker 1: net neutrality, but before I moved to that space, which
46:16
Speaker 1: I know is going to take a lot of time,
46:18
Speaker 1: I have to talk about farmers a little bit first.
46:22
Speaker 1: Why can't farmers repair their own tractors? This is the
46:26
Speaker 1: most insane thing I can imagine as someone who likes
46:31
Speaker 1: to tinker and do some of my own repairs. If
46:33
Speaker 1: you're if you're a farmer, why can't you take your
46:36
Speaker 1: John dear tractor and fix it yourself when it breaks? Well,
46:42
Speaker 1: you know, look, it's you're you're you're keying in on
46:46
Speaker 1: a lot of these pragmatic things that we're very focused
46:49
Speaker 1: on as well. It's hard to it's hard to prosecute
46:51
Speaker 1: an argument why that makes a lot of sense um.
46:54
Speaker 1: And part of the reason why we are where we
46:56
Speaker 1: are is because of a set of rules that have
46:59
Speaker 1: been in place that end up favoring the incumbent. Right
47:03
Speaker 1: If you are the incumbent, and you sell contractor and
47:08
Speaker 1: you restrict uh the where somebody can get it fixed,
47:13
Speaker 1: then it you know, makes it easier for you to
47:16
Speaker 1: keep you know, to maintain control of the customer base. UM.
47:19
Speaker 1: But the question that you're appropriately raising is what's the
47:23
Speaker 1: what's the broader consumer benefit and what's the broader rationale
47:25
Speaker 1: behind it? Um. And we think that that's the kind
47:28
Speaker 1: of thing that we need to uh, you know, we
47:30
Speaker 1: need to fundamentally rethink. You know. It's It's true across
47:34
Speaker 1: the across the economy, there are the sort of right
47:38
Speaker 1: to repair provisions that again are rules in place that
47:43
Speaker 1: we need to take a hard look at to make
47:45
Speaker 1: sure that if they're in place, they are actually serving
47:48
Speaker 1: some important safety benefits, safety rationale or otherwise and not
47:53
Speaker 1: just there to uh to favor or or keep out
47:59
Speaker 1: new entrance into a market. In that particular case, we're
48:03
Speaker 1: quite excited about the idea that you know, if you
48:05
Speaker 1: open up uh and give um. And that's why I've
48:09
Speaker 1: encouraged the FTC to look at saying give you give
48:11
Speaker 1: farmers the right to repair their own equipment how they
48:13
Speaker 1: like without having to rely on any particular expensive manufacturer,
48:20
Speaker 1: and in doing so that will also you know again
48:23
Speaker 1: it's the same thing you know that should make life
48:26
Speaker 1: easier for farmers, UH, it should make it should bring
48:30
Speaker 1: prices down, but also encourage innovation because if you're you know,
48:34
Speaker 1: a if you're a pair shop, an independent repair shop
48:38
Speaker 1: that works on some other you know small um, small
48:43
Speaker 1: mechanical issues, and that you open this up, well, then
48:47
Speaker 1: you have a market to enter into. You can learn
48:48
Speaker 1: how to fix tractors UH efficiently and cheaply, and then
48:52
Speaker 1: you can grow grow as a result. UM. And I
48:56
Speaker 1: think that that's the point I would I would emphasize
48:58
Speaker 1: if this is not a bad out keeping businesses in
49:02
Speaker 1: the US from growing, gaining market share UM and doing
49:06
Speaker 1: what businesses need to do to be successful, which is
49:09
Speaker 1: internew markets, innovate, grow and as a result get bigger.
49:13
Speaker 1: That's part of the goal of effective UH capitalism. This
49:17
Speaker 1: is not about stifling that. It's more about looking at
49:20
Speaker 1: those areas where a rule actually keeps incumbents from being
49:24
Speaker 1: able to enter into the market and really ask the
49:26
Speaker 1: hard question of is there a legitimate economic rational to
49:29
Speaker 1: that other than rents or other than stifling competition. And
49:34
Speaker 1: it's not just factors. It's it's cell phones. My my
49:38
Speaker 1: Apple iPhone is dying, and I can either swap the
49:41
Speaker 1: battery out and then cause all sorts of problems because
49:44
Speaker 1: I'm not allowed to change a battery, or i could
49:47
Speaker 1: go buy a brand new phone. Um. But before again,
49:50
Speaker 1: before we get to technology, let me stay with farmers.
49:53
Speaker 1: There are some pretty surprising restrictions on seeds, including liability
50:01
Speaker 1: for some farmers for seeds they never even used. What's
50:05
Speaker 1: going on in that area. I've read some pretty horrible
50:09
Speaker 1: stories about farmers being sued by by big agg For
50:13
Speaker 1: lack of a better phrase, what can be done to
50:16
Speaker 1: allow farmers to take more control of their own crops,
50:20
Speaker 1: of their own planting and their own harvesting. Well, this
50:24
Speaker 1: is a really good example of when you see consolidation
50:29
Speaker 1: in the market, that should raise a question, a legitimate
50:33
Speaker 1: question of is that consolidation um UH encouraging healthy competition
50:39
Speaker 1: or consistent with healthy competition, or is it actually um
50:43
Speaker 1: stifling that competition. So, if you look at the market
50:48
Speaker 1: for agricultural inputs UM, seeds, feed, fertilizer, we've seen significant
50:55
Speaker 1: consolidation over the last few decades. To your point on seeds, UM,
51:03
Speaker 1: you know uh to you know, to a first approximation
51:08
Speaker 1: about for companies control most of the world market at
51:12
Speaker 1: this point, and we've seen prices go up very significantly
51:17
Speaker 1: across time. And so what that does, what we've seen
51:20
Speaker 1: in that market is that the increase in price and
51:23
Speaker 1: the reduction and competition also puts those providers in a
51:27
Speaker 1: position where they can put increased demands because the the
51:31
Speaker 1: end farmer, the small farmer just doesn't have choice to
51:34
Speaker 1: get there, uh, to source their seeds from any other producer,
51:38
Speaker 1: so they can limit options, they can you know, they
51:41
Speaker 1: can require the use of those in certain ways that
51:45
Speaker 1: then can create liability for um the end producer. What
51:49
Speaker 1: it also does is it means that the end farmer
51:52
Speaker 1: ends up getting less and less of the total aggregate
51:56
Speaker 1: benefit of the output that they grow. So, you know,
51:58
Speaker 1: when you're using a seed to wrote a food commodity,
52:02
Speaker 1: at the end of the day, the farmers, as we've
52:05
Speaker 1: seen this consolidation consolidation increase, they've gotten less and less
52:09
Speaker 1: of the total aggregate economic benefit of um of of
52:14
Speaker 1: of that output. And so you've got you know, more
52:17
Speaker 1: consolidation prices increasing and less of the benefit of each
52:21
Speaker 1: dollar being uh garnered for that end output food product
52:26
Speaker 1: declining for for decades. And I think this is an
52:29
Speaker 1: interesting place with respect to this executive order where the UM,
52:33
Speaker 1: we've gotten an enormous amount of outpouring from agricultural constituencies,
52:38
Speaker 1: those small farmers organizations in states. UH, we've seen you know,
52:43
Speaker 1: everybody from from Senator Kester in Montana to Senator Grassley
52:48
Speaker 1: in Iowa saying, UM, this is what we need to
52:52
Speaker 1: try to take on consolidation and incourage get better competition,
52:56
Speaker 1: Get competition back into markets. Four seed into mark it's
53:00
Speaker 1: her feet into markets for fertilizer, to give the smaller
53:04
Speaker 1: farmers a real fighting chance, um, and to give them
53:08
Speaker 1: more of the share of the economic output of the
53:11
Speaker 1: product the producer. And ultimately, if there's more competition, not
53:15
Speaker 1: only does the benefit farmers I have to assume in
53:19
Speaker 1: this current inflation concerned environment, this can help drive food
53:24
Speaker 1: prices down over the long haul. I think it's a
53:27
Speaker 1: way to to create a stable UH and and better
53:32
Speaker 1: price outcomes over over the longer term. Yeah, because you see,
53:36
Speaker 1: you know that prices when prices for input goods are
53:39
Speaker 1: going up. That was true in in agriculture markets prior
53:43
Speaker 1: to the pandemic UM and certainly it remains a concern.
53:46
Speaker 1: Now this is this These types of steps we hope
53:49
Speaker 1: will actually put downward pressure on on those markets over
53:53
Speaker 1: the longer term. Alright, so let's talk about everybody's favorite segment,
53:57
Speaker 1: big Tech. I read n y U Professor Scott Galloway's
54:02
Speaker 1: book The Four I think it came out in seventeen
54:07
Speaker 1: UH and the basic premises the biggest companies in technology
54:12
Speaker 1: have become very large, very powerful. They buy up nascent
54:17
Speaker 1: competitors before they're even out of the womb, and they
54:21
Speaker 1: just have incredible market power. What can be done about
54:26
Speaker 1: this concentrated UH strength of these giant trillion dollar technology companies. Well,
54:35
Speaker 1: I would start by saying, look, the UM our technology
54:40
Speaker 1: sector and our tech companies are a reflection of the
54:45
Speaker 1: unparalleled innovation of the American economy. UM and reflect um
54:50
Speaker 1: and and and drive and have generated a lot of
54:53
Speaker 1: the innovation and benefits that Americans across the board, you
54:57
Speaker 1: and I benefit from on a daily basis. And so
55:00
Speaker 1: um that's that's that's that's important and important at the
55:03
Speaker 1: starting point. And at the same time, there are really
55:07
Speaker 1: significant problems with concentration and with any competitive behavior in
55:13
Speaker 1: uh in the tech sector. And that's what we're really
55:17
Speaker 1: trying to focus on in this executive order h and
55:21
Speaker 1: across across the board, and it's it's not you know,
55:24
Speaker 1: this conversation can often be sort of very um, yeah,
55:30
Speaker 1: can drive to sort of in co Wait, there's just
55:32
Speaker 1: something there's something inherently wrong with big tech, right, and
55:37
Speaker 1: we're trying to break that down and say, let's try
55:40
Speaker 1: to identify those areas where we have real questions about
55:44
Speaker 1: dominant you know, uh tech platforms and where they may
55:49
Speaker 1: be under commining competition or uh um, you know, reducing competition.
55:56
Speaker 1: So that's that's that's that's our focus. So you know,
55:59
Speaker 1: for example, where you know, the the the executive orders
56:02
Speaker 1: encouraging the FTC too, but not new rules on how
56:09
Speaker 1: tech platforms can gather and collect data and use that
56:13
Speaker 1: data in places like retail marketplaces on their own platforms,
56:20
Speaker 1: um uh And and that's you know, that's that's a
56:24
Speaker 1: that's a more concrete example, but one that I think
56:26
Speaker 1: that you know a lot of end consumers have um
56:31
Speaker 1: have observed or have interacted with in their in their
56:35
Speaker 1: daily life. That's clearly a place where we need to
56:38
Speaker 1: take a very hard look and apply scrutiny. Another is
56:42
Speaker 1: with respect to mergers, right, and this is a place
56:44
Speaker 1: where clearly, UM, we we need to increase the focus
56:51
Speaker 1: again the antitrust. The actual enforcement UH, we will leave
56:54
Speaker 1: to the Department of Justice and will leave to the FTC.
56:57
Speaker 1: But it's a matter of policy. We have to focus
57:00
Speaker 1: in particular, in a particular focus on the acquisition of
57:03
Speaker 1: competitors and the impact of those in the tech sector
57:07
Speaker 1: on platforms that then are dominant enough that they can
57:12
Speaker 1: use mergers to just basically to squeeze out competition UM
57:17
Speaker 1: by competitors in the first place. And at the end
57:19
Speaker 1: of the day, you know, we want to create a
57:21
Speaker 1: circumstance where the next generation of great tech companies in
57:26
Speaker 1: the United States come from the innovative capacity of this
57:29
Speaker 1: economy which is unparalleled UM and continue to drive innovation.
57:33
Speaker 1: But we think that these types of UM reforms are
57:36
Speaker 1: actually necessary to do that, so that we don't end
57:38
Speaker 1: up stifling competition and and losing that kind of next
57:42
Speaker 1: generation of innovation. You mentioned encouraging the FTC to establish
57:46
Speaker 1: rules on surveillance UM. There are also some rules on
57:50
Speaker 1: accumulation of data. It seems that other countries like Europe
57:54
Speaker 1: or even the state of California have very robust data
57:58
Speaker 1: privacy laws. Does that require separate legislation or can that
58:04
Speaker 1: be done through this Council and through the FDC. Well,
58:09
Speaker 1: I think there was a lot that we can do.
58:11
Speaker 1: There's there's there's a lot that we can do, and
58:13
Speaker 1: the lots that that the UH, the FC in the
58:17
Speaker 1: Department of Justice can can do and can move on
58:20
Speaker 1: their own. And I think that, UM, we will see
58:22
Speaker 1: that with respect to I anticipate we'll see that with
58:25
Speaker 1: respect to data. UM, we'll see that with respect to
58:28
Speaker 1: UH scrutiny on mergers and also I think on some
58:33
Speaker 1: more specific behaviors and methods UH that UH that we've
58:39
Speaker 1: seen emerge in the industry and that we have um
58:43
Speaker 1: uh called out you know in the UM in the
58:49
Speaker 1: Executive Order, particularly around competing on your own platform, right
58:54
Speaker 1: that UM and so using the the platform dominance to
58:58
Speaker 1: then compete with others on your platform. That's a place
59:02
Speaker 1: where is sort of intuitively you really need to apply
59:06
Speaker 1: scrutiny to activities in that space. At the same time,
59:10
Speaker 1: you you are right that there's both at the state
59:12
Speaker 1: level UM and at the federal level as well. There's
59:14
Speaker 1: an active conversation about where UM additional authority will be necessary.
59:20
Speaker 1: And I mentioned earlier, you know there's a there's an active,
59:23
Speaker 1: robust conversation going on the US Congress on that front.
59:25
Speaker 1: Bipartisan in nature. Should anticipate that we're gonna see more
59:29
Speaker 1: activity on the legislative front, which reflects the fact that, UM,
59:33
Speaker 1: we probably are going to need more authority as well.
59:36
Speaker 1: Makes makes a lot of sense, and it's kind of
59:39
Speaker 1: an interesting coalition of people criticizing the market power of
59:45
Speaker 1: big tech. Conservatives are looking at it from one perspective,
59:49
Speaker 1: Progressives are looking at it from a very different perspective.
59:53
Speaker 1: Is there is there a coalition to be had to
59:55
Speaker 1: actually get some legislation passed on this? Well? I think
1:00:01
Speaker 1: that here's what I say. We've seen bipartisan activity principally
1:00:07
Speaker 1: over the last couple of weeks. We've seen that in
1:00:09
Speaker 1: the House, UH, and we're encouraged by that work because
1:00:13
Speaker 1: I think that it is it is raising appropriately UH
1:00:16
Speaker 1: the authorities necessary to go at UM some of these
1:00:20
Speaker 1: concerns that we've talked about, UM, they're similar work going
1:00:23
Speaker 1: on in the Senate, and I anticipate that that you know,
1:00:26
Speaker 1: will will progress. It's always one of the things I
1:00:29
Speaker 1: found in this job is it's both not a good
1:00:32
Speaker 1: idea UM and very difficult to really predict with accuracy
1:00:36
Speaker 1: exactly what the U. S. Congress is going to do. UM.
1:00:39
Speaker 1: So I won't I won't try to do that in
1:00:41
Speaker 1: this context, but I would say that if you look
1:00:43
Speaker 1: at the work that's going on, there's a lot of
1:00:46
Speaker 1: thought behind it. There's been a lot of energy building
1:00:49
Speaker 1: on this issue across time. It is bipartisan in nature,
1:00:52
Speaker 1: and so it's complicated. It's a complicated SEPs and issue,
1:00:55
Speaker 1: and it's complicated politically as well. But certainly we are
1:00:57
Speaker 1: encouraged by it because I think you know, at the
1:01:01
Speaker 1: end of the day, the President does believe that we
1:01:04
Speaker 1: we really need to focus on these sets of issues.
1:01:06
Speaker 1: We cannot just allow the status quo to continue. The
1:01:12
Speaker 1: actions that we are taking in the Executive Order are
1:01:14
Speaker 1: a big step in that direction. But we're going to
1:01:17
Speaker 1: keep working with Congress and hopefully we will will be
1:01:19
Speaker 1: able to progress on the legislator front as well. And
1:01:22
Speaker 1: I have to just quickly ask you about net neutrality
1:01:25
Speaker 1: that was undone by the last administration. What are the
1:01:29
Speaker 1: plans in this administration. Are we going to restore net
1:01:32
Speaker 1: neutrality so that certain consolidated companies they might own the
1:01:37
Speaker 1: pipes and the content, can't give their own materials preference
1:01:42
Speaker 1: over the rest of the Internet. So the Presidency on
1:01:47
Speaker 1: this is pretty clear. He's held it since the campaign
1:01:51
Speaker 1: that he believes that net neutrality rules are necessary and appropriate,
1:01:57
Speaker 1: that the steps that the prior administrator and UM took
1:02:01
Speaker 1: we're in the wrong direction. And then and in the
1:02:05
Speaker 1: Executive Order encourages the SEC to restore those rules. UM.
1:02:11
Speaker 1: And so that's where we are, UM, and we're with
1:02:14
Speaker 1: that's one of the key steps that was embedded in
1:02:17
Speaker 1: this Executive Order. UM. The FEC operates independently, but the
1:02:21
Speaker 1: President's got a clear view and is encouraging the FEC
1:02:24
Speaker 1: to take action on that front. And I see, I
1:02:26
Speaker 1: only have time for one more question, So let me
1:02:29
Speaker 1: make it a big one. Let's look back from four
1:02:33
Speaker 1: years in the future at at this council. How will
1:02:37
Speaker 1: you be able to tell if this council was successful
1:02:41
Speaker 1: or not. At the end of the day, this is
1:02:46
Speaker 1: about improving economic outcomes for people, whether that's in higher wages,
1:02:53
Speaker 1: lower prices, or the impact of more innovation in their
1:02:58
Speaker 1: lives and in the communities in which they operate. So
1:03:01
Speaker 1: at core, if we look back, success will be because
1:03:05
Speaker 1: across the economy, lots of people have been able to
1:03:08
Speaker 1: improve their economic prospects in practical ways. People will be
1:03:13
Speaker 1: able to go into a pharmacy and by hearing it's
1:03:17
Speaker 1: over the counter, cheaper, more innovative, better outcome. People will
1:03:22
Speaker 1: have more opportunity to go across the street to the
1:03:26
Speaker 1: employer that might want to offer them a better job,
1:03:29
Speaker 1: and get employers to compete for their talent rather than
1:03:33
Speaker 1: being locked into a non compete prescription. Drop prices will
1:03:37
Speaker 1: be lower than they otherwise, will be people who have
1:03:40
Speaker 1: more options to get high speed internet even if they
1:03:43
Speaker 1: live in an apartment building with a particular landlord. And
1:03:47
Speaker 1: you know, people will be able to do other things
1:03:49
Speaker 1: that we haven't touched on in this conversation, like move
1:03:52
Speaker 1: financial institutions shift their data from bank on to bank too,
1:03:56
Speaker 1: without having to go through a complicated process. All of
1:04:00
Speaker 1: these things just go to very practical frictions in a
1:04:03
Speaker 1: person's life. But at the end of the day, success
1:04:07
Speaker 1: will be we have made those frictions easier and gone
1:04:11
Speaker 1: at that five dollars in the aggregate that is dragging
1:04:15
Speaker 1: on the typical families economic outcomes and started to reverse that.
1:04:20
Speaker 1: So that's that's how we think about success um. It
1:04:24
Speaker 1: will require structure and process and a kind of focus
1:04:28
Speaker 1: on executing across these these seventy two executive actions. But
1:04:33
Speaker 1: that's our north star, Brian. This has just been absolutely enlightening.
1:04:38
Speaker 1: Thank you again for being so generous with your time.
1:04:42
Speaker 1: We have been speaking with Brian dec He is the
1:04:44
Speaker 1: director of the National Economic Council and the new chairperson
1:04:49
Speaker 1: of the President's Council on Economic Competitiveness. If you enjoy
1:04:54
Speaker 1: this conversation, check out any of our prior four hundred
1:04:57
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1:05:01
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1:05:08
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1:05:12
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Speaker 1: weekly column at Bloomberg dot com slash Opinion. Follow me
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