Neo-Brandeisian Retrospective: Biden's Competition EO

President Biden’s executive order on competition served as a manifesto for the Neo-Brandeisian movement and the blueprint for Bidenomics.  The EO focused on equality of outcomes, government spending, and antitrust enforcement to achieve political goals. With an obsession with fairness, the EO called on government to micro-manage the economy and usurp the role of consumers in picking winners and losers in the market. It ultimately proved a political deadweight.

The EO rested on flawed theories and false data. The Neo-Brandeisians peddled the flawed belief that our economy has become overconcentrated, driven in part by lax merger enforcement, but the government’s own data showed that industrial concentration has been declining and that mergers correlate with a rise in innovation, R&D expenditures, and utility patent applications.

Moreover, the EO pushed the discredited claptrap that industrial concentration caused high food prices, but looking at beef and dairy prices President Biden’s own Agriculture Department recognized that prices hikes were driven by higher feed costs, increased demand, and changes in the supply chain. According to the Washington Post at the time, “Economists across the political spectrum are rightly calling out the White House for this foolishness.”

Even worse, the EO’s action plan itself fueled inflation. Large business can promote efficiency, which drives productivity and growth.  The EO, however, declared war on companies that had achieved economies of scale, discouraging pro-competitive mergers and even seeking to prevent companies from investing in new technologies.

Similarly, the EO directed the FTC to revitalize the Robinson-Patman Act, a tortured law that the bipartisan congressional Antitrust Modernization Commission recommended Congress fully repeal.  The Neo-Brandeisians peddled the belief that, with enforcement, prices would magically drop to the lowest price point offered, a position belied by empirical evidence.

Perhaps the EO’s greatest single flaw is that it presumed that “government knows best” how to grow the economy. The Biden-era competition EO marshaled the forces of government to align against job creators, innovators, and investors. It directed 12 different federal agencies to deliver 72 growth killing initiatives.

Because of an obsession with fairness, a disregard for efficient markets, myths about concentration, and policies that fueled inflation and dampened growth, the Competition EO failed. The Trump Administration has an opportunity to repeal and revise the EO in a way that promotes growth.

About the authors

Sean Heather

Sean Heather is Senior Vice President for International Regulatory Affairs and Antitrust.

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