Biden’s flawed executive decree kills economic competition
The Biden administration has had no shortage of economic policies to take stock in 2021, including one that is easy to ignore. On July 9, the President issued a Executive Decree order officials to promote “an open and competitive economy”, a laudable goal. Unfortunately, the order perversely undermines this goal. proposing more intense federal regulation of large swathes of the US economy, rather than relying more on market forces backed by well-crafted antitrust laws.
Like a Analysis of the Caton Institute explains, the ordinance “slips on the fact” that many government regulations serve as barriers to entry, which are “crucial obstacles to competition in the US economy.” If the administration is serious about increasing competition in the U.S. economy, it should remove the July order and issue a new one.
Specifically, the administration should focus on government programs that artificially retard competition, undermine innovation and harm consumers. It should require executive regulatory and competition experts – the Office and Management and Budget and the Department of Justice – to assess long-standing regulatory regimes that by their very nature undermine competetion. On the basis of these assessments, the president could recommend statutory changes.
To begin with, government experts should focus their attention on five programs: the US Postal Service, agricultural marketing orders, the sugar law, the Jones law, and anti-dumping laws.
US Postal Service
The U.S. Postal Service has a full legal monopoly which prohibits any other entity from delivering first class mail to a letterbox. It can use these monopoly profits to help its other operations, taking advantage of higher prices to keep express mail and parcel prices uncompetitive. This effectively removes competition from the shipping and delivery markets, which contributes to inefficient supply chains.
Additionally, the Postal Service can borrow money directly from the US Treasury at subsidized rates and is exempt from state and local sales, income, and property taxes. These financial advantages allowed the postal service to operate at a loss for almost a decade without having to cut costs.
A simple statutory amendment could remove the monopoly on first class mail. This change would open up the market to competition and force both the postal service and potential market entrants to reduce costs and increase innovation. Greater automation of parcel management could become mainstream and new products and services, such as a monthly subscription to reject bulk mail and advertising, could become available.
The Jones Law of 1920 requires domestic shipping to be provided by ships built, equipped, owned, and flying the flag of the United States. Restrictions on non-U.S. Vessels have dramatically increased the supply chain crisis which seriously harms the US economy. Any cargo arriving from Europe, Asia, or anywhere outside of the United States must first be unloaded and then reloaded onto another vessel if ocean transportation is desired. This second loading process slows down turnaround time in ports and dramatically increases costs. The restrictions on non-US ships create insurmountable obstacles to their use.
Repealing the Jones Act would lower these artificial barriers to competition and facilitate an increase in the use of waterborne freight transportation. This would relieve pressure on supply chains, lower costs, and ultimately benefit consumers by making products available faster and at lower prices.
Agricultural marketing orders
Agricultural marketing orders are restrictions authorized by law on the production and sale of fruits, vegetables and other crops that aim to maintain “orderly market conditions”. Industry groups seeking to maintain constant food stocks and reduce perishability agree to set volume limits in the name of price stability.
Marketing order systems undermine the ability of agricultural producers to respond to market incentives, harming both farmers and consumers. Farmers who distribute more crop than the allocated amount will be fined by the federal government. In short, production is lower and prices higher than in a free market. Repealing the legal authority for marketing orders would solve this problem.
The sugar law
The sugar law directly inflicts significant damage on the US economy. By restricting the US sugar market, the government is acting as a “candy coated cartelâExecutor, co-ordinating and directing the sale of sugar. Specifically, the government restricts production by punishing companies that exceed quotas with forced storage and imposes huge tariffs on imports, causing the price of sugar in the United States to double its market price. global. Consumers are harmed and American companies that use sugar become less competitive, resulting in unnecessary job losses. A simple solution would be to repeal the sugar law in its entirety.
Special industry-specific tariffs, called anti-dumping duties, are designed to protect US producers from “damage” caused by foreign competitors “dumping” a large quantity of competing products into the US market at low prices. Anti-dumping laws artificially increase costs for US manufacturers who purchase imports at low prices, making them less competitive, and ultimately increase prices for US consumers themselves.
Anti-dumping laws do not prevent efficient American industries from being forced out of business. On the contrary, dumping duties are only a special form of protectionism granted to favored industries. Ideally, anti-dumping laws should be repealed. If repeal is not possible, legal dumping tests and cost measurement should be reformed to bring them in line with antitrust law. Tariffs should only be allowed in cases of genuinely predatory behavior that would unproductively destroy an American industry.
The five government programs highlighted above are far from unique. Other federal programs that undermine competition also deserve close scrutiny. President Joe Biden is expected to revise his competition order to favor smarter regulation over more regulation. In doing so, he would follow the lead of a former Democratic president, Jimmy Carter, whose deregulation initiatives, although imperfect, benefited the economy by removing harmful restrictions on air and ground transportation. A revamped executive order emphasizing regulatory reforms, not further regulatory damage, could be a beacon of hope for a failing US economy.
Alden F. Abbott is a Principal Investigator at the Mercatus Center at George Mason University and a former General Counsel for the Federal Trade Commission.