A New Era of Antitrust

October 18, 2023


The Bidenomics Brief is a Roosevelt Institute newsletter where we track the big debates and developments shaping the new economic paradigm.



Welcome back to the Bidenomics Brief from the Roosevelt Institute.

This week, we take a closer look at how the Biden administration’s renewed antitrust focus provides one of the most important examples of rebalancing power in the economy. We’ll explain why Lina Khan and the FTC’s lawsuit against Amazon has the potential to redefine how Americans think about the relationship between government and corporate power. And we’ll look at what the Writers Guild won, and what it means for workers.


The Rebalancing​

The FTC is tackling Amazon’s market power—and changing the face of antitrust

The Federal Trade Commission’s decision to file suit against Amazon for its monopolistic, anticompetitive business practices is a watershed moment in American antitrust history.

Alongside other ongoing lawsuits against Meta and Google, the Amazon suit could change how Americans view the relationship between government and corporate power.

Since the 1970s, the Chicago School of neoliberal thought has provided the prevailing approach to questions of monopoly and competition, where the market was understood to be self-correcting, and efficiency was something to be protected. Monopolies were only considered harmful if they led to higher prices for consumers under the so-called “consumer welfare” standard. The Chicago School’s laissez-faire approach to antitrust dovetailed with its approach to taxation and other forms of regulations to form the backbone of the trickle-down policy and legal framework. Ironically, new research from Eric Posner (Richard’s son) and Luigi Zingales at, of all places, the University of Chicago found that “the decline of antitrust enforcement took place at the hands of regulators and judges with little to no open political support.”

Instead of expecting “the market” to do the work of correcting itself, President Biden’s appointment of strong antitrust regulators like Lina Khan signaled the revival of an old tradition—government using the full range of tools allowed by the law to shape markets in ways that benefit consumers, workers, and the public. The FTC’s suit largely focuses on the growing rents Amazon extracts from sellers who are forced to use Amazon’s web and fulfillment services at increasing costs, which are then passed on to the consumer. But, the FTC is alleging a wide range of abuses that include—but are not limited to—the company using its market power to set prices above what a competitive market would bear. This marks a potential shift in antitrust enforcement away from the narrow approach of the trickle-down past toward a more expansive and holistic approach more in keeping with the regulatory frameworks established during the progressive and New Deal eras.

Pro-corporate editorial pages at the Wall Street Journal and Bloomberg published editorials slamming the suit and suggesting that Lina Khan was out of her depth and out of control. Amazon said the suit would increase prices, lead to slower deliveries, and hurt small businesses. But on Amazon’s own forum, sellers’ reactions to news about the FTC’s suit were overwhelmingly positive. According to the Institute of Local Self-Reliance, Amazon now pockets 45 cents of every dollar they make in sales, up from 19 cents in 2014.

The American people are also on the side of government action to limit the power of Big Tech. Polling in the past three years has consistently shown that a significant majority of Americans—across the political spectrum—agree with breaking up the Big Tech companies. And recent polling suggests Americans’ distrust of Big Tech has only increased during the pandemic—with Amazon suffering some of the largest drops in public confidence. In a world in which monopolies like Amazon dominate entire industries, successful antitrust action could restructure markets in ways that benefit workers, consumers, and the environment. The FTC’s case against Amazon may not be part of Bidenomics proper, but its potential to rebalance the economy is at the heart of Bidenomics’ promise.

 

Some Like It Hot

How union wins are reshaping their industries

The ongoing wave of strikes and collective action by workers—made possible by their fierce determination and a hot labor market catalyzed by Biden-era policy decisions—has started to yield real benefits.

The United Auto Workers were able to secure an agreement that EV battery manufacturing will be included in the next GM labor agreement—a historic victory that was considered unlikely at the outset of the negotiations.

And while the Screen Actors Guild strike grinds on, the Writers Guild of America won a contract that included nearly all of their demands, and set some interesting and important precedents for other kinds of creative and knowledge workers. After a 148-day strike, the union negotiators sent an email to the members announcing they’d reached an agreement with the producers: “We can say, with great pride, that this deal is exceptional—with meaningful gains and protections for writers in every sector of the membership.” The WGA estimates that the deal is worth $233 million annually, nearly three times the value of the Alliance of Motion Picture and Television Producers’ original proposal.

Crucially for such a high-profile strike, the WGA agreement shows that the promise of collective bargaining goes beyond raising wages; it also gives workers the power to shape their industries. Like many other workers who have been striking during the pandemic, writers were focused on the need for more staffing to alleviate the burden on understaffed workers and create more job opportunities. In this case, workers won an increase in the minimum number of writers per show. According to Variety, “A six-episode series calls for at least three writer-level hires. Series that run 7-12 episodes per season have to hire five writers; series that run 13 episodes or more must hire six writers.”

As the WGA’s success shows, collective bargaining also allows us to write a new story about the role of technology in displacing labor. So often we hear that the displacement of workers is a natural consequence of technological “disruption” and innovation. But, in what could prove to be a precedent-setting success, the guild also won strong protections against the use of AI in the creative process. According to the WGA, “AI can’t write or rewrite literary material, and AI-generated material will not be considered source material under the MBA, meaning that AI-generated material can’t be used to undermine a writer’s credit.” While a writer can choose to use AI if they so please during the writing process, the company can’t force a writer to use AI, and the company must disclose “if any materials given to the writer have been generated by AI or incorporate AI-generated material.”

The WGA contract demonstrates that collective bargaining is about more than raising wages. It also gives workers an opportunity to shape their industries, even in the face of technological disruption, and can lay the groundwork for future sectoral or even economy-wide regulatory frameworks. Workers should have a say in their industries, and collective bargaining is part of what makes it possible.

 

What to Read

  • Lee Harris at The American Prospect is reporting that the US and EU may be nearing a deal to reorient trade policy to ban the sale of the most carbon-intensive products. For more on these negotiations, see Biden’s trade ambassador Katherine Tai address the Center for American Progress. Those talks are due to be completed as early as this Friday (October 20). If there’s a deal, we’ll discuss it in a future edition of the Bidenomics Brief.
  • Don’t miss these insights from Amy Kapczinski on lessons to take from the successes, failures, and missed opportunities of Operation Warp Speed.

 

Who Said It: JRB or FDR?

Every week, we close with a quote from either President Biden or FDR that sheds some particular light upon the prior week’s news. If you guessed last week’s quote about the “struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering” was from FDR—you were right!

The quote comes from FDR’s famous Madison Square Garden speech on October 31, just three days before his reelection in the 1936 presidential race. President Roosevelt would go on to win that election with 60.8 percent of the vote.

And this week’s quote:

“This agreement did not come easily. But its formation is a testament to the power of collective bargaining. There simply is no substitute for employers and employees coming together to negotiate in good faith toward an agreement that makes a business stronger and secures the pay, benefits, and dignity that workers deserve. I urge all employers to remember that all workers—including writers, actors, and auto workers—deserve a fair share of the value their labor helped create.”