Feeding the biggest monopoly of them all
Over the summer, President Joe Biden signed an executive order that says it will marshal the forces of the federal government to spur a renewed burst of competitiveness in the U.S. economy.
It’s mild-mannered boilerplate. But how does Mr. Biden propose to increase competition? Through a series of new regulations, greater anti-trust enforcement, and meddling with drug prices. But nothing in the order tackles the biggest obstacles to more competition and innovation — the federal Leviathan that consumes more and more of our economic activity:
We can all agree with the desirability of competitive markets, if not the methods to achieve them. But there is something contradictory about an attempt to increase competition through further regulation. If anything, the US government has historically been the largest (and most entrenched) monopoly in the US economy. Federal government spending stood at about 20% of GDP before the Trump-Biden spending splurge (an extravaganza passed under the guise of COVID-19, but largely good old-fashioned pork). It now stands at 30% of GDP, with several more trillion dollars on the horizon. If we add state and local government spending (20%), and the estimated burden of compliance with federal regulations (10%), American governments control about 60% of the economy. That would be a good place to start cutting for competitiveness. And, while we’re at it, how about addressing the quasi-monopoly of failed K-12 education?
How about that, indeed. And let’s not forget these gems, either:
It is hard to take seriously a proposal to increase competitiveness in labor markets from an administration that is pushing for the greatest barrier to entry, a $15/hour minimum wage, and is beholden to labor unions that tend to favor job licensing. It’s also interesting to note the absence of criminal justice reform as a priority (an estimated 27% of formerly incarcerated people are unemployed, as they face barriers to employment). While this may involve only 600,000 new people per year, it would have benefits for labor markets and for crime reduction.
Taking the Biden administration’s economic prescriptions seriously was always a challenge. Increasingly, it’s becoming a joke…on us.