In a recent executive order, US President Joe Biden has sought to rein in the mega corporations that have gained power and influence over the last two decades. The directive seeks to address the sharp increase in the consolidation of industries across sectors such as agriculture, technology, air travel and health care.
Biden's new order is seen by many as an attempt to rein in mega corporations. It also comes at a time when many Americans are feeling disenfranchised with their government due to increasing economic inequality and growing concerns about how big businesses wield their power in Washington DC. The White House believes that declining competition across the economy has resulted in prices for consumers of staples like prescription drugs, lower wages for workers and economic drag.
“Higher prices and lower wages caused by lack of competition are now estimated to cost the median American household $5,000 per year,” The White House said that the order would help “ensure a diverse and competitive marketplace for American students, workers,
entrepreneurs and consumers."
On the other hand, the U.S. Chamber of Commerce issued a rebuke of Biden’s approach. According to them, the order is a political ploy that will force many U.S. businesses to consider moving operations outside the United States.
“Today’s executive order is built on the flawed belief that our economy is over-concentrated, stagnant and fails to generate private investment needed to spur innovation,” said Neil Bradley, executive vice president, chief policy officer and head of Strategic Advocacy at the U.S. Chamber of Commerce.
The order includes 72 initiatives by more than a dozen federal agencies, with the aim of reducing monopoly power. The order is expected to have a major impact on the following industries: pharmaceuticals and medical devices, bank mergers, social media and technology platforms, agriculture and air travel.
In the pharmaceutical and medical device industry, consolidation has led to a dramatic price increase on drugs. In some cases drug prices have more than tripled. This executive order targets areas where a lack of competition leads to increased prices and reduced access both in the economy for drugs as well as health care facilities. The Consumer Financial Protection Bureau is tasked with creating new regulations that would allow consumers to download and transfer their bank information, the USDA is asked to consider issuing new rules defining when meat can bear “Product of USA” labels to restrict companies from labeling food produced overseas as American-made when it was simply processed in the US. Additionally, Biden's plan is expected to ask agencies to tackle extra fees within air travel. These fees are for things like baggage, on-flight services and cancellations.
But presidential directives typically have far-reaching scheduling implications. So while this directive may not be finalized anytime soon, it highlights concerns regarding the sharp increase in consolidation of industries over the last two decades. This has raised worries that the big companies are choking off competition and innovation.
Only time will tell whether the US President's plan will be effective in easing these worries.