Brian Deese on Unleashing Competition (Podcast)

Episode Summary

Executive Summary: In this episode of Masters in Business, Barry Ritholtz interviews Brian Deese, Director of the National Economic Council, about President Biden's executive order promoting competition in the American economy. The order addresses industry consolidation, which costs the average American family $5,000 annually, through 72 initiatives across sectors like labor, healthcare, tech, and agriculture. Deese explains the formation of the President's Council on Competition, which he chairs, and discusses specific actions such as banning non-compete agreements, allowing hearing aids over-the-counter, and promoting right-to-repair for farmers.

Main Topics: Genesis and Philosophy of the Competition Executive Order (Priority: 5/5): The order is based on the principle that fair competition drives lower prices, higher wages, and innovation. It addresses decades of declining antitrust enforcement and industry consolidation, costing families $5,000/year. Labor Market Reforms: Non-competes, Licensing, and Wage Data (Priority: 5/5): The order targets non-compete agreements affecting 60 million workers, occupational licensing (30% of jobs), and employer wage data sharing, aiming to increase worker mobility and wages. Healthcare and Prescription Drug Pricing (Priority: 4/5): Actions include allowing over-the-counter hearing aids, banning 'pay-for-delay' deals that keep generics off market, and enabling states to import drugs from Canada to lower prices. Technology and Net Neutrality (Priority: 4/5): The order encourages FTC rules on data collection and platform competition, and urges FCC to restore net neutrality. It also addresses landlord-broadband exclusivity deals that limit consumer choice. Agriculture and Right to Repair (Priority: 3/5): The order targets consolidation in seeds, feed, and fertilizer markets, and promotes farmers' right to repair their own equipment, reducing dependence on expensive manufacturers. Real Estate Commissions and Broadband Access (Priority: 3/5): The DOJ is re-examining real estate commission structures, and the order aims to increase broadband competition by addressing landlord-provider agreements and promoting access.

Key Arguments: Industry consolidation has reduced competition, leading to higher prices and lower wages for consumers. Non-compete agreements and occupational licensing unnecessarily restrict worker mobility and should be reformed. Pay-for-delay deals in pharmaceuticals stifle innovation and keep drug prices high. Tech platforms' data collection and self-preferencing behaviors require new rules to ensure fair competition. Farmers should have the right to repair their own equipment, reducing costs and fostering innovation. Restoring net neutrality is necessary to prevent dominant internet providers from favoring their own content.

Data Points: Annual cost of consolidation to typical household: $5,000 - Estimated aggregate impact of reduced competition on prices and wages. Decline in new business formation since 1970s: 50% - Rate of small business formation has fallen significantly. Workers affected by non-compete agreements: 60 million - About one in three employees are required to sign non-competes. Jobs requiring occupational licenses: 30% - Up from 5% in the 1950s, often unnecessarily restricting mobility. Increase in annual mergers over last decades: 5-6 fold - Number of mergers has surged, contributing to consolidation. Industries with increased consolidation: 75% - Measured over the last 20 years. Price difference for U.S. prescription drugs vs. international: 2.5 times - U.S. consumers pay significantly more for the same drugs.

Pivotal Quotes: "Having fair and open competition is a fundamental ingredient of a healthy capital economy. It's what actually drives better outcomes: lower prices, higher wages, more innovation, more economic growth." — Brian Deese: Explaining the core rationale behind the executive order on competition. "If you're the scientist who owns the secret recipe for COVID, you may need to sign a non-compete to not just go to Pepsi and give away that trade secret. But when you got to 60 million people and one in three employers, this goes much broader." — Brian Deese: Distinguishing legitimate use of non-competes from widespread overuse harming workers. "Success will be because across the economy, lots of people have been able to improve their economic prospects in practical ways." — Brian Deese: Defining the ultimate measure of success for the competition council.

Implications: This executive order signals a major shift in U.S. antitrust policy, potentially lowering consumer prices, increasing worker mobility, and fostering innovation. Businesses should prepare for stricter merger reviews, new rules on data and non-competes, and greater regulatory oversight across multiple sectors.