Brian Deese on Unleashing Competition (Podcast)

the executive branch over the next four years. And we really got deep into the weeds. We talked about everything from farmers to employee contracts, to net neutrality UH, to the right to repair your own um products that you buy, to you know everything, any trust enforcement. It really was a policy wonks delight. If you're remotely interested in economic competition, any trust enforcement, employee contracts, well you're gonna find this

to be absolutely fascinating. With no further ado, my conversation with the National Economic Council's director, Brian Diese, this is Mesters in Business with Very Results on Bluebird Radio. This week, I have an extra special guest. His name is Brian dies He is the Director of the National Economic Council at the White House and essentially the chief economic advisor to President Biden. Previously, he was the global head of Sustainable Investing at black Rock, and he was President Obama's

Senior advisor for Climate and energy policy. Brian Diese, welcome back the Master's in Business. Thanks Erry, It's great to be here. So, so let's start with your role in this new administration. You are the thirteenth director of the National Economic Council. I think most people are more familiar

with the Council of Economic Advisors. Tell us a little bit about this group, what it does, and how it differs from the c e A. So the National Economic Council was created by executive order in the early nine nineties with the goal of having a White House entity that could coordinate economic policy on behalf of the president the Some people think about the c A, but I think that the more natural analog is the National Security Council.

So the National Security Council existed in the White House as a way of coordinating policy on national security and foreign policy issues. The National Economic Council was modeled to do the same for UH for both domestic and international economic uh priorties. So if you go back and you read the executive order that was creating early the early it founds pretty true to today. So what does that mean?

Number One, have an effective way to coordinate and aggregate the views of all of the key economic policy principles.

The Secretary of the Treasury, the Chair of the Council of Economic Advisors are Commerce Secretary or Labor Secretary, and down the line, create a common table around which we can debate and discuss and provide the president clear policy recommendations and clear economic advice, and at the same time have a coordinated way to take the direction from the President about his views and his his direction on the economy and drive that across the broad inter agency of

the executive branch. To your question about the Council of Economic Advisors, the Council of Economic Advisors is designed as a almost an internal think tank of economists and experts, many of whom came out of academia and spend one or two years at the Council and provide an analytical base and an economic base to think through issues, to provide analysis um and really be a kind of thoughts center.

Nash Economic Council is really designed to coordinate bringing those views to the table, but also um connecting them to the legislative and political realities that we're operating in to try to get the best outcomes possible in service of the president schools. So, so let's talk a little bit about your boss, the President and some of his goals. Last week, he signed an executive order to quote, promote

competition in the American economy. We've kind of become used to these sort of one page or photo ops for executive orders, but that was not what this was. It's a seven thousand word, seventy two bullet point document and and it's very serious policy initiative. Tell us what was the thinking behind rolling out this new policy this way? Well, I appreciate you counting words and actions, because we're we're

certainly focused on that as well. But we're really excited about this executive order, and it's based on a kind of very simple but important intuition, which is that having fair and open competition is a fundable, fundamental ingredient of

a healthy capitalist economy. It's what actually drives better outcomes, lower prices, higher wages, more innovation, more economic growth, and so the core goal of this executive order is to reset across the entire executive branch a focus on where and in what ways can we encourage healthy competition in service of achieving those outcomes lower prices, higher wages, more innovation. And what we've seen across time is that our economy

has gotten less competitive. UM. We have a larger umber of our industries that are now more concentrated than they were twenty or thirty years ago. We've seen the rate of new business formation, particularly small business formation, fall by

almost since the nineteen seventies. And if you look across industries, whether it's you know, in in me packing or in broadband internet, UM, consumers choices have been constrained and we haven't seen that kind of the follow through benefit that at least has been argued by folks who say, you know, more consolidation will actually generate lower prices for consumers. We

haven't seen that either. In fact, if you aggregate up the impact of consolidation to an American household in terms of prices and wages and other attending costs, you know the best estimates so that it's costing about five thousand dollars a year for the typical household. So the goal of this executive Order is to say, how can we start to get at that? And fundamentally, this is this is it's it's this is not about being pro business

or anti businesses about being pro competition. A lot of the ideas in this Executive Order are actually deregulatory in nature, trying to remove some barriers to entry that actually keep workers from more effectively moving and competing for jobs or new businesses to enter into new markets and grow and gain market share as a result. So that's the that's

that's the at a high level, that's our goal. But you're right, um, we we wanted to take a really serious effort to go agency by agency and look where where the challenges, what are the tools that we have, and how could we advance the ball. It looks different in different agencies. There's a lot uh to unpack here, but that's the goal at the high level. And I

have to tell you that's a shocking number. The lack of competition caused by industry consolidation and concentration plus the average American family five thousand dollars a year, that that's a giant number. Yeah, and you when you just strow

it down. You know. That's that's a if you you know, but I also would say embedded in that is a big opportunity because if we can actually break down some of those barriers and we can encourage better competition, what that means is that we have a way of, um actually boosting economic outcomes for the typical family in a significant way. But that sounds pretty esoteric, but you break it down into very practical things. Um, something like hearing.

It's today, you need to get a prescription. You need to go to a doctor and get a prescription. You can't buy hearing it's over the counter. There's almost fifty million people in the country who have some form of hearing loss. Um. A lot of those are older, but a lot of younger people as well. UM. And that requirement operates, you know, as economists say, as a barrier to entry. And so what that means is that it just costs a lot more. It's also a hassle, but

it costs a lot more to get hearing. It's so one of the things that this executive order directs is to plement a rule to allow hearing aids to be bought over the counter. What that's gonna do is it's going to make it easier for those fifty million people to get hearing aids more cheaply. But we also hope it will spur innovation by reducing that barrier to entry. Now, new companies, new market entrance, can come in and innovate in providing hearing aid products at a lower price point,

and so that that that's just one example. Could you think about how that five thousand dollars aggregates up. That's one very practical example, but HiT's a lot of people in their daily life not only can you not only can you you know you have a little less hassle that you can just go to the pharmacy and buy a pair of hearing aids. But overwhelmingly we know that room removing a barrier like that will make it cheaper and hopefully we'll generate more innovation and more opportunity for

new business entrance to you know, succeeded. That's really interesting. Let's let's talk a little bit about part of this executive order, which is the formation of the President's Council on Competitiveness, beginning with the Council membership. This is this is quite a list. It's the Secretary of Treasury, the Secretary of Defense, the Attorney General, Chair of the FTC, Chair of the Consumer Financial Protection Board FCC, Agriculture, Commerce,

on and on. It's practically the full cabinet. Why so broad a membership? What what's the thinking behind that? While you're making me realize, I'm gonna have to get a bigger office to get everybody around the table, particularly now

that we can um start to do these convenings in person. Look, the idea of this was pretty simple, which is over the last several months, where we have done is we've run a process of going out to agencies and understanding from the agencies where the where their authority exists in terms of competition policy or antitrust um and how they think it could be better deployed in service of encouraging

competition that will be good for consumers and families. And what we found in that process is there's the breadth of acts and the breath breath of tools and authorities really runs across um often climes. This conversation starts and centers around the core antitrust statutes UH and the core antitrust enforcement agencies, the Department of Justice and the FTC. Their role is critical and they operate into independently when it comes to enforcement matters, but in fact the actual

tools and authorities are much broader. So in U s d A, for example, we just had the UM hundred year anniversary of the Packers and Stockyards Act, which is the antitrust statute that that applies to UM to food UH, food and agricultural commodities meat packing in others UM we have at the Department of Transportation authorities to look at competition in the airline industry, in the railroad industry, in

the shipping industry UM and across the board. So what we realized in putting this executive work together is that the actual coordination across these different parts of our government

is really important for two reasons. One because it's important for the agencies to understand how when they're taking action to encourage competition in a particular segment of the market, like when HHS finalizes this rule to make hearing aids available over the counter, how does that fit into a broader economic strategy to encourage competition in UH, in the railroad industry, or in the shipping industry. And the second is to make sure that we are we are effectively

coordinating and not getting across purposes. So if if if one agency is moving out in a certain way, and try to make sure that it's consistent and that the and that businesses and other stakeholders that are actually having to operate within these rules of the road have as clear as possible guidance from the executive branch um on on what our policies and what our intentions are. So

that's the goal of the Council. It's been a long time, uh in American economic policy that we've really priority tized competition policy in this way, and we're going to need a structure to have that ongoing focus across time and where we hope that this Council will serve that purpose. So let's stay with that structure a little bit. I mentioned all the members of this council. I didn't mention

the chairperson that would happen to be you. How big of a job is this going to be relative to your role as as director of the National Economic Council. How large of a priority is this and what do you hope to accomplish with it? Well, I think you saw from the President's speech and announcement last week. The priority that he and that we and as administration are

putting on this effort, which is very high. UM. That we are obviously very focused on the immediate economic challenges UM, the rescue plan and the impact that has had on the economy over the last couple of months. The effort we have a Congress right now working on an infrastructure pack it and on a human infrastructure element as well. UM. But but but equally in that category is this effort to try to lower prices for consumers, increased wages, generate

more innovation by encouraging competition. So I would say that, look, it's a big priority and part of why we wanted to move out early. UM. This is relatively early in administration to put on an executive order that is this this broad in terms of directives to different agencies. Was to make sure that we were getting going because some of these things, UM, appropriately will take some time. The rulemaking process, uh, you know explicitly builds in time for

notice and comment and engagement. UM. So we know that these things will take some time. But we wanted to get the ball rolling and as a result, our focus on this council and my role in in in trying to lead and coordinate that will be a big piece of business. But we're really excited about being out of the game um early and uh and and aggressively here.

And I think what you're gonna see, hopefully is that for a lot of end uh end recipients, typical families, businesses, this is going to be a real welcome uh, real welcome opportunity because whether you're a small family farmer who has been struggling under the sense that you know, costs keep going up and your choices are are going down because you keep seeing consolidation in the market, or you're just you know, somebody who is looking for the best

job possible and realizing that there are restrictions on you know, moving from job to job that you didn't even know existed. These are kinds of things that could help people in their daily lives. But if we're going to get to helping in at that end point, we really got to be organized and coordinated as a federal government. So we gotta you know, it's gonna be a big piece of business, but one that we're very excited about. So we're going to drill down into some of the specifics on a

sector by sector basis. But before we get that, Granu Lare, I want to just discuss briefly the genesis of this.

Your White House colleague Tim Woo, along with a bunch of others, published a large research paper back in November, right right after the election, and their analysis identified that pretty much since the Microsoft anti trust case in the ninety nineties, the US has kind of given up on um anti trust enforcement and the result has been huge industry consolidation, reduction of competition, increase pricing power, and higher costs two consumers. So that leads to the question what

happened to anti trust enforcement in the United States. Yeah, it's it's an important question and and also one that I think is helpful to put in historic context, because if you look at the arc of competition policy and any trust enforcement in the U s. It really you do see ebbs and flows, you know, going back as far as the passage of the Sherman Anti Trust Act in the eighteen nineties, right, that was a reaction to thee both the political corruption but also the sort of

behavior that of monopolies in the in the in the Gilded Age, and laid the groundwork for of course, you know, UH, President Teddy Roosevelt becoming famous in in trust busting and UH and and the activities in the early nineteen hundreds UM.

And then you saw another acceleration on the back end of the UM in the in the nineteen thirties, on the back end of the First World War UM, and then coming out of the Second World War with with FDR UM reflecting that as well, you then saw a different a different approach that emerged in the nineteen seventies and a new school of thought that was very was was very narrowing of the view of competition policy UM, and that led to a multi decade approach, as you say,

limiting enforcement of antitrust and a view that kind of all things equal, UH, letting consolidation occur would generate economic benefits and so therefore at the margin we should be sort of accommodating of consolidation unless there was radically clear that it was bad for bad for UH consumers, or

bad for prices. And so we've seen the implications of that, and to your point, we've seen over the last couple of decades the number of annual mergers has increased by five or six folds UM, and we have seen in industry. The measure of industry consolidation has increased significantly over the last twenty years, and we haven't seen the attendant benefit in terms of lower prices um or or more innovation

in the economy. And so over the last five years or so, there's been a growing body of economic research to try to identify the fact the harms that have

come from this consolidation UH, and that work started. Some of that work started and was really put on the map at the end of the Obama administration UM, including by UM Tim Woo who you mentioned, Jason Furman, others of my former colleagues, who really started to pinpoint this decline in any trust enforcement and the decline and focus on competition policy as one thing that has added to the stagnancy a small business formation, the inequality that we

have seen UM, and in the academic realm, we've seen that that work only accelerate over the course the last five years. And so certainly the executive order here and the actions and the work that is embedded here is really building on that framework and building on the findings that have come out over that and we certainly we do view it in historic perspective of now trying to

really shift back to a focus on prioritizing UM. The enforcements of anti trust statutes focus on competition and a focus on the end outcome and the end benefit to

the end consumer and worker. And and for those people who may not be familiar with Tim Woo, not only is he the person who coined the phrase net neutrality, he is the author of a couple of books, The Curse of Bigness, Anti Trust in the New Gilded Age as well as The Master Switch, where he describes how eventually these information systems they become consolidated, they become closed and less and less competitive until some disruptive innovation comes along.

And my sense is this council is trying to encourage less of that concentration and more of the disruptive innovation. Yeah, that's exactly right. And uh and Kim as Kim works for Obvious here at the NBC and has been a thought leader on these issues for some time. And you characterize, you know, accurately, the one of the key objectives of this council is to try to get toward how we

can encourage that type of innovation. UM. And one thing I would say is that This really is something that I think we've increasingly seen cuts across traditional um lines or dividing lines in economic thought, and it cuts across to traditional political dividing lines to I mean, some of the things we're talking about here are really about getting rid of regulations that stand in the way of that

kind of innovation. You know, one of the examples that's in the Executive Order is around is in them is in uh fear and line the the the the alcohol market, and you've got some incumbent rules on bottle size and bottle labeling that when you really unpack them and say, what why is it that you know, to operate in a market you have to meet certain bottle size requirements because maybe you've got an idea to ring a product to market that just looks different and that's going to

be your you know, that's going to be your branding edge. Well, you know, when you unpack and and look at the reason why those regulations exist, you know some of them

are because they're just protecting incumbents. Uh and uh. You know the similar to a number of these occupational licensing requirements where you have requirements to get a license to be um to braid hair or to cut hair um or you know, to do all manner of jobs, particularly at the m in different states where you know, if you if you're moving from one state to another, you've got to go through a whole process of getting a

new license. UM. And you know, look, having licensing requirements for uh, you know, for jobs that require you know that are that where they're safety or there's other things involved obviously make a lot of sense. But in a lot of cases, when you unpack it, rules like that are have been put in place to favor incumbents and make it harder for new entrance to get into the market.

And so we're really you know, we we think this real opportunity both to be disruptive in terms of the economic slock, but also disruptive in terms of some of the embedded political realities of this we've had. You know, a lot of these items have strange bedfellows in terms of the support behind them, and that's part of what's exciting about it for us as well. Right, clear clearly

a lot of these licensing rules are anti competitive. UM. Before we dig down and get granular into the individual sectors, I have one last broad overview question and it's on anti trust enforcement. There has been a deeply embedded sort of less a fair doctrine at both the Department of Justice and the FTC. Obviously, Lena Khan and Marrick Garland represent a break from that philosophy. But how do you turn around two decades of I was gonna say lacks enforcement,

but it's really a skepticism about anti trust law. How do you reverse that? Well, I think you start by doing what we did in the Executive Order, which is to articulate that it is the policy of the executive branch to vigorously enforce our antitrust laws, and more than that, UM to enforce them in the context of a um UH an economic policy that views increasing competition as a key way of improving lives and economic outcomes for the

American people. So part of it is you start by articulating a clear economic strategy and economic crossoity behind why it is that we need greater UM and more vigorous enforcement of our antitrust statutes. And you know some of the some of the work that UH in the nineteen seventies and early eighties that led to this kind of multi decade effort to try to undermine it. For orsman of antitrust started from articulating a similarly articulating a philosophy,

but a philosophy to very different ends. So that's you know, one important step is I think what we're trying to do is to articulate clearly the policy of the government. A second I do want to be clear is that the actual enforcement appropriately and necessarily operates independently, independently at the Department of Justice and the FTC. But I think getting high quality personnel in that will do that effectively.

UM is a is a second important step, and so we're you know, we're moving on that front as well. And then you know, we we do you know, we do have an issue, which is that ultimately these things, the antitrust doctrine gets UM gets developed in the context of the judicial branch and and and challenges to decisions.

And we've seen that obviously over the course of decades as and so you know, there are also some places where we may need to change the law, We may need to clarify or strengthen uh, the UM the antitrust authorities, and there's bipartisan work in Congress that's going on on that front right now. Particularly it relates to the tech industry, and so that's something that we are engaged on as well.

But we we feel quite good about the fact that even within the existing authorities that we have across the federal government, we can make a lot of progress. And that's where we're focused for the time being. All Right, So let's dive into some of these sectors and and really this executive order covers everything from healthcare to financial products to net neutrality, data farmers labeling. Let's start with

labor and employee contracts. I recall a couple of years ago, UM, a bunch of reports sort of surfaced about various tech companies Google, Apple, Facebook that had these anti poaching agreements they wouldn't hire each other's senior personnel. Obviously illegal and

a restrictive um comminence amongst them. But but less obvious are some of the basic restrictive contracts, non competes, non disclosures, other onerous clauses uh that are common in Silicon Valley but have spread out to the rest of the country. What can this council do to allow greater competition for uh, those sort of employees who want to switch jobs. Yeah,

so this is an incredibly important issue. You know, our our our labor market will work more effectively when workers are competing for jobs, but also employers are competing for workers. And when we have you know, fewer frictions and better matching between the workers and the jobs that they will be most successful in, we have better you know, outcomes over um. But to your point, we've got some real

frictions and we have real opportunities to address them. So this executive order and the work through the Council, we're gonna go at three of those. The first is which you refer to as non compete agreements, and it's striking today, about one in three employers require that an employee will sign a noncompete agreement. So you're talking about about sixty

million people in the workforce. UM. And it's not just as you say in Silicon Valley, and it's not just in uh, those circumstances where there's an obvious uh or or clear um competitive reason why you need it. So, you know, the President joking, not jokingly, but you know, illustratively pointed out to the fact that you know, you're

if you're the scientist who owns the secret recipe for coke. Um. You know you may need to sign a noncompete to not just go to PEPSI and give away that trade secret, right um, when the um and so so clearly these these noncompete operate as a as a as a legitimate tool. But when you got to sixty million people and one of free employers, this goes much broader. Construction workers, hotel workers, um. You know you work in a restaurant and hospitality, fast

food um. And also for the for low wage jobs, entry level jobs, not just more senior jobs where you'd be access to more sensitive information. And so you know this, the executive order is operating from a pretty basic principle that if particularly if you're operating in those sectors and someone offers you a better job, you should be able to take it. And if your existing employer wants you

to stay, they should compete for your talent. Um. And so the order uh UM is is directing the FTC to look at either modifying or banning non compete clauses. So that's number one. The second is what I mentioned earlier, which is about the licenses required to operate in a job. So again about one in three jobs, about jobs in the us also require a license, and so that spans

the uh you know that that spans the horizon. Obviously, you know you need a pilot's license to be to to operate an aircraft, but you also need a license to be on accountant, and interior decorator, a hairdresser, and importantly one in free today need that. That was five in the nineteen fifties. So we've seen a significant increase in the number of jobs that require a license, and

so likewise disorder goes out. Saying in those cases where unnecessary licensing is actually reducing mobility, um that we should put limits or restrictions on them. At one point, I was, how light here is? You know some some people really need to be mobile. Uh that you know, it's part of how our economy works. You take military families, for example, you have to move every couple of years in order

to do your job. Well, if you're a spouse of if you have a you know a one one one member of a partnership is in the military and moving. The other person works in a job where state by state you have different licensing requirements. Then you know, every time they move, that could be free six months of friction in terms of getting into the labor market and finding a job. The last thing we're focused on here

is about wage data. And one of the things that that is true today is that employers can share detailed wage data between employers without having to share it to employees.

And again this is just what the concern that is raised is that if you know, if employers can share wage data without sharing it to employees, that it makes it easier for them to um to you know, either explicitly colluded or just implicitly reduce uh, you know, competition and not have to compete as vigorously on on on wages and so and you could end up, you know, putting downward pressure on wages. So it all three of

those days. We think we can make some progress by either eliminating or restricting um uh non competes, licensing, uh, you know, wage data sharing, and so that's that's our real focus on the labor market, and we think if we can make some progress on all free, what you end up with again is a more competitive labor market, actually reducing regulation and making it easier for people to move from job to job. So so I get the

idea of leveling the playing fields, increasing mobility. It would be great if states had reciprocity on various licensing UM. But a lot of these non competes and a lot of these employee contracts are governed by state law. What is the authority for the FDC or or the federal government to come in and say, hey, this, UH, this very weak permissive state statute allowing these restrictive employee agreements is going to be bypassed by the federal government. From

whence does that authority come? So in a lot of these cases, UH, these are lawyer contracts or they are employer agreements. UH. And even in cases where U states have UM, the states have authorities UH the employers are making UH contracts where there is a a federal nexus, and and that that extends to FTC authorities to UH

to limit or ban UH anti competitive practices. So the FTC does have UM pretty broad authority in these areas, even in cases where the you know, the the a state rule or a state requirement UM is comes into play. So we're gonna gonna we're gonna do it we can at the federal level, we think we have UM some real scope here. Obviously, the FTC will sort through that UM and and make its determinations ultimate determinations on how

to use that authority independently. But also, you know, part of what we're doing and part of what we're trying to encourage here is a consideration of this at the state level as well. So one of the things we will be doing is reaching out and engaging with um UH state and UH municipal actors as well, because you know, one of the things that we found is that there's appetite to try to address this at the state level too.

So you know, where where the ultimate authority actually is not a federal authority, we also have a certain ability to convene and use the bully pulpit to encourage action of the state as well. So let's switch over to real estate. UH. Many people may not be aware that the United States has a much higher real estate Transaction Commission than many other countries. The prior administration had cut a bit of a sweetheart deal with the National Association

of Realtors. You guys, this administration put the n a R unnoticed that that deal was off the table, and you want to do something about how they're maintaining high real estate prices. Tell us about what the Competitive Council can do about excessive real estate commissions. Well, look, I think it's a very you know, it's it's it's a

it's a very similar uh dynamic. But again, you know, operating in a different industry, which is, you know, can we bring more transparency uh and can we also bring more more competition into into a market with the with the goal of trying to ultimately identify what's good for the uh, you know, for the for the for the end consumer. So you know, the the the Justice Department UH did um uh did take take action independently to try to um uh to try to take another look

at this question. UM and you know, the a real question at issue here is whether this sort of the structure of commissions is going to advance competition, encourage more competition with better outcomes for uh, for consumers. And this question of whether you have very high and also uniform commissions across an industry, what is is the question of whether that's actually you know, that's that is the result of a competitive outcome, or whether that is the result

of a lack of competition. So ultimately, you know, this is a this falls in the category of an enforcement action that the Department of Justice will operate independently. But I think lifting up what you see is again an important question being asked, right, which is that um, if you if you have it, if you have history, if you have if you have high commissions UM and UNI

warm commissions UM. It is you know, it's appropriate to ask that question of is that the result of a competitive outcome or is that the result of lack of competition? And you know, I anticipate that that's what will that's what we'll see and hopefully that's that's the outcome that we will uh that will will arrive will arrive at. But ultimately the Department of Justice full will independently navigate that m consistent with their enforcement role. And let's stay

with real estate a minute. One of the things that I was shocked by in the Executive Order and surprised to learn very often landlords of rental buildings or even condos sell exclusive rights to the building to a cable company, meaning no competition between fiber optic cable satellite for customers. I had no idea this existed. I can't imagine it's legal. It has to be anti competitive and make things so much more expensive for consumers, tell us a little bit

about what you want to do with that. I'm glad you picked up on that. And it goes to a broader issue, which is, how do we actually achieve the goal of affordable high speed internet access for all Americans? UM And that's a big goal, um and there's big challenges for us as a country to get to there. But part of getting there is actually not only creating

UM access. You know, people in rural America live in a jurisdiction where there isn't even access to high speed internet, but also creating competition where the fiber has been laid and the um uh and the the access is there, but it's unaffordable and unaffordable in part because there isn't sufficient competition. So, you know, a a really strikingly high share of Americans live in jurisdictions where there is only one uh one reliable broadband provider. And this gets to

your point. Many people live in circumstance is where they are themselves restricted to only accessing one uh one internet provider UM and and yeah it's um, it's not it's not as well known, but it is the case that in some cases you have these agreements these landlord provider agreements where UM, just by dint of deciding to live in a particular building you you then lose access to

a competitive market for for broadband services. I would say, you know, anecdotally, one of the things that I think you hear a lot is that I mean is that people can't really understand what it is, why what they're paying for, and why they're paying with respect to UM internet providers UM. And I think that you know, the opportunity here is to say, if we can create more competition, this is a place where ultimately consumers will end up with with with more options and that I could drive

lower prices and better and better outcomes as well. So that particular issue of landlords and tenants is a particularly evocative example of the challenge, as you've noted, But the challenge is actually much broader than that, which is at the end of the day, every American you know, high speed internet today is like electricity was a hundred years ago. It is the power by which you interact with the

twenty one century economy. And if you don't have access to high speed internet, you really can't be a full participant in the nation's economy today. UM, and we need to make sure that everybody has that access. Some of that is, you know, about building out more fiber and building out more actual access, but encouraging healthy competition in this sector is a big part of this as well.

And something else I found in the Executive Order that I never heard of and kind of blew my minds paid a delay big Farmer paying Janet eric drug companies to not make cheaper generics. How on earth could that be allowed? Well, look, you know, UH, there is a we we have a uh, we have a set of challenges in the market for prescription drugs UM and UH

and and that I think is is is well known. UM. And you know, there's a there's a obviously, there is a legitimate issue here about UM, the upfront investment needed to innovate and identify prescription and and the the um innovations that go into prescription drugs and making sure that companies can recoup those. But there's a lot of elements of how that market operates that go well beyond that

and actually end up just driving up prices for consumers. UM. And you're you're raising one of them, which is you know, there's one of the one of the strategies that manufacturers have used in the past is if you're the UM, if you're the brand name drug manufacturer, you encourage generic manufacturers to to stay out of the market by providing them UH incentive payments and UH and that you know, at the end of the day, there's no there's a

there's to two negative impacts the economy. One is less innovation UM, but the other is higher prices for and consumers. And we see in the evidence of these pay for delay UH schemes that it produces both of those outcomes, less innovation and higher prices. So that's the kind of thing that we want to work to try to reduce or eliminate and also just encourage more competition in the

market for generics as well. So the other, you know, another element that UM that the Executive Order directs is for the FDA to work with states to allow them to import prescription drugs from UH Canada UM consistent with safety standards. And this is again something that a number of states have expressed an interest in doing because it would create more competition and lower prices for their UM

there for consumers in their states. And the federal government has been operated traditionally as a barrier to that, and we want to change that. We want to have a federal government again consistent with safety standards, encouraging that kind of UH state action to increase competition UM in the In the prescription drug market as well, It's always seemed weird to me that US consumers are the one subsidizing drugs for the rest of the world than U S

consumers were paying so much more. It's not just Canada, but it's throughout Europe and in the UK. It just seems so weird to me that Americans pay a much higher price for the same exact drug, including those made by American drug companies. Yeah, look at striking right, if you're a U S consumer, you are likely to pay two and a half times as much for the same

prescription drug than your international counterpart. Obviously it's varies from country to country, but on average, that's uh, that's the reality. And we think that there's a lot that could be done, common sense things that could be done, you know, banning a pay for delay arrangement that reduces innovation drives the prices,

lighting states imports safely from Canada. There's also some steps we're gonna need to work with Congress to do as well, though, and that's one of the things that we're working on right now, in fact, is to try to finally give Medicare the ability to negotiate UM as the largest bulk purchase of prescription drugs in the market, UM, give Medicare the ability to use that market position to actually negotiate for lower prices, which would not only increase reduced prices

for UM the end participants in Medicare, but also it would have a downward pressure on prices across the industry because Medicare is the sort of the the benchmark rate UH in in many cases, So you know, we just you're right, it's the kind of thing that it's also the kind of thing that so many Americans know and uh understand and actually feel on their daily lives, and they know that it just doesn't make a lot of sense.

Why is it that we're paying so much UM. But at the same time, it's hard to pinpoint, well, how can we fix that. We're trying to break that down and say there's some really concrete, practical things we could do and we and in doing so, where this is this is about government eliminating rules, eliminating regulations that just don't make a lot of sense um, using market power

to actually bargain for better prices. These are the kinds of things that we think make a lot of sense and kind of make intuitive sense to the American people as well. I want to talk about big tech and net neutrality, but before I moved to that space, which I know is going to take a lot of time, I have to talk about farmers a little bit first. Why can't farmers repair their own tractors? This is the most insane thing I can imagine as someone who likes

to tinker and do some of my own repairs. If you're if you're a farmer, why can't you take your John dear tractor and fix it yourself when it breaks? Well, you know, look, it's you're you're you're keying in on a lot of these pragmatic things that we're very focused on as well. It's hard to it's hard to prosecute an argument why that makes a lot of sense um. And part of the reason why we are where we are is because of a set of rules that have

been in place that end up favoring the incumbent. Right If you are the incumbent, and you sell contractor and you restrict uh the where somebody can get it fixed, then it you know, makes it easier for you to keep you know, to maintain control of the customer base. UM. But the question that you're appropriately raising is what's the what's the broader consumer benefit and what's the broader rationale behind it? Um. And we think that that's the kind of thing that we need to uh, you know, we

need to fundamentally rethink. You know. It's It's true across the across the economy, there are the sort of right to repair provisions that again are rules in place that we need to take a hard look at to make sure that if they're in place, they are actually serving some important safety benefits, safety rationale or otherwise and not just there to uh to favor or or keep out new entrance into a market. In that particular case, we're quite excited about the idea that you know, if you

open up uh and give um. And that's why I've encouraged the FTC to look at saying give you give farmers the right to repair their own equipment how they like without having to rely on any particular expensive manufacturer, and in doing so that will also you know again it's the same thing you know that should make life easier for farmers, UH, it should make it should bring prices down, but also encourage innovation because if you're you know, a if you're a pair shop, an independent repair shop

that works on some other you know small um, small mechanical issues, and that you open this up, well, then you have a market to enter into. You can learn how to fix tractors UH efficiently and cheaply, and then

you can grow grow as a result. UM. And I think that that's the point I would I would emphasize if this is not a bad out keeping businesses in the US from growing, gaining market share UM and doing what businesses need to do to be successful, which is internew markets, innovate, grow and as a result get bigger. That's part of the goal of effective UH capitalism. This

is not about stifling that. It's more about looking at those areas where a rule actually keeps incumbents from being able to enter into the market and really ask the hard question of is there a legitimate economic rational to that other than rents or other than stifling competition. And it's not just factors. It's it's cell phones. My my Apple iPhone is dying, and I can either swap the battery out and then cause all sorts of problems because I'm not allowed to change a battery, or i could

go buy a brand new phone. Um. But before again, before we get to technology, let me stay with farmers. There are some pretty surprising restrictions on seeds, including liability for some farmers for seeds they never even used. What's going on in that area. I've read some pretty horrible stories about farmers being sued by by big agg For lack of a better phrase, what can be done to allow farmers to take more control of their own crops,

of their own planting and their own harvesting. Well, this is a really good example of when you see consolidation in the market, that should raise a question, a legitimate question of is that consolidation um UH encouraging healthy competition or consistent with healthy competition, or is it actually um stifling that competition. So, if you look at the market for agricultural inputs UM, seeds, feed, fertilizer, we've seen significant

consolidation over the last few decades. To your point on seeds, UM, you know uh to you know, to a first approximation about for companies control most of the world market at this point, and we've seen prices go up very significantly

across time. And so what that does, what we've seen in that market is that the increase in price and the reduction and competition also puts those providers in a position where they can put increased demands because the the end farmer, the small farmer just doesn't have choice to get there, uh, to source their seeds from any other producer, so they can limit options, they can you know, they can require the use of those in certain ways that

then can create liability for um the end producer. What it also does is it means that the end farmer ends up getting less and less of the total aggregate benefit of the output that they grow. So, you know, when you're using a seed to wrote a food commodity, at the end of the day, the farmers, as we've seen this consolidation consolidation increase, they've gotten less and less of the total aggregate economic benefit of um of of

of that output. And so you've got you know, more consolidation prices increasing and less of the benefit of each dollar being uh garnered for that end output food product declining for for decades. And I think this is an interesting place with respect to this executive order where the UM, we've gotten an enormous amount of outpouring from agricultural constituencies,

those small farmers organizations in states. UH, we've seen you know, everybody from from Senator Kester in Montana to Senator Grassley in Iowa saying, UM, this is what we need to try to take on consolidation and incourage get better competition, Get competition back into markets. Four seed into mark it's her feet into markets for fertilizer, to give the smaller farmers a real fighting chance, um, and to give them more of the share of the economic output of the

product the producer. And ultimately, if there's more competition, not only does the benefit farmers I have to assume in this current inflation concerned environment, this can help drive food prices down over the long haul. I think it's a way to to create a stable UH and and better price outcomes over over the longer term. Yeah, because you see, you know that prices when prices for input goods are

going up. That was true in in agriculture markets prior to the pandemic UM and certainly it remains a concern. Now this is this These types of steps we hope will actually put downward pressure on on those markets over the longer term. Alright, so let's talk about everybody's favorite segment, big Tech. I read n y U Professor Scott Galloway's book The Four I think it came out in seventeen UH and the basic premises the biggest companies in technology

have become very large, very powerful. They buy up nascent competitors before they're even out of the womb, and they just have incredible market power. What can be done about this concentrated UH strength of these giant trillion dollar technology companies. Well, I would start by saying, look, the UM our technology sector and our tech companies are a reflection of the

unparalleled innovation of the American economy. UM and reflect um and and and drive and have generated a lot of the innovation and benefits that Americans across the board, you and I benefit from on a daily basis. And so um that's that's that's that's important and important at the starting point. And at the same time, there are really significant problems with concentration and with any competitive behavior in

uh in the tech sector. And that's what we're really trying to focus on in this executive order h and across across the board, and it's it's not you know, this conversation can often be sort of very um, yeah, can drive to sort of in co Wait, there's just something there's something inherently wrong with big tech, right, and we're trying to break that down and say, let's try to identify those areas where we have real questions about dominant you know, uh tech platforms and where they may

be under commining competition or uh um, you know, reducing competition.

So that's that's that's that's our focus. So you know, for example, where you know, the the the executive orders encouraging the FTC too, but not new rules on how tech platforms can gather and collect data and use that data in places like retail marketplaces on their own platforms, um uh And and that's you know, that's that's a that's a more concrete example, but one that I think that you know a lot of end consumers have um have observed or have interacted with in their in their

daily life. That's clearly a place where we need to take a very hard look and apply scrutiny. Another is with respect to mergers, right, and this is a place where clearly, UM, we we need to increase the focus again the antitrust. The actual enforcement UH, we will leave to the Department of Justice and will leave to the FTC.

But it's a matter of policy. We have to focus in particular, in a particular focus on the acquisition of competitors and the impact of those in the tech sector on platforms that then are dominant enough that they can use mergers to just basically to squeeze out competition UM

by competitors in the first place. And at the end of the day, you know, we want to create a circumstance where the next generation of great tech companies in the United States come from the innovative capacity of this economy which is unparalleled UM and continue to drive innovation. But we think that these types of UM reforms are actually necessary to do that, so that we don't end up stifling competition and and losing that kind of next

generation of innovation. You mentioned encouraging the FTC to establish rules on surveillance UM. There are also some rules on accumulation of data. It seems that other countries like Europe or even the state of California have very robust data privacy laws. Does that require separate legislation or can that be done through this Council and through the FDC. Well, I think there was a lot that we can do.

There's there's there's a lot that we can do, and the lots that that the UH, the FC in the Department of Justice can can do and can move on their own. And I think that, UM, we will see that with respect to I anticipate we'll see that with

respect to data. UM, we'll see that with respect to UH scrutiny on mergers and also I think on some more specific behaviors and methods UH that UH that we've seen emerge in the industry and that we have um uh called out you know in the UM in the Executive Order, particularly around competing on your own platform, right that UM and so using the the platform dominance to then compete with others on your platform. That's a place where is sort of intuitively you really need to apply

scrutiny to activities in that space. At the same time, you you are right that there's both at the state level UM and at the federal level as well. There's an active conversation about where UM additional authority will be necessary. And I mentioned earlier, you know there's a there's an active, robust conversation going on the US Congress on that front.

Bipartisan in nature. Should anticipate that we're gonna see more activity on the legislative front, which reflects the fact that, UM, we probably are going to need more authority as well. Makes makes a lot of sense, and it's kind of an interesting coalition of people criticizing the market power of big tech. Conservatives are looking at it from one perspective, Progressives are looking at it from a very different perspective. Is there is there a coalition to be had to

actually get some legislation passed on this? Well? I think that here's what I say. We've seen bipartisan activity principally over the last couple of weeks. We've seen that in the House, UH, and we're encouraged by that work because I think that it is it is raising appropriately UH the authorities necessary to go at UM some of these concerns that we've talked about, UM, they're similar work going on in the Senate, and I anticipate that that you know,

will will progress. It's always one of the things I found in this job is it's both not a good idea UM and very difficult to really predict with accuracy exactly what the U. S. Congress is going to do. UM. So I won't I won't try to do that in this context, but I would say that if you look at the work that's going on, there's a lot of thought behind it. There's been a lot of energy building on this issue across time. It is bipartisan in nature,

and so it's complicated. It's a complicated SEPs and issue, and it's complicated politically as well. But certainly we are encouraged by it because I think you know, at the end of the day, the President does believe that we we really need to focus on these sets of issues. We cannot just allow the status quo to continue. The actions that we are taking in the Executive Order are a big step in that direction. But we're going to keep working with Congress and hopefully we will will be

able to progress on the legislator front as well. And I have to just quickly ask you about net neutrality that was undone by the last administration. What are the plans in this administration. Are we going to restore net neutrality so that certain consolidated companies they might own the pipes and the content, can't give their own materials preference over the rest of the Internet. So the Presidency on

this is pretty clear. He's held it since the campaign that he believes that net neutrality rules are necessary and appropriate, that the steps that the prior administrator and UM took we're in the wrong direction. And then and in the Executive Order encourages the SEC to restore those rules. UM. And so that's where we are, UM, and we're with that's one of the key steps that was embedded in

this Executive Order. UM. The FEC operates independently, but the President's got a clear view and is encouraging the FEC to take action on that front. And I see, I only have time for one more question, So let me make it a big one. Let's look back from four years in the future at at this council. How will you be able to tell if this council was successful

or not. At the end of the day, this is about improving economic outcomes for people, whether that's in higher wages, lower prices, or the impact of more innovation in their lives and in the communities in which they operate. So at core, if we look back, success will be because across the economy, lots of people have been able to improve their economic prospects in practical ways. People will be able to go into a pharmacy and by hearing it's

over the counter, cheaper, more innovative, better outcome. People will have more opportunity to go across the street to the employer that might want to offer them a better job, and get employers to compete for their talent rather than being locked into a non compete prescription. Drop prices will be lower than they otherwise, will be people who have more options to get high speed internet even if they

live in an apartment building with a particular landlord. And you know, people will be able to do other things that we haven't touched on in this conversation, like move financial institutions shift their data from bank on to bank too, without having to go through a complicated process. All of these things just go to very practical frictions in a

person's life. But at the end of the day, success will be we have made those frictions easier and gone at that five dollars in the aggregate that is dragging on the typical families economic outcomes and started to reverse that. So that's that's how we think about success um. It will require structure and process and a kind of focus on executing across these these seventy two executive actions. But that's our north star, Brian. This has just been absolutely enlightening.

Thank you again for being so generous with your time. We have been speaking with Brian dec He is the director of the National Economic Council and the new chairperson of the President's Council on Economic Competitiveness. If you enjoy this conversation, check out any of our prior four hundred such interviews. You can find those wherever you feed your podcast fix iTunes, Spotify, Google Podcasts, etcetera. We love your comments, feedback and suggestions right to us at m IB podcast

at Bloomberg dot net. You can sign up from my daily reading list at Ridholts dot com. Check out my weekly column at Bloomberg dot com slash Opinion. Follow me on Twitter at Rid Halts. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Tim Harrow is my audio engineer. Latica val Bron is my project manager. Paris Walt is my producer. Michael Batnick is my head of research. I'm

Barry Ridholts. You've been listening to Masters in Business on Bloomberg Radio.