Biden Unveils Bid to Reform Economy Through Executive Power

This post was originally published on this site

Joe Biden will sign a sweeping executive order Friday that aims to progressively reform America’s markets in labor, agriculture, health care, technology, internet service, transport, and more. If the president has his druthers, workers will gain more power over employers; small farmers over Big Ag; start-ups over Big Tech; rail passengers over freight companies; fliers over airlines; and rural areas over their hospitals.

© Sarah Silbiger/Bloomberg via Getty Images A man railing against the railroad trusts like it’s 1899. Sarah Silbiger/Bloomberg via Getty Images

The executive order comprises 72 different actions and recommendations, united by the overarching theme of combating corporate consolidation and the abuses of power that arise from it. Although many of the order’s individual items are rather modest (one seeks to require airlines to pay passengers partial refunds if their checked baggage is delayed), taken together, they constitute a major reform agenda. If federal agencies faithfully implement the bulk of Biden’s proposals, then the order will become a model for how Democratic presidents can affect economic change, even in the absence of congressional backing — a challenge that’s likely to grow more relevant in the second half of Biden’s term.

Load Error

On labor rights, the order instructs the Federal Trade Commission (FTC) to (1) ban or limit noncompete agreements, (2) ban unnecessary occupational licensing restrictions, and (3) strengthen antitrust guidance preventing employers from colluding to suppress wages and benefits in their industries. The ban on noncompete contracts is especially significant. Clauses barring employees from working for a competing firm in the future were once largely confined to white-collar executives’ contracts, where their infringement on labor rights could be rationalized on grounds of protecting trade secrets. But fast-food restaurants and other employers of low-wage labor came to discover the utility of such clauses: One way to prevent a high-performing worker from leaving for the other burger joint in town is to give her a raise; another, cheaper way is to make her forfeit her right to work for that other burger joint.

If the FTC heeds Biden’s request, such noncompete clauses will be eliminated, and employers will once again be forced to retain workers by offering competitive compensation. The order’s occupational licensing provision, meanwhile, aims to make it easier for workers licensed to practice a given trade in one state to do so in a different one; as is, America’s disparate licensing regimes discourage economic mobility. The call for fortifying anti-collusion practices is aimed at snuffing out wage-suppression schemes, like the one Apple, Google, and Intel cooked up last decade, in which the firms promised not to hire away each other’s workers, lest they find themselves in bidding wars for top talent.

Biden takes direct aim at Big Tech firms in a separate section of the order imploring the FTC to block “killer acquisitions,” in which an established tech firm buys up an upstart competitor for the primary purpose of snuffing out a potential competitive threat (Facebook’s purchase of Instagram being a high-profile example of the phenomenon). The order also asks the commission to establish rules regulating tech firms’ surveillance of users and accumulation of their personal data.

In the health-care market, Biden (1) directs Health and Human Services (HHS) to make hearing aids available over the counter, thereby encouraging broader competition in the sector to drive prices down, (2) asks the Food and Drug Administration (FDA) to help U.S. consumers safely import prescription drugs from Canada (where government price controls limit the cost of such medicines), and (3) encourages the FTC to ban “pay for delay” agreements, in which brand-name drugmakers pay competitors to keep cheap, generic versions of high-cost prescriptions off the market.

In the transportation sector, Biden would (1) mandate greater transparency in airline fees, and guarantee passengers refunds of any fees paid for delayed baggage or faulty Wi-Fi, (2) require railroad-track owners to accommodate passenger rail, and (3) prevent shipping companies from charging U.S. exporters extortionate rates.

In agriculture, Biden’s order would, among other things, establish a “right to repair.” At present, dominant agricultural-equipment makers can prohibit farmers from fixing their own tractors or taking faulty equipment to an independently owned repair shop. Biden would repeal such restrictions on farmers’ liberty. In internet service, the order would restore net-neutrality rules, cap the termination fees an internet-service provider can charge for cancellation (thereby making it easier for consumers to switch plans if a competitor offers a better price), and forbid ISPs from making deals with landlords that require tenants to use their service.

This summary of the order’s contents is far from comprehensive. But it gives you a sense of its wide-reaching ambitions. The big question is how many of these ambitions will actually be realized.

A significant percentage of the order’s provisions are merely recommendations directed at commissions that boast legal independence from the White House: the FTC and FCC. Meanwhile, some of Biden’s proposed reforms (such as the occupational licensing ban) concern state law, and would thus require the cooperation of authorities outside executive control. And even if every federal agency abides by Biden’s dictates, a conservative-dominated judiciary could still strike down many of his reforms.

This said, the broad popularity of most of Biden’s proposals could mitigate judicial opposition. Republicans do not like paying baggage fees for late luggage any more than Democrats do. Older GOP voters would surely like paying less for hearing aids and prescription drugs. And after Donald Trump’s eviction from major social-media platforms, Big Tech might be more anathema to the right than to the left.

The 72 proposals in Biden’s executive order add up to one big proposition: If the president identifies modest regulatory changes — that deal with (largely) non-polarized subjects, have natural constituencies, and attract little popular opposition — then he or she can enact significant economic reform without securing congressional cooperation or incurring judicial opposition.

That could be a winning formula. But timid bureaucracies and reactionary judges could give Biden’s antitrust agenda some stiff competition.

Continue Reading