This Week Is What Governing Looks Like
In an extraordinary week, the government blocked several mergers, banned non-competes, restructured our communications environment, passed a Federal privacy law, and regulated airlines.
Yesterday the FTC banned non-competes for workers, which is an earthquake in employment law. As conservative Congressman Matt Gaetz put it, the move is a “vindication of economic freedom and free enterprise.”
And yet, when I was composing the piece describing what happened, I was struck by how many other important policy choices this week I had not been able to cover. Last night, for instance, the Senate passed a bill to force the divestment of TikTok from Chinese ownership and control, which is the most significant governance of a communications market since the Cable Act of 1992. The legislation also included our first national privacy law, a mild measure that prohibits the sale of sensitive personal data by brokers to China or Russia. Biden also announced tariffs on Chinese steel and solar panels to protect domestic production. Altogether, these actions are a way of moving away from the assumption that globalization is an inevitable force, and a return to the governance choices that America explicitly made for most of its history.
There’s so much more, of course. On Monday, the Antitrust Division forced a giant insulation company called TopBuild to abandon its acquisition of SPI Parent Holding Company, and the Federal Trade Commission challenged an $8.5 billion fashion merger which would have put Coach, Kate Spade, and Michael Kors all under one roof, alleging that the deal will raise prices and harm workers. Additionally, Kroger/Albertsons announced they would be selling 166 more stores than originally intended to placate antitrust enforcers. It will not work, because no divestment will restore competition, but it shows that corporations are feeling the effects of deterrence.
In terms of regulation, well, this morning, Pete Buttigieg at the Department of Transportation issued a rule “requiring airlines to give you an automatic refund if your flight is canceled or delayed or if they lose your bags.” It sounds like an anodyne consumer protection measure, but it actually will structure the airline market, creating an incentive for airlines to stop planning flights they know they will have to cancel. Similarly, the Consumer Financial Protection Bureau announced it has been cracking down on junk fees by mortgage servicers, such as unlawful or deceptive property inspection, loss mitigation, and late fees. And the Department of Labor under Julie Su expanded the number of workers eligible for overtime pay by 4 million.
Finally, in private conflicts over political economy, there were a couple of important announcements. First, Delta raised wages for 80,000 non-union flight attendants and ground workers by 5% to ward off a union organizing campaign. And second, control of app stores loosened a bit because of a private antitrust case between Epic Games and Apple. Epic Games won a motion against the iPhone giant, with Judge Yvonne Gonzalez Rogers asserting that Epic had made a “sufficient preliminary showing that, viewed holistically, Apple’s practice changes undermine the spirit of the injunction by limiting competition, impeding the free flow of information, and constraining user choice.” There will be a hearing on May 8th to see if Apple gets held in contempt of court.
Five years ago, it would be impossible to imagine a week like this one, when our democratically elected government and private litigants actually exerted power in a meaningful way across our commercial landscape. Any of these single events would have been considered massive. This week, well, we haven’t even hit Thursday.
To recap, here’s what the government has done:
Banned non-compete agreements for 40 million workers
Raised overtime wages for 4 million salaried workers
Forced airlines to automatically offer refunds for canceled flights and poorly handled baggage
Banned illegal junk fees in mortgage lending
Forced divestment of TikTok from Chinese ownership
Blocked corporate merger in insulation
Filed to block a corporate merger in fashion
Announced tariff increases on steel to protect domestic producers
Announced an end to the duty free period on Chinese solar panels to encourage U.S. manufacturing.
Passed the first Federal privacy law to stop data brokers from selling sensitive information to China and Russia
This list, interestingly enough, reminds me of one Congressman Wright Patman used to run for office in Texas.
There we go.
In free enterprise capitalism, it is definitional that there is ease of entry and exit among both buyers and sellers. For the last 60 years, America has moved rapidly into crony capitalism, leaving free enterprise in the dust. But for the last three years, the Biden administration has been doing yeoman work to make our form of capitalism a little bit freer, and a little less infected with cronyism.
Forgot about Biden Annuity Junk Fee initiative ie Fiduciary rule will save 401(k) investors $billions
https://commonsense401kproject.com/2023/11/05/annuity-junk-fees-in-current-401k-plans/