Friday’s Executive Order includes, “over the last several decades, as industries have consolidated, competition has weakened in too many markets, denying Americans the benefits of an open economy and widening racial, income, and wealth inequality.”
Maybe this is just another way of saying: “A more diverse set of economic players will be more responsive to demand.”
Maybe there is little more here than a distinction between political rhetoric and network(y) language.
Mature high volume, high velocity networks tend toward consolidation. Functional concentrations of capacity often enhance network efficiency. But over-concentration can also increase the risk of catastrophic network failure. Tightly concentrated, interdependent networks are very effective at spreading good or bad.
I am interested in Supply Chain Resilience — if you are reading this, I suppose you are as well. Diversity and decentralization of network nodes combined with densely (critical?) diverse connectivity may achieve efficiencies of concentrated networks while reducing catastrophic risk.
The authors of the Executive Order do not address Supply Chain Resilience. They are much more concerned with labor market flexibility, consumer choice, easy access to economic markets, cost/price dynamics, and related second-order cultural, social, and political effects. The authors perceive that consolidation of ownership — especially consolidation of market value — reduces competition that ipso facto reduces market flexibility, openness, and responsiveness. (Or using my terminology: increases network friction and fragility.)
With this Executive Order the Biden administration intends, “to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony — especially as these issues arise in labor markets, agricultural markets, Internet platform industries, healthcare markets (including insurance, hospital, and prescription drug markets), repair markets, and United States markets directly affected by foreign cartel activity.” So, there is a new focus — even targeting — for enforcing existing antitrust principles and processes. Unfortunately, this approach can only undo what has already been done.
Attempting to foster a more proactive, even preventive approach, the EO sets out, “Agencies can and should further the polices set forth in section 1 of this order by, among other things, adopting pro‑competitive regulations and approaches to procurement and spending, and by rescinding regulations that create unnecessary barriers to entry that stifle competition.”
This White House is in the middle of a process explicitly focused on Supply Chain Resilience (see here and here). I may be more inclined to connect this new EO to that ongoing work than anyone at the White House. The lack of any reference to Supply Chain Resilience by this new EO is important to acknowledge, even as consolidation, competition, and concentration are each crucial issues in Supply Chain Resilience.
I am trying — even straining — to be affirmative regarding the intentions that motivate this Executive Order and the February 24 EO specifically focused on supply chains. But I will confess that in each case I am troubled by what I perceive to be a preoccupation with treating symptoms rather than a principled diagnosis and prescription to address core causes.
Related Comments:
The Curse of Less Bigness by Robert Armstrong in The Financial Times.
Joe Biden, 20th Century Trustbuster by the Editorial Board of the Wall Street Journal
Civilization and its Discontents by Sigmund Freud (origin of the phrase “the narcissism of small (or minor) differences.”)