Later today the President will sign a new Executive Order on Promoting Competition in the American Economy (according to the early morning fact sheet). I have not yet seen a final draft of the actual order. But be forewarned, the “facts” require fourteen sheets of 12 point type, more than 3600 words.
I did see a purported early draft of the EO. That draft was shorter and more focused, apparently similar to something the WSJ also received. That freight-focused piece was, however, still packed with very specific examples to spur proactive federal interventions. Actionable measures are increasingly the preferred currency of policymaking, much more than old fashioned statements of principle. According to the fact sheet, “The Order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition problems across our economy.” Yikes.
But this morning on Bloomberg Surveillance, Danny Blanchflower characterized the EO as “an opening salvo… without any teeth.” (Watch/listen starting just before 1hr:13mn mark on the video.)
Salvo has two meanings in English. The better known (it seems to me) involves the concentrated release of artillery or language against a target. The second is to insert, usually in a legal document, specific reservations or exceptions. The White House almost certainly intends for this EO to achieve the first meaning. But as Dr. Blanchflower suggests, it is instead a fair example of salvo’s second meaning. Again and again the fact sheet critiques a specific economic outcome and reserves Presidential authority to undertake an exception for a particular group or situation. There is not (yet and for me) a clear vision of coherent principle.
I am told that one of the West Wing authors (well, probably, EOB telecommuters) of the Executive Order is Tim Wu. In 2017 while a faculty member at Columbia Law School, Mr. Wu wrote, Antitrust via Rulemaking: Competitive Catalysts. He explained, “The strategy involves using industry specific statutes, rulemakings, or other tools of the regulatory state to achieve the traditional competition goals associated with the antitrust laws.” Cass Sunstein, well-known for nudging, is referenced in two of Mr. Wu’s citations. I hear related harmonies. Despite it’s larger claims and considerable detail, the fact sheet suggests the economic equivalent of Cognitive Behavioral Therapy: a nudge here and there, not electroshock nor a frontal lobotomy.
Pareto proportions are remarkably persistent. Power laws seem to be innate. Consolidation can generate real benefits to consumers, producers, and the economy at large. Economies of scale can usually be exploited for the general welfare. As long as the economic system self-organizes around demand; especially when the ecosystem of demand and supply features and fosters considerable diversity.
In a recent personal exchange, a Chief Supply Chain Officer with a global retailer wrote, “In order to stay resilient to growing threats that await us — contagion, bio warfare, acts of god, or human misadventure — we need a common problem-solving framework. Each of these threats impact the supply chain in different ways stressing commodity pools in different ways. So a demand driven supply chain structure is needed to navigate this.” As common sensical as this may sound, it implies a revolutionary shift in current structures and (usually unconscious) management concepts.
A trucking company CEO reacted to proposed Biden administration Supply Chain Resilience measures, “The transportation industry remains diversified, decentralized, sustainable and resilient… If our trucking industry were as consolidated as our rail or pipeline industry, one hack could cripple our economy or a region, sending deep impacts nationwide. We depend on food and consumer goods for so much. There is no discernable benefit from the standpoint of service or flexibility or supply chain fluidity when industry consolidates to larger fleets.” This is more than a nudge, this is a principle, even a personal commitment.
So… whenever I am able to read the the Executive Order’s specific salvos, I will be looking and listening for how the principles of demand-orientation and system-wide diversity are consistently reflected in the seventy-two recommended actions — or not.