Trump Administration Sees No Threat to Economy From Monopolies – The New York Times

WASHINGTON — President Trump and his economic team see “no need to hastily rewrite the federal government’s antitrust rules,” drawing a battle line with leading Democratic presidential candidates on an issue that has increasingly drawn the attention of economists, legal scholars and other academics.

In their annual Economic Report of the President, released on Thursday, Mr. Trump and his advisers effectively dismiss an emerging line of economic research that finds large American companies increasingly dominate industries like telecommunications and tech, stifling competition and hurting consumers.

That research, which President Barack Obama’s economic team championed in 2016, has become fodder for presidential candidates like Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont to call for breaking up big tech companies.

In its report, the Trump administration contends that the studies that demonstrate rising market concentration in the economy are flawed — and that the rise of large companies may not be a bad thing for consumers.

“Concentration may be driven by economies of scale and scope that can lower costs for consumers,” the report reads. “Also, successful firms tend to grow, and it is important that antitrust enforcement and competition policy not be used to punish firms for their competitive success.”

That assessment was consistent with the bright picture that administration officials painted in the report on the health of the economy.

They forecast growth of 3.1 percent for the year, measuring fourth quarter over fourth quarter, although that prediction relies on Congress passing a large-scale infrastructure plan and other policy initiatives that appear unlikely in an election year. Without those, the growth forecast falls below 3 percent.

This year’s report takes direct aim at the 2016 report presented by Mr. Obama and his Council of Economic Advisers, then led by the Harvard economist Jason Furman, which warned that rising market concentration was hampering economic dynamism and exacerbating inequality.

The Trump administration has approved some high-profile corporate mergers, like the marriage of Sprint and T-Mobile, while trying to block others, like AT&T’s purchase of Time Warner. In their report, Mr. Trump’s advisers say federal agencies already have the tools they need to evaluate those mergers and other antitrust cases. It laments that some Americans have come to hold the “mistaken, simplistic view that ‘Big Is Bad.’”

New research released Thursday by the University of Chicago’s Becker Friedman Institute for Economics offers new evidence for why populist politicians like Mr. Trump should be concerned with whether market concentration is in fact rising in the economy: The rise hurts blue-collar workers, like those employed in factories, more than everyone else.

The research, from the University of Chicago economists Greg Kaplan and Piotr Zoch, does not seek to quantify whether concentration has gone up or down in recent years. Instead, it studies what happens to particular classes of workers when companies increasingly dominate a market and have more power to raise prices. It finds that some workers — those who make things — are hurt in when their employer dominates an industry. The workers who sell or market or design things gain.

“It’s leading to an increase in the incomes of white-collar workers,” Mr. Kaplan said in an interview, “at the expense of blue-collar workers.”

There’s a relatively simple explanation for why that is. When companies have more pricing power, they make fewer products and sell each one for a higher profit margin. In that case, it’s far more valuable to a company to be an employee working in so-called expansionary positions, like marketing, than in production jobs, like working a factory line — because there’s less production to be done and more salesmanship.

Mr. Trump has repeatedly highlighted his administration’s record of delivering for the production workers he targeted in his 2016 campaign promises. The new economic report is no exception.

In recent decades, the report says, the government disproportionately regulated industries like manufacturing “that offer fulfilling, blue collar jobs for the majority of Americans who do not have a college degree.”

“These misguided policy decisions,” it continues, “imposed real-world costs that created barriers to success and prosperity for hardworking Americans. Those days are over.”