Biden wages war on anticompetitive "moats"
Three weeks after naming Lina Khan to FTC chair, President Joe Biden has made her pro-competition philosophy the centerpiece of a sweeping executive order.
Why it matters: Biden is promulgating Khan's vision of anticompetitive behavior across "more than a dozen" different agencies. The order does not have the force of law; instead, it has the force of narrative.
- The aim is to entrench the idea that an anticompetitive "moat," as frequently extolled by the likes of Warren Buffett, is just a polite euphemism for ripping off consumers.
- The larger project, however, is to move the culture and solidify the new narrative more broadly. Where popular opinion goes, lawmakers and jurists will ultimately follow.
Context: A moat, in the eyes of Buffett, is a company's built-in competitive advantage; the best kind of moat is when a company has no competition at all.
- Flashback: "Competition is for losers," Peter Thiel has said.
- Between the lines: Thiel says that "capitalism and competition are opposites," since competition makes it much harder for capitalists to accumulate a fortune. Biden, by contrast, says that "capitalism without competition isn’t capitalism. It’s exploitation."
How it works: Biden's executive order is not aimed at all big business. Common targets of the left such as Walmart, ExxonMobil and Goldman Sachs are almost entirely untouched by it.
- Instead, Biden is taking aim at companies engaged in anticompetitive behavior — firms that actively stifle competition by, say, insisting on having a monopoly on tractor repair, or by forcing consumers to go to a specialist before they can procure a hearing aid.
The bottom line: The success or failure of that project will ultimately be decided by judges, who tend to move extremely slowly. But jurists do tend to follow broader social trends.
- If Khan's view of anticompetitive behavior becomes received opinion across the government broadly, that will inevitably show up in both legislation and jurisprudence eventually.