    [Joint House and Senate Hearing, 117 Congress]
    [From the U.S. Government Publishing Office]

                                                             S. Hrg. 117-64

                              A SECOND GILDED AGE:
                        HOW CONCENTRATED CORPORATE POWER
                          UNDERMINES SHARED PROSPERITY

    =======================================================================

                                VIRTUAL HEARING

                                   BEFORE THE

                            JOINT ECONOMIC COMMITTEE

                                     OF THE

                         CONGRESS OF THE UNITED STATES

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                 JULY 14, 2021

                                   __________

              Printed for the use of the Joint Economic Committee

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    45-447                    WASHINGTON : 2022

    -----------------------------------------------------------------------------------

                            JOINT ECONOMIC COMMITTEE

        [Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]

    HOUSE OF REPRESENTATIVES             SENATE
    Donald S. Beyer Jr., Virginia,       Martin Heinrich, New Mexico, Vice
        Chairman                             Chairman
    David Trone, Maryland                Amy Klobuchar, Minnesota
    Joyce Beatty, Ohio                   Margaret Wood Hassan, New
    Mark Pocan, Wisconsin                    Hampshire
    Scott Peters, California             Mark Kelly, Arizona
    Sharice L. Davids, Kansas            Raphael G. Warnock, Georgia
    David Schweikert, Arizona            Mike Lee, Utah, Ranking Member
    Jaime Herrera Beutler, Washington    Tom Cotton, Arkansas
    Jodey C. Arrington, Texas            Rob Portman, Ohio
    Ron Estes, Kansas                    Bill Cassidy, M.D., Louisiana
                                         Ted Cruz, Texas

                      Tamara L. Fucile, Executive Director
                Vanessa Brown Calder, Republican Staff Director
                      Colleen J. Healy, Financial Director

                                C O N T E N T S

                                  ----------

                         Opening Statements of Members

    Hon. Donald Beyer Jr., Chairman, a U.S. Representative from the
      Commonwealth of Virginia.......................................     1
    Hon. Mike Lee, Ranking Member, a U.S. Senator from Utah..........     3
    Hon. Amy Klobuchar, a U.S. Senator from Minnesota................     5

                                   Witnesses

    Dr. Thomas Philippon, Max L. Heine Professor of Finance, New York
      University, Stern School of Business, New York, NY.............     8
    Dr. Kate Bahn, Director of Labor Market Policy and Interim Chief
      Economist, Washington Center for Equitable Growth, Washington,
      DC.............................................................     9
    Ms. Stacy Mitchell, Co-Director, Institute for Local Self-
      Reliance, Washington, DC.......................................    12
    Mr. Chris Edwards, Director of Tax Policy Studies, Cato
      Institute, Washington, DC......................................    13

                           Submissions for the Record

    Prepared statement of Hon. Donald Beyer Jr., Chairman, a U.S.
      Representative from the Commonwealth of Virginia...............    34
    Prepared statement of Hon. Mike Lee, Ranking Member, a U.S.
      Senator from Utah..............................................    35
    Prepared statement of Dr. Philippon, Max L. Heine Professor of
      Finance, New York University, Stern School of Business, New
      York, NY.......................................................    37
    Prepared statement of Dr. Kate Bahn, Director of Labor Market
      Policy and Interim Chief Economist, Washington Center for
      Equitable Growth, Washington, DC...............................    46
    Prepared statement of Ms. Stacy Mitchell, Co-Director, Institute
      for Local Self-Reliance, Washington, DC........................    54
    Prepared statement of Mr. Chris Edwards, Director of Tax Policy
      Studies, Cato Institute, Washington, DC........................    66
    Response from Dr. Philippon to Questions for the Record Submitted
      by Senator Kelly...............................................    76
    Response from Dr. Bahn to Questions for the Record Submitted by
      Senator Kelly..................................................    76
    Response from Ms. Mitchell to Questions for the Record Submitted
      by Senator Kelly...............................................    77

                              A SECOND GILDED AGE:
                        HOW CONCENTRATED CORPORATE POWER
                          UNDERMINES SHARED PROSPERITY

                                  ----------

                            WEDNESDAY, JULY 14, 2021

                        United States Congress,
                              Joint Economic Committee,
                                                        Washington, DC.
        The WebEx virtual hearing was convened, pursuant to notice,
    at 2:30 p.m., before the Joint Economic Committee, Hon. Donald
    S. Beyer Jr., Chairman, presiding.
        Representatives present: Beyer, Beatty, Pocan, Peters, and
    Schweikert
        Senators present: Klobuchar, Hassan, Lee, and Warnock
        Staff present: Vanessa Brown Calder, Sean Gogolin, Devin
    Gould, Tamara Fucile, Owen Haaga, Erica Handloff, Colleen
    Healy, Jeremy Johnson, Christina King, Adam Michel, Michael
    Pearson, Alexander Schunk, Nita Somasundaram, Sydney Thomas,
    Jackie Varas, and Emily Volk

     OPENING STATEMENT OF HON. DONALD BEYER JR., CHAIRMAN, A U.S.
            REPRESENTATIVE FROM THE COMMONWEALTH OF VIRGINIA

        Chairman Beyer. This hearing will come to order. I would
    like to welcome everyone to today's hearing focused on the
    economic impact of concentrated corporate power. I was
    encouraged to see President Biden's signing of an Executive
    Order just last week taking action on this very issue.
        I want to thank each of our distinguished witnesses for
    sharing their expertise today. We have a world-class panel, and
    I know we are all going to be excited to hear from them.
        Access to opportunity, open markets, and fair competition
    are fundamental to advancing shared prosperity in our country.
        Competition in markets leads to lower prices and higher
    quality goods and services, ensuring that consumers do not
    overpay for the products and services they rely on, whether it
    is a vital medication or broadband internet.
        Workers also benefit when businesses compete for their
    labor. Competition for worker incentivizes firms to pay good
    wages or risk losing their workers to competitors, and thereby
    serving as a counterbalance to rising corporate power and
    enabling workers to bargain for better working conditions. And
    competitive markets allow everyday Americans to take a chance
    on an idea and start a business. Or maybe they innovate on a
    product and make it more affordable.
        Research shows the possibility of new entrants into a
    market compels existing firms to continue investing in people
    and capital to stay ahead, which also elevates the United
    States as a leader in the global economy.
        We are here today because corporate concentration imperils
    shared prosperity and exacerbates economic inequality.
        Across industries--including health care, financial
    services, telecommunications, agriculture and more--we are
    seeing much higher levels of concentration than were there
    three decades ago. And evidence shows this has led to weaker
    business investment, higher prices for consumers, and lower
    wages for workers.
        This consolidation of corporate power has allowed the
    wealthiest at the top to capture a larger share of the gains
    from economic growth. Amid record-breaking profits,
    corporations are paying less in taxes today than they did 30
    years ago, while investing 10 cents less per dollar of profit.
    All of this has led to reduced productivity gains in
    concentrated industries and slower growth economy-wide.
        This is a problem because consumers are bearing the burden.
    On average, we pay about twice as much for cellphone plans than
    some of our friends in other advanced economies with more
    providers. The same is true for broadband access. With more
    competition, hard-working Americans could save billions each
    year.
        Our workers are also paying for this in the form of
    stagnant wages. Research shows the median American household
    loses an estimated $5,000 each year through reduced wages and
    higher prices caused by a lack of competition.
        Now how did we get here?
        The explosion of mergers and acquisitions have played a key
    role in the consolidation of industries. Over the past 40
    years, they have been allowed to proceed at an unprecedented
    pace, and the same holds for an array of anticompetitive
    practices by industry leaders.
        This is due in part to our failed experiment with a more
    lax enforcement of antitrust laws and the under-funding of
    Federal enforcement agencies.
        During this time, our economy has lost half of its firms on
    a per capita basis. This has disproportionately impacted
    marginalized communities where we've seen a disappearance of
    independent grocery stores, pharmacies, and community banks.
        The rise of non-compete agreements is also part of the
    story. At least 1 in 3 businesses require that workers sign
    non-compete agreements, which suppress workers' wages, hinder
    the ability to pursue better opportunities and contribute to
    persistent racial and gender disparities. And about 1 in 5
    workers without a college education is subject to these non-
    compete agreements.
        The good news is that there are steps that we as a country
    can take to reduce this concentration of corporate power, and
    we will hear more about these proposals from our expert panel
    today.
        Additionally, there have been productive bipartisan
    conversations here on Capitol Hill about how to best tackle
    these challenges. Following a bipartisan investigation that
    uncovered evidence of ample anticompetitive practices, the
    House Judiciary Committee recently approved six bipartisan
    bills to address business concentration and bolster competition
    on digital platforms.
        In the Senate, my dear friend and colleague Senator
    Klobuchar wrote an entire book about antitrust, the challenges
    we face, and what we can do to make our economy more
    competitive. Earlier this year, the Senator introduced the
    Competition and Antitrust Law Enforcement Reform Act. Among
    other things, this bill would give Federal enforcers more
    resources to do their jobs and strengthen prohibitions on
    anticompetitive conduct. The Senator will tell us more about
    this and some of her other ideas shortly.
        We have an opportunity now to restore a competitive economy
    and advance shared prosperity. President Biden's Executive
    Order advances a whole-of-government approach to promote fair
    competition, and it is now our turn to act here in Congress
    with bold and decisive action. And this is why I look forward
    to the testimonies and insights of our witnesses today.
        Now I would like to turn this over to Senator Mike Lee,
    another leading voice in this space, for his opening statement.
    Senator Lee, the floor is yours.
        [The prepared statement of Chairman Beyer appears in the
    Submissions for the Record on page 34.]

      OPENING STATEMENT OF HON. MIKE LEE, RANKING MEMBER, A U.S.
                           SENATOR FROM UTAH

        Senator Lee. Thank you very much, Mr. Chairman.
        From our earliest days, it has been businesses both large
    and small that have been the backbone of our country. And as
    Calvin Coolidge once put it: The chief business of the American
    people is business. From colonial farmers to pioneering
    homesteaders, to merchants, craftsmen, and professionals,
    American entrepreneurs have sought to build a better life for
    themselves and achieve the American Dream.
        For centuries, Americans who are innovative have come
    together through commerce and competition to improve life for
    themselves and their families and their communities.
        It is no surprise, then, that American businesses are a
    source of local and national pride. They are often more than
    just a place to work. They add vitality into our neighborhoods,
    our towns, our cities, and communities.
        Businesses are also the heartbeat of our economy. Small
    businesses in particular represent about half of all private-
    sector jobs in the United States, nearly half of the U.S. GDP,
    and they account for two out of every three jobs created in the
    United States today.
        Over the years, we have seen the rise of a number of big
    businesses, and today we are again witnessing the increasing
    market power of a few large firms. Of course this raises some
    important questions, that a lot of people are concerned,
    understandably, that the largeness of certain enterprises makes
    them dangerous--some say, inherently dangerous to small
    businesses and to consumers and to workers.
        However, the fact is that big is not always bad. But
    neither is it always good. And we should not be forced to
    pretend that it is either one way or the other. To imply that
    we should support or defend a business simply based on its size
    is unserious and it is meant to move the conversation away from
    a firm's specific conduct.
        The rise of some highly visible large firms is oftentimes a
    product of their greater market-based innovations. The prospect
    of gaining a larger market share incentivizes competition that
    can lead to better products and services at lower prices.
    Market share won through competition should be celebrated not
    punished.
        Changing technology and increasing investment in software
    processes and R&D may also be an important factor. In
    industries where these investments are protected by patents,
    policy has explicitly created government-granted monopolies. We
    allow this because the prospect of collecting monopoly profits
    acts as an incentive for firms to innovate and invest in new
    ideas.
        In other areas, new investments are associated with higher
    productivity gains, especially in the high-tech and consumer
    sectors, suggesting that these businesses have gained greater
    efficiencies through market competition. But there are other
    factors behind industry concentration, factors that could
    indeed be cause for concern and deserve our attention.
        For instance, government regulations impose huge, stifling
    barriers to new business creation and protect existing firms
    from competition. From 2010 to 2020, the U.S. Government
    imposed an average of 365 new regulations each year affecting
    everything from how farmers make their living, to which
    employees small business owners are legally allowed to hire, to
    how many workers they can afford to pay.
        These regulations impose tremendous costs on American
    businesses, workers, and taxpayers, costing an average of $81
    billion per year and requiring 77 million hours of paperwork
    annually.
        This burden disproportionately falls on small businesses
    and startups. In fact, there is plenty of evidence showing that
    regulatory accumulation reduces the number of small businesses
    relative to larger ones. In this regard, Federal, State, and
    local regulations are locking out small businesses from
    competing, and thus further entrenching big businesses.
        Reducing regulatory requirements on American business would
    help foster more market competition. With more market
    competition, the more competition any time you are going to
    increase quality and reduce prices, and that is good for
    consumers.
        Antitrust enforcement has also been declining for decades.
    Some monopolies are indeed bad, and those that rise or remain
    through anticompetitive and exclusionary conduct and not
    through competition on the merits stand in the way of free
    markets, and they degrade the options available to consumers.
        A proper response in this regard is to modernize antitrust
    laws to find the right balance between over-enforcement and
    under-enforcement. That is exactly why I have introduced the
    Tougher Enforcement Against Monopolists, or TEAM Act, which
    would preserve free-market competition by codifying the
    Consumer Welfare Standard and strengthening enforcement against
    companies that engage in anticompetitive behavior.
        Other efforts like the Administration's recent Executive
    Order on competition unfortunately missed the market by
    overstepping the President's authority and massively expanding
    Federal regulatory power. But whatever action we take, we ought
    to remember that big businesses are not necessarily harmful if
    workers continue to find well-paying jobs and consumers
    continue to benefit from high-quality, diverse, and low-cost
    goods and services. The ability for them to do that of course
    is always enhanced by robust competition.
        The beauty of our free-market economy is that whatever your
    cause or your career, your success depends on your service. The
    way to look out for yourself is to look out for those around
    you. The way to get ahead is to help other people do the same,
    and to put your God-given talents and efforts to work in the
    service of your neighbor.
        In the process of earning money and building wealth,
    individuals can add value to other peoples' lives. In all of
    our efforts going forward, we ought to ensure that businesses
    both large and small are able to keep doing just that. And I am
    hopeful that today's hearing will aid us in achieving this
    goal.
        Thank you.
        Chairman Beyer. Senator Lee, thank you very much. And thank
    you for introducing the team effort. That is very much in the
    right direction.
        [The prepared statement of Senator Lee appears in the
    Submissions for the Record on page 35.]
        It is now my honor to introduce the distinguished Senator
    from Minnesota, Senator Klobuchar, who has just written a book
    titled Antitrust. There is no confusion about what the book is
    about. If I can quote from a review of The New York Times, it
    says, ``It is an impressive work of scholarship, deeply
    researched, highly informative, and it is surprisingly readable
    in the bargain.''
        Senator Klobuchar, we will never forget the picture of you
    announcing for President in the snow storm, but we would love
    to hear what you have to say about antitrust, so we look
    forward to it.

     OPENING STATEMENT OF HON. AMY KLOBUCHAR, A U.S. SENATOR FROM
                               MINNESOTA

        Senator Klobuchar. Well thank you, Mr. Chairman. And since
    I have the floor, I will now read all 600 pages of the book
    into the record. No, I will try to give a summary of my views.
        I first want to thank you for having the foresight of
    having this hearing. I want to thank my colleague, Senator Lee.
    We had a hearing yesterday in our subcommittee together on what
    we can do about pharmaceutical prices, and we have introduced a
    number of bills together, including one with Representatives
    Buck and Cicilline to give the State Attorney General more
    tools to use as we take on this major problem of monopolies.
        I think we all know in our different ways that America has
    a monopoly problem. Whether you are a cattle producer trying to
    bring your beef to market, whether you are someone that is
    trying to get a deal on online travel and suddenly find out
    that all the websites you go to, 90 percent of them are owned
    by really two companies, whether you are someone that wants to
    get a fair price on a prescription drug where we know we have
    seen such enormous price increases in America over the last few
    decades. And then finally, of course, if you are someone that
    is trying to get the truth off of social media platforms, or
    you are trying to protect your privacy. And you wonder why
    there are not all these bells and whistles that would do that,
    or why Google was able to, or Facebook, hold an entire country
    hostage, which is the country of Australia when they simply
    tried to charge for content and make sure that the news
    organizations were getting a fair deal.
        Well, this is about monopolies. And I truly appreciated the
    title of your hearing because this is something that has gone
    on since the gilded age, and it could be well characterized, as
    you called it, as the second gilded age in this country. And I
    think the answers are right before us.
        There is a focus, as there should be, on some specific
    solutions. Senator Lee and I had an incredible hearing on App
    Stores in which we actually had to push Apple to even get us a
    witness. And we did, and we had companies from Spotify to
    Match.com testify about how much they had to pay out just to
    use the App stores, which are pretty much today's modern
    websites.
        There are things we can do in that area. There are things
    we can do from patents, patent thickening, patent thickets to
    the issues that we have with pay-for-delay in pharma. There is
    privacy legislation to be passed.
        But then let's go a step further. I think we need an
    overhaul of our antitrust laws, if you really want to get at
    all these things at once, switching the burden for the big mega
    mergers, looking back into some very consolidated industries,
    not all industries, but the most consolidated ones where you
    have dominant players to figure out what needs to be done. Do
    some assets have to be divested? Do we have to put better
    bumpers in place on consent decrees and agreements? And all of
    this, to me, leads to something that Senator Lee mentioned,
    which is enforcement.
        And I don't think that our agencies can take on the biggest
    companies the world has ever known with Band-Aids and duct
    tape. And that is why Senator Grassley and I passed in the U.S.
    Senate our bill to change the merger fee structure, which has
    not happened for decades, which is now over in the House and I
    know has some good, strong bipartisan support which, without
    hurting any small companies or mergers in small companies,
    would actually bring in over $100 million because of the way we
    changed the structure for the FTC and for the DOJ Antitrust
    Division.
        So that is number one.
        Number two is what I have already mentioned, the standard
    change.
        And number three is something that you had the foresight to
    look at, which is other things that can be done like allowing
    workers to go to another job if they want to go, very radical,
    with non-compete agreements being used only in the
    circumstances that fit them, as opposed to the front-line
    workers. Making sure that, to me, immigration reform is a piece
    of this. And making sure that we have the workers that we need
    when we are facing a labor shortage.
        And then also looking at our STEM education and allowing
    new workers to go into the workforce. I just bring up a few of
    those ideas, but there are many, many more. And I just want to
    thank you, Mr. Chairman, for this hearing and the Ranking
    Member. And I am really excited. And I think there are some
    really good things in the White House's, President Biden's
    Executive Order. And if you don't think he means business when
    he is governing right now, he just came over to the Senate
    Caucus today and I think we all know he means business.
        And, secondly, the work that we can do here on a bipartisan
    basis in Congress. And I do want to say that I have gotten to
    know Representative Buck, and of course Cicilline, quite well,
    and I really appreciate their bipartisan efforts over in your
    House of Representatives.
        So thank you for allowing me to say a few words.
        Chairman Beyer. Senator Klobuchar, thank you very much. And
    thank you for writing the 600-page book that gives us a
    blueprint for much of what we can do. It is wonderful to have
    you on this committee.
        Senator Klobuchar. Thank you.
        Chairman Beyer. I would now like to introduce our four
    distinguished witnesses. Dr. Thomas Philippon is the Professor
    of Finance at New York University Stern School of Business. He
    has published widely on macroeconomics and finance, including
    the market power of large firms. His 2019 book, The Great
    Reversal, explores the causes and consequences of increased
    concentration and decreased competition in the U.S. economy.
    His research finds that American consumers, workers, and
    potential new entrants are shouldering the cost of rising
    corporate consolidation. Dr. Philippon has a Ph.D. in Economics
    from the Massachusetts Institute of Technology, and is in Paris
    tonight on Bastille Day, and I would like to note that we freed
    him from the prison today in order to testify.
        Dr. Kate Bahn is the Director of Labor Market Policy and
    Interim Chief Economist at the Washington Center for Equitable
    Growth. Her research focuses on gender, race, and ethnicity in
    the labor market, care work, and monopsony. She has written
    extensively about the impact of the lack of competition in
    labor markets, and how it gives employer's unfair wage-setting
    power, to undercut the earnings of workers and increase their
    own profits. Her work shows how increasing workers' bargaining
    power has strengthening the unions can counteract the effects
    of employers' market power. Dr. Bahn received her Ph.D. in
    Economics from the New School for Social Research.
        Ms. Stacy Mitchell is the Co-Director of the Institute for
    Local Self-Reliance where she directs its independent business
    initiative. Her research and reporting have focused on the
    importance of small businesses, and the public policies driving
    their decline and she has analyzed the shift in antitrust
    policy toward maximizing efficiency over promoting fair and
    open markets for all competitors. She is the author of the book
    Big Box Swindle, which details how mega retailers are fueling
    many of our most pressing social and economic challenges. Ms.
    Mitchell has a Bachelor's Degree in American Economic and Labor
    History from McAllister College.
        Finally, Mr. Chris Edwards is a prior legacy employee from
    the Joint Economic Committee, and Chris is now the Director of
    Tax Policy Studies at the Cato Institute. He previously served
    as senior economist for the Republican staff for the Joint
    Economic Committee. He is recognized for his work on Federal
    and State tax and budget issues. In addition to his work with
    the JEC, Mr. Edwards has served as a manager with
    PriceWaterhouseCoopers, and as an economist with the Tax
    Foundation. Mr. Edwards has an M.A. in Economics from the
    George Mason University.
        Dr. Philippon, let's begin with your testimony and then we
    will continue in the order of introductions. Dr. Philippon, the
    floor is yours.

     STATEMENT OF DR. THOMAS PHILIPPON, MAX L. HEINE PROFESSOR OF
      FINANCE, NEW YORK UNIVERSITY, STERN SCHOOL OF BUSINESS, NEW
                                YORK, NY

        Dr. Philippon. Thank you, Chairman Beyer, Vice Chairman
    Heinrich, and Ranking Member Lee for giving me the opportunity
    to testify in front of you today.
        So I would like to divide my remarks into two parts: just a
    quick review of the evidence, what we know and what we do not
    know. And then I would like to explain the main consequences of
    existing market power and growth. And then in conclusion, I
    will give some policy options.
        So first the evidence. While obviously the first, the most
    discussed, the most popular evidence is concentration. And
    indeed, we have seen that many industries have become more
    concentrated over the past 20 years. Now concentration is an
    important warning sign because it can suggest that some firms
    have increased their market power.
        But concentration is not by itself a concluding indicator.
    And the main reason is concentration can increase for various
    reasons. Like was just said, big is not always bad. So instead
    of looking at market share at a point in time, which is what
    concentration does, I find it useful to consider how market
    shares can change over time. And in a competing industry, we
    might very well have a departure at the point in time, but if
    the industry is competitive, we don't expect that firm to
    remain dominant forever.
        And unfortunately, if you look at the data, this kind of
    hasty reshuffling has increased over the past 20 years. If you
    look at the largest 100 firms in the U.S. in the year 2000, you
    will see that 55 out of these 100 firms were relative
    newcomers.
        If you look at 2019, and again you look at the 100 largest
    firms in the U.S., the fraction of newcomers instead of being
    55 percent is now down to 29 percent. The 71 auto firms had
    been in the top 100 for every year over the past 10 years. So
    this reshuffling has decreased over time.
        Another indicator which is important, obviously, is
    profits, payouts, and investments. Now the share of after-tax
    corporate profits and GDP has increased by roughly 50 percent
    in 2000. Again, that might not be an issue if high profits led
    to high investment. The problem is, as you know, what happened.
    Investment in fact has been relatively weak, and instead firms
    have not chosen their higher profit to include investment.
    Instead, they have used their profit to increase their payout
    to shareholders. So the ratio of payout to total assets has
    roughly doubled since 2000.
        Now there are many other industry studies that are detailed
    and show that consumers pay higher prices that are too high.
    They also are studies that look at the labor market. But let me
    now turn to the consequences.
        So there is a broad review of the evidence and I think that
    prices in the U.S. are somewhere between 7 or 8 percent higher
    today than they would be if competition had remained as healthy
    as it was in the late 1990s. So what are the consequences?
        Well, first, higher prices. So the median household spends
    about $5,300 a year. I estimate that they pay about 7 or 8
    percent to high prices. That means that they pay about $3,700
    each year in monopoly rent. If you add that for all the
    households in the U.S., you get about $600 billion in excess
    monopoly rent.
        Now this is to a lower living standard and higher
    inequality. Now the study at the end of the story does not take
    into account the impacts of competition and growth on
    investment and productivity. Once you factor in the impact of
    competition on investment, then you find that if we could
    return to the high level of competition that we had 20 years
    ago, GDP would increase by about 5 percent, which is a trillion
    dollars.
        Finally, because increased investment would lead to higher
    real wages, it also would gain not just a consumer prices but
    also as workers, higher real wages. So, if you go back to this
    median household, we discussed earlier, the improvement in
    living standards would be something like $5,000 once you take
    into account the growth, lower prices and higher wages.
        So to conclude, I think that this shows that the stakes are
    high. To make it short, if you improve competition, the same as
    cutting taxes for working families by $600 billion per year,
    except you don't have to actually increase the deficit to do
    it.
        We will also boost the economics something like a trillion
    dollars each year, so the stakes are high. The policy changes
    are real, because we don't know for sure what are the better
    tools, and exactly which to act first, but I think that if you
    review the evidence very broadly you see four goals that would
    be useful in all cases.
        First, tighten up the reviews.
        Second, reduce barriers to entry.
        Third, improve price transparency.
        And fourth, reduce switching costs for consumers.
        Thank you very much for the opportunity to testify.
        [The prepared statement of Dr. Philippon appears in the
    Submissions for the Record on page 37.]
        Chairman Beyer. Thank you, Dr. Philippon, very much. We
    will come back to you with many questions in the minutes to
    come. Now let me introduce Dr. Kate Bahn for her testimony.

    STATEMENT OF DR. KATE BAHN, DIRECTOR OF LABOR MARKET POLICY AND
       INTERIM CHIEF ECONOMIST, WASHINGTON CENTER FOR EQUITABLE
                         GROWTH, WASHINGTON, DC

        Dr. Bahn. Thank you, Chair Beyer, Ranking Member Lee, and
    Members of the Joint Economic Committee, for inviting me to
    testify today. My name is Kate Bahn and I am the Director of
    Labor Market Policy and Interim Chief Economist at the
    Washington Center for Equitable Growth.
        We seek to advance evidence-backed ideas and policies that
    build strong, stable and broad-based growth. Mounting evidence,
    which I will review today, demonstrates how the rising
    concentration of corporate power has increased economic
    inequality, which has dragged down economic growth. I will
    explain what causes an economic concept called ``Monopsony''
    and how it impacts different workers. And finally, how policy
    can push back on employers having significant monopsony power
    over the market and over workers.
        The United States boasts one of the wealthiest economies in
    the world, but decades of increasing income inequality, job
    polarization, and stagnant wages for most Americans has plagued
    our labor market. This has demonstrated that a rising tide does
    not lift all boats.
        Monopsony is a key economic concept to understand in this
    discussion. Monopsony is the labor market equivalent of the
    better-known phenomenon of monopoly, but instead of having only
    one seller of a good or service, there is effectively only one
    buyer of a good or service. Like monopoly, this phenomenon is
    not limited to when a firm is strictly the only buyer of labor.
        When employers have outsized powers, they are able to set
    wages for their workers rather than wages being determined by
    competitive market forces. Given this monopsony power,
    employers undercut workers.
        One recent survey of all economic research on monopsony
    finds that on average across studies employees have the power
    to keep wages over one-third less than what they would be in a
    perfectly competitive market. Firms can use monopsony powers to
    lower workers' wages through a number of common occurrences in
    the labor market.
        First, if there are few potential employers.
        Second, if workers face job mobility constraints.
        Third, if workers can only gather imperfect information
    about employers and jobs.
        Fourth, when workers have divergent preferences for job
    attributes.
        And finally, when workers lack the ability to bargain over
    wages and working conditions.
        While concentrated labor markets are not the norm, they are
    pervasive across the U.S. Research has found that 60 percent of
    U.S. local labor markets are highly concentrated. This accounts
    for 20 percent of employment in the United States, and it has
    been particularly pernicious in rural areas.
        When markets are very concentrated, employers can give
    workers smaller yearly raises or make working conditions worse,
    knowing the workers have nowhere to go to find a better job.
    But as I noted, competition is not the only source of monopsony
    power. Job mobility, which is the ability to move between jobs,
    also affects the market and in turn may give employers the
    power to keep wages below competitive levels.
        Job mobility can be limited by non-compete agreements where
    workers are compelled to sign away their rights to go work for
    a direct competitor of their employer. Asymmetric information
    between employers and workers also influences how workers sort
    between jobs and puts downward pressure on wage offers.
        Workers often know little about the salary range at
    potential employers, even within their own firms. In contrast,
    employers know what all their employees are paid and often
    require applicants to disclose their current salaries or
    competing job offers, giving them much more information to work
    with.
        And finally, varied worker preferences also give employers
    the power to undercut wages. Workers who are more likely to
    face hostile work environments, among them Black workers in
    primarily White occupations or women in male-dominated fields,
    may look for workplaces that are more inclusive. Or parents who
    have primary responsibility for case making for their children
    may need a more predictable schedule or autonomy over their
    schedules. This lack of mobility lowers wages. The
    concentration of corporate power has dire consequences for
    workers who are already disadvantaged in the U.S. Economy.
    Workers facing hiring discrimination, pregnant women, Black and
    Latinex workers, have fewer job offers so they will be forced
    to accept substandard opportunities. And having an unstable
    fallback position, without personal wealth or adequate income
    support, may reduce the ability of a worker to search for a job
    that is both the best fit and garners the highest possible
    wages. Employers are able to exploit these conditions by
    undercutting workers' wages without risking losing their labor
    supply, amplifying the negative consequences of rising
    corporate power.
        Reversing the trends that caused this ``Second Gilded Age''
    starts with ensuring that the U.S. economy is competitive. The
    Biden Administration is starting to strengthen enforcement
    against anticompetitive conduct, but this can go further,
    including new laws that codify, clarify, and strengthen
    antitrust law for labor markets.
        But antitrust laws are not sufficient. Another important
    way to address the concentration of corporate power is to build
    countervailing power for workers--such as the Protecting the
    Right to Organize Act--that would expand the ability of unions
    to organize workers, while limiting the employer's ability to
    exploit workers along multiple axes.
        One feature of a monopsonistic labor market is that wages
    are artificially suppressed, so there is room to raise the
    floor with tools such as increasing the minimum wage.
        Finally, giving workers universal protections and investing
    in social infrastructure will provide a stable foundation for
    workers to search for quality jobs.
        Building the foundation of security for workers not only
    directly impacts their well-being, but also provides the
    foundation for productivity growth through better job matchers
    and stronger economic growth through increased incomes.
        Thank you, and I look forward to your questions.
        [The prepared statement of Dr. Bahn appears in the
    Submissions for the Record on page 46.]
        Chairman Beyer. Thank you very much, Dr. Bahn. The
    questions will come, I promise. Let me now introduce Ms.
    Mitchell, Stacy Mitchell, for your testimony.

      STATEMENT OF MS. STACY MITCHELL, CO-DIRECTOR, INSTITUTE FOR
                  LOCAL SELF-RELIANCE, WASHINGTON, DC

        Ms. Mitchell. Thank you, and good afternoon, Chairman
    Beyer, Ranking Member Lee, Senator Klobuchar, and Members of
    the Committee. Thank you for inviting me to this important
    hearing.
        I am the Co-Director of the Institute for Local Self-
    Reliance. Several years ago, I set out to study a crucial
    question: What is killing America's small, independent
    businesses?
        In the 1980s, businesses with fewer than 100 employees
    accounted for 40 percent of all business revenue. Today, their
    share has dropped to 20 percent. And this trend has been
    accelerating. In the last decade, we have lost tens of
    thousands of small retail owners, distributors, manufacturers,
    and more.
        The story about the decline of small business is that they
    cannot keep up. We assume big corporations are inherently
    better and more efficient, but in fact research shows that in
    many sectors independent businesses outperform. They deliver
    better products at cheaper prices, and more innovation.
        The real answer to what is killing small businesses is
    rooted in policy choices. Forty years ago, we abandoned our
    anti-monopoly policies. This has allowed a few corporations to
    amass extraordinary market power and yield it with impunity. We
    hear this every day from business owners. People like Ben
    Oglethorpe who owns the only pharmacy serving a large rural
    region of Maine. Oglethorpe's family pharmacy is beloved by the
    community and busy as can be, and yet he worries that he is
    going to be driven out of business. And that is because CVS and
    two other powerful pharmacy benefit management companies
    control how much he is reimbursed for filling prescriptions.
        These companies also compete with him. He has watched--CVS
    has slashed reimbursement rates of independent pharmacies
    across the country and forced them to close.
        We have heard similar stories from craft brewers like Bob
    Jensen who is an award-winning artist brewery in Chicago who
    struggled to get his store shown because in his region
    distribution is controlled by Anheuser-Busch and Coors. And
    there are many businesses that are blocked from being able to
    compete online because of Amazon's out-sized market power.
        People like Doug Mordaza in Michigan who launched an online
    business selling hair care products. At first, he did well. He
    quickly grew to nearly 50 employees. But Amazon's dominance
    meant that he depended on his marketplace for nearly 90 percent
    of his sales. Taking advantage of this, Amazon began to ratchet
    up the fee it charges sellers like Mordaza. By 2020, Amazon was
    taking nearly half of every dollar his company earned in sales,
    pushed his business into the red, and forced him to lay off
    most of his staff.
        America has a monopoly problem. It has rendered our economy
    less innovative. It has fueled rising inequality, and racial
    injustice. Concentrated market power has made the already steep
    barriers faced by Black entrepreneurs all but informidable.
        As Chairman Beyer noted, many Black and Brown communities
    lack basic services like grocery stores and pharmacies because
    of consolidation. The roots of all this can be traced to the
    1980s when the antitrust agencies and the courts made radical
    changes to our antitrust policies.
        They abandoned the long-standing goals of these policies,
    and instituted a new framework known as the consumer welfare
    standard. It sounds benign, but this approach has blinded
    antitrust enforcement. It has allowed, for example, large
    corporations to use their financial muscle to bankrupt smaller
    competitors and take market share without actually having to
    compete for it.
        It has led, for example, to predatory pricing which
    involves selling goods or services for low cost for a sustained
    period. We have seen Amazon repeatedly do this. It took light
    that big corporations can win simply by being bigger. A small
    business might have a better product, but it lacks the
    financial resources to sustain similar losses.
        Predatory pricing was effectively legalized by the Supreme
    Court in 1992. We see it in many other ways. Antitrust agencies
    and the courts, for example, allow vertical integration. I
    mentioned with CVS and Anheuser-Busch and how they have used
    that to block their smaller competitors from being able to
    compete.
        And third and finally, the current approach has allowed a
    few tech giants to seize control of our online market. Amazon
    is so dominant to online shopping traffic that retailers and
    brands left the site to reach their own market. So, Amazon also
    directly competes with these same businesses. Amazon routinely
    uses its gatekeeper power to exploit the businesses selling on
    its site and finally sellers appropriated their data and copied
    their best-selling products. And of course, it pockets the
    growing share of their fees, as I noticed.
        If Congress does not act to check Amazon's out-sized power,
    you are effectively allowing Amazon to function as a kind of
    private government that regulates and taxes the Nation's
    commerce and rules over those who engage in it.
        In my testimony, I outline several actions that I hope you
    will take, but I want to underscore particularly the importance
    as I close here of supporting the big tech legislation that is
    coming out of the House Judiciary Committee. It is the most
    important legislation for restoring fair markets for
    independent businesses.
        Thank you, and I look forward to your questions.
        [The prepared statement of Ms. Mitchell appears in the
    Submissions for the Record on page 54.]
        Chairman Beyer. Ms. Mitchell, thank you very much. We
    really appreciate it. And now, finally, we hear from Mr. Chris
    Edwards with the Cato Institute.

    STATEMENT OF MR. CHRIS EDWARDS, DIRECTOR OF TAX POLICY STUDIES,
                     CATO INSTITUTE, WASHINGTON, DC

        Mr. Edwards. Thank you very much, Chairman Beyer, and
    Ranking Member Lee. Thanks for inviting me to testify today.
        There are growing concerns about rising corporate power and
    some measures of industry concentration has certainly
    increased. However, globalization and technology are creating
    intense competition for big corporations today.
        Back in 1980, companies on the S&P 500 list stayed on the
    list an average of 30 years. Today companies stay on the S&P
    500 list an average of just 20 years. The fear of many big
    corporations today is that their businesses and industries will
    get disrupted and overtaken by technology-driven startups.
        The leading electric car company today in America is Tesla,
    not any of the major car companies. The MRNE technology behind
    COVID-19 vaccination was pioneered by biotech firms Moderna and
    Biointech, not any of the big pharma giants.
        We have seen startups displace corporate giants many times
    in history. In the 1970s, IBM dominated the computer industry,
    and the government prosecuted a 13-year antitrust case against
    them, But then along came Apple Computer and changed
    everything. In financial services today, swarms of big tech
    startups are cutting fees and challenging the big banks. This
    is all benefiting consumers. Tech startups are pushing prices
    down to zero in some cases. WhatsApp was a startup that now
    provides free phone service to 2 billion people around the
    world. Spotify was a startup that is now number one in music
    streaming, with its YouTube popular free service ahead of
    giants Amazon and Apple.
        The great majority of these tech-driven startups got off
    the ground with the risk capital funding from angel investors
    and venture capital. To limit corporate power, Congress should
    support policies to keep investment flowing to high-growth
    startups. Airbnb was an angel and venture capital funded
    startup that now competes against the big hotel companies.
        Elon Musk did not found Tesla. Instead, he was actually the
    original angel investor in Tesla back in 2004. So, Musk helped
    Tesla get off the ground. Moderna and Biointech were funded by
    hundreds of millions of dollars of angel and venture capital
    investments for an entire decade before the pandemic struck
    last year.
        In the news recently I noticed that Breeze Airwaves was
    launched in 2021 by the same entrepreneur who founded Jet Blue
    a couple of decades ago. The new airline is funded by $100
    million of angel and venture capital investments that plans to
    undercut the big airlines with super low-cost flights to under-
    served markets.
        So how can policymakers support startups and take on the
    big corporations? Well, first I think we need to keep capital
    gains taxes low. Capital gains are the reward for the high risk
    that investors undertake in investing in companies like Moderna
    and Tesla. Unfortunately, President Biden is proposing to
    sharply increase the capital gains tax rate, but our capital
    gains rate is already higher than the OECD average. I think a
    big capital gains tax increase, if applied to startup
    investing, would be a crushing blow to America's tech
    industries in particular.
        Now currently the Tax Code allows investors in some
    startups to defer or to eliminate their capital gains taxes.
    However, I fear that the general thrust of the current
    proposals such as Senator Wyden's plan to use mark-to-market or
    accrual accounting for capital gains would kill the benefit of
    investing in startups. No other OECD country uses accrual or
    mark-to-market accounting for capital gains.
        And lastly, I think policymakers should support open entry
    in markets. Rising regulatory burdens, as some of the other
    panelists mentioned, often advantage big companies over small
    ones. Many reforms during the 1970s and 1980s show that
    deregulation increases competition and benefits consumers such
    as airline deregulation and telecom deregulation.
        Deregulation allowed startup FedEx in the 1970s to
    revolutionize package delivery. One of the other panelists
    mentioned the craft beer industry. Deregulation in the beer
    industry in the 1970s and 1980s allowed an explosion of craft
    beer making with hundreds of new producers challenging the big
    beer oligopoly.
        So, in sum, we can limit corporate power to the benefit of
    consumers by vigorous competition from startups, and I think
    policymakers should remove barriers to entry where they can,
    and they should support low capital gains taxes to encourage
    investment in high-growth startups.
        Thank you very much for holding the hearing.
        [The prepared statement of Mr. Edwards appears in the
    Submissions for the Record on page 66.]
        Chairman Beyer. Mr. Edwards, thank you very much. And thank
    you, all of you, for your testimony. We will now begin the
    round of questions, and I get to go first.
        So, Ms. Mitchell, in Senator Lee's opening statement he
    talked about regulation being the cause of corporate
    concentration. Mr. Edwards just gave some examples of how
    deregulation led to more small business growth. But in your
    talking about the challenges that small businesses face, you
    did not mention regulation at all. Do you see regulation as the
    primary reason why small businesses are failing to thrive? Or
    is it the absence of antitrust enforcement?
        Ms. Mitchell. It is something of a combination of both but
    let me put a little bit of perspective on that, which is that
    what we are seeing is that as large companies amass market
    power, they also gain political power. And they are using that
    power to rewrite legislation and regulation in their own favor,
    and to disadvantage their smaller competitors.
        One place where we see this is in the Tax Code. The very
    complicated Tax Code with lots of loopholes that large
    corporations that are designed to large corporations to put
    through. As a result, you have a situation where Amazon for
    many years has paid effectively no Federal taxes, income taxes.
    And meanwhile, the local store down the street in your
    neighborhood is paying an effective Federal tax rate of about
    25 percent. That is an example of how our regulations are being
    warped by concentrated market power to disadvantage fair
    competition and small businesses, workers, and communities.
        Chairman Beyer. Thank you. Let me move on, limited time.
    Dr. Philippon, among your charts you showed that the high
    profits that corporations have, 9 percent of GDP rather than 6
    percent, has not led to higher investment, but rather an
    increase in share buybacks.
        Do you see a specific policy proposal that could rein in
    those share buybacks?
        Dr. Philippon. Well, I think the best place for your
    proposal in general in that case would be to improve
    competition. The fact that they make a lot of money is not,
    again, by itself, a bad thing. But in a competitive economy,
    they would be eager to reinvest their profits in order to grow
    their company faster.
        So if we make competition more intense, I think that the
    pay-outs by themselves will decrease simply because some will
    be forced to reinvest more of their profits. Now the difference
    between dividends and buybacks is not, in my view, necessarily
    a faster duration.
        Chairman Beyer. You also said that if we had competition--
    if we had not had this concentration of corporate power, the
    GDP could be 5 percent higher. Is this a one-time increase of 5
    percent? And would the economy grow more quickly if we had this
    decrease in corporate concentration?
        Dr. Philippon. So, this is a very deep question. The number
    I quoted was for the one-time increase, because this is the one
    that we can know more. Because it is only assumed that some
    have more pressure and hire more, which is not a controversial
    statement. It is every economy that can agree with that.
        And so, then you can quantify the 5 percent one-time gain.
    And there is also evidence that competition is good for
    innovation, in which case it would also improve the growth rate
    of the economy. I did not include that number because it is
    hard to quantify, but it is definitely positive. So that would
    add something.
        Chairman Beyer. Good. Thank you very much. Dr. Bahn, I have
    a complicated question for you. On page 3 of your remarks, you
    have this beautiful graph, the Herfindahl-Hirschman Index. And
    it shows the concentration of monopsonistic labor market power.
        It reminded me awful much about a political map on how
    Presidential elections are. Is there an alignment, do you
    think, between political leanings and monopsonistic market
    share? How would you interpret that?
        Dr. Bahn. What I am really saying in that map that I
    included is that rural areas kind of have really high levels of
    concentration, and so when there is a lower population there
    are fewer suppliers who end up being dominant in a really small
    area, but I don't know if we can say anything speculative about
    the connection between later market competition and political
    leanings in that area.
        Chairman Beyer. I do think we need to take that wonderful
    chart and give it to some political scientists across the
    political spectrum to see how to interpret that. That is very,
    very interesting.
        I will be back with more, but now since Senator Lee is off
    voting, I believe, I will now recognize the Ranking Member on
    the House side of the Joint Economic Committee, my friend Mr.
    Schweikert, from Arizona.
        Representative Schweikert. Thank you, Chairman Beyer, This
    is actually an area that Mr. Beyer and I have actually had
    conversations with over the years, and it is of great interest.
    But I think I am going to give you my perspective on why the
    regulatory side is part of the problem in our failure of
    design. Let me give you a specific example, and then I am going
    to turn to Dr. Philippon and Mr. Edwards to see if my
    disruption theory fits some of your own writing.
        I have spent years sitting through hearings on Dodd-Frank.
    The promise of Dodd-Frank was it was going to become a
    disruption in financial markets, and we were going to see all
    sorts of new products and new competition.
        Now, a decade later, we functionally see a concentration of
    the money center banks. And it turns out there is this term
    called ``regulatory arbitrage.'' Which means you now needed a
    much bigger book of business to spread your regulatory costs,
    therefore it wiped out small regional institutions. Yet, we had
    facts and the data that said the ultimate thing that created
    safety and soundness was equity capital.
        You could have dramatically dropped the regulatory burden
    on those regionals and small institutions and kept them
    dramatically safer and had them chip away at the size of the
    book of business of the money centers. I use that only as an
    example because I believe I can show you that from everything
    from health care to pharmaceuticals, to manufacturing, we are
    going to have to look in the mirror, Chairman Beyer, that much
    of what we do in Congress, whether we want to recognize it or
    not, we act somewhat like it's a protection racket. We design
    legislation specifically directing certain types of products,
    certain types of technologies, certain types of reimbursement,
    instead of understanding the disruption of technology that
    surrounds us.
        The last example I will give before the questions is, to
    think about all of our discussions in parts of our country that
    are under-served with broadband, but yet how often in those
    very conversations do we understand low Earth orbiting
    satellites now cover every part of North America and have
    broadband. But yet we still promote the same type of
    legislative subsidies that we have been doing for 20 years,
    instead of understanding the technologies that create the
    disruption.
        Mr. Edwards, I understand your focus is on capital markets.
    Beyond just capital gains, what else would you do in capital
    markets to allow those small entrepreneurial upstarts, whether
    it be from a minority community or just some folk's creative at
    universities, to be able to have an equity capital access so
    that their business plan is not to just be bought out by one of
    the dominant players? What would you do in the capital markets?
        Mr. Edwards. Right. Well, Congress has actually made quite
    a bit of progress in that respect particularly with the Jobs
    Act in 2012.
        Representative Schweikert. And I would like to mention two
    of those bills were mine.
        Mr. Edwards. Well thank you very much. I think that idea of
    opening up investment in private equity, in venture capital, in
    angel investment to more regular Americans, not just wealthy
    accredited investors, was the way to go. The legalization of
    equity crowd funding. I think that is fantastic. I think that
    opens up more diverse flows of money to more diverse types of
    startups. So I think that was all fantastic.
        You know, there is a basic problem that the regulatory cost
    of being a public company have gone up, which is one of the
    reasons why we have far fewer IPOs today, and far more of these
    companies like Uber and the like stay private longer, which I
    think is a real problem because it deprives middle class
    investors from gaining the benefits of these big boosts in
    value from these startup companies.
        Representative Schweikert. Thank you, Mr. Edwards.
        Dr. Philippon, in the last half a minute, touch on some
    regulatory arbitrage as being one of the barriers to disruption
    in our marketplace to bringing new products, new costs and new
    opportunities.
        Dr. Philippon. Right. So, it's specifically financing----
        Representative Schweikert. It could be anything,
    particularly health care as the most regulated.
        Dr. Philippon. Yes. So, I think that finance and health
    care stand up as two industries where the balance of regulation
    and efficiency has not been very good. So, in finance, clearly,
    we set the tradeoff between safety and competition, and we try
    to balance the two. But if you look clearly at the data, you
    see that I don't think we have found the right balance.
        The one thing I would point out, though, about Dodd-Frank
    and the lack, it gets better but it is not perfect. And some of
    the lack of competition actually comes from the lack of access
    to data from some of the new startups.
        But the two main advantages of income from large banks are
    (a) the--insurance and (b) the data that they have. If you
    could induce them to share their data more, you would have more
    entries into the market.
        Representative Schweikert. We actually have new legislation
    for securitized debt to flow information out.
        Chairman Beyer, thank you for your patience.
        Chairman Beyer. Thank you, Congressman Schweikert. And now
    I present our distinguished author, Senator Klobuchar.
        Senator Klobuchar. Thank you very much, Mr. Chairman. I
    want to say one thing I did not say in the opening. I really
    come at this from a point of wanting to rejuvenate our
    capitalist system. And as someone who was in the private
    sector, as I was, representing companies for nearly 15 years, I
    am not as successful in the private sector as you, Mr.
    Chairman, but I come at it that way: How can you spur
    innovation? And how can you make sure that indeed we have the
    next Google, and we have the next Pfizer, and that we are
    making sure that these startups have an environment where they
    cannot only start but they can thrive?
        Mr. Philippon, could you talk about--you have some shocking
    data there about the decline in the amount of competition, and
    the effect that if that continues really across industry. I am
    not just talking about tax. Without us at least doing something
    to enforce the antitrust laws, and why Adam Smith himself, the
    Godfather of capitalism, warned against a standing army of
    monopolies that we must always be aware of in order to make
    capitalism work.
        Dr. Philippon. Thank you very much, Senator.
        So, yes, I think the issue of monopoly is an old one. But
    to be fair, the reason it is tricky to solve, and I think it is
    something I do not of course have time to talk about in my
    remark, is we have to acknowledge that we still have a lot of
    uncertainty. To return to something that was said earlier, we
    do not know for sure what is good concentration and what is bad
    concentration. And in the modern knowledge economy, it is also
    that intangible assets have become more and more important.
        And so, with the rise of this type of asset, it becomes
    sometimes difficult to decide, especially in real time, what
    looks like legitimate concentration, earned by just being small
    term--from illegitimate concentration.
        So that is why I think that in the policy framework,
    especially today given the uncertainty, I think that we should
    have a very broad approach. I don't think that antitrust itself
    could solve the issue. I don't think regulation can solve all
    the issues, especially as we discussed that regulation can cut
    both ways.
        So, I think we need at the same time revival of antitrust,
    reviewing of regulations, and specifically geared toward again,
    price transparency; in all the markets where we see the biggest
    abuse, we see lack of price transparency and barriers to entry.
        If we focus on these two things, we go a long way toward
    improving the situation.
        Senator Klobuchar. OK, thank you. Dr. Bahn, along those
    same lines, as you know I have introduced legislation that is a
    broader approach to reforming our antitrust laws. And do you
    think we should--and I appreciate the work of the House in
    their incredible hearings on tech, and we are working with
    Representatives Cicilline and Buck to introduce versions of
    their bills. But could you talk briefly about updating our
    antitrust laws to address concentration in markets, including
    by the way labor markets, something you have talked about?
        Dr. Bahn. Yes, Senator Klobuchar. The new legislation that
    was included in your proposal would codify, clarify, and
    strengthen antitrust law to protect workers, and this is a
    really important guide for Federal antitrust agencies and
    judges in antitrust cases to have the authority to address
    anticompetitive conduct but clearly lack the means to do so.
    So, it is really critical that they have that guide, and that
    it is clearly defined as an issue in labor markets that need to
    be addressed.
        Senator Klobuchar. Very good. And maybe you, Ms. Mitchell--
    by the way, thank you for having the smart decision to go to
    McAllister College in Minnesota--Ms. Mitchell, could you talk a
    little bit about the President's Executive Order and why you
    think it is so important? Because as we look to update our
    antitrust laws, as so many Congresses before us have done from
    the Clayton Act to Taft Hartley and beyond, and work that has
    been done in the past with labor and other things, what do you
    think we could be doing with the Executive Order? And why is it
    important to do both things at the same time?
        Ms. Mitchell. Thank you, Senator. And I really appreciate
    your leadership on this issue and the legislation that you have
    introduced. The Executive Order is extraordinary in that it is
    a repudiation of I think where we have gone wrong. As President
    Biden said, we have run a 40-year experiment and it has really
    failed. America is worse off on so many fronts.
        The Executive Order I think will begin to harness a variety
    of tools within the agencies to address concentration and
    create more fair markets for farmers, small businesses, working
    people, and communities. I also think it is really important to
    underscore that this is not a problem that can be solved
    without Congress, because the courts have taken our laws so far
    off track that it is really absolutely imperative and urgent
    that Congress step in.
        Senator Klobuchar. Alright, thank you very much. And thank
    you, Mr. Chair. Fourteen seconds over, for a Senator that is
    pretty good.
        Chairman Beyer. [Laughing], thank you, Senator, very much.
    Let me now recognize our honorable friend from Columbus Ohio,
    Congresswoman Beatty.
        Representative Beatty. Thank you so much, Chairman Beyer,
    and certainly to all of my colleagues, and to the witnesses.
    Thank you for all of your expertise.
        My first question is going to go back to you, Dr. Bahn. In
    your testimony you discuss the rising usage of the non-compete
    agreement, even in the case for low-wage workers. You also
    quoted a lot of information by the 20th Century Economist Joan
    Robinson, who has also examined the lack of--how the lack of
    competition led to unfair and inefficient economic outcomes.
        I read the study, and according to the study of business
    owners by the Economic Policy Institute, they found that nearly
    a third of businesses ask all of their employees to sign a non-
    compete agreement. The Biden Administration recently signed
    Executive Orders on competition, asking the FTC to ban this
    practice, with very few exceptions.
        What effect do you think this will have on workers in
    competition?
        Dr. Bahn. Thank you so much, Representative Beatty. I think
    that the non-compete agreement issue is a really perfect
    example of a competitive model not bearing out in the real
    world. If anything, we think workers paid more for accepting a
    non-compete are finding the opposite and were finding that they
    are particularly prevalent for low-wage workers, too. Over 20
    percent of low-wage workers are bound by a non-compete.
        But what happens when you ban the enforcement of the non-
    compete, for example as Oregon did in 2008, wages in Oregon
    went up more quickly for workers in jobs that were previously
    covered by a non-compete compared to jobs that were not
    previously covered by a non-compete. So, there is evidence that
    shows that when you ban them, they the wage will go up more
    quickly.
        The key piece to this that I just also want to mention is
    that enforcement of labor protections through the Department of
    Labor is also a critical tool to ensure that workers are not
    exploited by anticompetitive conduct. So, I think it is really
    critical to make sure that our enforcement agencies,
    particularly the Department of Labor, can go after some of this
    misconduct as well.
        Representative Beatty. Thank you so much. Maybe Ms. Wilson
    or Dr. Philippon, for the last--or the past 30 years, our
    economy has seen a troubling trend of increasing wealth
    inequality. I am Chair of the Congressional Black Caucus, and
    we look at the inequities in the racial wealth gap.
        It is important for me to ask this question: I was reading
    another study, and according to the St. Louis research, in 1889
    the top 10 percent of Americans owned 67 percent of the United
    States' wealth. And then more recently, in 2016 or 2018, that
    number was 77 percent. The bottom 50 percent of United States
    households saw their share of wealth decrease by 67 percent
    over that same period of time.
        Has growing the market in a monopolistic behavior market
    contributed to this inequality, do you think? And if so, how?
        Ms. Mitchell. Sure. Thank you for the question. And, yes,
    when you concentrate economic power and decision-making, you
    inevitably concentrate income and wealth. So, we have seen a
    small number of people gain enormously in this economy, and
    more and more people are being left behind and harmed by this
    consolidation. Are the geographics mentioned in this? So, we
    see a few areas that are seeing good jobs, and lots of other
    cities and regions in rural areas that are being left behind.
    And there is a very profound racial dimension to this.
        We have lost lots of Black-owned businesses and banks. We
    have seen, as Dr. Bahn talked about, the effects on wages that
    have been particularly felt in industries that
    disproportionately employ people of color. More and more
    employers are able to take advantage of both racism and
    economic power to undermine their workforce, and that is
    serious.
        Representative Beatty. I will give you my last 30 seconds.
        Dr. Philippon. Thank you very much. So, I fully agree with
    what has been said. Both monopoly power and monopoly power will
    increase inequality. Very much along the line of Dr. Bahn said
    earlier, people who happen to be in the wrong labor market are
    going to see their wages depressed by the monopoly power of
    local employers. The same thing happens at the more
    microeconomic level, because when monopoly rents are high, the
    shareholder will gain more. Now of course if every family was a
    shareholder, then everything would be fine. But if you look at
    the actual distribution of share of stock, it is very
    concentrated.
        So, when you shift money away from workers, you also
    increase inequality significantly.
        Representative Beatty. OK, thank you. And my time is up.
    Thank you, Mr. Chairman.
        Chairman Beyer. Thank you, Congresswoman Beatty. Now let me
    recognize the gentleman from Madison, Wisconsin, Congressman
    Pocan.
        Representative Pocan. Thank you very much, Mr. Chairman,
    and thanks to all the witnesses. It is a great hearing. I
    appreciate it.
        I think, Dr. Philippon, let me ask you the first question.
    I know you have done a lot of work around broadband. I have co-
    chaired a bipartisan Rural Broadband Task Force--I'm sorry, a
    caucus, and I also served on Jim Clyburn's Rural Broadband Task
    Force. I live in a rural town of 830 people, and about three or
    four years ago I finally got broadband. Prior to that, I paid
    $300 a month for 40 measured gigs of broadband because I got a
    half-price sale for that amount.
        Many states like Wisconsin, and I think the majority of
    states have laws that you pretty much have to get broadband
    from the provider that has your area. We were not allowed to
    form a co-op. We were not allowed to buy from a neighboring
    community. So, we either went without broadband, or when a
    company got free money from the Federal Government, they
    decided to expand it into our area.
        You have done a lot of work in this area. Can you talk a
    bit about this, what we can do to try to make it so that people
    can have affordable broadband? My broadband now is about $90 a
    month in that rural area.
        Dr. Philippon. Thank you very much for the question. That
    hits close to home, because that is one of the motivations for
    writing the book, because I came to the U.S. from Europe 20
    years ago. And at that time, connections to the internet were a
    lot cheaper in the U.S. than in Europe because that market was
    highly competitive. And so it was a shock for me to see that.
        Over the following 20 years, it completely turned around
    and so now it is actually cheaper to get broadband access in
    Paris or Germany than it is to get access in Washington, or New
    York.
        So clearly the name of the game will be to increase
    competition. One of the issues you have in the U.S. is that the
    setup of democracy is state-by-state. And so, it is very hard
    to find a solution that would work across the entire country.
    It has to be state-by-state.
        And that means that also I don't think every extension is a
    solution. We think that including competition by bringing in a
    new provider is going to be tricky, at least in the short term,
    which is why probably you have to go state-by-state by first
    getting directly the prices that are charged, and then state-
    by-state bring competition. I don't think jumping directly to
    having many more providers is going to be practical, even
    though it would be ideal.
        Representative Pocan. Great. Thank you very much. Ms.
    Mitchell, I have a question for you. So, I am a small business
    owner since I was 23 years old, but a small business of 5
    employees. These days, they refer to that as a micro business,
    which most of us hate as a terminology if you are under 20
    employees.
        But as you have pointed out, the amount of business revenue
    for small businesses has halved since the 1980s. And even when
    we were putting together regulation to help small businesses
    through COVID, honestly, I fought with my own Party at times in
    understanding small businesses, because we don't have the same
    year-to-year sort of sales. We don't have, you know, issues
    that a bigger business has.
        Can you talk a little bit about what are the main threats
    that you are seeing to those small, independent businesses?
    And, you know, what we could do in the short term around that?
        Ms. Mitchell. Thank you for the question. Yes, micro
    business. The other one I think is ``Mom & Pop'' that people
    really hate. That was a sort of derogatory comment and I think
    many business owners hear it.
        Yeah, in our research and in the surveys we have done, we
    have done large national surveys of independent businesses, we
    do see issues of market power really top that list. There are
    other concerns, you know, the high cost of health insurance for
    example is one. But we have seen lots of different kinds of
    market power issues. The incredible fees that Visa and
    MasterCard are able to charge, and you can't say no to the
    credit cards. You have restaurants that, the DoorDashes of the
    world who have also become sort of gatekeepers charging these
    big tolls, and there is not enough competition there for
    regulation.
        I am really particularly struck by the fact that I think
    Amazon has just an incredible reach in a different market. Its
    gatekeeper power across a lot of different sectors. The online
    is where everything is moving. And if you have a company that
    controls your access to the online market and competes against
    you, it is a fundamental problem. And that is why I think the
    big tech breakup bill is so crucial.
        Representative Pocan. Yes, and we also let our employees go
    to the restroom and that somehow makes us less competitive
    against the Amazons of the world, unfortunately. But I fully
    appreciate that.
        I have 10 seconds, Mr. Chair, and I will yield back.
        Chairman Beyer. Thank you, Congressman, very much. And now,
    if Senator Lee is there--I notice his camera is on. I see his
    staff person occasionally. But if not, I would love to yield to
    my good friend from San Diego, Congressman Peters.
        Representative Peters. Thank you, Mr. Chairman. Thanks for
    holding this hearing. At the risk of repeating some of what
    Congresswoman Beatty was talking about, I did want to ask a
    little bit about non-competes.
        According to analysis from the Economic Innovation Group,
    greater enforceability of these contracts reduces new firm
    entry by 18 percent. And states that enforce non-competes tend
    to have lower prevailing wages than states that do not enforce.
        Overall, one in five workers without a college degree is
    subject to a non-compete agreement, and 30 to 40 percent are
    not asked to sign the agreements until they have accepted the
    position.
        Dr. Bahn, I know you have looked at this, and I want to
    just clarify. Is there any reason a worker that does not have
    access to proprietary information should be subject to a non-
    compete agreement? What would those circumstances be?
        Dr. Bahn. I think there are very few circumstances in which
    non-compete agreements are especially being compelled to sign a
    non-compete agreement has an economic justification such as
    trade secrets. I think, as you are noting, by and large it
    seems that workers are facing less than optimistic conditions.
    They cannot bargain over the conditions of the wage offer that
    they receive, so they have to accept them anyway, and it tends
    to be some of these low-wage workers with Jimmy Johns, or in
    the ArcTech example of a player who had non-compete workers for
    no economic justification.
        And as I mentioned to Congresswoman Beatty, it lowers
    wages. It reduces wage growth. It really is not good for
    particularly low-wage workers in these markets.
        Representative Peters. So, you mentioned that. Are there
    other particular industries where we know this has been
    especially damaging going from the ability from this labor
    market to be effective?
        Dr. Bahn. I am not aware that there are particular
    industries, but I do know it is something like 20 percent of
    workers who earn below the median wage in the U.S. are subject
    to a non-compete agreement, which is a really high level if we
    consider that low-wage workers are less likely to be in those
    occupations that we could say justifiably have some sort of
    economic justification for signing a non-compete agreement.
        Representative Peters. There was a mention earlier of the
    President's Executive Order, which I certainly welcome, and I
    hope it goes a long way to help workers, although I do think
    that--and maybe you could tell me if you agree--Congressional
    action is important in this space. I introduced the Workforce
    Mobility Act, which effectively bans non-compete agreements
    except in limited circumstances like protecting trade secrets.
        In San Diego, the innovation ecosystem is the backbone of
    the economy. We need policies to make sure that workers can
    compete everywhere.
        Do you believe, Dr. Bahn, that Congressional action is
    important in this space?
        Dr. Bahn. I absolutely do. And I think encouraging mobility
    in the labor market is one of the most important things we can
    do to have a dynamic and healthy economy. So I think policies
    that are exclusively designed to encourage worker mobility are
    what we need to have growth in our labor market going forward
    from the crisis. And we need explicit legislation.
        The current Executive Order is a good start, but it is just
    that. It encourages the people to address the issue, and I
    think the responsibility of the Department of Labor is really
    critical. They have the infrastructure to address labor market
    violations, and they need to do so.
        Representative Peters. Maybe I will ask, Ms. Mitchell, do
    you have an opinion on the extent to which non-compete
    agreements are a downward force on starting new small
    businesses in local economies that have been hurt by the
    pandemic lately?
        Ms Mitchell. It is absolutely a problem. I mean, not only
    can workers covered by these non-compete agreements not go out
    and start their own enterprises in that same field that they
    have skills in, but it also means if you are a new startup your
    ability to track those skilled workers is also key. So, it has
    a huge effect on startups.
        Representative Peters. Right. Thank you. I wanted to ask a
    question of Mr. Edwards. Your testimony talked about the
    importance of open markets. And I wanted to give you the chance
    to respond to this notion, this concern that has been raised
    about firms that control the market and compete against the
    people who are allowed in that market. Doesn't that create an
    anticompetitive situation that inhibits the ability of private
    capital invested in new innovation?
        Mr. Edwards. Well, you know, big corporations have--I agree
    with the other panelists about regulations and the like are
    preventing our open entry. But a lot of huge corporations like
    Amazon got where they are because they used high productivity,
    and they stay ahead of the pack by investing massively in R&D
    which has broad-based spillover benefits for the whole economy.
        I would not----
        Representative Peters. I guess the concern I would raise is
    that Amazon has become the market, and they are competing
    against the people in the market, and I think that creates an
    issue. And I take your point on private equity investment and
    on capital gains. I don't necessarily disagree with that. But I
    think that is something that has not been addressed, and it is
    still a concern for me.
        I have exceeded my time, so I yield back. Thank you, Mr.
    Chairman.
        Chairman Beyer. Thank you, Scott, very much. And David and
    Scott, we are going to do another round of questions while we
    await the return of Senator Lee who has not had a chance to do
    his first round of questions but should be back shortly.
        So, I will begin, but please think about it and you are
    welcome to ask again. Let me start with Dr. Philippon.
        Mr. Edwards talked about supporting risk capital via lower
    taxes on capital gains. Obviously, that is very much in play
    with the potential Biden tax plan. How much of a challenge is
    capital today in the market? And is competition essentially a
    money problem?
        Dr. Philippon. Thank you very much. I think it is a very
    important question. My reading of the evidence today is that it
    is not the volume of financing that is constraining innovation.
    I mean when you talk to industry people, they tend to argue
    that they--money floating around to fund----.
        So, I don't think the supply of funds are the issue. So, I
    don't think they think that increasing taxes is a reasonable
    way would have a very large effect there. But I do think one of
    the issues, if you look at the exit of firms that do get
    financing, the fraction of firms that decide to go public and
    remain independent has decreased significantly over time. And
    more and more of the firms now, whether forcefully or not, end
    up being acquired.
        And so, I think that in my mind is the bigger issue.
        Chairman Beyer. Thank you very much. Mr. Edwards, I will
    get back to you in just a minute on that. Dr. Bahn, you talked
    about labor's share of income has declined and argue that a
    larger share of income would be a very good thing for workers.
        Would it also lead to faster economic growth? Or what is
    its impact on economic growth?
        Dr. Bahn. Sure. Thank you for the question. So, as you
    noted, the labor share of income has been declining. The way I
    interpret this is that as far as constraining monopsony power
    has decreased over time, at the same time that we have seen a
    growth in capital and less to labor. As Mr. Philippon noted,
    rising profits have gone to sales rather than investments for
    innovation growth. And finally, economic research has suggested
    that the labor share of income is positively correlated with
    the growth in the long run. So, it is important for the entire
    economy to ensure that workers are earning the value they
    produce for growth.
        Chairman Beyer. You know, one of the big issues for
    Democrats and Republicans, as long as I have been here, been
    trying to come up from the more anemic economic growth of the
    teens, to much faster growth in the next generation.
        And then, Ms. Mitchell, we now have these credit deserts
    with the disappearance of community banks, and just the big,
    big banks everywhere. The hope was that FinTech firms would
    fill that gap. Do you see any evidence of that happening?
        Ms. Mitchell. No, on the Fin side, the kind of lending at
    the community banks is long term where they are engaged with
    the business, helping them grow and develop over time, and
    doing that with reasonable interest rates, and on reasonable
    terms. The FinTech operations that we see charge very high
    rates on short-term loans. They are not based in the same
    community. When they are under stress during a financial
    downturn, for example, they may call those loans very quickly,
    exactly what you do not want to have happen to a business
    facing a downturn.
        So those are not good replacements. I am deeply worried
    about the decline of community banks and all of our community
    banks.
        Chairman Beyer. Great. Thank you very much. I will now
    yield to Senator Lee, who has returned to us. Senator, thank
    you for coming back.
        Senator Lee. Thank you so much, Mr. Chairman.
        Mr. Edwards, I would like to start with you. American
    businesses are some of the most innovative in the world. As you
    note in your testimony, we are global leaders in computer
    technology and business services, and in pharmaceutical
    development, just to name a few.
        The most disruptive innovators that is where American
    businesses and workers are on the leading cutting edge and are
    often pioneered by new companies entering an existing market to
    challenge an outdated product or service.
        Now you mentioned that the threat of higher taxes could
    make it harder to fund future innovative startups. Can you
    elaborate on how tax hikes or threatened tax hikes could make
    big businesses even bigger? And why market-based competition is
    such an effective check on corporate power?
        Mr. Edwards. Well, venture capital is a unique American
    success story. It is the reason why lists of the most
    innovative companies in the world, the great majority of them
    are American because we have had since the late 1970s this
    massive flow of venture capital partly triggered by a famous
    1978 cut in the Federal capital gains tax rate.
        Chairman Beyer talked about, a little bit about the flow of
    funds to startups. It is true. There is a huge flow of funds
    through startups now, which is fantastic, but I hope they don't
    break the American system of moderate capital gains taxes and
    everything we have going on in places like Silicon Valley.
    Let's not break that.
        We are doing great with launching new high-growth
    businesses. That is the way to challenge these big corporations
    going forward.
        Senator Lee. Well thank you. My own State of Utah is
    fortunate to have had strong economic growth in recent years,
    as well as one of the strongest pandemic recoveries. Utah
    currently has one of the lowest unemployment rates in the
    Nation, and its GDP growth far surpasses the national growth
    rate. Our population growth over the last decade was also the
    highest in the Nation.
        I attribute the state's resilience and continued economic
    prosperity to its business-friendly policies and its strong
    communities, families, and social ties, this is a concept we
    refer to as ``social capital.''
        So, Mr. Edwards, as you pointed out in your research, many
    entrepreneurs face increasing tax and regulatory challenges at
    the Federal, State, and local level. These government
    impediments make starting and maintaining a thriving business
    needlessly complex and costly. And at the Federal level, the
    REINS Act would give Americans an important check on costly
    Federal regulation by helping to hold Executive Branch agencies
    accountable. And I believe the REINS Act would make a
    meaningful difference for small businesses and entrepreneurs in
    the long term in particular.
        In your view, what are some of the other important reforms
    that might help clear the path for innovation and support the
    new business formation?
        Mr. Edwards. Well, I think this is a problem, and I think
    Dr. Philippon has talked about this in his research. The
    regulatory problems at all three levels of government block
    entrepreneurship. I mean, I applaud President Biden for looking
    at the issue of occupational licensing.
        As you may know, the share of U.S. jobs that have the
    required occupational licenses have gone up from 5 percent in
    the 1950s up to over 20 percent today. At the state level,
    there are Certificate of Need laws that block investment in
    health care. There is a big problem with the U.S. Air Force.
    The U.S. Air Force, the way they are run is monopoly governing
    authority. Hence, the blocked new airline entry into the
    business.
        So, I think there are problems at all three levels of
    government on the regulatory matters. My last point, back in
    the 1970s deregulation of airlines, and trucking, and many
    other industries was very much a bipartisan reform approach
    that everyone agrees was very successful.
        I mentioned the beer industry, which Jimmy Carter
    deregulated at the Federal level. Airlines, and many other
    things. So, I think deregulation to help upstart businesses can
    be bipartisan.
        Senator Lee. So, with regard to the airports, are you aware
    of any policy proposal on how we can fix that issue today? I
    have seen that, where you have got slots out there carefully
    allocated, and that has made it almost impossible to have new
    entrants. How do you fix that?
        Mr. Edwards. So, there's some Brookings' economists who
    have written extensively about that. There is a problem with
    dominant carriers in hub airports who write these contracts
    with a government airport authority that exclude new entrants.
    The way to fix that is the way they have done it in Britain,
    which is you privatize the airports like Heathrow as a private
    airport has a much bigger incentive to open gates to real-time
    sort of pricing to allow upstart airlines to come in and buy
    gate space. And a lot of U.S. cities have blocked.
        A last point on this is, we have a government authority in
    New York that owns all three airports. That makes no sense. And
    in D.C. the same authority owns National and Dulles. Why is
    that? Why not privatize the airports and let, for example,
    Reagan and Dulles compete with each other?
        So, I think airports are something that again could be a
    bipartisan reform area.
        Senator Lee. Well said. Thank you very much. Thank you, Mr.
    Chairman.
        Chairman Beyer. Thank you, Senator, very much. I will now
    recognize--and, Senator, we are doing a second round. So, if
    you are inclined, we will come back around to you again.
        Congressman Peters, the floor is yours.
        Representative Peters. Thank you, Mr. Chairman. I will pick
    up again with Mr. Edwards just to see if I can get your answer
    on the concern raised about if it is true that Amazon might
    have so much owned the market and be competing against the
    market at the same time, how does that not discourage
    investment innovation?
        Mr. Edwards. Well, I think you can see Amazon both ways. I
    mean, Amazon has been successful because it has been incredibly
    productive, and it has provided opportunities for millions and
    millions of small businesses.
        I can see that there is an issue that they also compete
    against small businesses, but there is no reason why new
    platforms can't arise with a different model and compete
    against Amazon. I really don't believe that--I think any big
    corporation can be beat by upstart competitors.
        When you look at history, I mean 15 years ago Apple
    dominated music streaming. Now Spotify has blown them away. It
    was a small startup in Sweden. So, I think upstarts can take on
    any company, even the biggest.
        Representative Peters. You are not really arguing that that
    is a competitive model, but you are saying someone can just
    rise up and replace Amazon or compete with Amazon is what you
    are suggesting?
        Mr. Edwards. Absolutely. It is not going to happen
    overnight, but it could well. I don't see any reason why a
    marketplace could not gravitate to new platforms in the future.
        Representative Peters. Did you want to address why it is OK
    to have non-compete agreements in the fast-food industry?
        Mr. Edwards. So, it's interesting you mentioned you're from
    California. California has had a ban on non-compete for over a
    century. I think that has actually been important for the rise
    of Silicon Valley and high tech in places like San Diego. So, I
    actually think that is a space issue. Space can solve that
    problem any time they want if they desire.
        Representative Peters. I appreciate that, and I appreciate,
    Mr. Chairman, the chance to hear both sides of it, and I think
    we are informed. So, thank you very much and I yield back.
        Chairman Beyer. So, thank you, Congressman Peters. I now
    recognize Congressman Schweikert for a second round.
        Representative Schweikert. Thank you, Mr. Chairman. This is
    one of those conversations where I wish I had one of my charts
    because there is a hierarchy here of what creates a competitive
    disruptive economy, and then helps remove or compete away
    dominant market players.
        We see what the Biden Administration has just recently
    done, and what you have actually just talked about, on some of
    the Executive Orders using the regulatory mechanism.
        My concern--and I want to come back to this--is that many
    things you and I and our brothers and sisters in Congress do,
    are actually anticompetitive. And yet often we don't realize
    we're doing it.
        I appreciate, Mr. Edwards, the comment on the Jobs Act, but
    that is almost a decade ago. And it took how many years to even
    get an incremental crowd source funding mechanism, and even
    then, it barely exists because of the bureaucracy around it.
        In many ways, we empower the bureaucracy in such a fashion
    that an economy that should be running on disruption and that
    innovation and that creates the price pressures, and the new
    systems of delivery, you and I keep supporting regulatory
    environments, reimbursement in health care, and others where I
    don't think we realize we are not being agnostic.
        Think of some of the things we are doing on energy right
    now where we call out specific types of energy, instead of
    doing a piece of legislation that says we're agnostic. We don't
    care if it has these attributes. We don't care what the
    generation source is. Instead we let innovation and disruption
    take place.
        Mr. Edwards--and I know your specialization has been a
    taxation capital market--what do we do as policymakers to
    maximize that disruptive type of economy that in many ways
    gives everyone a fighting chance to be that successful
    entrepreneur?
        Can you think of items within both the Federal bureaucracy
    and our legislative agenda that would help that happen?
        Mr. Edwards. Well, I mean I am in favor of further
    liberalization of the rules on accredited investors. There is a
    good argument----
        Representative Schweikert. That is also my other bill.
        Mr. Edwards. Right. Right. I mean there's a good argument
    that we shouldn't even have those rules. I think giving middle
    class Americans access to investment in private equity,
    expanding and liberalizing those rules, is an important thing
    to do.
        You know, with capital gains, capital gains is really
    important not only for the investors--I mentioned angel
    investors and venture capital--but for the entrepreneurs
    themselves. If you have a high capital gains tax rate, people
    are not going to want to be entrepreneurs. They are going to
    want to go for salary jobs. And also, you know, about three-
    quarters of all tech firms in Silicon Valley use stock options
    for employees where the benefit, again, is capital gains.
        So, Silicon Valley companies are cash poor. What they have
    is they can offer stock options. That has been hugely important
    for Silicon Valley and other tech clusters.
        So I am saying let's not break what has worked in the
    United States for our tech industry.
        Representative Schweikert. Any thoughts of what we could do
    in the tech regulatory world for the true sort of micro
    entrepreneur? Such as, the minority woman who lives down the
    street from me who is actually starting a series of barbeque
    trucks.
        Mr. Edwards. So I just published a study a month or so ago
    at Cato looking at State and local regulations, and I listed
    about 15 or 16 different types of regulations.
        One very interesting area that is home-based businesses.
        Two-thirds of all American businesses are launched at home.
    But a lot of cities have tight zoning laws that prevent home-
    based businesses from starting.
        Apple was started in a garage. Hewlett Packard was started
    in a garage. Amazon was started in a garage. Home-based
    businesses are really important, and that is something that
    should be an area of bipartisan reform.
        Representative Schweikert. Chairman Beyer, we are back to
    the need for the chart of both the things we can do at the
    regulatory level for those companies that are using their
    oligopoly power, but all the way down to regulatory
    bureaucracy, State and local, and those in the Federal
    Government from what we do tax-wise and becoming technology
    neutral, whether it be from health care to environment, to
    other things. We could probably have that disruptive revolution
    that creates a much more egalitarian economy. And with that, I
    yield back.
        Chairman Beyer. Congressman Schweikert, thank you. I am
    going to have to get you together with Mr. Hagga of our Joint
    Economic Committee team who is the only other person I know who
    is as chartphilic as you are. And with that, let me--I want to
    thank each of our witnesses today for their expert
    contributions. Competition is foundational to a strong economy.
    It helps place the promise of the American Dream within reach
    for workers and entrepreneurs, but the concentration of
    corporate market power subverts this promise, worsening
    economic inequality and hindering productivity and economic
    growth, as we have heard again and again this afternoon.
        To promote shared prosperity, Congress must continue to
    advance an economy where all can compete and contribute. So
    thank you to Professor Philippon. We hope that the fireworks
    are fun tonight on Bastille Day in Paris. Thanks for helping us
    understand the economics of competition, how to restore open
    markets, and for explaining how our failed experiment with lax
    antitrust enforcement has led to reduced investment, weaker
    productivity growth, higher prices, and stagnant wages.
        And thank you to Dr. Bahn for breaking down the word
    monopsony, and for sharing your expertise on how the erosion of
    competition in labor markets impacts workers. As you made
    clear, when employers must compete for labor, it leads to
    higher wages, more flexible hours, and better benefits for
    workers, and I am eager to share your chart, the Herfindahl-
    Hirschman with some political science. There is a lot more to
    be pulled from that.
        And thank you, Ms. Mitchell, for sharing your insights into
    the challenges that small businesses face, and specifically the
    examples that you cited from around the country. This is vital
    to our understanding of how they are impacted by rising
    corporate power. And your focus on solutions to strengthen
    communities and to restore the ability of small businesses to
    compete will guide our work.
        We are also grateful to Mr. Edwards. It is always good to
    have somebody from Cato to come to share your thoughts and
    expertise with us today.
        And it is a special treat to welcome former JEC staff as
    expert witnesses.
        Thanks also to all my colleagues for joining this important
    discussion and sharing your insights. We have the power to
    restore competition and build shared prosperity by vigorously
    enforcing our antitrust laws and adapting them to the 21st
    Century, by funding our Federal enforcement agencies, and by
    protecting the rights of workers to organize.
        We commit to moving these ideas forward, and as we do this
    important work we hope to continue to rely on your expertise
    and good faith. So thank you all for participating today.
        The record will remain open for three business days, and
    this hearing is formally adjourned.
        [Whereupon, at 4:04 p.m., Wednesday, July 14, 2021, the
    hearing was adjourned.]

                           SUBMISSIONS FOR THE RECORD

             Prepared Statement of Hon. Donald Beyer Jr., Chairman,
                            Joint Economic Committee
        This hearing will come to order. I would like to welcome everyone
    to today's hearing focused on the economic impact of concentrated
    corporate power. I was encouraged to see President Biden's signing of
    an Executive Order just last week taking action on this very issue.
        I want to thank each of our distinguished witnesses for sharing
    their expertise today. We have a world-class panel, and I am excited to
    hear from them.
                     competition enables shared prosperity
        Access to opportunity, open markets and fair competition are
    fundamental to advancing shared prosperity in our country.
        Competition in markets leads to lower prices and higher quality
    goods and services, ensuring that consumers do not overpay for the
    products and services they rely on, whether a vital medication or
    broadband internet.
        Workers also benefit when businesses compete for their labor.
    Competition for workers incentivizes firms to pay good wages or risk
    losing their workers to competitors, thereby serving as a
    counterbalance to rising corporate power and enabling workers to
    bargain for better working conditions.
        And competitive markets allow everyday Americans to take a chance
    on an idea and start a business. Or maybe they innovate on a product
    and make it more affordable.
        Research shows the possibility of new entrants into a market
    compels existing firms to continue investing in people and capital to
    stay ahead, which also elevates the United States as a leader in the
    global economy.
                                  the problem
        We are here today because corporate concentration imperils shared
    prosperity and exacerbates economic inequality.
        Across industries--including health care, financial services,
    telecommunications, agriculture and more--we are seeing higher levels
    of concentration than there were three decades ago. Evidence shows this
    has led to weaker business investment, higher prices for consumers and
    lower wages for workers.
        This consolidation of corporate power has allowed the wealthiest at
    the top to capture a larger share of the gains from economic growth:
    Amid record-breaking profits, corporations are paying less in taxes
    today than they did 30 years ago while reinvesting 10 cents less per
    dollar of profit. All of this has led to reduced productivity gains in
    concentrated industries and slower growth economy-wide.
        This is a problem because consumers are bearing the burden. On
    average, we pay about twice as much for cellphone plans than some of
    our friends in other advanced economies with more providers. The same
    is true for broadband access. With more competition, hardworking
    Americans could save billions each year.
        Our workers are also paying for this in the form of stagnant wages.
    Research shows, the median American household loses an estimated $5,000
    each year through reduced wages and higher prices caused by a lack of
    competition.
                                   the cause
        How did we get here?
        The explosion of mergers and acquisitions have a played a key role
    in the consolidation of industries. Over the past 40 years, they have
    been allowed to proceed at an unprecedented pace, and the same holds
    for an array of anticompetitive practices by industry leaders.
        This is due in part to our failed experiment with a more lax
    enforcement of antitrust laws and the under-funding of Federal
    enforcement agencies.
        During this time, our economy has lost half of its firms on a per
    capita basis. This has disproportionately impacted marginalized
    communities, where we've seen a disappearance of independent grocery
    stores, pharmacies and community banks.
        The rise of non-compete agreements is also part of the story. At
    least 1 in 3 businesses require that workers sign non-compete
    agreements, which suppress workers' wages, hinder their ability to
    pursue better opportunities and contribute to persistent racial and
    gender disparities. About 1 in 5 workers without a college education is
    subject to these non-compete agreements.
                           proposals to make progress
        The good news is that there are steps that we as a country can take
    to reduce this concentration of corporate power. We'll hear more about
    these proposals from our expert panel today.
        Additionally, there have been productive bipartisan conversations
    here on Capitol Hill about how to best tack these challenges. Following
    a bipartisan investigation that uncovered evidence of ample
    anticompetitive practices, the House Judiciary Committee recently
    approved six bipartisan bills to address business concentration and
    bolster competition on digital platforms.
        In the Senate, my dear friend and colleague, Senator Klobuchar
    wrote an entire book about antitrust, the challenges we face and what
    we can do to make our economy more competitive.
        Earlier this year, the Senator introduced the Competition and
    Antitrust Law Enforcement Reform Act. Among other things, this bill
    would give Federal enforcers more resources to do their jobs and
    strengthen prohibitions on anticompetitive conduct. The Senator will
    tell us more about this and some of her other ideas shortly.
                           the opportunity before us
        We have an opportunity now to restore a competitive economy and
    advance shared prosperity.
        President Biden's Executive Order advances a whole-of-government
    approach to promote fair competition, and it is now our turn to act
    here in Congress with bold and decisive action.
        And this is why I look forward to the testimoneys and insights of
    our witnesses today. Now, I would like to turn it over to Senator Lee--
    another leading voice in this space--for his opening statement.
                                   __________
              Prepared Statement of Hon. Mike Lee, Ranking Member,
                            Joint Economic Committee
        From our earliest days, it has been businesses--both large and
    small--that have been the backbone of our country. As Calvin Coolidge
    once put it, ``The chief business of the American people is business.''
        From colonial farmers, to pioneering homesteaders, to merchants,
    craftsmen, and professionals, American entrepreneurs have sought to
    build a better life for themselves and achieve the American dream. For
    centuries, innovative Americans have come together through commerce and
    competition to improve life for themselves, their families, and their
    communities.
        It is no surprise, then, that American businesses are a source of
    local and national pride. They are often more than place to work; they
    add vitality into our neighborhoods, towns, cities, and communities.
        Businesses are also the heartbeat of our economy. Small businesses
    in particular represent half of all private sector jobs in the U.S.,
    nearly half the U.S. GDP, and account for two out of every three new
    jobs created in the U.S. today.
        Over the years, we have seen the rise of many big businesses, and
    today we are again witnessing the increasing market power of a few
    large firms. Of course, this raises important questions. Many people
    are concerned that the largeness of certain enterprises makes them
    inherently dangerous to small businesses, to consumers, and to workers.
        However, the fact is, big is not always bad--but neither is it
    always good. And we should not be forced to pretend that it is one way
    or the other. To imply that we should support or defend a business
    simply based on its size is unserious and meant to move the
    conversation away from a firm's specific conduct.
        The rise of some highly visible large firms is oftentimes a product
    of their greater market-based innovations. The prospect of gaining a
    larger market share incentivizes competition that leads to better
    products and services at lower prices. Market share won through
    competition should be celebrated, not punished.
        Changing technology and increasing investment in software,
    processes, and R&D may also be an important factor. In industries where
    these investments are protected by patents, policy has explicitly
    created government-granted monopolies. We allow this because the
    prospect of collecting monopoly profits acts as an incentive for firms
    to innovate and invest in new ideas.
        In other areas, new investments are associated with higher
    productivity gains--especially in the high-tech and consumer sectors--
    suggesting that these businesses have gained greater efficiencies
    through market competition.
        But there are other factors behind industry concentration that
    could indeed be cause for concern and deserve our attention.
        For instance, government regulations impose huge, stifling barriers
    to new business creation and protect existing firms from competition.
    From 2010 to 2020, the U.S. Government imposed an average of 365 new
    regulations each year, affecting everything from how farmers make their
    livings, to which employees small business owners are legally allowed
    to hire, to how many workers they can afford to pay.
        These regulations impose tremendous costs on American businesses,
    workers, and taxpayers, costing an average of $81 billion per year and
    requiring 77 million hours of paperwork annually. This burden
    disproportionately falls on small businesses and startups. In fact,
    there is plenty of evidence showing that regulatory accumulation
    reduces the number of small businesses relative to larger ones.
        In this regard, Federal, State, and local regulations are locking
    out small businesses from competing and thus further entrenching big
    businesses. Reducing regulatory requirements on American businesses
    would help foster more market competition.
        Antitrust enforcement has also been declining for decades. Some
    monopolies are indeed bad, and those that rise through anticompetitive
    and exclusionary conduct--and not through competition on the merits--
    stand in the way of free markets and degrade the options available to
    consumers.
        A proper response in this regard is to modernize antitrust laws to
    find the right balance between over-enforcement and under-enforcement.
    That is exactly why I've introduced the Tougher Enforcement Against
    Monopolists, or TEAM Act, which would preserve free market competition
    by codifying the consumer welfare standard and strengthening
    enforcement against companies that engage in anticompetitive behavior.
        Other efforts, like the administration's recent executive order on
    competition, unfortunately miss the mark by overstepping the
    president's authority and massively expanding Federal regulatory power.
        Whatever action we take, we ought to remember that big businesses
    are not necessarily harmful if workers continue to find well-paying
    jobs, and consumers continue to benefit from high-quality, diverse, and
    low-cost goods and services.
        The beauty of our free market economy is that whatever your cause
    or your career, your success depends on your service. The way to look
    out for yourself is to look out for those around you. The way to get
    ahead is to help other people do the same, and to put your God-given
    talents and efforts to work in the service of your neighbor. In the
    process of earning money and building wealth, individuals can add value
    to other people's lives.
        In all of our efforts going forward, we ought to ensure that
    businesses both large and small are able to keep doing just that, and I
    am hopeful that today's hearing will aid us in achieving this goal.
        Thank you.

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

     Response from Dr. Philippon to Questions for the Record Submitted by
                               Senator Mark Kelly
        1. Dr. Philippon, I'd like to ask about drug pricing. The Kaiser
    Family Foundation did an analysis that found that the 250 top-selling
    drugs in Part D with only one manufacturer and no generic or
    biosimilar--so no competition--make up seven percent of all Part D
    covered drugs, but 60 percent of Part D spending.
        There are about 45 million people who have Part D plans. That's a
    lot of leverage that the HHS Secretary would have to make these drugs
    cheaper if he were allowed to negotiate prices. Doesn't it make sense
    for Medicare to be able to negotiate the price of drugs, including
    those that have no competitors in the market?
        Yes, it absolutely makes sense for Medicare to be able to negotiate
    drug prices. If you look around the world, you see that in essentially
    all countries the domestic equivalents of Medicare do in fact negotiate
    prices. The U.S. is the only country where this does not happen and is
    also the country where households face the highest prices.
        There are several other issues with Medicare payment policies. For
    instance, they create an incentive for physician practices to be owned
    by hospitals, since Medicare pays more for the same service when the
    practice is owned by a hospital than when it is independent (Martin
    Gaynor, 2021, ``Antitrust Applied: Hospital Consolidation Concerns and
    Solutions'').

        2. To all witnesses:

        President Biden's executive order last week included the creation
    of a White House Competition Council to coordinate competition policy
    across agencies to ensure a cohesive Federal approach. From your
    perspective, how can this council be most effective in creating
    positive outcomes for the American consumer? Is there anything in
    particular you hope it takes on--or anything you hope it avoids?
        I think that the creation of the Council is an excellent idea. The
    council should embolden existing regulatory agencies and coordinate
    their actions. Many of these agencies have not been active enough in
    recent years.
        In addition to health care costs, I think that prioritizing fixed
    monthly bills would be useful: cell phone, internet, utilities, health
    insurance. Households have little flexibility in adjusting these
    expenses and any reduction in prices would immediately improve their
    living standards.
                                   __________
        Response from Dr. Bahn to Questions for the Record Submitted by
                               Senator Mark Kelly
        1. Dr. Bahn, you've done a lot of work around how a lack of
    competition among employers and the inability for workers to easily
    move between jobs is bad for the worker--that it can give an employer
    more latitude to reduce wages and benefits.
        I'm curious how this looks right now, as we are trying to claw our
    way out of this pandemic. What do you predict the long-term impact of
    the pandemic on lack of competition among employers to be? Is it too
    soon to know?
        The public health crisis may have business-side impacts that reduce
    competition among employers for workers. Research has found that small
    businesses are often in more financially fragile positions that make
    them more likely to close during an economic crisis like the recent
    recession. As small businesses risk closure, ``big box'' stores become
    more economically dominant. This may exacerbate the dominance of large
    businesses as employers, who will have more wage-setting power in
    absence of competitors for workers. Particularly in rural areas, the
    wage-setting power of large employers may lead to spillover effects and
    put downward pressure on earnings across a geographic area. Research on
    Walmart Supercenters has found that the opening of a supercenter will
    lower wages in the surrounding areas.
        But in addition to the effects of business size, the pandemic may
    exacerbate limited worker mobility due to other causes. The continuing
    public health crisis may increase what economists call search
    frictions--hindrances to being able to easily search for and match into
    an appropriate job--which ultimately reduce competition and thereby
    suppress wages. For instance, the pandemic has made many workers
    hesitant to take jobs that pose a health risk, reducing their potential
    number of viable employers and making it harder to move between jobs as
    a result. When workers aren't able to move between jobs, employers can
    exploit this by paying them less. In this context, access to health
    services, like health insurance, may be more critical as a labor market
    policy. For instance, research on variation in Medicaid generosity has
    found that better access to Medicaid increased the likelihood that
    workers are able to move into a job with better pay, and this was even
    before the public health crisis we continue to face.
        These forces that lead to lower competition for workers are part of
    a long-term trend that pre-dates the recent economic crisis and the
    pandemic, and has led to stagnant wages. The pandemic risks entrenching
    these forces. While it is still too soon to tell whether the pandemic-
    specific forces will have a structural effect on the economy, it is
    still important to increase competition in the labor market so that
    workers can share in the value they create for the American economy and
    reverse long-running trends in rising economic inequality.
        What's critical to understand here is that factors that limit
    worker mobility between jobs, not just employer concentration across
    geographic space, lead to lower competition by giving employers the
    power to undercut wages without losing their workforce. This points to
    policy solutions. As I noted in my written testimony, supporting worker
    power is a critical tool that will help balance employers' ability to
    undercut wages for a variety of reasons by giving workers the ability
    to collectively bargain over wages and bring them closer to the levels
    that would exist in a competitive market. This is primarily done
    through supporting workers' right to organize unions, including
    provisions currently in the Protecting the Right to Organize Act. In
    addition to this, universal worker protections, like anti-
    discrimination protections, and social infrastructure policies like
    income supports such as Unemployment Insurance and health insurance
    programs like Medicaid, also give workers the stable foundation
    necessary to finding the best job for themselves where they can be safe
    and earn a secure living.

        2. All witnesses:

        President Biden's executive order last week included the creation
    of a White House Competition Council to coordinate competition policy
    across agencies to ensure a cohesive Federal approach. From your
    perspective, how can this council be most effective in creating
    positive outcomes for the American consumer? Is there anything in
    particular you hope it takes on--or anything you hope it avoids?
        The Department of Labor is a critical enforcement agency for labor
    rights and job quality, including mitigating the impact of
    anticompetitive conduct. Evidence has demonstrated that, even in the
    presence of legal protections, many employers still violate the law
    with little recourse for workers in an individual complaint-based
    system. Effective enforcement not only helps workers whose employers
    have charges brought against them, but it has a chilling effect so
    other employers are less likely to violate labor rights or engage in
    anticompetitive conduct. The Department of Labor has a vast worker
    enforcement infrastructure, including the ability to carry out
    strategic enforcement--where investigations are conducted in industries
    and occupations that are more likely to have violations--so including
    our primary labor protection agency in addressing competition is an
    important piece of ensuring workers receive their fair share in an
    economy currently stacked against them.
                                   __________
      Response from Ms. Mitchell to Questions for the Record Submitted by
                               Senator Mark Kelly
        1. Ms. Mitchell, in Arizona 99 percent of businesses are considered
    small businesses. These are the businesses at risk of having the scale
    tilted against them by big companies who have more control over shared
    suppliers. Then these businesses got hit again in the pandemic, which
    is why I led the push to include the SBA Community Navigator Pilot
    Program in the American Rescue Plan to provide assistance to small
    businesses that faced barriers accessing COVID relief.
        How do we combat both of these forces--consolidation plus the
    challenges of the pandemic--to keep our small businesses strong? What
    are ways that communities themselves can strengthen small business?
        Thank you, Senator Kelly, for your questions. And, thank you for
    your stewardship of the Community Navigator Pilot Program. It is
    bringing crucial guidance and resources to thousands of small
    businesses throughout the country.
        Corporate consolidation has been one of the greatest threats to
    small business growth and development in the United States for several
    decades. In the 1980s, big box stores--Walmart, in particular--used
    their outsized market leverage to undercut prices, selling products at
    a loss in order to force out small businesses and control local
    markets. Category killers, like Home Depot and Staples, have dominated
    regional markets, eliminating small business competitors in their
    respective categories. Bank consolidations have starved small
    businesses of needed capital. Amazon controls the platform on which
    hundreds of thousands of small businesses sell products, then uses the
    information it gleans from them to unfairly compete against them. We
    heard just this past week from a realtor in Rhode Island about
    challenges her industry is facing from big tech platforms like Zillow,
    which is gaining breadth and depth by buying both direct competitors
    and also real estate transaction services.
        The challenge of enforcing corporate consolidation lies largely
    with the Federal Trade Commission, with the Department of Justice's
    Antitrust Division, and with Congress, and this is absolutely crucial
    to leveling the playing field for small businesses. But there ARE some
    pre-emptive and corrective actions that communities can undertake to
    strengthen small business.
        First and foremost, communities can create economic development
    plans that truly prioritize small businesses--businesses whose profits
    remain local and that build local wealth. This has implications for
    everything from a community's procurement practices to its
    comprehensive plan and zoning code. It is ludicrous that low-income
    communities that desperately need access to the healthy food that full-
    service grocery stores provide are being overrun by dollar stores whose
    limited food offerings are mostly processed and preserved, not fresh,
    constricting the market for full-service grocery stores--but this is
    the unfortunate byproduct of local planning practices that
    underestimate the market power of dollar stores and the deep pockets of
    their attorneys to challenge local planning decisions. Communities can
    also ensure that ample and equitable capital is available for small
    business loans and equity investments and that local lenders have
    adequate liquidity to meet these needs. They can build a robust
    technical assistance infrastructure to provide training and mentorship
    at all levels, from young entrepreneurs to retiring owners hoping to
    transition their businesses to new owners--this is at the heart of the
    Community Navigator Pilot Program, a program which we hope will
    continue in the future. They can invest in local solutions to delivery
    and fulfillment challenges, such as supporting locally owned restaurant
    meal delivery services. They can overhaul their municipal and
    institutional procurement policies to streamline procurement for small
    businesses and ensure that the procurement process eliminates barriers
    to minority-, women-, and veteran-owned businesses and actively invites
    their participation. They can insist that developers demonstrate that
    there is adequate market demand to support new commercial space as a
    condition of development. All of these potential actions are hallmarks
    of community economic development strategies that recognize that small
    businesses build local wealth, rather than extracting local wealth for
    corporate expansion or for the benefit of distant investors, and that
    small business development should be at the forefront of our economic
    development planning.
        2. Ms. Mitchell, during the state work period I visited Chandler-
    Gilbert Community College, which is part of Maricopa Community
    Colleges. Maricopa has partnered with Intel to create our state's first
    AI certificate and degree program. As AI development accelerates, the
    immediate thought is often that it's going to take away human jobs--but
    that's not necessarily the case. Maricopa is providing the skills
    training that becomes increasingly necessary as technology develops.
        Could you talk about how AI and technology come into play when
    we're talking about consolidation and market power? And more to the
    skills training side, could you speak to the benefits of skills
    training to give a worker greater control and autonomy over their job
    movement and career progression?
        The Big Tech firms use AI in a number of ways to entrench their
    market power. I can't speak to skills training.

        3. All witnesses:

        President Biden's executive order last week included the creation
    of a White House Competition Council to coordinate competition policy
    across agencies to ensure a cohesive Federal approach. From your
    perspective, how can this council be most effective in creating
    positive outcomes for the American consumer? Is there anything in
    particular you hope it takes on--or anything you hope it avoids?
        President Biden signed a sweeping Executive Order (EO) aimed at
    undoing concentrated corporate control and ending decades of
    consolidation throughout our economy. The order includes 72 initiatives
    that direct cabinet-level departments in the Executive Branch and
    encourage independent agencies such as the Federal Trade Commission
    (FTC) to identify and root out ``overconcentration, monopolization and
    unfair competition'' in the industries they oversee. Because the
    Executive Branch oversees a multitude of industries, including health
    care, transportation, agriculture, and telecommunications, the order
    and the directives it contains represents one of the most significant
    shifts in U.S. competition policy in the past half-century. My
    organization applauded the Administration for the EO, but our concern
    is the agencies will not deliver on the expansive intent of the EO.
        The White House Competition Council, led by the Director of the
    National Economic Council, will play an important role to ensure the
    agencies deliver. As described in the EO, the Competition Council will
    monitor the progress and execution of the initiatives. It will also
    play a key role in coordinating the Federal Government's response to
    the rising power of large corporations in the economy. We would like to
    see the Competition Council build in mechanisms for greater
    transparency, oversight and accountability so stakeholders, advocates
    and the public at large to engage with the Council. This should
    include:

          Create public forums to engage key stakeholders and
    frontlines communities. The Competition Council should hold public
    forums designed to directly engage the public on competition policy
    matters. The Competition Council could coordinate ``listening
    sessions'' focusing on specific industries to help identify competition
    and consolidation issues and engage frontline communities, such as
    business owners, workers, advocates and other key stakeholders in the
    policymaking process. There is precedent for this. The Obama
    administration hosted field hearings on agriculture issues. More
    recently, under Chair Lina Khan, the FTC holds monthly open meetings
    where the public can engage directly with the FTC. Establishing these
    mechanisms to engage the public not only informs effective
    policymaking, but also legitimizes government action by establishing a
    public record and creating greater transparency over the process.
          Establish industry-specific working groups. The EO
    addresses concentration and monopolization in a range of industries
    spanning from healthcare, defense, Big tech to agriculture. Each of
    these industries are unique, and as such, deserve industry-specific
    solutions to address competition issues. We encourage the Competition
    Council to create sub-groups, organized by industry, to identify
    concentration and monopoly issues in that industry and design tailored
    government action. These working groups would also include, as needed,
    the antitrust agencies along to consider rulemaking or other actions to
    resolve those issues.
          Regular reporting on the Council's activities and agency
    execution of the EO. The White House should produce and publicly
    release a quarterly report summarizing the Competition Council's work
    and the Federal Government's progress on the EO. This should include an
    analysis summarizing any barriers or challenges inhibiting the agencies
    from delivering on the mandate. It should also include analysis of any
    necessary legislative changes.

                                      [all]