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

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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                        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.
    
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 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.
  

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