AEP PRESIDENT, ROBERT H. BORK, JR., SPEAKS AT REGULATORY TRANSPARENCY PROJECT EVENT HOSTED BY THE FEDERALIST SOCIETY

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TRANSCRIPT OF AEP PRESIDENT, ROBERT H. BORK, JR.: 

Thank you for the invitation to participate in this discussion. I am humbled to be in the company of my fellow panelists.

The title of this panel is: Competition at a Crossroads: Will the Executive Order on Competition Advance Competition, or Restrict It?

I believe that the answer is, on the whole, that it will restrict competition.

Although some suggested reforms among the 72 make sense – most notably relaxing restrictive occupational licensing – on balance the President’s XO will increase burdensome, confusing regulation on both big and small business. Let’s be clear – more redtape and control from the federal government restricts competition. Politicians and bureaucrats always seem to overlook the effect of their own actions. They are blind to Newton’s third law as it might be applied in their own realm.

Of course, I reserve my final judgment, as we all should, until we see what the agencies and departments of the federal government actually produce. I hope they take their time about it and weigh costs versus benefits – but who am I kidding.

But here are just three examples why I am prepared at this point to pass my preliminary judgment:

1. Smaller businesses are ill equipped to handle more regulation and the uncertainty and costs it creates. Big business is not so handicapped. However bigger companies are more likely to be able to absorb the cost and burden of more regulation. This is one probable reason why we’ve seen a dramatic slow-down in the creation of new businesses pre-covid. Between 2007 and the first half of 2019, applications to form businesses that would likely hire workers fell 16 percent.
   
   
2. Then there is the creation of woke standards. For example, and here I cite my friend John McGinnis of Northwestern University Law School, the order calls on antitrust to provide an “environment conducive to the preservation of our democratic and political institutions.” As John says “it is not plausible for regulators to determine the legal rules by which companies will advance democracy. This nebulous standard is an open invitation to “discretionary actions” by the government.
   
   

These recommendations are based largely on a desire to appease some rent seeking political or interest group –not on maximizing economic efficiency and consumer welfare. As Howard notes these are essentially payoffs, picking winners and losers.

And, I haven’t even mentioned the infusion of social policy regulation that will be part of this effort from labor, to climate change, to equity. The agencies will have companies large and small coming to Washington for permission to run their businesses at every level.

1. One other point, as I wrote yesterday in The Hill, the President’s antitrust policies will be inflationary as restrictions on competition will raise costs. The X0’s focus on family farms for example will raise prices by favoring less efficient enterprises and discouraging efficient consolidation that makes sense. The persecution of energy markets – seen in the cancelling of the Keystone Xl Pipeline, the discouragement of new pipelines, the war on natural gas – has transformed the United States … and not in a good way. After becoming the world’s lead energy provider, we now have National Security Advisor Jake Sullivan begging Putin and OPEC to open their spigots. We are already seeing significant energy inflation. The confused antitrust standards of the XOs will make energy inflation worse.

 
I must note, on a point of personal privilege, based on the President’s remarks announcing the XO – that it is based on faulty facts and logic.

When President Biden announced his XO he chose to name my father and his failed “experiment” by which he meant the economic and legal analysis of his book The Antitrust Paradox and the consumer welfare standard that has repeatedly been endorsed by the courts. As measures of its failure he cited:

 “Less growth, weakened investment and fewer small businesses.”

The president is simply wrong:

Instead of “less growth”, the economy almost tripled in size from 1980 to 2020 under the consumer-welfare standard. Over this time, the World Bank reports that Americans’ per capita income has nearly doubled.

Instead of weakened investment , we have enjoyed a 9.99% inflation-adjusted annual rate of return from 1980 to 2020 -- more than 2 points above returns during the prior 40 years before the consumer welfare standard.

Instead of “fewer small businesses” the overall trend under the consumer welfare standard had for decades been strong, with a 54% increase in small businesses since 1980.

So, to sum up, on the whole, the XO will lead to less competition and harm consumer through higher prices, less choice, fewer jobs, and less innovation. It is part of larger plan hatched by Elizabeth Warren, Amy Klobuchar, and their twin Rasputin’s: Tim Wu and Lina Khan.

The goal to remove the neutral principle of the CWS that is neither conservative nor liberal, Republican nor Democrat and replace it with an anti-capitalist, big is bad, woke set of laws and regulations that harken back to a time in this country where competition policy was built on subjective biases of its enforcers.

The result of all of this will be antitrust law detached from the Consumer Welfare Standard that is becomes a regulatory, statutory, and judicial Ouija board – it is apt to go anywhere and spell out anything guided by the personal preferences of the legislator, the regulator, or the judge. Such rootless jurisprudence allows judges to create new law, introducing a level of unpredictability.
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Thank you.