Australia’s assistant minister for competition, Andrew Leigh, says the country should follow in the footsteps of the Biden administration and adopt a more cynical view of big business, including more government intervention in the market.
The Labor minister has blamed increasing market concentration in the hands of a few big companies for creating higher prices for consumers (including inflation), and less opportunity for workers to switch to higher paying jobs—a principle known as “dynamism.”
“Over recent decades, there have been a number of significant changes in the Australian economy. The job‑switching rate has fallen. The business start‑up rate has declined. The largest firms have increased their market share. Mark‑ups have increased,” he told attendees of the FH Gruen Lecture at the Australian National University in Canberra on Aug. 25. “All this suggests that the Australian economy has become less competitive.”
One example he gave was to suggest that anti-competitive behaviour would lead to higher prices and worse products and services.
The US Connection
Leigh said that for years Australia, like the United States, was heavily influenced by the “Chicago School” theory—a more relaxed approach to regulating big companies—where the market was allowed to naturally control uncompetitive behaviour such as predatory pricing. The principle can be summed up in the phrase: “Big is beautiful.”However, the minister—who is also a professor of economics—said that in recent decades a new approach had emerged called the “New Brandeis Movement”—also known as “hipster antitrust”—that assumes too much market concentration can be harmful to consumers, dynamism, and result in a more “sluggish economy.”
In essence, the movement calls for greater government intervention to penalise and limit the influence of big companies in a market.
Leigh travelled to Washington D.C. last month to meet with Sen. Amy Klobuchar (D-MN), author of “Antitrust: Taking on Monopoly Power from the Gilded Age to the Digital Age; Lina Khan, who now heads the Federal Trade Commission; and Tim Wu, author of ”The Curse of Bigness,” who helped the Biden administration shape its anti-trust executive order in 2021.
“Australia should not ignore this marked shift in the way that senior U.S. officials are regarding competition policy,” Leigh said. “This is all the more so given the evidence that our economy has seen a fall in the start-up rate, a rise in market concentration, and a rise in mark-ups.”
He said competition policy needed to be factored in when implementing regulation, and more needed to be done to encourage funding to innovative firms.
Big Ideas, Little Action So Far
In response, Rob Nicholls, competition expert at the University of New South Wales, said the appointment of Khan to the Federal Trade Commission was an affirmation of “New Brandeis Movement” principles.“With support from both sides of U.S. politics—for very different reasons—the ‘big may not be beautiful’ approach has been applied to the major tech players. That is GAFAM [Google, Amazon, Facebook, Apple, and Microsoft],” Nicholls told The Epoch Times.
He said the left side of politics was motivated by the belief that more government intervention was needed, while the right side of politics wanted to deal with increased censorship of conservative voices on social media platforms.
However, Nicholls noted that Khan had done little to actually implement Brandeis’s ideas so far, and Australia’s Leigh had simply adopted existing competition policy. He did note that the speech may have been a “warning shot” from the minister to big companies.
“It is difficult to assess whether competition could be stronger in Australia, it is a small, open economy where local demand is significantly lower than that in the European Union or the United States,” he said. “Australia has traditionally only had a small number of competitors in sectors with the highest consumer involvement, including airlines, telecommunications, supermarkets, and banking.”
Meanwhile, John Humphreys, chief economist at the Australian Taxpayers Alliance, said while Leigh had correctly identified ongoing problems in the economy, his solution was “upside down.”
“Over the last couple of decades, regulation has gone through the roof. There hasn’t been any structural or microeconomic reform to speak of over the last couple of decades, except the tax cuts coming in next year,” he told The Epoch Times, in reference to Stage Three personal income tax cuts introduced by the previous federal Coalition government.
“He’s got it exactly upside-down when he talks about the causes and the way out of this problem,” he added. “Competition actually decreases because of high barriers to entry.”
“[Leigh] says there are fewer new businesses entering industry—which he points out and is correct—but he has misunderstood the cause. The cause is him and his friends down in Parliament in Canberra passing too many laws, restrictions, and regulations that limit people to start and enter into business.”
In the U.S. context, economist and senior fellow at the Heritage Foundation, Stephen Moore, said major drops in the stock price of Facebook and Netflix in early 2022 was evidence of the free market doing its job.
