Transcript: Brian Deese, NEC Director



The transcript from this week’s, MiB: Brian Deese, NEC Director, is below.

You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.


RITHOLTZ: I know I say it every week, but really this week I have an extra special guest. Straight from the White House, Brian Deese is the Director of the National Economic Council. He is essentially the Chief Economic Adviser to the President of the United States, and we spent a lot of time discussing the President’s new Council on Competition, which is a very, very big deal. It’s going to be a big driver of policy from the executive branch over the next four years.

And we really got deep into the weeds. We talked about everything from farmers to employee contracts, to net neutrality, to the right to repair your own products that you buy to, you know, everything, antitrust enforcement. It really was a policy wonk’s delight. If you’re remotely interested in economic competition, antitrust enforcement, employee contracts, well, you’re going to find this to be absolutely fascinating.

With no further ado, my conversation with the National Economic Council’s Director Brian Deese.

VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

RITHOLTZ: This week, I have an extra special guest. His name is Brian Deese. He is the Director of the National Economic Council at the White House and essentially the Chief Economic Adviser to President Biden. Previously, he was the Global Head of Sustainable Investing at Blackrock, and he was President Obama’s Senior Adviser for Climate and Energy Policy.

Brian Deese, welcome back to Masters in Business.

DEESE: Thanks, Barry. It’s great to be here.

RITHOLTZ: So — so let’s start with your role in this new administration. You are the thirteenth Director of the National Economic Council. I think most people are more familiar with the Council of Economic Advisers. Tell us a little bit about this group, what it does, and — and how it differs from the CEA.

DEESE: So the — the National Economic Council was created by executive order in the early 1990’s with the goal of having a White House entities that could coordinate economic policy on behalf of the President. The — some people think about the CEA, but I think that the more natural analog is the National Security Council. So the National Security Council exists within the White House as a way of coordinating policy on national security and foreign policy issues. The National Economic Council was modeled to do the same for — for both domestic and international economic priorities.

So if you go back and you read the executive order that was created in early — the early 1990’s, it holds pretty true to today. So what does that mean?

Number one, having an effective way to coordinate and aggregate the views of all of the key economic policy principles, the Secretary of the Treasury, the Chair of the Council of Economic Advisers, our Commerce Secretary, our Labor Secretary, and down the line, create a common table around which we can debate and discuss and provide the President clear policy recommendations and clear economic advice and, at the same time, have a — a coordinated way to take the direction from the President about his views and his — his direction on the economy and drive that across the broad interagency of the executive branch.

To your question about the Council of Economic Advisers, the Council of Economic Advisers is designed as a — almost an internal think tank of economists and experts, many of whom come out of academia and spend one or two years at the Council and provide a — an analytical base — an economic base to think through issues, to provide analysis and really be a kind of thought.

The National Economic Council is really designed to coordinate, bringing those views to the table, but also connecting them to the legislative and political realities that we’re operating in to try to get the best outcomes possible and service to the President’s goals.

RITHOLTZ: So — so let’s talk a little bit about your boss, the President, and some of his goals. Last week, he signed an executive order to, quote, “promote competition in the American economy.” We’ve kind of become used to the sort of one-pager photo-ops for executive orders, but that was not what this was. It’s a 7,000-word 72-bullet point document, and — and it’s very serious policy initiative. Tell us what was the thinking behind rolling out this new policy this way.

DEESE: Well, I appreciate you counting words and actions because we are — we’re certainly focused on that as well. We’re really excited about this executive order, and it’s based on a kind of very simple but important intuition, which is that having fair and open competition is a fundable — fundamental ingredient of a healthy capitalist economy. It’s what actually drives better outcomes — lower prices, higher wages, more innovation, more economic growth.

And so the, quote, goal of this executive order is “to reset across the entire executive branch a focus on where and in what ways can we encourage healthy competition in service of achieving those outcomes,” lower prices, higher wages, more innovation.

And what we’ve seen across time is that our economy has gotten less competitive. We have a larger number of our industries that are now more concentrated than they were 20 or 30 years ago. We’ve seen the rate of new business formation, particularly small business formation fall by almost 50 percent since the 1970’s.

And if you look across industries, whether it’s, you know, in — in meat packing or in broadband Internet, consumers’ choices have been constrained. And we haven’t seen the kind of the — the follow-through benefit that at least has been argued by folks who say, you know, more consolidation will actually generate lower prices for consumers. We haven’t seen that either.

In fact, if you aggregate up the impact of consolidation to an American household in terms of prices and wages and other attendant costs, you know, the best estimate so that it’s costing about $5,000 a year for the typical household. So the goal of this executive order is to say how can we start to get at that. And fundamentally, this is — this is its — its — this is not about being sort of pro-business or anti-business, this is about being pro-competition.

A lot of the ideas in this executive order are actually deregulatory in nature, trying to remove some barriers to entry that actually keep workers from more effectively moving and competing for jobs or new businesses to enter into new markets, and grow and gain market share as a result. So that’s the — that’s — that’s the — at a high level, that’s our goal.

But you’re right, we — we wanted to take a really serious effort to go agency by agency and look where — where are the challenges, what are the tools that we have, and how could we advance the ball. It looks different in different agencies. There’s a lot to unpack here, but that’s the goal of the high level.

RITHOLTZ: And I have to tell you, that’s a shocking number. The lack of competition caused by industry, consolidation, and concentration cost the average American family $5,000 a year. That’s a giant number.

DEESE: Yeah, and when you — when you distill it down, you know, that’s — that’s a — if — if — if you — you know, but I also would say embedded in that is a big opportunity because if we can actually break down some of those barriers and we can encourage fair competition, what that means is that we have a way of actually boosting economic outcomes for the typical family in a significant way.

But that sounds pretty esoteric, but you break it down into very practical things, something like hearing aids. Today, you need to get a prescription. You need to go to a doctor and get a prescription. You can’t buy hearing aids over-the-counter.

There’s almost 50 million people in the country who have some form of hearing loss. A lot of those are older, but a lot of younger people as well. And that requirement operates, you know, as economists would say, as a barrier to entry. And so what that means is it just costs a lot more. It’s also a hassle, but it costs a lot more to get hearing aids.

So one of the things that this executive order directs is to implement a rule to allow hearing aids to be bought over-the-counter. What that’s going to do is it’s going to make it easier for those 50 million people to get hearing aids more cheaply, but we also hope it’ll spur innovation by reducing that barrier to entry.

Now, new companies, new market entrants can come in and innovate in providing hearing aid products at a lower price point. And so that — that’s just one example if you think about how that, you know, $5,000 aggregates up. That’s one very practical example, but it’s a lot of people in their daily life. Not only can you — not only can you — you know, you have a little less hassle that you can just go to the pharmacy and buy a pair of hearing aids. But overwhelmingly, we know that removing a barrier like that will make it cheaper and, hopefully, will generate more innovation and more opportunity for new business entrants to, you know, succeed.

RITHOLTZ: That’s really interesting. Let’s talk a little bit about part of this executive order, which is the formation of the President’s Council on Competitiveness, beginning with council membership. This is — this is quite a list. It’s the Secretary of Treasury, the Secretary of Defense, the Attorney General, Chair of the FTC, Chair of the Consumer Financial Protection Board, the FCC, Agriculture, Commerce, on and on. It’s practically the full cabinet. Why so broad a membership? What — what’s the thinking behind that?

DEESE: Well, you’re making me realize I’m going to have to get a bigger office to get everybody around the table, particularly now that we can start to do these convenings in-person.

Look, the idea of this was pretty simple, which is over the last several months what we have done is we’ve run a process of going out to agencies and understanding from the agencies where the — where their authority exists in terms of competition policy or antitrust and how they think it could be better deployed in the service of encouraging competition that’ll be good for consumers and families.

And what we found in that process is there’s — the — the breadth of actions and the breadth — breadth of tools and authorities really runs across. Oftentimes this conversation starts and centers around the core antitrust statutes and the core antitrust enforcement agencies — the Department of Justice and the FTC. Their role is critical and they operate independently when it comes to enforcement matters. But, in fact, the actual tools and authorities are much broader. So in USDA, for example, we just had the 100-year anniversary of the Packers and Stockyards Act, which is the antitrust statute that — that applies to — to food — food and agricultural commodities, meat packing and others.

We have at the Department of Transportation authorities to look at competition in the airline industry, in the railroad industry, in the shipping industry, and across the board. So what we realized in putting this executive order together is that the actual coordination across these different parts of our government is really important for two reasons. One, because it’s important for the agencies to understand how — when they are taking action to encourage competition in a particular segment of the market, like when HHS finalizes this rule to make hearing aids available over-the-counter, how does that fit into a broader economic strategy to encourage competition in — in the railroad industry or in the shipping industry.

And the second is to make sure that we are — we are effectively coordinating and not getting across purposes. So if — if — if one agency is moving out in a certain way, try to make sure that it’s consistent, and that the — and that businesses and other stakeholders that are actually having to operate within these rules of the road have as clear as possible guidance from the executive branch on — on what our policies and what our intentions are.

So that’s the goal of the council. It’s been a long time in American economic policy that we’ve really prioritized competition policy in this way, and we’re going to need a structure to have that ongoing focus across time. And we hope that this council will serve that purpose.

RITHOLTZ: So — so let’s stay with that structure a little bit. I mentioned all the members of — of this council. I didn’t mention the chairperson. That would happen to be you. How big of a job is this going to be relative to your role as — as Director of the National Economic Council? How large of a priority is this? And — and what do you hope to accomplish with it?

DEESE: Well, I think you saw from the President’s speech and announcement last week the priority that he and that we, as administration, are putting on this effort, which is very high, that we are obviously very focused on the immediate economic challenges, the — the Rescue Plan and the impact that that’s had on the economy over the last couple of months, the effort we have with Congress right now working on an infrastructure package and on a human infrastructure element as well. But — but equally in that category is this effort to try to lower prices for consumers, increase wages, generate more innovation by encouraging competition.

So I would say that, look, it’s a big priority. And part of why we wanted to move out early — this is relatively early in an administration to put on an executive order that is this — this broad in terms of directives to different agencies was to make sure that we were getting going because some of these things appropriately will take some time.

The rulemaking process, you know, explicitly builds in time for notice and comment and engagement. So we — we know that these things will take some time, but we wanted to get the ball rolling. And as a result, our focus on this council and my role in — in — in trying to lead and coordinate that will be a big piece of business. But we’re really excited about being out of the gate early and — and — and aggressively here.

And I think what you’re going to see, hopefully, is that for a lot of end — end recipients, typical families, businesses, this is going to be a real welcome — a real welcome opportunity because whether you’re a small family farmer who has been struggling under the sense that, you know, costs keep going up and your choices are — are going down because you keep seeing consolidation in a market or you’re just, you know, somebody who is looking for the best job possible and realizing that there are restrictions on, you know, moving from job-to-job that you didn’t even know existed. These are kinds of things that could help people in their daily lives.

But if we’re going to get to helping in — at that end point, we really got to be organized and coordinated as a federal government. So we got a — you know, it’s going to be a big piece of business, but one that we’re very excited about.


RITHOLTZ: So we’re going to drill down into some of the specifics on a sector by sector basis, but before we get that granular, I want to just discuss briefly the genesis of this. Your White House colleague Tim Wu, along with a bunch of others, published a — a large research paper back in November right — right after the election. And their analysis identified that pretty much since the Microsoft antitrust case in the 1990’s, the U.S. has kind of given up on antitrust enforcement. And the result has been huge industry consolidation, reduction of competition, increased pricing power and higher cost to consumers. So that leads to the question what happened to antitrust enforcement in the United States.

DEESE: Well, it’s — it’s an important question and — and also one that I think it’s helpful to put in historic context because if you look at the arc of competition policy and antitrust enforcement in the U.S., it really — you do see ebbs and flows, ou know, going back as far as the passage of the Sherman Antitrust Act in the 1890’s, right, that was a reaction to the — both the political corruption, but also the — the sort of behavior that — of monopolies in the — in the — in the Gilded Age and laid the groundwork for, of course, you know, President Teddy Roosevelt becoming famous in — in — in trust busting and — and — and the activities in the early 1900’s.

And then you — you saw another acceleration on the back end of the — in — in the 1930’s on the backend of the first World War. And then coming out of the second World War with — with FDR reflecting that as well.

You then saw a different — a different approach that emerged in the 1970’s and the new school of thought that was very — was — was very narrowing of the view of competition policy and that lead to a multi-decade approach of, as you say, limiting enforcement of antitrust and a view that kind of, all things equal, letting consolidation occur would generate economic benefits and so, therefore, at the margin, we should be sort of accommodating of consolidation unless it was, you know, radically clear that it was bad for — bad for consumers or bad for prices. And so we’ve seen the implications of that.

And — and to your point, we’ve seen over the last couple of decades the number of annual mergers has increased by five or six-fold. And we have seen in 75 percent of industries the, you know, measure of industry consolidation has increased significantly over the last 20 years. And we haven’t seen the attendant benefit in terms of lower prices or — or more innovation in the economy.

And so, you know, over the last five years or so, there has been a growing body of economic research to try to identify the — the harms that have come from this consolidation. And that work started — some of that work started and was really put on the map at the end of the Obama administration, including by Tim Wu who you mentioned, Jason Furman, others and my former colleagues who just really started to pinpoint this decline in antitrust enforcement and the decline in focus on competition policy as one thing that has added to the stagnancy of small business formation, the inequality that we have seen.

And in the academic realm, we have seen that — that work-only accelerator over the course of the last five years. And so certainly, the executive order here and the actions in the work that is embedded here is really building on that framework and building on the findings that have come out over that. And we certainly — we — we do view it in historic perspective of now trying to really shift back to a focus on prioritizing the enforcement of antitrust statutes, a focus on competition, and a focus on the end outcome and the end benefit to the end consumer and worker.

RITHOLTZ: And — and for those people who may not be familiar with Tim Wu, not only is he the person who coined the phrase “net neutrality,” he is the author of a couple of books, “The Curse of Bigness: Antitrust in the New Gilded Age,” as well as “The Master Switch” where he describes how eventually these information systems, they become consolidated, they become closed and less and less competitive until some disruptive innovation comes along. And my sense is this council is trying to encourage less of that concentration and more of the disruptive innovation.

DEESE: Yeah, that’s exactly right. And — and Tim is — Tim works for us here at the NEC and has been a thought leader on these issues for some time. And you’ve characterized, you know, accurately the — one of the key objectives of this council is to try to get toward how we can encourage that type of innovation.

And one thing I would say is that this really is something that I think we’ve increasingly seen cuts across traditional lines or dividing lines in economic thought, and it cuts across traditional political dividing lines, too. I mean, some of the things we’re talking about here are really about getting rid of regulations that stand in the way of that kind of innovation.

You know, one of the examples that’s in the executive order is around — is in the — is in beer and wine, the — the — the — the alcohol market, and you’ve got some incumbent rules on bottle size and bottle labeling. But when you really unpack them and say why is it that you need to operate in a market you have to meet certain bottle size requirements because maybe you’ve got an idea to bring a product to market that just looks different and that’s going to be your — you know, that’s going to be your branding edge?

Well, you know, when you unpack and — and — and look at the reason why those regulations exist, you know, some of them are because they’re just protecting incumbents. And, you know, they’re similar to a number of these occupational licensing requirements where you have requirements to get a license to be — to braid hair or to cut hair or, you know, to do all manner of — of jobs, particularly at the — in different states where, you know, if you — if you’re moving from one state to another, you’ve got to go through a whole process of getting a new license.

And, you know, look, having licensing requirements for — you know, for jobs that require, you know, that are — that — where there’s safety or there’s other things involved obviously make a lot of sense. But in a lot of cases, when you unpack at rules like that are — have been put in place to favor incumbents and make it harder for new entrants to get into the market. And so we’re really — you know, we — we think there’s a real opportunity both to be disruptive in terms of the economic thought, but also disruptive in terms of some of the embedded political realities of this.

We’ve had, you know, a lot of these items have strange bedfellows in terms of the support behind them, and that’s part of what’s exciting about it for us as well.

RITHOLTZ: Right. Clearly, a lot of these licensing rules are anti-competitive. Before we dig down and get granular into the individual sectors, I — I have one last broad overview question, and it’s on antitrust enforcement.

There has been a deeply embedded sort of let’s say fair doctrine at both the Department of Justice and the FTC. Obviously, Lina Khan and Merrick Garland represent a break from that philosophy, but how do you turn around two decades of — I was going to say lax enforcement, but it’s really a — a skepticism about antitrust law. How do you reverse that?

DEESE: Well, I think you start by doing what we did in the executive order, which is to articulate that it is the policy of the executive branch to vigorously enforce our antitrust laws, and more than that to enforce them in the context of a — an economic policy that views increasing competition as a key way of improving lives in economic outcomes for the American people. So part of it is you start by articulating a clear economic strategy and economic philosophy behind why it is that we need greater and more vigorous enforcement of our antitrust statutes.

And, you know, some of the — some of the — the work that in the 1970’s and early 80’s that led to this kind of multidecade effort to try to undermine enforcement of antitrust started from articulating a — a similarly articulating philosophy, but a philosophy to very different ends. So that’s — you know, one important step is I think what we’re trying to do is to articulate clearly the policy of the government.

The second I do want to be clear is that the actual enforcement appropriately and necessarily operates independently — independently of the Department of Justice and the FTC, but I think getting high-quality personnel in that will do that effectively is a — is — is a second and important step. And so we’re — you know, we’re — we’re moving on that front as well.

And then, you know, we — we do — you know, we do have an issue, which is that ultimately this thing — the — the antitrust doctrine gets — gets developed in the context of the judicial branch and — and — and challenges to decisions. And we’ve seen that obviously over the course of decades as well.

And so, you know, there are also some places where we may need to change a lot. We may need to clarify or strengthen the — the antitrust authorities. And there’s bipartisan work in Congress that’s going on on that front right now, particularly as it relates to the tech industry. And so that’s something that we are engaged on as well. But we — we feel quite good about the fact that even within the existing authorities that we have across the federal government, we can make a lot of progress, and that’s where we’re focused for the time being.

RITHOLTZ: All right. So let’s dive into some of these sectors, and — and really this executive order covers everything from health care to financial products, the net neutrality, data farmers, labeling. Let’s start with labor and employee contracts.

I recall a couple of years ago a bunch of reports sort of surfaced about various tech companies — Google, Apple, Facebook — that had these anti-poaching agreements. They wouldn’t hire each other’s senior personnel, obviously, illegal and restrictive covenant amongst them. But — but less obvious are some of the basic restrictive contracts, non-competes, non-disclosures, other onerous clauses that are common in Silicon Valley, but have spread out to the rest of the country. What can this council do to allow greater competition for those sort of employees who want to switch jobs?

DEESE: Yes, so this is an incredibly important issue. You know, our — our — our labor market will work more effectively when workers are competing for jobs, but also employers are competing for workers. And when we have, you know, fewer frictions and better matching between the workers and the jobs that they will be most successful in, we get better, you know, outcomes overall.

But to your point, we’ve got some real frictions and we have real opportunities to address them. So this executive order and the work for the council, we’re going to go at three of those. The first is what you refer to as non-compete agreements, and it’s striking.

Today, about one in three employers require that an employee will sign a non-compete agreement. So you’re talking about — about 60 million people in the workforce, and it’s not just, as you say, in Silicon Valley, and it’s not just in those circumstances where there’s an obvious or — or clear competitive reason why you need it. So, you know, present not jokingly but, you know, illustratively pointed out to the fact that, you know, if you’re the scientist who owns the secret recipe for Coke, you know, you — you may need to sign a non-compete to not just go to Pepsi and give away that trade secret, right, when this …

RITHOLTZ: Clearly.

DEESE: … and so — so clearly these — these — your non-competes operate as a — as a — as a legitimate tool.

But when you got to 60 million people and one of three employers, this goes much broader — construction workers, hotel workers. You know, you work in a restaurant and hospitality, fast food, and also for the — for low-wage jobs, entry-level jobs not just more senior jobs where you be access to more sensitive information.

And so, you know, this — the — the executive order is operating for a pretty basic principle that is particularly for operating in those sectors. And someone offers you a better job, you should be able to take it. And if your existing employer wants you to stay, they should compete for your talent. And so the order is — is — is directing the FTC to look at either modifying or banning non-compete clauses. So that’s — that’s number one.

The second is what I mentioned earlier, which is about the licenses required to operate in the job. So again, about one in three jobs — about 30 percent of jobs in the U.S. also require a license, and so that spans the — you know, that — that spans the horizon, obviously. You know, you need a pilot’s license to be — to — to operate an aircraft, but you also need a license to be an accountant, an interior decorator, a hair dresser.

And importantly, one in three today need that. That was five percent in the 1950’s.


DEESE: So we’ve seen a significant increase in the number of jobs that require a license. And so likewise, this order goes at the same — in those cases where unnecessary licensing is actually reducing mobility, then we should put limits or restrictions on them.

And one point I would highlight here is, you know, some — some people really need to be mobile that, you know, it’s part of how our economy works. You take military families, for example. You have to move every couple of years in order to do your job.

Well, if you’re a spouse of a — if you have a — you know, a one — one — one member of a partnership is — is in the military and moving, the other person works in a job where state by state you have different licensing requirements then, you know, every time they move, that could be three, six months of, you know, friction in terms of getting into the labor market and finding a job.

The last thing we’ll focus on here is about wage data. And one of the things that — that is true today is that employers can share detailed wage data between employers without having to share it to employees. And again, this is just what the concern that is raised is that if — you know, if employers can share wage data without sharing it to employees, then makes it easier for them to — to, you know, either explicitly collude or just implicitly reduce, you know, competition and not have to compete as vigorously on — on wages. And so — and you could end up, you know, putting downward pressure on wages.

So in all three of those areas, we think we can make some progress by either eliminating or restricting non-competes, licensing, you know, wage data sharing. And so that’s — that’s a real focus in the labor market. And we think if we can make some progress on all free, which you end up with, again is a more competitive labor market actually reducing regulation and making it easier for people to move from job to job.

RITHOLTZ: So — so I get the idea of leveling the playing field, increasing mobility would be great if states had reciprocity on various licensing. But a lot of these non-competes and a lot of these employee contracts are governed by state law. What is the authority for the FTC or — or the federal government to come in and say, hey, this — this very weak permissive state statute allowing these restrictive employee agreements is going to be bypassed by the federal government. From whence does that authority come?

DEESE: So in a lot of these cases, these are employer contracts or they are employer agreements. And even in cases where states have — states have authorities, the, you know, employers are making contracts where there is a — a federal nexus. And — and that — that extends to FTC authorities to — to limit or ban anti-competitive practices.

So the FTC does have a pretty broad authority in these areas even in cases where the — you know, the — the — a state rule or a state requirement is — comes into play. So we’re going to — we’re going to — we’re going to do what we can at the federal level. We think we have some real scope here. Obviously, the FTC will sort through that and — and make its determinations — ultimate determinations on how to use that authority independently.

But also, you know, part of what we are doing and part of what we’re trying to encourage here is a consideration of this at the state level as well. So one of the things we will be doing is reaching out and engaging with state and — and municipal actors as well because, you know, one of things that we found is that there’s appetite to try to address this at the state level, too. So, you know, where — where the ultimate authority actually is not a federal authority, we also have a, you know, certain ability to convene and use the bully pulpit to encourage action of the state as well.


RITHOLTZ: So let’s switch over to real estate. Many people may not be aware that the United States has a much higher real estate transaction commission than many other countries. The prior administration had cut a bit of a sweetheart deal with the National Association of Realtors. You guys — this administration put the NAR on notice that that deal was off the table and you want to do something about how they’re maintaining high real estate prices. Tell us about what the competitive council can do about excessive realistic commissions.

DEESE: Well, look, I think it’s a very — you know, it’s — it’s a — it’s a very similar dynamic, but again, you know, operating in — in a different industry, which is, you know, can we bring more transparency and can we also bring more — more competition into — into a market with the — with the goal of trying to ultimately identify what’s good for the — you know, for — for the — for the end consumer.

So, you know, the — the — the — the Justice Department did — did take — take action, yeah, independently to try to — to try to take another look at this question. And, you know, the — the — the real question at issue here is whether the — the sort of the structure of — of commissions is going to advance competition, encourage more competition with better outcomes for — for consumers. And this question of whether you have very high and also uniform commissions across an industry raises a question of whether that’s actually, you know — that’s — that is the result of a competitive outcome or whether that is the result of — of a lack of competition.

So ultimately, you know, this is a — these falls in the category of an enforcement action that the Department of Justice will operate independently. But I think lifting up, what you see is again an important question being asked, right, which is that if you — if you have a — if you have — if you have — if you have high commissions and uniform commissions, it is — you know, it’s appropriate to ask that question of is that the result of a competitive outcome or is that the result of lack of competition.

And, you know, I anticipate that that’s what we’ll — that’s what we’ll see and, hopefully, that’s — that’s the outcome that we will — that we’ll — we’ll arrive — we’ll arrive at, but ultimately the Department of Justice will independently navigate that consistent with their enforcement role.

RITHOLTZ: And — and let’s stay with real estate a minute. One of the things that I was shocked by in the executive order and — and surprised to learn, very often landlords of rental buildings or even condos sell exclusive rights to the building to a cable company, meaning no competition between fiber optic, cable, satellite for customers.

I — I had no idea this existed. I can’t imagine it’s legal, it has to be anti-competitive and make things so much more expensive for consumers. Tell us a little bit about what you want to do with that.

DEESE: I’m glad you picked up on that, and it — it goes to a broader issue, which is how do we actually achieve the goal of affordable high-speed Internet access for all Americans. And that’s a big goal, and there’s big challenges for us as a country to get to there. But part of getting there is actually not only creating access.

You know, 30 percent of people in rural America live in a jurisdiction where there isn’t even access to high-speed Internet, but also creating competition where the fiber has been weighed and the — and the — the axis is there. But it’s unaffordable, and unaffordable in part because there isn’t sufficient competition. So, you know, a — a — a really strikingly high share of Americans live in jurisdictions where there is only one — one reliable broadband provider.

And this gets to your point, many people live in circumstances where they are themselves restricted to only accessing one — one Internet provider. And — and yeah, it’s — it’s not — it’s not as well-known, but it is the case that, in some cases, you have these agreements, these landlord provider agreements where just by dint of deciding to live in a particular building, you — you then lose access to a competitive market for — for broadband services, which tell you anecdotally one of the things that I think you hear a lot is that — I mean, is that people can’t really understand what it — why — what — what they’re paying for and why they’re paying with respect to Internet providers.

And I think that, you know, the opportunity here is to say if we can create more competition, this is a place where ultimately consumers will end up with — with — with more options, and that they’ll drive lower prices and better — and better outcomes as well. So that particular issue of landlords and tenants is a — is a particularly evocative example of the challenges you’ve noted. But the challenge is actually much broader than that, which is at the end of the day, every American, you know, high-speed Internet today is like electricity was a …


DEESE: … 100 years ago. It is the power by which you interact with the 21st century economy. And if you don’t have access to high-speed Internet, you really can’t be a full participant in the nation’s economy today. And we need to make sure that everybody has that access. Some of that is, you know, about building out, well, fiber and building out more actual access. But encouraging healthy competition in this sector is a big part of it as well.

RITHOLTZ: And — and something else I found in the executive order that I never heard of and kind of blew my mind, pay the delay, big pharma paying generic drug companies to not make cheaper generics. How on earth could that be allowed?

DEESE: Well, look, you know, there is a — we — we have a — we have a set of challenges in the — the market for prescription drugs. And — and — and that I think is — is — is well-known. And, you know, there’s a — there’s a — obviously, there is a legitimate issue here about the upfront investment needed to innovate and identify prescription and — and the — the — the innovations that go into prescription drugs and making sure that companies can recoup those. But there’s a lot of elements of how that market operates that go well beyond that and actually end up just driving up prices for consumers.

And you’re — you’re raising one of them, which is, you know, there is — that one of the — one of the strategies that manufacturers have used in the past is if you were the — if you’re the brand name drug manufacturer, you encourage generic manufacturers to — to stay out of the market by, you know, providing them incentive payments. And — and that, you know, at the end of the day, there’s no — there’s a — there’s two — two negative impacts for the economy, one is less innovation, but the other is higher prices for end consumers. And we see in the evidence of these pay-for-delay schemes that it — it produces both of those outcomes: less innovation and higher prices. So that’s the kind of thing that we — we want to work to try to reduce or eliminate, and also just to encourage more competition in the market for generics as well.

So the other, you know, another element that — that the executive order directs is for the FDA to work with states to allow them to import prescription drugs from Canada consistent with safety standards. And this is again something that a number of states have expressed an interest in doing because it would create more competition and lower prices for their — their — for consumers and their states.

And the federal government has been operated, you know, traditionally as a barrier to that, and we want to change that. We want to have the federal government, again consistent with safety standards, encouraging that kind of state action to increase competition in the — in the prescription drug market as well.

RITHOLTZ: It’s always seemed weird to me that U.S. consumers are the ones subsidizing drugs for the rest of the world, that U.S. consumers were paying so much more. It’s not just Canada, but it’s throughout Europe and — and the U.K. It just seems so weird to me that Americans pay a much higher price for the same exact drug, including those made by American drug companies.

DEESE: Yeah, look, it’s striking, right? If you’re a U.S. consumer, you are likely to pay 2.5 times as much for the same prescription drug than your international counterpart. Obviously, it, you know, varies from country-to-country, but on average, that’s — that’s the reality. And we think that there’s a lot that could be done, common sense things that could be done, you know, banning a pay for delay arrangement that reduces innovation drives the prices, letting states import safely from Canada.

There’s also some steps we’re going to need to work with Congress to do as well though, and that’s one of the things that we’re working on right now, in fact, is to try to finally give Medicare the ability to negotiate as the largest bulk purchaser of prescription drugs in the market, give Medicare the ability to use that market position to actually negotiate for lower prices, which would not only increase reduced prices for the end participants in Medicare, but also it would have a downward pressure on prices across the industry because Medicare is the sort of the — the benchmark rate in — in many cases.

So, you know, we just — you’re right, it’s a kind of thing that — it’s also the kind of thing that so many Americans know and — and understand and actually feel on their daily lives, and they know that it just doesn’t make a lot of sense why is it that we’re paying so much. But at the same time, it’s hard to pinpoint, well, how can we fix that. We’re trying to break that down and say there’s some really concrete practical things we could do.

And we — and in doing so, we’re — this is — this is about government eliminating rules, eliminating regulations that just don’t make a lot of sense using market-powered actually bargained for better prices. These are the kinds of things that we think make a lot of sense and — and kind of make intuitive sense to the American people as well.

RITHOLTZ: I want to talk about big tech and net neutrality, but before I move to that space, which I know is going to take a lot of time, I — I have to talk about farmers a little bit. First, why can’t farmers repair their own tractors? This is the most insane thing I can imagine as someone who likes to tinker and do some of my own repairs. If you’re — if you’re a farmer, why can’t you take your John Deere tractor and fix it yourself when it breaks?

DEESE: Well, you know, look, it’s — you’re — you’re — you’re keying in on a lot of these pragmatic things (inaudible) are focused on as well. It’s hard to — it’s hard to prosecute an argument why that makes a lot of sense. And part of the reason why we are where we are is because of a set of rules that have been put in place that end up favoring the incumbent, right?

If you are the incumbent and you sell a tractor, and you restrict the — where somebody can get it fixed then, you know, it makes it easier for you to keep — you know, to maintain control of the customer base. But the question that you’re appropriately raising is what’s the — what’s the broader consumer benefit and what’s the broader rationale behind it? And we think that that’s the kind of thing that we need to — you know, we need to fundamentally rethink.

You know, it’s — it’s true across the — across the economy. There are this sort of right to repair provisions that again our rules in place that we need to take a hard look at to make sure that if they’re in place, they are actually serving some important safety — safety rationale or otherwise and not just there to — to favor or — or, you know, or keep out new entrants into a market.

In that particular case, we’re quite excited about the idea that, you know, if you open up and give — and that’s why we encourage the FTC to look at saying give — you know, give farmers the right to repair their own equipment how they like without having to rely on any particular expensive manufacturer. And in doing so, that will also — you know, again it’s the same thing, you know, that should make life easier for farmers. It should make — it should bring prices down, but also encourage innovation because if you’re, you know, a — if you’re a repair shop, an independent repair shop that works on some other, you know, small — small mechanical issues and you open this up, well, then you have a market to enter into. You can learn how to fix tractors efficiently and cheaply, and then you can grow — grow as a result.

And I — I think that that’s a point I would — I would emphasize of this is not about keeping businesses in the U.S. from growing, gaining market share and doing what businesses need to do to be successful, which is enter new markets, innovate, grow and, as a result, get bigger. That’s part of the goal of effective capitalism. This is not about stifling that. It’s more about looking at those areas where a rule actually keeps incumbents from being able enter into the market and really ask a hard question of is there a legitimate economic rationale to that other than rents or other than stifling competition.

RITHOLTZ: Right. And it’s not just factors, it’s — it’s cell phones. My — my apple iPhone is dying and I can either swap the battery out and then close all sorts of problems because I’m not allowed to change a battery or I could go buy a brand-new phone. But again, before we get to technology, let me stay with farmers. There are some pretty surprising restrictions on seeds, including liability for some farmers for seeds they never even used. What’s going on in that area?

I’ve read some pretty horrible stories about farmers being sued by — by big Ag, for lack of a better phrase. What can be done to allow farmers to take more control of their own crops, of their own planting and their own harvesting?

DEESE: Well, this is a really good example of when you see consolidation in the market. That should raise a question, a legitimate question of is that consolidation encouraging healthy competition or consistent with healthy competition or is it actually stifling that competition.

So if you look at the market for agricultural inputs: seeds, feed, fertilizer, we’ve seen significant consolidation over the last few decades. So to your point on seeds, you know, to a — you know, to a first approximation about four companies control most of the world market at this point, and we’ve seen prices go up very significantly across time. And so what that — what — what we’ve seen in that market is that the increase in price and the reduction of competition also puts those providers in a position where they can put increased demands because the — the end farmer, the small farmer had — just doesn’t have a choice to get there to source their seeds from any other producer.

So they can limit options. They can — you know, they can require the use of those in certain ways but then can create liability for the end producer. What it also does is it means that the end farmer ends up getting less and less of the total aggregate benefit of the output that they grow. So, you know, when you’re using a seed to grow it a — a food commodity, at the end of the day, the — you know, farmers, as we’ve seen this consolidating — consolidation increased, they’ve gotten less and less of the total aggregate economic benefit of — of — of — of that output.

And so you’ve got, you know, more consolidation, prices increasing, and less of the benefit of each dollar being garnered for that and output food products declining for — for decades. And I think this is an interesting place with respect to this executive order where the — we’ve gotten an enormous amount of outpouring from agricultural constituencies, the small farmers organizations in states.

We’ve seen, you know, everybody from — from Senator Tester in Montana to Senator Grassley in Iowa saying this is what we need to try to take on consolidation and get better competition — get competition back into markets for seed — into markets for seed, into markets for fertilizer to give the smaller farmers a real fighting chance, and to give them more of the share of the economic output of the product they’re producing.

RITHOLTZ: And — and ultimately, if there’s more competition not only does it benefit farmers, I have to assume in this current inflation concerned environment, this can help drive food prices down over the long haul.

DEESE: I think it’s a way to — to — to create a stable and — and better price outcomes over — over the longer-term, yeah, because you see, you know, that prices — when prices for input goods are going up …


DEESE: … that was true in agricultural markets prior to the pandemic. And certainly, it remains a concern now. This is a — this — these types of steps, we hope, will actually put downward pressure on — on those markets over the longer-term.

RITHOLTZ: All right. So let’s talk about everybody’s favorite segment, big tech.


RITHOLTZ: I read NYU Professor Scott Galloway’s book, “The Four.” I think it came out in 2016 or 2017. And the basic premises, the biggest companies in technology have become very large, very powerful. They buy up nascent competitors before they’re even out of the womb, and they just have incredible market power. What can be done about this concentrated strength of these giant trillion-dollar technology companies?

DEESE: Well, I would start by saying, look, the — our technology sector and our tech companies are a reflection of the unparalleled innovation of the American economy and reflect and — and — and drive and have generated a lot of the innovation and benefits that Americans across the board, you and I, benefit from on a daily basis. And so that’s — that’s — that’s — that’s important and important starting point.

And at the same time, there are really significant problems with concentration and with anti-competitive behavior in — in the tech sector, and that’s what we’re really trying to focus on in this executive order and across — across the board. And it’s — it’s not — you know, this conversation can often be sort of very — it can drive to sort of and (inaudible). There’s just something — there’s something inherently wrong with big tech, right? And we’re trying to break that down and say let’s try to identify those areas where we — we have real questions about dominant, you know, tech platforms and where they may be under to mining competition or, you know, reducing competition.

So that’s the — that’s — that’s — that’s our focus. So, you know, for example where, you know, the — the — the executive order is encouraging the FTC to adopt new rules on how tech platforms can gather and collect data, and use that data in places like retail marketplaces on their own platforms. And — and that’s — you know, that’s — that’s a — that’s a more concrete example, but one that I think that, you know, a lot of end consumers have — have observed or have interacted with in their — in their daily life. That’s clearly a place where we need to take a very hard look and apply scrutiny.

Another is with respect to mergers, right, and this is a place where clearly we — we need to increase the focus. Again, the antitrust — the actual enforcement we will leave to the Department of Justice and we’ll leave to the FTC. But as a matter of policy, we have to focus in — you know, particular focus on the acquisition of competitors and the impact of those in the tech sector on platforms that then are dominant enough that they can use mergers to just basically to squeeze out competition by competitors in the first place.

And at the end of the day, you know, we want to create a circumstance where the next generation of great tech companies in the United States come from the innovative capacity of this economy, which is unparalleled, and continue to drive innovation. But we think that these types of performers are actually necessary to do that so that we don’t end up stifling competition and — and losing that kind of next generation of innovation.

RITHOLTZ: You — you mentioned encouraging the FTC to establish rules on surveillance, there also some rules on accumulation of data. It seems that other countries like Europe or even the state of California have very robust data privacy laws. Does that require separate legislation or can that be done through this council and through the FTC?

DEESE: Well, I think that there’s a lot that we can do. There’s — there’s — there’s a lot that we can do and a lot that — that the — the FTC and the Department of Justice can — can do and can move on their own. And I think that we’ll see that with respect to — I anticipate we’ll see that with respect to data. We’ll see that with respect to scrutiny on mergers, and also I think on some more specific behaviors and methods that — that we’ve seen emerge in the industry, and that we have called out, you know, in the — in the executive order, particularly around competing on your own platform, right?

That — and so using the — you know, the platform dominance to then compete with others on your platform, you know, it’s a place where it sort of — intuitively, you — you — you really need to apply scrutiny to activities in that space.

At the same time, you — you are right that there’s both at the state level and at the federal level as well. There’s an active conversation about where additional authority will be necessary. And I — I mentioned earlier, you know, there’s an — there’s an active robust conversation going on in the U.S. Congress on that front, bipartisan in nature, so I anticipate that we’re going to see more activity on the legislative front, which reflects the fact that we probably are going to need more authority as well.

RITHOLTZ: Makes — makes a lot of sense, and it’s kind of an interesting coalition of people criticizing the market power of big tech. Conservatives are looking at it from one perspective. Progressives are looking at it from a very different perspective. Is there — is there a coalition to be had to actually get some legislation passed on this?

DEESE: Well, I — I think that — here’s what I’d say. We have seen bipartisan activity principally over the last couple of weeks. We’ve seen that in the House, and we’re encouraged by that work because I think that it is — it is raising appropriately the authorities necessary to go at some of these concerns that we’ve talked about.

There is similar work going on in the Senate, and I anticipate that that, you know, will — will progress. It’s always one of the things I found in this job is it’s both not a good idea and very difficult to really predict with accuracy exact with the U.S. Congress is going to do. So I won’t — I won’t try to do that in this context. But I would say that if you look at the work that’s going on, there’s a lot of thought behind it. There’s been a lot of energy building on this issue across time. It is bipartisan in nature, and so it’s — it’s a complicated substantive issue and it’s complicated politically as well, but certainly, we are encouraged by it because I think, you know, at the end of the day, the President does believe that we — we really need to focus on these sensitive issues. We cannot just allow the status quo to continue.

The actions that we are taking in the executive order are a big step in that direction, but we’re going to keep working with Congress. And, hopefully, we will — we’ll be able to progress on to legislative front as well.

RITHOLTZ: And I have to just quickly ask you about net neutrality, that was undone by the last administration. What are the plans in this administration? Are we going to restore net neutrality so that certain consolidated companies — they might own the pipes and the content – can’t give their own materials preference over the rest of the Internet?

DEESE: So the — the President’s view on this is pretty clear, you held it since the campaign that he believes that net neutrality rules are necessary and appropriate, that the steps that the prior administration took were in the wrong direction and then — and in the executive order encourages the FCC to — to restore those rules. And so that’s where we are, and we are — that’s one of the key steps that was embedded in this executive order. The FCC operates independently. The President’s got a clear view and is encouraging that FCC to take action on that front.

RITHOLTZ: And I see I only have time for one more question, so let me make it a big one. Let’s look back from four years in the future at — at this council. How will you be able to tell if this council was successful or not?

DEESE: At the end of the day, this is about improving economic outcomes for people, whether that’s in higher wages, lower prices or the impact of more innovation in their lives and in the communities in which they operate. So at core, if we look back successful be because across the economy, lots of people have been able to improve their economic prospects in practical ways. People will be able to go into a pharmacy and by hearing aids over-the-counter, cheaper, more innovative, better outcome.

People will have more opportunity to go across the street to the employer that might want to offer them a better job and get employers to compete for their talent rather than being locked into a non-compete. Prescription drug prices will be lower than they otherwise will be. People have more options to get high-speed Internet even if they live in an apartment building with a particular landlord. And, you know, people will be able to do other things that we — we haven’t touched on in this conversation like move financial institutions. It skips their data from Bank 1 to Bank 2 without having to go through a complicated process.

All of these things just go to very practical frictions in a person’s life, but at the end of the day, successful be we have made those frictions easier and gone at that $5,000 in the aggregate that is dragging on the typical families’ economic outcomes and started to reverse that.

So that’s — that’s how we think about success. It will require structure and process and a kind of focus on executing across these — these 72 executive actions, but that’s our North Star.

RITHOLTZ: Brian, this has just been absolutely enlightening. Thank you again for being so generous with your time. We have been speaking with Brian Deese. He is the Director of the National Economic Council and the new Chairperson of the President’s Council on Economic Competitiveness.

If you enjoy this conversation, check out any of our prior 400 such interviews. You can find those wherever you feed your podcast fix: iTunes, Spotify, Google podcast, et cetera.

We love your comments, feedback and suggestions. Write to us at You can sign up for my daily reading list at Check out my weekly column at Follow me on Twitter @ritholtz.

I would be remiss if I did not thank the crack team that helps put these conversations together each week. Tim Herro is my Audio Engineer. Atika Valbrun is my Project Manager. Paris Wald is my Producer. Michael Batnick is my Head of Research.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.




Print Friendly, PDF & Email

Posted Under