Former Treasury Secretary Larry Summers has a history of disagreeing with the Biden administration's economic policies. On Thursday, he took to the airwaves to criticize the Federal Trade Commission's new merger and acquisitions guidelines released on Wednesday.
He wished that offering the updated guidelines “had been taken as an opportunity to rationalize the policy and step back rather than to double down on what sometimes seems almost like a war on business,” Summers said during an interview with Bloomberg TV. “So based on what's been put out for public comment and a very rapid study I've been able to do so far, I'm a bit disappointed.”
The FTC’s updated guidelines include added provisions that would allow the government to block mergers and acquisitions that could “lessen competition for workers.” Previous policies focused only on the impact to consumers. Summers took issue with this portion of the guidelines specifically, preferring instead to stick with the current, orthodox view that defines monopolies by their effect on consumer prices.
“I do not think it is remotely plausible to ascribe lower real wages or more men not working to anything about monopoly power,” Summers said. “I think that traditional thinking has had it about right in this area in believing that the standard for merger policy, in thinking about the organization of industries, is lower prices for consumers.”
He went on to cite a few examples of how that plays out in practice in the marketplace.
“Sometimes that happens by breaking up monopolies, sometimes that happens by really efficient firms expanding by bringing lower prices, as with Walmart or with Amazon,” Summers said.
FTC chair Lina Khan said the policies were necessary to reflect the changing nature of American business. Both she and other FTC officials reiterated that these guidelines are not laws in and of themselves. Instead, they are an explanation of how their department interprets these laws.
“These guidelines reflect the law,” FTC chair Lina Khan said in a CNBC interview on Wednesday. “This document is designed to make sure everybody is on notice about what the state of the law is.”
The antitrust guidelines are in the public comment phase through Sept. 17. It remains to be seen whether the FTC will heed any of the former Treasury secretary’s advice.
Summers has a history with the Biden admin
This isn’t the first time Summers has split with President Joe Biden. The famed economist criticized the administration’s 2021 COVID-relief stimulus in the heyday of the pandemic and, last summer, during its attempts to fight inflation.
Summers was particularly critical of the $1.9 trillion COVID-19 stimulus plan, claiming it would lead to higher inflation. Biden implemented the plan shortly after taking office in March 2021, when the pandemic was still at the center of American life. Summers was particularly concerned that stimulus checks and added uninsurance benefits would lead to inflation, calling the package the “least responsible macroeconomic policy” of the last 40 years.
Summers was right that inflation would rise, and it peaked at 9.1% in June 2022. However, some argue that given the fact that inflation rose globally from 3% in 2020 to 7% in April 2023, according to data from the International Monetary Fund, the conditions that caused inflation may not be attributable to a U.S. domestic policy alone. Especially considering that the U.S. is now ahead of much the developed world in curbing inflation.
Summers and the Biden administration also disagreed on how the government should tackle inflation. For starters, Summers thought the government, including the Federal Reserve, were slow to address the problem. He even harangued two Fed regional bank presidents in-person at a private meeting at the Aspen Economic Strategy Group, the Washington Post reported last October.
Not only did Summers disagree about the timelines of the inflation response, he was also critical of the measures themselves. In June 2022, when the U.S. faced 9% inflation, Summers predicted an unemployment rate of 5% or higher for five years or an unemployment rate of 10% for a year would be needed to lower inflation. The June 2023 inflation rate was 3.0%, while the unemployment rate has remained around 3.5% since June 2022.
Summers and the FTC did not immediately respond to a request for comment.
