Thanks to the deregulatory effort pursued by the Trump Administration since entering office in 2017, the United States possessed the strongest economy in human history when the coronavirus pandemic hit.
By reducing government intervention in the private economy rather than maximizing it, we finally reached escape velocity from the Obama malaise, which was the objectively worst cyclical economic “recovery” in recorded U.S. history. Markets jolted upward under Trump after they’d flatlined for two years as the Obama Administration concluded, and private businesses hired to such a degree that the number of available jobs exceeded the number of unemployed Americans for the first time ever.
From internet service to energy exploration to labor policy, getting government out of the way once again proved the most potent stimulant for economic growth and job creation.
In welcome news this week, President Trump accelerated that deregulatory thrust by signing an executive order directing federal agencies to “combat the economic consequences of COVID-19 with the same vigor and resourcefulness with which the fight against COVID-19 itself has been waged”:
Agencies should address this economic emergency by rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery, consistent with applicable law and with protection of the public health and safety, with national and homeland security, and with budgetary priorities and operational feasibility. They should also give businesses, especially small businesses, the confidence they need to re-open by providing guidance on what the law requires; by recognizing the efforts of businesses to comply with the often-complex regulations in complicated and swiftly changing circumstances; and by committing to fairness in administrative enforcement and adjudication…
The heads of all agencies shall identify regulatory standards that may inhibit economic recovery and shall consider taking appropriate action, consistent with applicable law, including by issuing proposed rules as necessary, to temporarily or permanently rescind, modify, waive, or exempt persons or entities from those requirements, and to consider exercising appropriate temporary enforcement discretion or appropriate temporary extensions of time as provided for in enforceable agreements with respect to those requirements, for the purpose of promoting job creation and economic growth, insofar as doing so is consistent with the law…
While the Trump Administration was further unleashing economic vigor, however, a predictable chorus of leftists continue to pursue the opposite approach, seeking to tighten government control and strangle market forces. Per Rahm Emanuel’s adage, they’re unwilling to let this crisis go to waste.
Specifically, noted economic sages Senator Elizabeth Warren (D – Massachusetts) and Representatives Alexandria Ocasio-Cortez (D – New York) and David Cicilline (D – Rhode Island) are introducing legislation imposing a wholesale “moratorium on mergers until the pandemic ends” as part of any new Congressional coronavirus relief legislation.
Think about that. They seek to halt the free, voluntary, mutual agreements between private parties to combine their efficiencies amid an already-fraught economic environment.
Although they claim that their proposal is “desperately needed” due to the “national emergency,” their rationalization is belied by the simple fact that they were advocating the same sort of moratoria before the world even became aware of coronavirus.
Additionally, the economic reality is that economic downturns already tend to dampen merger activity, not increase it. In the last recession, for instance, Department of Justice (DOJ) and Federal Trade Commission (FTC) data show that merger activity plummeted by 59% from 2008 to 2009 alone.
Accordingly, it’s clear that the coronavirus crisis doesn’t justify the Warren-AOC-Cicilline moratorium, it simply offers them a convenient excuse to pursue their big-government ideological agenda.
But as National Taxpayer Union (NTU) Policy and Government Affairs Manager Thomas Aiello explains, private merger agreements offer enormous benefits for both consumers and the larger economy, which is even more critical during a moment like this:
Economists generally agree that mergers can increase efficiency, a vital economic metric for all businesses, both big and small. Permitting businesses to consolidate has the potential to increase economies of scale, which causes the average cost of production to fall while the output volume rises. Reductions in the cost of inputs and the elimination of redundancies will lower average cost, with those savings being passed onto consumers in the form of lower prices.
Merging also allows businesses to allocate greater capital into innovation instead of dedicating resources toward undercutting competition. Because the new firm will earn more profit, more resources will be used to finance risky (and often expensive) research and development that wouldn’t have otherwise happened. Experts continuously cite that “mergers and acquisition activities have a positive and significant effect on innovation and have found no support for the argument that mergers are detrimental to innovate.”
Lower prices for consumers, more investment and innovation and elimination of inefficient business redundancies? That’s precisely what the economy needs right now, not the Warren-AOC-Cicilline suffocating regulatory approach.
That approach also parallels the Trump Administration’s broader pro-market economic policies, which brought us record prosperity and offer the optimal course for restoring it as quickly as possible.
Our current economic crisis requires pro-market policies, not the latest schemes from the minds of extremists like Elizabeth Warren and AOC, and their proposed merger moratorium must be swiftly rejected.
Reprinted with Permission from - Center for Individual Freedom by - Timothy H. Lee