For advocates of free markets, the role of government in regulating markets is a crucial battleground where principles of individual freedom clash with centralized control. Market Institute President Charles Sauer has a new article in Real Clear Markets that examines how Senators Elizabeth Warren and Edward Kennedy’s views on market intervention align with the ideals of promoting free markets and limiting government interference.
He writes:
“Most political observers would say there is little difference between Massachusetts Senator Elizabeth Warren and her predecessor, the late Edward Kennedy. Like Senator Kennedy, Senator Warren is a leader of the progressive wing of the Democratic party, and as such plays a major role in setting the legislative agenda for progressives both in Congress and in the larger policy community. However, Senator Kennedy was willing to rethink progressive assumptions about the benefits of government regulations if the facts demonstrated that government intervention harmed workers, consumers, and small businesses while benefiting big corporations. In contrast, Senator Warren has shown no willingness to rethink the benefits of government intervention in the marketplace, even when the intervention in question harms her constituents.
During the Carter Administration, Senator Kennedy was part of a group of leading progressives who realized that federal transportation regulations served the interests of big business by cartelizing the industry, thus limiting competition, keeping prices high and consumer options limited. For example, the New Deal-era Civil Aeronautics Board (CAB) supposedly benefited consumers by setting prices, as well as establishing airline routes and flight schedules. This system was supposed to protect consumers by ensuring affordable fares and available flights. However, in practice, the CAB allowed ten airlines to monopolize the market and make air travel unaffordable to the average American.
Kennedy, with the assistance of his aide future Supreme Court Justice Stephen Breyer, helped pass the Airline Deregulation Act. The result was an increase in competition, which gave consumers more choices for air travel at affordable prices. The benefits can be seen in the following statistic: in 1976 less than 30% of Americans had taken a commercial flight, but by the turn of the century 60% of Americans took at least one round trip flight per year.
Kennedy also helped Jimmy Carter deregulate the trucking and railroad industries with similar results. Allowing train and truck shippers to compete by offering lower prices provided short term benefits to consumers, while strengthening the transportation industry. A study by the American Consumer Institute on trucking deregulation found that “from 1980 to 2020, taking account of inflation, the industry’s productivity has increased 159%, shipping volumes have increased 57%, revenues have dropped 13%, and prices have plummeted 44%.” In contrast to Senator Kennedy, Senator Warren clings to the “government knows best” philosophy, even in the face of evidence demonstrating that is not the case.
For example, Warren supported government action blocking Amazon’s proposed purchase of iRobot, maker of the popular electronic vacuum Roomba. Warren was the lead in a letter to Federal Trade Commission (FTC) head Lina Khan, objecting to the merger on the grounds that big companies like Amazon should not be allowed to “buy their way out of competition.” This ignores the fact that Amazon did not decide to try to purchase iRobot until Amazon’s own robot vacuum failed to compete with Roomba.
More significantly Warren does not understand how the modern tech industry works. Many investors invest money in startups in the hope that once the company’s products become successful, one of the big tech companies will seek to acquire them, giving the investors a huge payday. If Warren (and her fellow progressives like Khan) had their way, it would be harder for start-up tech companies to attract capital. So, Warren’s policies would mean fewer tech startups, less innovation, and fewer jobs.”
