Trump Administration Sees No Threat to Economy From Monopolies

New research released Thursday by the University of Chicago’s Becker Friedman Institute for Economics offers new evidence for why populist politicians like Mr. Trump should be concerned with whether market concentration is in fact rising in the economy: The rise hurts blue-collar workers, like those employed in factories, more than everyone else.

The research, from the University of Chicago economists Greg Kaplan and Piotr Zoch, does not seek to quantify whether concentration has gone up or down in recent years. Instead, it studies what happens to particular classes of workers when companies increasingly dominate a market and have more power to raise prices. It finds that some workers — those who make things — are hurt in when their employer dominates an industry. The workers who sell or market or design things gain.

“It’s leading to an increase in the incomes of white-collar workers,” Mr. Kaplan said in an interview, “at the expense of blue-collar workers.”

There’s a relatively simple explanation for why that is. When companies have more pricing power, they make fewer products and sell each one for a higher profit margin. In that case, it’s far more valuable to a company to be an employee working in so-called expansionary positions, like marketing, than in production jobs, like working a factory line — because there’s less production to be done and more salesmanship.

Mr. Trump has repeatedly highlighted his administration’s record of delivering for the production workers he targeted in his 2016 campaign promises. The new economic report is no exception.

In recent decades, the report says, the government disproportionately regulated industries like manufacturing “that offer fulfilling, blue collar jobs for the majority of Americans who do not have a college degree.”

“These misguided policy decisions,” it continues, “imposed real-world costs that created barriers to success and prosperity for hardworking Americans. Those days are over.”

Article source: https://www.nytimes.com/2020/02/20/business/trump-economy-monopoly.html