Brian Albrecht on Business Dynamism, Greedflation, and Antitrust
Feb 3, 2025
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Brian Albrecht, chief economist at the International Center for Law & Economics and co-author of Economic Forces, dives into compelling economic discussions. He examines the decline of business dynamism and the rise of 'greedflation,' explaining how market power affects industries today. Albrecht critiques traditional theories on tariffs and urges a reevaluation of their economic impact. He also discusses the Biden administration's antitrust efforts, emphasizing challenges in regulating big tech. A must-listen for insights on modern economic policy!
Brian Albrecht emphasizes the disconnect between rising market power and business dynamism, challenging traditional assumptions about industry performance.
The podcast highlights the Biden administration's aggressive antitrust measures, which focus more on potential future competition rather than current market conditions.
Albrecht argues for a revised perspective on tariffs, suggesting that they should be assessed based on their intricate effects on modern supply chains.
Deep dives
Brian Albrecht's Role and Background
Brian Albrecht serves as the chief economist for the International Center for Law and Economics, where his work primarily focuses on incorporating economic reasoning into policy discussions. His prior experience includes earning a PhD from the renowned University of Minnesota, where he developed a deep interest in microeconomic theory. In his role at the ICLE, he collaborates with approximately 90 academic affiliates and emphasizes the importance of teaching basic economic principles to policymakers and legal professionals. Albrecht discusses his commitment to bringing economic analysis to contemporary policy issues and educating various stakeholders on key economic concepts.
Market Power and Business Dynamism
The podcast delves into the recent trends in market power and business dynamism, highlighting a significant increase in average markups—a measure indicating a firm's ability to charge prices above costs. A paper co-authored by Albrecht shows that while markups have escalated, the decline in business dynamism isn't simply a consequence of increased market power. Contrary to expectations, industries that exhibited the highest markups didn't necessarily correlate with significant declines in dynamism. This finding raises questions about the assumed relationship between rising market power and dwindling dynamism in various sectors.
Influence of the Biden Administration on Antitrust
Albrecht discusses the antitrust landscape under the Biden administration, notably how it has focused on addressing perceived monopolistic behavior, especially within the tech sector. The administration's aggressive stance includes notable actions, such as challenging mergers and acquisitions based on potential future competition rather than current market realities. Despite some successes in blocking specific mergers, many initiatives based on new, speculative theories of harm have encountered setbacks in court. Albrecht suggests that while there has been a significant push for a revitalized approach to antitrust, the practical outcomes have not aligned with the more ambitious theoretical frameworks.
The Interplay Between Tariffs and Economic Dynamics
The podcast presents Albrecht's insights into the economic implications of tariffs, particularly how they might disrupt supply chains and affect various sectors. He argues that traditional economic narratives that support tariffs need updating, as many imports serve as essential inputs for domestic production. Thus, straightforward tariffs on finished goods might be less harmful to the overall market than tariffs on raw materials. Analyzing past trade policies, Albrecht emphasizes the complications arising from tariffs, including rent-seeking behavior and the unintended consequences for domestic industries.
Revisiting Economic Models in the Context of Trade
Albrecht challenges the traditional Econ 101 narrative regarding tariffs and their straightforward benefits to domestic production. He suggests that the simplistic view of protecting local manufacturers tends to overlook the complex dynamics of modern supply chains, where many imports are crucial inputs in manufacturing processes. His discussion proposes that a more nuanced understanding of tariffs could lead to better policy outcomes, particularly prioritizing tariffs on finished goods rather than intermediates. This approach may mitigate the adverse effects on broader employment and production, paving the way for a more effective trade policy.
Brian Albrecht is the chief economist for the International Center for Law & Economics and is the coauthor of the economics newsletter Economic Forces. In Brian’s first appearance on the show, he discussed the data behind business dynamism, the notion of greedflation, the recent developments in antitrust, the update Econ 101 needs to make in regard to tariffs, and much more.
Check out the transcript for this week’s episode, now with links.
