Unexplored Pathways

| Jun 16, 2020

The “Moving the Chains” symposium offers a variety of ideas on how to think about global competitiveness and supply chains. While I do not agree with all of the ideas offered, the conversation is essential – and common themes are emerging, such as opposition to the idea that the aim of trade policy should be efficiency, with little regard for other factors.

Rather than respond to a particular essay, I wanted to outline two other areas that are important but were not covered in the symposium.

The first is the direct public provision of goods and services. For example, the federal government has the power under existing laws to license a patented product, like a pharmaceutical drug. Public production – whether of medicines or other essential goods – has a variety of benefits. Domestic production creates resilience from global shocks; public capacity enables scaling up production in a crisis; public production gives government an understanding of cost structures that can serve as a “yardstick” for costs and prices in contracting decisions; and the public option can compete against private actors and push monopolists to lower their prices.

A second area is infrastructure regulation, sometimes called public utilities regulation or regulated industries law. The basic idea is that there are some businesses that serve as infrastructure, and they should be regulated to ensure public access on non-discriminatory terms. For example, the 1906 Hepburn Act prohibited railroads from owning companies that produced goods that shipped on the railways. Why? Because without a separation between the railroad and commercial activity that travels across the rails, railroad companies would be able to give special privileges to their own vertically integrated goods. Other producers would face higher costs to move their goods around. Favoritism of this type tends to build a monopoly and deprives the country of competition, innovation, and resilience. This tradition of American regulatory practice has implications for tech platforms.

These two pathways – public production and infrastructure regulation – come at the problem of weakened supply chains in a different way than many of the proposals offered in the symposium. But both can help to make America more competitive and more economically resilient.

Ganesh Sitaraman

Ganesh Sitaraman is a professor of law at Vanderbilt Law School and author of The Great Democracy: How to Fix Our Politics, Unrig the Economy, and Unite America.