Elizabeth Warren participated in a town hall this week on CNN. The biggest attention grabber of the night was her proposition to get rid of the Electoral College. In fairness to the Senator, the Electoral College has been questioned at some point in virtually every election cycle since the year 2000.
What’s more concerning about a potential Warren presidency is actually twofold: her inarticulate ideas on health care, and her desire to break up the big tech companies.
In regards to health care, Warren largely dodged the hot button issues of the night. When asked about the Medicare for All proposal, Warren prefaced by saying “some people” say we should lower the age to 30. What’s important, Warren said was “that everybody has to come to the table on this.” Only then will we be able to truly know how to implement a Medicare for All solution. But who exactly is this elusive “everybody?” She didn’t really elaborate.
But Warren was adamant that this “everybody” needed to come together because the issue at hand is so drastically complicated. This is an accurate statement by the Senator. The United States healthcare system is insanely complex. It’s a hodgepodge mixture of public and private options, with protectionist policies that prevent our neighbors to the north from even selling us lower cost pharmaceuticals. It’s a disastrous mess.
However, it raises the question, is the healthcare system broken because of private enterprise or because of deliberate government policy? And to be fair to Senator Warren, she touched on this issue. Unlike her opponent, Cory Booker, Warren is advocating for the relaxation of protectionist drug policies. That would be a tremendous step in the right direction.
But she is also firmly entrenched in the idea that a centralized board can repair the fractured healthcare industry. With the complexities at hand, is Senator Warren overestimating the capabilities of a centralized solution?
F.A. Hayek spoke on this issue quite a bit in his book, The Road to Serfdom. To paraphrase Hayek, the more complicated the industry, the more necessary it is for free competition. This is because the more complex an industry is, the least likely that a small group of individuals will effectively grasp its intricacies. For Hayek, the government can do just fine in overseeing simple matters such as roads(maybe Hayek overestimated the government). However, their decisions on complex matters would likely just make the situation worse.
And Senator Warren did nothing to disrupt this notion. When pressed on whether or not she would do away with private healthcare entirely, she wavered. She looked uneasy. She alternated between maybe so but left the door open with a maybe not. The unsettling reality was simple: she doesn’t know.
But one thing she does know is that she wants to break up the big tech companies including, Amazon, Facebook, Apple, and Google. This is founded upon a preposterous notion that these companies have too much power over our lives. It’s founded on a very limited understanding of these businesses.
For starters, these businesses are not monopolies. In fact, they are each other’s biggest competitors. They are ruthlessly competing against one another in the internet advertising business. They are also competing for dominance in the smart home market.
No, the idea that these businesses are monopolies is an oversimplified take on their business models. It’s to view Amazon as an e-commerce market, or Google as a mere search engine. It’s a complete willingness to ignore that they are also competing in cloud, hardware, self-driving cars, healthcare, smartphones, operating systems, grocery retail, data centers, and just recently, with the Stadia reveal, the video game industry.
They face ruthless competition in all of these areas. Wal-Mart is growing e-commerce sales by 50% year over year. Etsy and Shopify are the two fastest growing e-commerce businesses in the United States. Google can’t compete with Apple in the smartphone market. Facebook is a dominant social platform, but not for e-dating (Match.com) or professional networking (LinkedIn).
To talk about breaking these businesses up is not only taking a narrow view of their operations, however. It’s also a blatant disregard for just how much the consumer has benefited from their innovation.
And why do they relentlessly pursue innovation? It wouldn’t make much sense to pursue innovation if they could just rest on their monopolistic power. On the other hand, their relentless pursuit to diversify is a direct acknowledgement of the precarious nature of the dominance hierarchy within the tech industry.
Consumers, however, will fail to benefit if Warren gets her way. Her policies will result in a dramatic leveling of the tech industry just when we need it the most. Automation, space travel, and advances in healthcare are just within the reach of Amazon, Google, and Apple. It would be a shame to watch the government stifle their ambitions.