Know is, who took documents out of the scif. If thats illegal then biden would have been illegal. Thank you. Host joe is next, dayton, ohio, good morning, joe. Caller good morning from a balmy 70 degrees here in dayton, ohio. 2a joe biden willfully retained documents. Hurs own words. Joe biden military classified secrets to his ghost writer. Joe biden told his ghost writer. You will know her from her books and her work with cmn. And she was a Ground Breaking scholar before becoming chairperson of the ftc, and thats impressive because shes still very young, i think the youngest in history. What im most interested about todays discussion, carnegie has been doing a lot of work on political economy so this fits in well. It has become a draw. I to say interesting times, but eunusualness in our politics is ans of the political economy moment were living thru in many ways. In that sense, i think, chairperson cox remarks from r particularly important because shes somebody who has trayed to assert a new conception of one of the fundamentals of our think about the idea ofwe competition and what it does to drive innovation, to lower price for consumers, etc. She has won, as you might expect for somebody trying to assert a new way of conceptualizing a fundamental concept in our political economy, shes won plaudits from those taking on big tech in the name of consumers as well as raise criticisms and questions from those who wonder actions may weaken the United States position on National Security by negatively impacting our competitiveness in the world or affecting the ecosystem here at home in the National Security space. I expect shell address those concerns and others in her remarks. Its a pasure to you with us here today, welcome to the Carnegie Endowment and we look forward to your speech. [applause] good afternoon, everybody. Its great to be here with you all. Many thanks to dan and tino and the Carnegie Endowment for hosting me today. I want to start off by thain foc chair to come here to discuss our global competitiveness. The federal trade commission fo Consumer Protection law. We focus primarily on the domestic markets an u. S. Economy. Through this work we get■ a ground level view of how markets are structured in america. And how the extent of competition or consolidation drives outcomes that affect all of us. Like many across government the f. T. C. Is watching closely ase d a. I. Tools creates tuns and risks. Our work is already tackling the daytoday harms these tools■. ■ cantor beau charge from voice cloning scams to commercial surveillance. But beyond these immediate challenges, we face right now a more fundamental question of power and governance. Will this be a moment of opening up markets to free competition, unleashing the full potential of emerging technologies . Or will a handful of dominant te control over key tools locking us in to a future of their choosing . The stakes of question are enormously high. Technological break throughs candice rupt markets, spur Economic Growth, and nature of war and geopolitics. Whether we opt for a National Policy of consolidation or of competition will have huge consequences for decades to come. As in prior moments of contestation we are starting to hear the arguments that america must protect its domestic monopolies to ensure that we stay ahead on the global ser thn promoting free and fair competition, this National Champions argument holds that coddling dominance. I want to explain why we should be extraordinarily skeptical of this National Champions argument and why we should instead recognize that monopoly power in America Today is a major threat to our National Interests and global leadership. Lets begin by looking at the world of the re of competition in providing for a common defense. In 2021, an errant spark in an explosives factory in louisiana destroyed the only plant in the United States that makes black powder, a highly combustible product used to make mortar artd tomahawk missiles. Theres no substitute for black powder and it has hundreds of military applications. So when that factory blew up and we didnt have any backup plans, it destroyed the only black powder production in all of north america. Theres a simple lesson here, dont put all of your eggs in one basket. This is but one of many examples of how consolidation today is threatening our National Interests. Economists often think about monopolies in consolidated markets as causing the problem of higher prices and lower outputs. Weve seen how monopolies also can foster systemic concentrating production also concentrates risk. Im sure somebody could argue that it was more efficient to put black powder production in one plant in louisiana. And maybe it was. Until it wasnt. Defense officials the problem of monopoly now country as a strategic weakness. The pentagon has been warning about vulnerabilities iny suppln for years. One top official recently noted that our increased reliance on a small number of contors for critical capabilities impact ours ability to ramp up production. One early victory after i the f. T. C. Was blocking the proposed merger between lockheed and aerojet. Aerojet is the last independent u. S. Supplier missile inputs and our investigation shows that the deal would have allowed lockheed to cut off rivals access to this key input and jack up the price that our government and ultimately the public has to pay. It was the first time in decades that ourovernment had sued the con sol to halt conle is daition in the Defense Industrial base. Its Defense Industrial base where we have a problem. The upon democratic showed fragility across the supply chains with shortages in 3■beverything from semiconducts to p. P. E. s. And its not just a once in seanchry pandemic. Even more routine disruptions like plant contaminations or hurricanes have revealed how in a concentrated system, a single shock can have cascading effects ranging from baby formula to i. V. Bags. Consolidation doesnt just cause problems with supply chains. For years successive administrations have sought to strengthen our Cyber Security defenses against a catastrophic effect. Just a few weeks ago, one of the main medical benefit claims networks in america changed health care was taken down for wes due to a cyber attack, depriving homents and medical provides of the ability to bill for their services and wreaking havoc across our health care system. Owned by United Health group which was allowed to buy change despite a d. O. J. Lawsuit seeking to block the quite simply, we have a fragility problem in america. Consolidation and monopolization have left us moreulnebl and less resilient in the face of shocks. But what about a. I. And the innovation economy, you might say. Baby formula shortages are one thing but the corporations that run Big Data Centers and large language modelsji a technical operations with tens of billions of dollars of capital to deploy, trillions in market capizaighly skilled professionals. Again, we should be guided by history. In the president of citibank and key leader on wall street, asked why antitrust enforcers were filing lawsuits against high tech american darlings like i. B. M. And at t. He said, whats the public good of knocking i. B. M. You have a . The conclusion to all this nonsense is that people cry, lets break up the yankees because theyre so successful. End quote. By contrast at that time, europe and japan were protecting their National Championships. America chose to promote competition. Those antimonopoly lawsuits ended up fostering innovations, including the cell phone they feel National Champions protected by japan and europe fell behind and are long forgotten. In the u. S. , we bet on competition and that made all the difference. Imagine a different world where todays giants never had a chance t and innovate because policymakers decided it was more important to protect i. B. M. And at t from competition and allow them to main■tain famously an engineer at kodak had invented the first portable digital camera in the 1970s but in part because it didnt want to cannibalize its existing sales. More generally, Significant Research shows that while monopolies may help deliver marginal innovations and improvements, breakthrough and paradigm shifting have historically come from the disruptive outsider. It is our commitment to free and fair competition that has allowed america to has its citp Breakthrough Innovations and lead as an economic powerhouse. The times when we have accepted the National Champions argument now serve as a cautionary tale. In the 1990s, a white house adviser one very High Tech Firm that was, quote, a de facto National Champion so important that you can be an outfor it in governme. And we did support it, providing it with government contracts and allowing to it consolidate the industry. Im referring, of course, to boeing which is the single best example of why a National Champion strategy can be in 1997, boeing became the only commercial Aerospace Maker in the United States. It came to enjoy the status after buying udouglas, the onlyc producer of commercial airplane, a merger that had been reviewed by the f. T. C. Boeing is the clearest example of a purposeful decision to bet on National Champions on behalf of american interests. To override european objections to this merger, the white house reportedly threatened the w. T. O. Sanctions if the e. U. Challengel champion. And so they got it. P as with most highly concentrated industries, three things happened. As United Airlines c. E. O. Recently noted, this allowed tboing slow down innovation and reduce product quality. Boeings r d lower than that of its only rival, airbus. Worse quality is one of the harms most economists expect from monopolization because firms that face little competition have limited incentive to improve products. Es started to view their knowledgeable work force as a cost rather than an asset with tragic outcomes. As one put it in 2000, boeing has been less a business than a association of engineers devoted to building amazing flying machines. This corporations engineers designed the b52 in a single weekend. But the new, postmerger boeing, dez mated it work force, offshored production and demanded wage concessions. The third consequence was that boeing effectively became too big to fail and a point of leverage for countries seeking to influence u. S. Policymaking. In 2020, during koafd, congress carved out a 25 billion line item just for this one aerospace producer. Relying on a National Champion creates supply weaknesses and taxpayer liabilities but ial creates geopolitical as a result necialts that can be exployed both by Global Partners and rivals. As it wasifyug mcdonelldouglas, boeing held a Board Meeting in beijing and lobbied congress to end the annual review of chinas trading rights planes. The Chinese Government in turn would order boeing planes contingent upon certain u. S. Policies like whether the u. S. Held off on sending warships into the strait of taiwan or whether the u. S. Lifted bans on the export of certain tech nolings. National champions are still corporations first. They have earnings calls, shareholders and quarter profit targets. When policymakers in washington decide to back a single monopoly their objectives are but one concern among many for thatatio. As thenexxon c. E. O. Lee raymond said, quote, im not a u. S. Company and dont make decisions based on whats good for the u. S. , end quote. These days the National Champions argument often gets made in the context of our dominant technology firms. We often hear that pursuing antitrust cases against or regulating these firms will weaken American Innovation and cede the global stage to china. These conversations often assume a cold war like arms race with eachrys firms in a zero sum quest for dominance. The reality today is that some of these same firms are fairly integrated in china and are seeking greater access to the chinese market. Wile theres nothing intrinsically improper about these ties, we should be cleareyed about how they shape business incentives. Various incidents in recent years have highlighted how, when u. Orporations are economically dependent on china, it can spur them to act in ways that are contrary to our National Interests. Vu even if americas dominant firms are not prioritizing americas National Interests, what do we make of the idea that they can keep america in the lead only if theyre left alone . This too is an argument we should treat with great skepticism. History shows us lumbering monopolies mired in red tape and inertia cannot deliver the Breakthrough Innovations and Technological Advancements hungry startups kend to create. It is precisely these breakthroughs that allow america to harness these cutting j technologies and made our economy the envy of the world tomorrow stay ahead globally we dont need to protectonopolies from innovation, we need to protect innovation from monopolies. We need to choose competition over National Champions. Into pn 2021, the f. T. C. Blocked nvidias attempted have been the Largest Semiconductor chip mernler in history. The merger would have allowed a major chip provider tool key Computing Technologies that rival firms depend on to develop their own competing chips. Next generation technologies affecting everything from data centers to selfdriving cars two. Years on, nvidia continued to providennovative products at lower costs than we predibbed they would have with the merger. Choosing competition works. The final argument ill leave you with is that protecting monopolies over competition i d. More brittle. Over the last couple of years ive had the chance to hear from thousands of people from across america from nurses, farmers and Grocery Store workers, to tech founders, Hotel Franchise yeses and writes for the hollywood. A recurring theme across their stories has been a sense of fear, anxiety and powerlessness. People from how markets monopolized by dominant middlemen enable coercive tactics. They feel that their ability to make a decent living or thrive in their craft is too often not a function of their talents or diligence but instead is the ars of distant giants. A basic tenet of the american experiment is that real libertyc coercion and the arbitrary, unaccountable power that comes with economic domination. Our antitrust laws were passed as a way to safeguard against undue concentrations of power in our economic spheers just as the constitution creates planses against concentrated power in our political sphere. I want to offer that recommitting to robust antitrust enforcement and competition policy is gad for america because it will make us materially safer, our technologies more innovative and our econ but also because it is essential for ensuring real opportunity for americans and that people in daytoday dealings experience liberty rather than coercion. As folks in this room know all too well, when people li fighting on their behalf and become a strategic weakness that outsiders are only too happy to exploit. Ankfully, over the last few years urn the biden administration, we have seen enormous progress across government in ensuring that we are centeringve americans in our policy decisions. From trade and industrial policy, to National Security and competition, the admintrat experiences and adopted new paradigms. A common throughline across these approaches is a commitmens in favor of reality and evidence. Fighting back against the challenges t about more than just enforcing the antitrust laws. But by seeking fair competition and by demonstrating to the American People that the era of monopoly dominance over their live kans end and is not inevitable we can help rebuild not just the confidence of the e entrepreneur but also a belief in American Government and its leadership both at home and abroad. Thanks so much, i look forward to the conversation. [applause] thank you, chair khan for those■e remarks. It is now my pleasure to introduce our moderator. Thank you so much. Thanks to carnegie and thanks to chair khan. First of all i want to amplify a few thickus said. There was so much in that speech. You know, the idea that resiliency had an efficiency model for the last 40 years or so ealy in our economy which is about sending cheaper, that rula lot of concentration, a lot of siloing. We discovered in the pan tell democrat pab democratic that this has vulnerabilities. This comes with limits. Chips is a great, you mentioned chips as a great example. It was always kind of amazing to me as somebody who has traveled a lot in asia, covered global business, that anybody, not just the u. S. But china or europe, thought that having 92 of all high End Semiconductors in one contentious island was a good idea. Im curious, as you think through the paradigm youre bringing to antitrust, where do you see some of those