A Top Antitrust Lawyer on How Increased Competition Could Fight Inflation

Tracy Alloway (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:15)

And I'm Joe Weisenthal.

Tracy Alloway (0:18)

Joe, have I ever told you my favorite conspiracy theory?

Joe Weisenthal (0:24)

No, but I'm not surprised you have a favorite conspiracy theory. I don't know what it is, however.

Tracy Alloway (0:29)

I'll try not to take that personally. But my favorite conspiracy theory is a favorite-

Joe Weisenthal (0:34)

Does it have something to do with silver price suppression?

Tracy Alloway (0:38)

Well, now wait a second, that conspiracy theory actually turned out to be true. But anyway, okay, we're going to go on a really long tangent if we keep heading in that direction. No, my favorite conspiracy theory is, well, it has to do with inflation and eggs and cholesterol.

Joe Weisenthal (0:56)

Oh yeah, this is a good one.

Tracy Alloway (0:58)

Not many people know this, but in the 1960s, when there was high inflation and the president was very worried about it, this is Lyndon B. Johnson back then, he was trying to come up with all these different ways to maybe get prices to start coming down.

And one of the things he did was target eggs. And he basically told the surgeon general to issue alerts all about the risk of cholesterol in eggs to try to get people to buy fewer of them. And even to this day, people still think there's lots of cholesterol in eggs and that they're unhealthy. And a lot of that traces back to Lyndon Johnson trying to fight inflation 50 years ago, or 60 years ago, I should say.

Joe Weisenthal (1:47)

So wait, you said this is a conspiracy theory, but is it true? Did this actually happen? Or is it just people think this was the sequence of events?

Tracy Alloway (1:55)

No, no, no, this actually happened. But basically there was a conspiracy to tell the public that eggs were terribly unhealthy when in fact they certainly aren't.

So the reason I'm bringing it up is because there are clearly concerns about inflation right now. I think CPI is at something like 6.8%. And when people think about inflation, I think the first thing their minds turn to is interest rates and monetary policy. Inflation is high, so maybe the Fed should start raising rates. But of course, there are these different ways to actually try to bring prices down.

Joe Weisenthal (2:38)

Right, this is really the key thing, which is that obviously, people think of inflation as the purview of the Fed and monetary policy and monetary aggregates. Milton Friedman, inflation is always everywhere, a monetary phenomenon.

But we see it this year. If we had had, say, more used cars or more semiconductors to make cars or et cetera, we know that headline inflation would be lower. That's just a fact. And so we clearly see the existence, especially right now, what I would say is non-monetary inflation and maybe some economists would get annoyed by that or they would disagree or whatever. But we could point to, maybe overall, it's not just about bottlenecks or whatever, but we could certainly point to at times the existence of forces that are not clearly related to the Fed that push up the aggregates of price and disease without question. And you know, another area is like medical care.

I don't think the high cost of medical care is something that obviously is attributable to monetary policy.

Tracy Alloway (3:42)

No. And we are starting to see politicians pay more attention to these specific issues. So we've been talking a lot about attempts to ease supply chain congestion.

And I have to say, one of the more interesting efforts that is currently going on has to do with antitrust legislation, which is not necessarily something that you would think of when you think of supply chain problems.

Joe Weisenthal (4:09)

Yeah, no, I think that's like really interesting. And you know, obviously, these are sort of like slow moving things.

And they're probably a limit to what you could do in the next few months. But the idea that a few companies have incredible amounts of buying power because of concentration, because of lack of competition, it seems like a very interesting avenue and one that even at least in the medium to longer term, if not right away in the next few months, could increase the sort of like productive capacity overall if we had more competitive markets.

Tracy Alloway (4:41)

Exactly. So we are going to be digging into that question of whether or not you can use antitrust enforcement to try to bring down inflation and ease some of these supply constraints, bring down things like food prices.