Larry Summers blasts Biden for ‘hipster' antitrust policies

Yahoo Finance's Rick Newman details former Treasury Secretary Larry Summers' critical comments on President Biden's antitrust legislation, price hikes on oil and natural gas, and inflation.

Video transcript

SEANA SMITH: Former Treasury Secretary Larry Summers is stepping up his criticism of President Biden and his efforts to fight inflation. Now he's warning that his, quote, "hipster--" that's the word he used-- antitrust policies carry real risk.

Rick Newman is looking into this story for us. And Rick, I guess, first, just unpack what Larry Summers is saying because he's saying basically that President Biden's antitrust policies, that that's going to make inflation maybe even worse than it currently is.

RICK NEWMAN: He was referring to me when he meant hipster antitrust--

- Yeah, baby.

RICK NEWMAN: --just to clarify.

Well, President Biden and some other Democrats have said one of the causes of 8.3% inflation is we've got too many monopoly-type companies or near-monopoly companies that are just price gouging. And, you know, we know they want to break up some of the tech companies. President Biden has singled out meat producers as if they're-- as if they're just raising prices because they can.

And Larry Summers kind of went after some Biden officials over the weekend, and he said, look, you guys want-- you want smaller companies instead of these larger companies, but in many cases, larger companies are the most efficient. They're vertically integrated. They actually are the best way to get low prices. And if you want to go breaking them up and saying we need four smaller companies instead of two big ones, then you're just going to end up with companies that are producing at a higher cost.

So he's just-- he's just pushing back on the Biden administration. And, of course, we all know he was the first one to ring the alarm about inflation becoming a problem a year ago. He turned out to be right about that. So now I think what he says gets even more notice than it probably would have otherwise.

- Yeah, take politics out of the equation. He's been more right than either side of the aisle over the last year and a half. And I love when somebody so intelligent, Rick, says policies that attack bigness can easily be inflationary. I mean, bigness is not ordinarily a word that they throw around, but he's talking about also some of the antitrust sentiment that's coming out of the Biden administration.

RICK NEWMAN: Right. And this is among the Democratic Party, and a lot of it it's in the left of the Democratic Party. Break them up because they're too big. I mean, the traditional reason we break up monopolies is because they are price gouging, but when you-- I mean, I've done some of the analysis to see are there unusual price hikes in any of these industries? So I'll just give you a couple. Meat-- the average increase in meat per year over the last five years is 3.9%. Average inflation over that time was 3.6%. So, I mean, that doesn't sound like price gouging.

They're going after banks. They want to-- they say some of the banks are too big. Well, financial services only up an average of 3.3% a year. Internet service is only up 1% per year. You know, they're going after the tech firms and, of course, the social-media companies. How much does that cost again? I think it's free.

So you can't say that the problem here is really their pricing power. You can say there are other problems with dominant companies such as-- I mean, a legitimate one might be, like, fast-food chains that require lower- and middle-paid people to sign nondisclosure agreements. I mean, that does not seem right, but just take on that problem. Don't just say we need to break up this entire company or this infrastructure companies. Just do something about the NDAs if that's the problem.

- And obviously different companies have different input costs, things like freight to worry about, supply-chain issues. Is there a way then to sort of really level this out so it doesn't seem like all the blame is just because these companies are too big? How is that being broken down, I guess, for the public so they can understand what's happening?

RICK NEWMAN: Well, there's obviously a blame game going on here. I mean, Biden wants to blame anybody but himself and Democratic policies for the inflation. Of course, Larry-- the point Larry Summers made a year ago was that passing that huge rescue plan was going to put more money into the economy. People were going to buy more stuff. Demand is going to push prices up, and that's what happened.

So obviously Biden is trying to deflect some of the blame here. We also need to talk about gas prices. Everybody wants to know whose fault are-- whose fault is $4.50 gas, which I think could actually be $5 or $5.50 gas, I'm sorry to say.

But look around the world. I mean, prices are going up basically the same everywhere, and we know that's not just a US problem, so it can't be because of just US companies.

- Yeah, the UK is at a 40-year high at 9%.

Real quickly, Summers also wants to focus on tariffs. Seems like there's a split in the Biden administration over that-- China tariffs.

RICK NEWMAN: Yeah, there's been some research recently that said if Biden were to remove all the China-- the tariffs Trump put on Chinese goods, he could bring inflation down by, like, a percentage point or perhaps 1 and 1/2 percentage points. Biden doesn't want to do that, though.

- Long term, that could be dangerous. Short term could be a win, right, but long term slippery.

All right, Rick Newman-- hipster Rick Newman.

RICK NEWMAN: I try.

- Thank you, hipster.

SEANA SMITH: Your new nickname.

- Appreciate it. Good to see you.