(Drivebycuriosity) - There is a fundamental change in America´s antitrust policy. Traditionally antitrust enforcement tried to fight for consumer welfare and to punish corporations for wrong doing. Consumers should enjoy reliable services, high quality & variety for low prices.
Not anymore. This all changed July 2021 when President Biden made Lina Khan chair of the powerful Federal Trade Commission (FTC), America´s antitrust authority. Khan is a radical who became famous when she - still a law student - published a paper where she lamented that Amazon`s prices are too low (!). She claimed that the company is a monopoly or will become one, ignoring history, economics and the existence of Walmart, Target, Ebay, Shopify and the growing number of other online sellers who all want to eat Amazon´s pie (yalelawjournal ).
Nevertheless the Khan controls the mighty FTC because she is supported by commissioners Rebecca Slaughter & Alvaro Bedoya which give her a political 3:2 majority (versus Christine S. Wilson & Noah J. Phillips). Khan, Slaughter & Bedoya belong to the Neo-Brandeisian movement who declares efficiency & consumer welfare as irrelevant and wants to expand significantly the government’s role in the U.S. economy ( dailyjournal promarket).
Political & Social Goals
According to Khan & Co. low prices are bad, because they hurt competitors (including those who are inefficient). Khan argued in one of her articles - written for a Marxist Paper - that antitrust must be reconfigured toward the redistribution of economic and political power and away from concerns regarding prices (lpeproject realclearpolicy).
The Khan controlled FTC ignores economics & history and wants to fix social issues like underemployment, income disparity, political power, and wealth accumulation (thehill ). Khan supporter Rebecca Slaughter demands that antitrust should be used to accomplish political and social goals (ftc.gov thecentersquare crowell). Slaughter declared in a speech "Antitrust can and should be deployed in the fight against racism" (ftc.gov ).
Let Them Eat Cake
Alvaro Bedoya, the newest member of the board, wants to punish stores for providing the lowest possible prices to consumers (CarlSzabo ). The commissioner also claims that efficiency is unfair because efficient companies hurt inefficient competitors (ftc.gov ). Sounds crazy, but Khan & her supporters have never worked in any real job and they are not educated in economics. How can an inefficient company offer reliable services, high quality for reasonable prices? Giving up efficiency leads to waste, corruption and nepotism.
Bedoya wants to reanimate the Robinson-Patman Act from 1936 and criticizes that powerful buyers — such as Amazon, Target, Walmart and other chain retailers - force their suppliers to sell to them relatively cheap. If
the US government would prevent Walmart, Amazon, Target, & Co. to
purchase cheap to keep their costs low the change would raise prices for almost
everything. Especially low income households, who depend on cheap goods, would suffer. Let them eat cake? The change also would reduce the pressure to produce efficiently
and with low costs and would so encourage waste and inefficient
behavior. Not of concern for Khan, Slaughter & Bedoya. They turned the FTC in a "board of irresponsible people", a phrase coined by Monty Python.
.
Big Government Instead Of Big Corporations
The FTC majority views large companies as evil and prefers "that the government, rather than the private sector, orchestrates the functioning of the economy" writes FTC-commissioner Christine S. Wilson (a minority voter) ( .ftc.gov). She notices that the Neo-Brandeisians, who control the FTC, represent a Marxist ideology which aims for a socialist society, where the means of production is controlled by the state, and planning will substitute for competition as the economy’s steering mechanism ( ftc.gov).
The Khan also works with far-left groups like the Law and Political Economy (LPE), an organization that claims to “work to understand the relationship between market supremacy and racial, gender, and economic injustice; to articulate the relationship between capitalism and devaluation of social and ecological reproduction; and to explore the distinctive ways that law gives shape to and legitimates neoliberal capitalism, ranging from dynamics of financialization to the relation between the carceral state and capitalism” ( based-politics). Law Professor Herbert Hovenkamp describes her work as “technically undisciplined, untestable, and even incoherent” ( digitalliberty).
War on
Entrepreneurs
Biden protege Lina Khan has an explicit beef with Amazon and stated publicly, absent any formal hearing, that the company is guilty of antitrust violations and should be broken up." (yalejreg.com wsj.com). Instead of fighting against price hikes Lina Khan`s FTC wants to fight against low prices (yalelawjournal reason). Khan & Co. claim that low prices destroy competition, hurt workers and ruin the environment (vox ).
Since being in control of the FTC the Khan started to harass Amazon, her arch enemy. The FTC is issuing several subpoenas
to founder Jeff Bezos, CEO Andy Jassy & other employees about a diversity of Amazon businesses ( theverge). The
FTC is also inquiring Amazon’s acquisitions of MGM, iRobot & the
health care provider One Medical, even though these companies are in
different markets than Amazon and none of them is a monopoly ( protocol). And the FTC is probing Amazon’s subscription services, including Prime subscriptions ( bloomberg ).
The Khan also started a feud against Meta, the mother of Facebook, stupidly claiming that Facebook is a monopoly (bbc
). This accusation is as ill fetched as the Amazon monopoly claim. Meta`s stock market capitalization shrank more than 70% because the corporation is losing users to up-and-coming
competitors like TikTok & Snapchat. Facebook & Instagram are financed
by advertisements and are therefore competing against other media corporations like Twitter, Google, News Corp, Apple, Paramount etc.
Khan´s FTC also started to attack Walmart, claiming that the company turned a blind eye to fraud taking place by money transfer agents doing business at Walmart ( steve forbes).
Remembrance Of Soviet Era
FTC´s irresponsible crusade is already suffering a row of setbacks because courts disagree Khan`s radicalism ( nationalreview axios ). Unfazed the Khan recently published her 5-years-plan, called "Strategic Plan for Fiscal Years 2022-2026" (ftc.gov
). Khan`s 5-years-plan is a remembrance of Soviet era 5-years-plans,
central planning and Lenin. It will be an enormous power grab - if she
gets away with it.
Khan´s 5-years plan has several new goals which go beyond consumer interests and - to make it worse - are even against consumer interests. Objective 1.4 announces support equity for historically underserved communities, which include Black Americans, Latinos, members of religious minorities, lesbian, gay, bisexual, and persons adversely affected by persistent poverty or inequality. Apparently Khan`s antitrust ignores consumers and focuses instead on race and income inequality, following Karin Slaugther`s ideas who claims that antitrust is about equality & race (crowell ftc.gov).
The neglect of consumer interests is also announced in Khan`s Strategic Goal 2: "The FTC’s efforts to prevent and police unfair methods of competition focus on preventing anticompetitive mergers and business practices through enforcement". What is unfair? Is it unfair to offer better products than competitors? Apparently Khan & Co. want to protect competitors, even those which are infefficient, which leads to less competition and will harm the consumer.
Former FTC chairman Timothy Muris criticized that the commission is “sacrificing large tangible benefits based on merely speculative, future competitive harm” ( nationalreview).
Even though the FTC is losing in the courts the Khan continues her "quixotic attack on American businesses" (twitter ). Khan’s freak regulation and her disregard for the rule of law & sound economics bodes badly for the US economy.
