Economics: Antitrust - The Ghost Of Lenin

 

(Drivebycuriosity) - "Trust is good, but control is better", said Vladimir Lenin. The late leader of the defunct Soviet Union initiated a mixed economy policy with a free market and capitalism, "both subject to state control" ( newworldencyclopedia ).

The Biden administration follows Lenin. Biden`s powerful bureaucrats don´t trust the CEOs of Americas biggest corporations, instead they want to control them and try to gain authority over their corporations. Biden uses a powerful tool: Antitrust. For a long time antitrust enforcement stood for the interests of the consumers   and tried to punish corporations for bad services, low quality & variety and too high prices (consumer welfare). 

Soon after Biden became President he changed the concept of antitrust and the leadership of the agencies that enforce antitrust in the US: The Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DOJ).

Biden announced anti-monopoly researcher Lina Khan Chair of the mighty FTC and antitrust attorney Jonathan Kanter became head of the more than 800-person antitrust division of the Department of Justice (driveby ). Khan & Kanter belong to the Neo Brandeisian movement (named after Supreme Court Justice Louis Brandeis, 1916-1939 wikipedia). The Neo-Brandeisians declare consumer welfare as irrelevant and want to expand the government’s role in the U.S. economy significantly ( pbwt.com dailyjournal promarket reason). 

 

              Ignoring Growing Competition 

In September 2023 Khan`s FTC filed a massive law suit against Amazon (172 pages ). The authority claims that Amazon is a monopoly and stifles emerging competition ( ftc.gov vox.com). The claim ignores Walmart`s fast growing online business (plus 24% YoY), the rise of e-commerce sites like Shopify, Wayfair, Etsy & Ebay and doesn`t take notice of innovative newcomers who are aggressively entering the highly competitive market, like TikTok`s online shop, the Chinese shopping app Temu and online shopping platform Shein ( driveby Temu nymag). The rapid growth of Amazon`s challengers indicates a healthy competition.

The real purpose of the law suit is to gain control over one of America´s largest corporations and to be in charge of Amazon`s business. FTC Chair Khan wants to tell Amazon what it can do and what not, how much the corporation charges their customers and how they deal with the business partners (nationalreview ).

Amazon became a behemoth because the corporation is very efficient and obsessed with cost cutting and delivering goods cheap, fast & reliably (consumer welfare). They have been constructing a network of huge fulfillment centers which are very efficient and save a lot of costs. None of these counts for the FTC. The Khan denounces efficiency for irrelevant and declared in an interview: “The word efficiency doesn’t appear anywhere in the antitrust statutes....  It’s not that any business practice that increases welfare or increases efficiency is fine" (promarket). FTC Commissioner Bedoya, a Khan supporter, claims that efficiency is unfair because efficient companies hurt inefficient competitors (ftc.gov ). 

In November 2023 Jonathan Kanter`s DOJ hit Google with a law suit, claiming that Google is monopolizing the market for online advertising (reuters searchengineland). Kanter ignores that users prefer Google`s search engine because their American competitors Bing (owned by Microsoft), DuckDuckGo and others are inferior. Kanter also does not care that Google competes against Meta (owner of Facebook & Instagram), Amazon and others and only has 29% of the market for online advertising (yalejreg ). Like his ally Khan, DOJ enforcer Kanter treats efficiency & consumer interests (consumer welfare) as irrelevant. He wants to gain power over Google.

There is more to come. Kanter & Khan aim to reign into Artificial Intelligence (AI).  Reuters reports: "The U.S. Justice Department and the Federal Trade Commission are in discussions over which agency can probe OpenAI on antitrust grounds, including the AI firm's partnership with Microsoft" ( reuters). The New York Times also knows that Kanter`s DOJ prepares a sweeping antitrust case against Apple ( nytimes).  

That`s not enough: Since Twitter is owned by Elon Musk, Khan`s FTC is orchestrating an aggressive campaign against Twitter because the entrepreneur is not popular with the Democrats and the Biden Administration. "The agency sent more than a dozen letters to Twitter in a span of 10 weeks that contained more than 350 specific demands, thus creating a "substantial burden on the company's operations." ( npr.org wsj  judiciary  nytimes).

The aggressive law suits are not surprising. The Khan and her ally Jonathan Kanter have pushed their agencies away from settling cases and toward an aggressive strategy of taking companies all the way to court (Politico). Kanter intends to stop mergers even if they would raise efficiency and reduce costs (truthonthemarket ). The mighty bureaucrats are supported by Elizabeth Warren and allied with a "progressive" new strain in antitrust thinking, reports Politico. They intend to stop mergers even if they would raise efficiency and reduce costs (truthonthemarket ). 

 

 

                  Redistribution Of Power

FTC Chair Khan tries to expand her already extensive might and argued - in an article for a Marxist paper - that antitrust must be reconfigured toward the redistribution of economic and political power and away from concerns regarding price (lpeproject  realclearpolicy). The Khan claims that she has the "Rule Making Authority" and that she can decide what is & isn't "unfair competitive conduct" ( ftc.gov    twitter  uschamber ).  FTC commissioner Rebecca Slaughter, another Khan supporter, demands that “antitrust should be used to accomplish political and social goals including racial equity” ( thecentersquare  crowell). According to former FTC-Commissioner Christine S. Wilson the Brandeisian FTC represents a Marxist ideology and tries to replace the market process of supply and demand by a continuously regulated environment (ftc.gov ).

The Khan follows Lenin and declared: "Market structure is deeply political. One reason is that all markets are governed by law. The structure of a market at any given time is the product of political decisions—made and not made—about how players in that market will be allowed to use their power" ( law.duke).

 

( ftc.gov)

 

Although neither Khan nor Kanter are democratically elected, both have the power to throw a lot sand into the gears of successful companies, which are the engines of the US economy. Their regulations and inquiries reduce Big Tech`s  abilities to further innovate because they are occupying management capacities and are slowing decision processes - making business more complicated and costly. Innovators and startups are getting discouraged when they know that strong growth will get punished.

 

Conclusion: Biden`s new trust busters are aiming for a leadership of unelected bureaucrats and they are using their growing power to punish merits, diligence, risk taking etc (calling merits "unfair"). They are not only burning more and more money of the tax payers for ridiculous law suits. The sued companies suffer enormous costs as well. Mergers get many months delayed, causing additional costs, and the defendants have to employ armies of expensive lawyers. The consumers are the losers. They have to bear these costs by paying higher prices and are getting reduced selection and quality of goods & services. Winners are bureaucrats, law firms and foreign competitors like Sony and Alibaba.