Big business currently wields extraordinary power over the economy to the detriment of workers, small business owners and democracy. For forty years, they did so with the consent of the Federal Trade Commission. It’s about to end. Why? Because there’s a new sheriff in town.
Last week, in a rare moment of bipartisanship, the Senate voted to confirm Lina Khan as commissioner to the Federal Trade Commission. Forty-eight Democrats and twenty-one republicans supported its confirmation. Shortly thereafter, President Biden appointed her president of the agency. That evening, she was sworn in and began her term.
When was the last time twenty-one Republicans did something progressives applauded? His confirmation process was, in our view, a surprise to some progressives, who began to believe that working across party lines is impossible.
The confirmation showed two things: how just anger there is against the big monopoly companies at the local level. Republicans and Democrats are hearing it from their working class voters, small business owners and community leaders. It also showed how impressive Lina Khan is. She is unfazed, clear and does not allow herself to be trapped by double talk or evasion.
Appointing Khan as president was good policy and good policy on Biden’s part. It doubles down on a popular candidate, and it puts one of the country’s most extraordinary leaders in a position where she can directly improve the economy.
Yet even when effusive, most headlines are wrong about Khan’s appointment. Most of the headlines were about big tech. the Financial Time, for example, exclaimed, “Lina Khan, the new antitrust chief taking on Big Tech! Big Tech is indeed a big deal, but the Federal Trade Commission occupies a much bigger position.
Franklin D. Roosevelt and Ronald Reagan both used the FTC as a key tool to reshape the economy, albeit in very different directions. When President Reagan came to power with a pro-concentration platform (his supporters would describe it as anti-antitrust), changes to the Federal Trade Commission were at the heart of how he began to revamp the economy from top to bottom. The FTC stopped carrying antitrust cases, changed the philosophy of the office, and began to promote a new ideology, which has dominated the agency since then: that the purpose of antitrust law is to protect low prices in the short term for consumers. The Reagan-Bush-Clinton-Bush-Obama ideology (largely the same, with only a few disagreements on the sidelines) has had very little to say to change that.
For example, in the FTC’s imaginary economic system over the past forty years, rational companies do not engage in predatory pricing, and so the agency does not need to worry about it. Khan has written about how Amazon finances itself, but people are missing the mark when they present it as anti-big tech instead of anti-predation pricing. The predatory pricing issues she touched on in her brilliant 2017 article don’t just appear in technology, they also appear in agriculture, pharmaceutical, and food and beverage companies.
Unlike the ideological and abstract rulers of the Reagan Revolution, Khan’s analysis is deeply based on fact. Often overlooked in her profiles, the fact that she was a journalist for several years before entering law school, and she always starts with the facts on the ground – an approach that echoes the work of Louis Brandeis, the one of the most important anti-monopolists. our country has never known. We would expect to see this same factual approach to defining his work at the FTC.
In addition to taking enforcement action and promulgating rules, the FTC has the power to investigate to issue subpoenas and collect evidence related to potentially anti-competitive behavior on the part of nearly all businesses engaged in commerce. . This investigative power includes the power to review proposed mergers beyond a certain size and block those that “would significantly reduce competition”. The agency can also sue companies when they engage in anti-competitive behavior and impose remedies that require them to change their business models. It can implement rules to combat widespread unfair competition methods and can impose civil penalties for violations. Khan was the key staff member of the House Antitrust Subcommittee’s grand investigation into how Amazon, Apple, Facebook and Google are using their dominance to hurt competition, rightly heralded as one of the best investigations. conducted by Congress over the past decades.
Although the agency’s final decisions are based on the votes of four other commissioners, including two appointed by Republicans, President Khan will lead a Democratic majority that can guide the agency’s strategy and decide when and how to use this powerful set. tools to move the economy in a more equitable direction. As president, she has the power to set the agenda and manage the staff.
But she has her work cut out for her. Over the past forty years, the uncontrolled power and consolidation of business has decimated the middle class and left everyone except the ultra-rich in a much weaker economic position. Wages have gone down. The prices were raised. And it has become increasingly difficult to start and operate small and even medium-sized businesses. Mergers are occurring at an unprecedented rate and the the research is clear that they mainly lead to layoffs that help CEOs and hurt workers. Mergers and monopolization have wiped out black and brown owned businesses and destroyed communities. The problems of concentration are not niche or tangential; they are at the heart of what is wrong with our economy.
Strong competition policy – which the FTC can enforce and which we hope to see from President Khan – is essential to end this damage and achieve racial and economic justice. One of Khan’s most important contributions to anti-monopoly thought has been her Series of Arguments on Inequality and Monopoly, where she showed how concentration has been a key factor in our unmanageable inequality.
For all its potential power, the FTC has not been a major player in US economic policy in our lifetime, and that’s part of the problem. It is also by design. When Reagan took office, his FTC chairman, James C. Miller III, reorganized the commission into a watchdog agency, reinterpreting anti-monopoly laws as consumer welfare rules to be used as a last resort. .
Just as FDR used the FTC as a crucial tool to decentralize corporate power and support democratic renewal, Reagan used it to achieve the opposite. To be fair, part of maximizing the impact of the FTC depends on passing the legislation through Congress. Because Reagan not only set up a regressive FTC, he led what has become three generations of judges who demolished good laws through bad court decisions. Only Congress – or a revolution in the courts – can overturn these decisions.
President Khan also inherits an agency which for a generation has been passively reflecting on its authority and will need to take a more aggressive approach to address many of the wrongs she has highlighted during her professional career.
Despite the big money interests against her, Khan was named – and easily confirmed – because what she stood for is so popular across the political spectrum.
She has spent her career depicting the business world through the prism of power – and it’s the world most people already know from their own experience: small and medium-sized tech companies and retailers know the abuse of big business. technology and how they use the choke point. the power to tax in private and crush those who depend on it. Workers regularly face employers who force them to sign arbitration contracts and non-compete agreements because their power allows them to control people’s working conditions.
The appointment of Khan is therefore a huge deal for workers and for democracy. Conventional wisdom would say that his track record would have made an executive appointment impossible. Even ten years ago, it would have been extremely difficult to imagine such a person being nominated, let alone confirmed, and asked to lead the FTC. Thank goodness President Biden ignored such advice, if he received it.
The question now is whether the Democratic establishment will learn the right lesson. Since Donald Trump, Republicans have attempted to appropriate economic populism, though their version is often spurious, using attacks on cultural elites to distract from economic power. The most effective way to fight back is through honest, clear and substantive economic populism like Lina Khan’s.