Why the fight at the Federal Trade Commission is good news for consumers.

Thanks to chair Lina Khan, the FTC is busy limiting non-competitive business practices that impact all of us.

Another week brought more breathless news about the next presidential race, the debt ceiling, the war in Ukraine, toxic train derailments, and pitchers and catchers reporting to spring training.  There was also economic news. Inflation continues to ease, corporate profits remain high, and there’s trouble brewing at the Federal Trade Commission. 

The what? 

Okay, I know this is a bit in the weeds for most of us, but I assure you, to corporate titans around the country this is a very big deal.  Since her confirmation as head of the FTC in June of 2021, Lina Khan has been doing battle with a system determined to maintain the status quo. 

From banning non-compete clauses, challenging corporate consolidations that lessen competition, to sanctioning companies for price gouging,  the FTC, under Lina Khan, has started to do its job again. And, for the first time, it is looking at anti-competitive effects of platform-based business models like Amazon and Facebook. 

The results are exactly what you would expect: GOP appointees to the Commission are loudly resigning in protest. Rupert Murdoch’s New York Post calls Khan “the most dangerous person in government for those of us who cherish free markets.”

Rhetoric, as we all know, is part of politics, but responsible adults will stop to consider what’s really going on. Google and Facebook have created information monopolies that have largely bankrupted small news organizations across America. Consolidations in freight rail have given such power to the companies that they successfully fought against giving workers any paid sick leave and, with disastrous results across the Ohio Valley without necessary safety upgrades. Corporate power has grown steadily for fifty years, under the rhetorical banner of free markets. But even Adam Smith, the founder of economics as a science, understood that markets are not free if they are not competitive. 

Monopolies create what economists call rent seeking behaviors. These behaviors are all about obtaining prices above the fair market price for goods and services. Consider cereal, a staple that has steeply risen in cost during this period of inflation. Walk down the aisle and try to shop for a good price. Do you pick Grape Nuts or Great Grains or Shredded Wheat or Honey Bunches of Oats? Doesn’t matter. They are all owned by the same company, so the competition between them isn’t real. 

If you read the Wall Street Journal you will learn that inflation is about money supply, fiscal give-aways, and rising wages. You will not ever read about the role of monopolies, anti-competitive practices, secret fees, or rent seeking behaviors.  So when the New York Post cries about wanting a free market, you should understand that to mean that the school yard bully should be free to push the smaller kid off the slide and charge everyone else their allowance for the right to climb that ladder. By the way, like breakfast cereal, the Wall Street Journal, the New York Post, and of course FOX TV are all owned by the same company.

That’s why Joe Biden’s presidency is so meaningful. He has put together an administration that is fighting back against the bullies in order to level the playing field. 

Photo by Casimer Campos  Copyright: 2021 Casmoe Photography

Ms. Khan is corporate America’s public enemy number one. She has a south Asian heritage. She is a she. And she young. And will not be who they need her to be. Oh, the outrage!

Last week, I predicted that President Biden’s biggest legacy will be economic- widening participation and in the miracle of American commerce, shrinking the gap between the wealthiest and the rest of us, and delivering the kind of broadly shared prosperity that is only possible in a democracy where the rules are not rigged in favor of the few. 

We should thank Ms. Khan for the arrows she is taking to make that happen.