Why Free Thinkers Need to Block Lina Khan's FTC Nomination
(AP Photo/Steven Senne, File)
Why Free Thinkers Need to Block Lina Khan's FTC Nomination
(AP Photo/Steven Senne, File)
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Lina Khan – the celebrity scholar recasting antitrust law into a tool to enable government to control capitalism – gave Republican senators a chance to ask her hard questions in her April nomination hearing for the Federal Trade Commission. Will Republicans continue to be so solicitous when voting on her nomination within a few days?

In her hearing, Khan may have expected to have to run a gauntlet. Instead, most Republicans threw her a parade. Sen. Ted Cruz (R-TX) was congratulatory, virtually high-fiving Khan for sharing his desire to use antitrust law to pummel Big Tech companies.

What was lost on most of the Republicans in the Senate Commerce committee hearing – Sen. Mike Lee (R-UT) was a notable exception – are the larger issues in Khan’s legal philosophy. Catapulted to fame by her essay, “Amazon’s Antitrust Paradox,” Khan is leading a movement to scrap the Consumer Welfare Standard, the metric by which jurists and regulators have applied antitrust law for almost a half-century.

The standard, most famously elucidated by Robert Bork in The Antitrust Paradox in 1978, is a modestly functional policy. It poses one over-arching question: Is a given merger or acquisition apt to harm consumers? If the answer is yes, then government action is justified. If the answer is no, then it is more likely that government action will harm the consumer by reducing the “productive efficiency” of a new business combination.

Legislation proposed by Sen. Amy Klobuchar, inspired by Khan, would apply a risk-based strategy to mergers, and shift the burden of proof to businesses, requiring them to prove in advance that a proposed merger would do no harm – an almost impossible act of prophesy, for which a CEO could be criminally liable if wrong. Klobuchar would impose concepts of “fairness,” “equity” and the interests of labor and the environment on antitrust law.

What could be wrong with that? “There is no neutral principle for assigning weights to such divergent interests,” writes Alden Abbott, senior research fellow at the Mercatus Center. “There are no economic tools for accurately measuring how a transaction under review would affect those interests.”

Rebecca Slaughter, acting head of the Federal Trade Commission, earlier doubled down with tweets that antitrust should be “anti-racist.” Khan nominated to serve with Slaughter on the FTC, told a journalist she wants antitrust actions to express better “values.” Why not, then, also shape antitrust law to accelerate research for a cure for cancer?

The reigning Consumer Welfare Standard, a functional policy for consumer benefit, is not a wishing well for better “values.” It is more like a well-designed bridge engineered to protect the welfare of consumers. Heap more weight on it than it can handle, and that bridge will collapse.

When we use antitrust law to instill better values into the hearts of Americans, or to help labor, or protect the environment, or support racial justice – as commendable as those goals are – we introduce nebulous concepts that, in Abbott’s words, have no economic tools to measure a given transaction. When standards are vague, and the law ambiguous, the Biden Administration and its regulators will have the means to arbitrarily crack down on any business. If Ted Cruz dislikes “woke” corporate executives now, wait until their every move is under Washington’s microscope.

Far from criticizing this approach, however, Republican senators are embracing it. Sen. Josh Hawley (R-MO) is proposing a basket of radical, antibusiness proposals that would ban mergers and acquisitions for firms with a market cap of over $100 billion. He is aiming at Amazon, Google, Apple and Facebook. But he would also subject ExxonMobil, Procter & Gamble, Boeing, Berkshire Hathaway, Pepsi-Co, Cisco Systems and dozens of other corporations to a rule in which they would essentially be unable to acquire anything new.

This is not a recipe for more competition. It is a recipe for the fossilization of American capitalism. Both Khan and Hawley would jettison the Consumer Welfare Standard in favor of subjective, ever-shifting standards that would put American business firmly under control of politicians and their regulators.

Republicans should have asked Lina Khan:

Isn’t a standard that puts consumer welfare first in the best interests of all Americans, especially those who’ve been historically disadvantaged?

If businesses will have to predict the impact of a proposed transaction on competition, racial equity, or the environment, shouldn’t the government be held to the same standard? Shouldn’t the government have to predict in advance the impact of a given antitrust action – a forced break-up or a denied merger – and be sanctioned for making a mistake, just like businesses?

Finally, do we trust Washington politicians enough to grant them such sweeping power over the economy?

It is too late to ask these questions. But Republican senators can still register their concern by blocking Lina Khan’s nomination to the FTC.

Robert H. Bork, Jr., is the president of the Antitrust Education Project and Bork Publishing, which has just republished his father’s book, The Antitrust Paradox: A Policy at War with Itself.

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