No Lina Khan, Employees Aren't Victims and Employers Aren't Villains
(Graeme Jennings/Pool via AP)
No Lina Khan, Employees Aren't Victims and Employers Aren't Villains
(Graeme Jennings/Pool via AP)
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A few weeks ago Lina Khan, chair of the Federal Trade Commission, attempted to attack big businesses for their labor practices, but reality got in the way of her speech.

The fact is that the American free enterprise system – despite the best efforts of the Biden Administration to sabotage it – is so resilient that workers are leaving their jobs in search of more money, more freedom, and better working conditions. The tale of “empowered labor” isn’t the story that Chair Khanwanted to tell though – she wanted to deliver a story of labor mistreatment.

So, Chair Khan was left with a choice – deliver a tired, outdated speech attacking the treatment of labor by large corporations, or run and hide because she knew that reality didn’t support her claims. Since hiding is generally frowned upon for high-ranking political leaders, she went ahead and delivered the speech – she just chose to ignore the facts when she provided policy solutions.

The speech, which is only four pages long, is a perfect example of the strategy of the Biden Administration and the modern woke left: ignore reality – insert the reality that they want to play off people’s fears – and move forward from there.

Chair Kahn started the speech by stating her idea, or understanding, that the current debate surrounding antitrust has shifted away from just the idea that market consolidation could hurt consumers and now to include that market consolidation also can hurt labor. While it might be truthful to say that the public isn’t as concerned about the consumer welfare standard, that doesn’t mean that the economics or academics regarding the problems of antitrust laws have actually changed.

She framed her point by claiming that asymmetries in the labor market are becoming more acute. Or, to put it another way – she was claiming that employers are taking advantage of their employees more so than they have in the past. The problem is that everyone’s current experience is the opposite. We all know that restaurants and retail stores are having trouble fully staffing. We all know that even the US government is having trouble fully staffing – with teacher shortages, IRS delays, and forecast problems at USPS.

When there’s a labor shortage, it becomes a worker’s market.

Workers have the power. Wages are rising quickly – because demand is high. (Unfortunately, Biden is making sure inflation does too.) And, while this shortage is proof that some workers might have been underpaid before the pandemic, it is also proof that the asymmetries were not growing more acute. Labor, as a market, was comfortable – and leaving a job wasn’t comfortable. However, now the perception has changed. Workers know that demand is higher than they thought it was. Employers need workers and wages are rising to accommodate this new market.

This is how markets should work. The system – gasp – is working.

However, Chair Khan either doesn’t understand that workers have had this right, didn’t understand what it takes to claim the right, or just craves government to have a more paternal role than it should . The problem is the more the government inserts itself where it doesn’t belong, the more it will hurt other areas of the economy.

If a new government rule is created to protect “Tom” and forces his employer to raise Tom’s wages – then “Jerry,” who doesn’t have any skills in the market, will find it harder to get Tom’s job. Rules that increase wages by law ignore the fact that workers are paid for production. If a worker doesn’t produce what they are paid (or more importantly more than they are paid) then they cost the employer money. It might be nice if a wand could be waved – reality ignored – and people could make whatever they want for any job, at any skill level. In reality though – the economic disparities between different skill levels drives people to work harder, and learn more. And that means that companies can compete with each other to create even more jobs – instead of acting as public charities.

What we really need is leaders that match their policy decisions to the facts rather than the other way around. They need to stop creating false narratives, fearmongering, and casting themselves as the hero we don’t need.  Chair Khan has a goal – but she needs to portray workers as victims who need her to come save them. The problem that she faces is that employees aren’t victims – and conversely employers aren’t villains. We need public policy that recognizes this – not rhetoric that ignores it.

Charles Sauer (@CharlesSauer ) is the president of the Market Institute. He has previously worked on Capitol Hill, for a governor, and for an academic think tank.

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