One of the more libertarian-friendly aspects of Star Trek is the Prime Directive, which forbids the heroes of the franchise in Starfleet from interfering with the development of a civilization. Think of it as cosmic laissez faire. The Prime Directive implicitly endorses a non-interventionist foreign policy; however, it can also serve as a model for sound economic policy.
Free markets evolve and develop over time, as new businesses rise and fall depending on how well they service consumers. In many cases, entrepreneurs provide consumers with products they never knew they needed, or wanted, until someone invents them and brings them to the market. For example, 30 years ago, how many people imagined they would someday not be able to function without a mobile phone that could access the internet and download apps?
Government interference distorts the market process, causing inefficiencies and diverting a business’s resources from finding new ways to serve customers. Instead, effort is directed at ways to curry favor with government officials, which does nothing for the betterment of the people that corporations aim to help. To protect the marketplace, we need an economic Prime Directive forbidding government interference in a marketplace that has no barriers to entry.
There may be no agency head more committed to violating the economic prime directive than Federal Trade Commissioner Lina Khan. Khan become a progressive superstar while still a law student thanks to a law review article calling for new approach to antitrust enforcement to rein in the big tech companies, specifically Amazon. As FTC Chair, Khan wants to expand the use of antitrust to not just crack down on “big tech” but, in the words of one of her supporters “take charge of the entire economy.”
Khan’s FTC recently filed suit to stop Meta, Facebook’s parent company, from purchasing the virtual reality company Within Unlimited. This was part of an effort by Khan to stop big tech companies from purchasing smaller companies on the (shaky) grounds that this will spur more competition and innovation in the technology sector. Her authoritarian decision ignores the fact that a main reason for investing in start-ups is the hope that if the company succeeds, the investors will get a big payoff from an acquisition or merger with one of the big tech companies.
If Khan has her way, this method of attracting capital will be closed off to the entrepreneurs.
Politicians and bureaucrats like Lina Khan target big business because they think that once a business obtains a dominant position in a market, it will maintain that dominance unless government acts. They ignore the numerous examples of once-dominant companies that were knocked off their perches by competitors offering new goods or services that did a better job of appealing to consumers.
For example, IBM once controlled approximately 70% of global computing. The federal Government sued IBM for antirust violations, but by the time the case came to court IBM was already losing market share to two new computer companies named Apple and Microsoft.
History is repeating itself. While Meta battles Kahn and her FTC colleagues, it is also battling to stop hemorrhaging users — particularly young people — to Tik Tok and other sites. Meta’s stock is in freefall and CEO Marx Zuckerberg is warning Meta employees to expect hard times ahead. Amazon has also experienced a stock price decline, which may be attributed to the end of the COVID lockdowns that dramatically increased demand for Amazon’s shipping services two years ago. In other words, Amazon’s market position changed as consumer’s preferences and needs changed all without the interference of Khan.
As any Trekker can tell you, there is only justification for violating the Prime Directive if it’s to correct a prior violation of the Prime Directive. This has its counterpart in that there are numerous interventions in the market by government that have contributed to the growth of monopolies. Khan could use her powers for good by identifying government policies that inhibit development of competitive markets and work with others in the administration, Congress, and if necessary, state and local governments to remove them.
For example, consolidation in the healthcare industry, which is something the FTC, under Khan’s leadership, is addressing, is an intended consequence of Obamacare. So, instead of suing hospitals Khan should work to get Congress to repeal those parts of Obamacare that encourage consolidation.
Government interference in the marketplace creates distortions and inefficiencies that harm workers and consumers. That is why government bureaucrats like Khan should boldly go where no bureaucrat has gone before. Instead of using antitrust laws to expand government’s control of the economy, she could use her powers to remove prior government interventions that prevent new businesses and products from entering the market.
If our illustrious FTC chair doesn’t stop, we’ll have to get William Shatner to yell, “KHAAAAAN!!!”
