Massive corporations currently wield extraordinary power over the economy to the detriment of workers, small-business owners, and democracy. For 40 years, they have done so with the acquiescence of the Federal Trade Commission. That’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 a commissioner at the Federal Trade Commission. Forty-eight Democrats and 21 Republicans supported her confirmation. Shortly thereafter, President Biden named her the chair of the agency. By that evening, she was sworn in and began her term.
When was the last time 21 Republicans did something progressives cheered about? Her confirmation process was, we think, a surprise to some progressives, who have started to believe that working across party lines is impossible.
The confirmation showed two things: just how much righteous anger there is at big monopolistic corporations at the grassroots level. Republicans and Democrats alike are hearing it from their working-class constituents, their small-business owners, and their community leaders. It also showed how impressive Lina Khan is. She’s unflappable, clear, and doesn’t get trapped in double-speak or evasion.
Appointing Khan as chair was good politics and good policy on Biden’s part. He’s doubling down on a popular nominee, and he’s putting one of the country’s most extraordinary leaders in a position where she can directly improve the economy.
Yet, even when effusive, most of the headlines got Khan’s appointment wrong. Most of the headlines were about Big Tech. Financial Times, for instance, exclaimed, “Lina Khan, the New Antitrust Chief taking on Big Tech!” Big Tech is indeed a big issue, but the Federal Trade Commission sits in a much more important 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 into power with a pro-concentration platform (his backers would describe it as anti-antitrust), changes at the Federal Trade Commission were at the very center of how he began to reorganize the economy in a top-down way. The FTC stopped bringing antitrust cases, changed the philosophy of the office, and started pushing a new ideology—one that has dominated the agency ever since: that the purpose of antitrust law is to protect short term low prices for consumers. The Reagan-Bush-Clinton-Bush-Obama ideology (largely the same, with only some disagreement at the margins) has had very little to say to change that.
For instance, in the imagined economic system of the FTC over the last 40 years, rational companies don’t engage in predatory pricing, and therefore the agency doesn’t need to worry about it. Khan has written about how Amazon cross-subsidizes itself but people miss the mark when they cast her as anti–Big Tech instead of anti–predatory pricing. The predatory pricing concerns that she surfaced in her brilliant 2017 article don’t just show up in tech, they show up in agriculture and pharmaceuticals and food and beverage companies as well.
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Unlike the ideological and abstract leaders of the Reagan revolution, Khan’s analysis is deeply fact-based. Often ignored in her profiles is the fact that she was a journalist for several years before she went to law school, and she always starts with the facts on the ground—an approach that echoes the work of Louis Brandeis, one of the most important anti-monopolists our country has ever known. We expect to see that same fact-based approach to define her work in the FTC.
Besides bringing enforcement actions and promulgating rules, the FTC has investigatory power to issue subpoenas and gather evidence related to potentially anticompetitive behavior from almost any company engaging in commerce. This investigatory authority includes the power to review proposed mergers over a certain size and block those that would “substantially lessen competition.” The agency can also sue businesses when they engage in anticompetitive behavior and impose remedies that force them to change their business models. It can implement rules to address prevalent unfair methods of competition—and can impose civil penalties when violations occur. Khan was the key staffer in the major House Antitrust Subcommittee investigation of how Amazon, Apple, Facebook, and Google use their dominance to hurt competition, rightly heralded as one of the best investigations Congress has done in the last several decades.
Though the agency’s final decisions rely on the votes of four other commissioners, including two Republican appointees, Chairwoman Khan will lead a Democratic majority that can guide the agency’s strategy and decide when and how to exercise this powerful set of tools to move the economy in a more equitable direction. As chair, she has the power to set the agenda and to manage the staff.
But she’s got her work cut out for her. Over the past 40 years, unchecked corporate power and consolidation has decimated the middle class and left everyone but the ultra-wealthy in a much weaker economic position. Wages have declined. Prices have increased. And it has become increasingly hard to start and operate small, and even medium-sized, businesses. Mergers are occurring at record rates, and the research is clear that they mostly result in layoffs that help CEOs and hurt workers. Mergers and monopolization have wiped out Black- and brown-owned businesses and destroyed communities. Concentration issues are not niche or tangential; they sit at the heart of what is wrong with our economy.
Strong competition policy—which the FTC can implement and we hope to see from Chairwoman Khan—is essential to stopping these harms and achieving racial and economic justice. One of Khan’s most important contributions to anti-monopoly thinking was her series of arguments about inequality and monopoly, where she showed just how much concentration has been a key driver of our out-of-control inequality.
For all its potential power, the FTC hasn’t been a major player in American economic policy in either of our lifetimes—and that’s part of the problem. That’s also by design. When Reagan came into office, his FTC chair, James C. Miller III, reorganized the commission to be a bystander agency, reinterpreting antimonopoly laws as consumer-welfare-only rules to be used in the case of last resort.
Just as FDR used the FTC as a crucial tool to decentralize corporate power and support democratic revival, Reagan used it to achieve the opposite. To be fair, part of maximizing the impact of the FTC depends on Congress passing legislation. Because Reagan didn’t just put in place a regressive FTC, he led what became three generations of judges who tore down good laws through bad judicial decisions. Only Congress—or a revolution in the courts—can undo those decisions.
Chairwoman Khan also inherits an agency that has had a generation of thinking in a passive way about their authority and will need to embrace a more aggressive approach to address many of the harms she has spent her professional career highlighting.
Despite the big money interests against her, Khan got appointed—and easily confirmed—because what she has advocated for is very popular across the political spectrum.
She has spent her career describing the economic world through the lens of power—and that’s the world most people already know from their own experience: small and medium-sized tech companies and retailers know the abuse of Big Tech corporations, and the way they use chokepoint power to privately tax and squeeze those who rely on them. Workers routinely experience employers who force them to sign arbitration contracts and noncompetition agreements because their power allows them to control the terms by which people work.
So Khan’s appointment is a huge deal for workers—and for democracy. Conventional wisdom would say her background would have made an Executive Branch appointment impossible. Even 10 years ago, it would have been extremely difficult to even imagine such a person getting nominated—let alone confirmed, and tapped to lead the FTC. Thank goodness President Biden ignored any such advice—if he received it.
The question now is whether the Democratic establishment will learn the right lesson. Since Donald Trump, Republicans have been trying to own economic populism—though their version is often disingenuous, using attacks on cultural elites to distract from economic power. The most effective way to fight back is through honest, clear, substance-based economic populism, like that of Lina Khan.