In Lina Khan's America, there's plenty of common ground -- for those willing to challenge corporate power
What is the greater threat to your personal liberty -- a government that is too large or a corporation that is too large?
Yes, of course, the right answer is probably both, but Americans have a long-standing urge to blame government for all ills -- for some reason, we're quicker to trust corporations than elected officials. I have long feared that this fundamental American belief is constantly used as a misdirection play by gigantic corporations and their lobbyists. When I wrote Gotcha Capitalism 15 years ago, I argued that cheating and sneaky fees were the new American business model. On a small scale, this turns everyday purchases into a constant fight: What is this 15% surcharge on my dinner bill? Why is that lab test not covered by insurance? And so on.
But on a grand scale, it means Internet and cell phone service options are limited and substandard. It means your doctor only gets 7.5 minutes to perform an annual checkup. And it also means private equity firms control the housing market in many neighborhoods, while no small business can ever hope to escape whimsical landowners and their leases that can crush them at any time.
In other words, hidden fees are no small thing. It's nothing short of an attack on the American way of life.
I've talked with thousands of people since the publication of Gotcha Capitalism, and scarcely a handful of people disagree -- and I've found they are nearly all people who are rich thanks to the status quo.
This consensus, I should mention, reaches across the political spectrum. And yet, when America produced a leader who finally took on this fight, and gained some real traction, her work has been subject to disheartening revisionist history and...predictably...grand efforts at distraction. Still, I'm one who believes the consensus is so strong on the fight against corporate power that it's an idea whose time has come.
And so, I'd urge you to read this dialogue between Ross Douthat -- an unabashed conservative -- and Lina Khan, the former head of the Federal Trade Commission. At a time when there is so much knee-jerk disagreement on everything, I think you'll find so much common ground in the work she's doing. And if America is ever going to move forward, we should begin with the easy things, the areas where there is broad agreement. Gigantic corporations designed by MBA grads to destroy all small businesses so they can cheat consumers without competition is no one's idea of freedom, or free markets.
In case you don't feel like clicking, here are a few highlights from their conversation.
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[Douthat notes that Lina Khan has "fans" across the political spectrum]
Douthat: As you would expect as a Democratic appointee, most of your fans were Democrats and most of your critics were Republicans. But there was both a quite vocal contingent of Democrats — particularly corporate and corporate-adjacent Democrats — who were pretty anti-Lina Khan. And then there was a group of populist Republicans, who tended to sometimes at least say nice things about you, including figures as diverse as, now the vice president of the United States, JD Vance; Matt Gaetz, Josh Hawley; and others.
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[Large corporations impact the health care Americans receive]
Khan: One of the other big problems that I heard a lot about, including from health care workers, was the expansion of private equity into health care markets. I would hear routinely from E.R. doctors, for example, about how the expansion of private equity there had meant that there were all these punishing quotas, and E.R. doctors would have to think twice about whether they’d be able to comfort a grieving mother who had just lost her kid or have to move on to the next patient.
There are all sorts of cost effects here. People are paying more. We are seeing literal wealth transfers from Americans to these health care companies, in part because of a lack of competition. But it also manifests in all sorts of other ways in terms of degradation of service and doctors feeling like they don’t have autonomy to really do what is best for their patients and are instead having to follow these dictates of these distant giants that don’t even have a presence in the community.
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[Corporations need checks and balances, too]
Khan: So, antimonopoly as a philosophy and framework really adopts a skeptical posture toward unchecked concentrations of economic power. It’s basically a corollary to how we think about the need for checks and balances in our political sphere. There was a recognition that, in the way we overthrew a monarch to safeguard core liberties and freedoms, we had to protect ourselves from autocrats of trade and the entities that had come to dominate key arteries of commerce and communications, so we passed the antitrust and antimonopoly laws as a way to try to safeguard those freedoms.
The other important thing to remember is: how our markets are structured is not some inevitability. It’s deeply the product of laws and rules and policy choices that our enforcers are making. Evidence shows time and time again that when you have a reduction in competition in markets, firms can abuse that power. It can result in higher prices for consumers. It can mean lower wages for workers. It can mean fewer opportunities for small businesses and independent businesses. It can also ultimately lead people to feel less free if, in their day-to-day lives, they feel they don’t have real choice and firms can get away with abusing their power.
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[Monopoly power has deep impacts on everyday life]
Khan: I think the issue of unchecked corporate power sits upstream from a lot of the problems that people face in their day-to-day lives.
Of course, antitrust and even antimonopoly are just one set of policy tools, and so you need other policy levers to create markets that are really serving working people in their day-to-day lives. But I do think we’ve seen this issue of monopoly power, of incumbents that are not being checked by competition, and therefore can get away with making products worse, making prices higher, not feeling a pressure to really serve their customers or compete for workers.
It also has been reflected in issues around resiliency. We saw during the pandemic, we routinely hear from senior members of the Defense Department, that extreme consolidation has also made our supply chains much more brittle. And so the manifestations of this problem are manifold and show themselves in all sorts of areas.
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[In much of American commerce, there is only the illusion of competition]
Khan: Starting in the ’80s, we saw huge waves of consolidation. That meant that in industry after industry, where a few decades ago you had dozens of competitors, increasingly you just have a few. Sometimes the extent of this consolidation can be masked because if you go to a grocery store and you go to the laundry detergent aisle or the chip aisle or the candy aisle, you’ll see a lot of brands, but a lot of those brands are owned —
Douthat: You’ll see a lot of brands, just to be clear.
Khan: You’ll see a lot of brands. But they’re just controlled by two or three companies in market after market, whether laundry detergent or even areas like chips or candies or snacks. And so that extensive consolidation is the direct result of a policy pivot — a pretty radical policy pivot — that was made in the early ’80s and that was pretty much in place including through the Obama administration.
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[An adminstration fighting for the people wouldn't shutter the CFPB]
Khan: Personally I am also still waiting to see, especially at the F.T.C., whether the zeal that we see on some of these more conservative grievance issues is also going to be extending to some of the day-to-day challenges that people are facing, like in health care or food and agriculture. I also worry, as we see in other parts of the administration, that the law could be weaponized to reward friends and punish enemies. I think we are seeing a real backsliding when it comes to the dismantling of huge parts of the government. On the one hand, we hear this administration still wants to be tough on big tech, but they’ve dismantled the C.F.P.B. — the Consumer Financial Protection Bureau — which had a whole set of investigations underway into big tech’s incursion into payment platforms.
So it seems like we’re seeing a lot of rhetoric, but if ultimately you are serious about governing in ways that’s checking monopoly power, you need a government. You need a functioning government. And so many of the efforts that we’re seeing in the direction of weakening and enfeebling the government are going to make that much more difficult — there’s a basic contradiction there.
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[Business 2025 - create a bottleneck, then control the bottleneck]
Khan: A core part of a monopolist playbook is to create artificial scarcity and to actually serve as that bottleneck. So I think taking on those types of corporate bottlenecks, taking on those monopolies is absolutely in service of creating more growth.
On the issue of regulations and the extent to which they’re stifling that growth, I would say it can be pretty dangerous to talk about regulations as a monolith. There are different types of regulations. There can absolutely be regulations that are creating a lot of complexity and a lot of bureaucracy and, perversely, oftentimes benefit big business at the expense of small business, because it’s the bigger firms that are better equipped to navigate.
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As I mentioned, you should really read, or listen to, the entire interview. But let me make this plea -- at least consider the idea that large corporations are curtailling your freedom as much, if not more than, large government agencies. If you search for middle ground, you can find it.
Les deux.