The Wrath of Khan

One of the Biden administration's more interesting moves has been to appoint 32-year old Lina Khan to run the FTC. Khan has been on a rocket ship since she wrote a paper ("Amazon's Antitrust Paradox") while at Yale Law School criticizing the efficacy and wisdom of applying current antitrust law to Amazon. First, Columbia University made her an Associate Professor straight off, skipping the normal tenure process. Now she's been appointed to run an organization of 1100 without having ever managed much before.

I hope she does well. She went to Mamaroneck High School, Mary's alma mater, after all. But it is a rather rapid trajectory and not without risks. Democrats criticized appointments of judges by Trump when the judges had little experience but were just ideologically friendly. And rightly so. I fear this is a repeat of putting Atul Gawande -- a wonderful author and human being and likely a great doctor and surgeon -- in the CEO role of the JP Morgan/Amazon/Berkshire Hathaway captive health care provider. It failed ignominiously. Not because Gawande wasn't the right person for the job, probably because it couldn't be done. But having the wrong person for the job at the helm likely didn't help.

Khan's core thesis is indeed interesting. Since Robert Bork established the grounds of current antitrust law back in 1978, mergers have tended to be judged on the basis of their benefit to consumers, as measured in prices. Khan argues that Amazon engages in predatory pricing to grab market share and has insidious effects across the economy (now I am summarizing summaries, but it's soon time to move on with my day).

One key question I think is whether lower prices are really all that for the consumer. After all, we all know that buying the cheapest thing is not always the right thing. We also know that -- if something is being given away (Facebook, or Robin Hood with free commissions for example) -- something else is being taken (consumer data, payment for order flow). In a freemium situation, the consumer is the product.

Anyway, there's no doubt that she raises legitimate questions. We'll see how she does at the FTC. Certainly she has directed attention at a government agency people don't think about a lot, and to that extent she continues the civics lesson that was the Trump administration, which is itself not a bad effect. The more people examine, discuss, and think about the role of government, the better our outcomes will be in the end.