By: Eric Posner (Project Syndicate)
With the prominent anti-monopoly advocate Lina Khan having been appointed the new chair of the Federal Trade Commission, it is a good time to consider what influence the so-called New Brandeisians will have on US antitrust law. Khan is a leading figure in that movement, and another prominent exponent, Tim Wu, now sits on President Joe Biden’s National Economic Council. Arguing that antitrust law and enforcement are too weak and ineffectual, the New Brandeisians, named for the US Supreme Court Justice Louis Brandeis, are more open than traditional antitrust experts to breaking up monopolies.
Even before the New Brandeisians achieved prominence, there was a growing consensus that US courts and regulatory agencies do not enforce antitrust law as vigorously as they should. A long period of lax enforcement has led to more concentrated markets, higher prices for consumers, and skyrocketing corporate profits. A partial solution is to give regulators more resources and strengthen the standards that regulators use to approve big business mergers. A bill sponsored by Senator Amy Klobuchar of Minnesota proposes to do precisely that.
But beyond supporting these simple measures, the consensus among antitrust experts dissolves. The debate is shaping up as one between centrist or center-left technocrats who consider more enforcement resources and higher merger standards sufficient, and New Brandeisians who seek much more. (The right seems to be sitting on the sidelines, merely grumbling that Big Tech companies discriminate against Republicans.)
For their part, the technocrats are committed to traditional antitrust analysis, which weighs the benefits of market competition against the advantages of size. They believe that firms should be allowed to grow by offering superior products and services, even if they end up dominating markets. Mergers should be permitted as long as they generate economies of scale that outweigh the anticompetitive effects.
The New Brandeisians draw their inspiration from the anti-monopoly agitation of the Gilded Age. Late-nineteenth-century populists and twentieth-century progressives like Brandeis were not primarily concerned with efficiency, nor did they distinguish carefully between the effects of monopoly on prices, wages, competition, and other economic variables. Their argument was that the “robber barons” – men like the oil tycoon John D. Rockefeller and the steel magnate Andrew Carnegie – and their companies were simply too powerful. Their political and economic power were inconsistent with democratic self-government. It was this problem that antitrust law was meant to solve…
