https://www.thebignewsletter.com/p/monopoly-round-up-antitrust-chief?publication_id=11524&post_id=148887451&isFreemail=true&r=4c1h9r&triedRedirect=true
Monopoly Round-Up: Antitrust Chief Says Economics Has Its Big Tobacco Corruption Moment
Antitrust chief Jonathan Kanter gave a speech on the "crisis of expertise" in antitrust. "Conflicts of interest have become so rampant it is increasingly rare to encounter a neutral expert."
MATT STOLLER
But before I get to any of that, I want to spend a bit of time on a shocking speech at Fordham University given this week by the Antitrust chief at the Department of Justice, Jonathan Kanter, on the “crisis of expertise” in antitrust, aka the corruption of economists. After a career in the corporate bar, Kanter became the top official on antitrust in the executive branch. The top antitrust enforcer role has been until recently occupied by a someone with a sense of community among corporate practitioners. Kanter has changed the game, with aggressive monopolization suits against Google, Ticketmaster, and Apple.
And this week, Kanter decided it was time to tell some hard truths to fellow antitrust experts. With “gasps in the room,” he laid into academics, particularly economists, for taking money from large corporations and then offering their supposedly expert disinterested opinion. It’s a well-known problem, but one that goes unmentioned in polite circles. Until now.
Kanter noted a series of stories, like tricking an international enforcer into attending a training event he thought was associated with the U.S. government, but was in fact paid for by large corporations encouraging lax antitrust, or academics taking money from big tech and then advocating against action against big tech, all without disclosure. He cited, without naming names, a disgraced academic named Josh Wright authoring papers promoting Qualcomm’s posture on antitrust, papers later cited by a Court of Appeals ruling for the company. Wright was paid by Qualcomm, but hadn’t disclosed that.
Kanter’s speech has prompted an important conversation about the role of corporate PR and economics in policymaking. Law professor and former enforcer John Newman wrote a shocking thread about how it’s playing out in California, where the legislature has asked the California Law Review Commission whether antitrust law needs updating. Newman showed how Google, Amazon, and Apple, through a network of byzantine trade associations (NetChoice, DCI, RXN, Connected Commerce Council, CCIA, ITIF, Chamber of Progress) and economists who don’t disclose their affiliations, has sent significant amounts of expert commentary to overwhelm the commission. As Kanter said, it’s Big Tobacco, only this time paying off economists.
This is a step in the right direction by the Biden administration. On a tangentially related note, one rather disappointing move by the Obama administration was the appointment of people like Cass Sunstein:
https://harpers.org/archive/2014/12/obamas-obama/
After Sunstein took charge at OIRA, regulations were often delayed and the average review time doubled. A total of thirty-eight rules were bottled up at OIRA for more than a year, and several energy regulations sat there for close to two. OIRA delayed or weakened efforts to regulate coal ash, a waste product from coal-fired power plants that can pollute waterways. After refugees from Hurricane Katrina became sick from formaldehyde fumes released by their FEMA trailers, Congress passed a law in 2010 requiring tighter formaldehyde regulation. The nation’s chemical companies mounted a campaign to challenge the EPA’s proposed rules, and OIRA duly undermined the regulation.
By his own account, Sunstein aspired to run OIRA almost as a philosopher-king, untainted by politics. “On the rare occasions when members of my staff pointed out the views of interest groups,” he writes in Simpler, “I responded (I hope with humor, but also with a point), That’s sewer talk. Get your mind out of the gutter.”
Sunstein’s most recent book, published in October, is Valuing Life. The book, his third in two years, is mainly an exposition of how cost-benefit analysis works and the methodological challenges to its application. He notes in the introduction that the Obama Administration understood that “high regulatory costs could prove particularly harmful or unwelcome” during the “economically challenging time” following the 2008 financial crisis. But what were the economic costs of the inadequate regulation that led to the crisis and the stagnation that followed? This question is not addressed.
I really applaud the Biden administration for their stance on antitrust.
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