It’s Time for Congress to Restrain An Out-of-Control Lina Khan
As seen in RealClearMarkets.
In a Wall Street Journal piece explaining her decision to resign from the FTC, outgoing Commissioner Christine Wilson cited many reasons associated with Chairman Lina Khan, including Khan’s past written reports as a congressional staffer in which she called for restraints on Meta’s future ability to acquire companies. Wilson makes a reasonable case that Khan should have recused herself from any FTC-related activity involving Meta based on the aforementioned paper trail.
Ethically it makes sense, but to be fair, individuals like Khan are presumably tapped for roles like the one she has at the FTC based on what they’ve written or said in the past. Had Khan been quiet on the matter of Meta, and about her disdain for big and successful companies more broadly, we’ve likely never heard of her. It’s a long way of saying that the true fault for the monumental Khan-at-the-FTC error lies with a Biden administration that somehow saw her fit for the job in the first place.
From there, it’s been pointed out at the Journal that Khan was vetted by Congress for a spot as FTC commissioner, not as Chairman; the point being that she might have achieved greater oversight ahead of any vote on her had her elevation to FTC Chairman been known. It sounds reasonable at first glance, but only at first glance.
Really, where were the Republicans when Khan was merely nominated? She should never have been approved for FTC commissioner, let alone Chairman. Wilson explains why in many ways, but Khan’s utter disdain for the Constitution should have loomed large in disqualifying her. Indeed, while there are intriguing arguments that non-compete clauses in employee contracts sap economic vitality by suffocating the flow of human capital to its highest uses (the technology companies Khan regularly attacks remind us of this routinely), there’s nothing reasonable about heads of federal agencies presuming to decree a blanket national ban of those non-competes. Yet that’s what Khan is seeking as this opinion piece is being written.
Of course, much bigger than Khan arrogating to herself the power to void contracts is her belief that government entities (including her FTC) must stand in the way of successful businesses expanding via acquisition. This is a trampling on property rights, plain and simple. And from an unelected bureaucrat.
Khan has routinely dreamed up powers that the FTC lacks on the matter of acquisitions, including most famously her efforts to disallow Meta’s purchase of metaverse fitness company Within. While the courts ultimately rejected Khan’s rationale, her stated explanation for blocking Meta’s purchase was in deterring it from achieving its “ultimate goal of owning the entire Metaverse.” We should be so lucky. Please read on.
Seemingly lost in all of Khan’s conceit is that big signals victory for the rest of us. Lest readers forget, a company’s size and valuation is directly related to it discovering and meeting an unmet market need. Applied to Meta and the tens of billions it’s putting to work in pursuit of metaverse riches, it’s useful to point out that at least as of now there are no market indications that the metaverse represents the future. Evidence supporting what should be seen as a statement of the obvious is the shares of Meta itself. Well off of all-time highs, equity prices that represent a look into the future so far signal not insubstantial market skepticism.
Yet Khan was fearful of Meta buying Within? Assuming yet again she’s correct about these acquisitions solidifying Meta’s future of “owning the entire metaverse,” the rest of us will all be better off either way. Think about it. Assuming Meta and Mark Zuckerberg are right about what’s ahead, Americans and the world will enjoy the brilliant fruits of Zuckerberg getting the future correct once again. He was right about Facebook, he clearly saw something his competitors didn’t with Instagram and WhatsApp, so how exciting to think that Zuckerberg isn’t resting on his laurels. What else might he discover to our betterment?
Conversely, Zuckerberg and Meta could be wrong; either about the metaverse as the future, or the companies he’s buying as the shapers of that brilliant future. If he and Meta are wrong, that means the rest of us can look elsewhere on the matter of what tomorrow will look like. Information, good, bad or indifferent, is what powers economic progress.
Despite this truth, Khan is working aggressively to block the creation of this information. All of which calls for much more congressional oversight. Based on property rights alone, it’s essential that the owners of companies be free to sell to whomever they want. From there, the incentive to intrepidly put capital to work in future entrepreneurial endeavors will surely be dampened if Khan’s abuses of property rights aren’t checked now.
Wilson’s Journal piece noted Khan’s “willful disregard of congressionally imposed limits on agency jurisdiction.” Well, there you have it. The simple truth is that we need companies like Meta aggressively trying to find out what’s around the corner, but that won’t happen so long as Khan acts without restraint. In other words, it’s time for Congress to do its very necessary job of overseeing an agency head who is operating as though Congress doesn’t exist.