The FTC Is Driving Away Good Economists In Favor Of Political Henchmen
from the let-them-speak dept
Shut up and get in line — that’s the message Federal Trade Commission Chair Lina Khan recently broadcasted to FTC staffers. Within her first month as a new commissioner, Khan ordered a stop to all public speaking for “an all-hands-on-deck moment.” Evidently, she wants the FTC speaking with only one voice — her own. The gag order is going to run out the top economists and harm the FTC’s long-term effectiveness.
Khan rose to academic stardom at a young age as a vocal critic of Big Tech, especially Amazon. In her most famous writing, Amazon’s Antitrust Paradox, she argued for stronger antitrust enforcement even when companies are lowering prices for consumers. Khan’s preferred antitrust approach would be a complete overhaul of the current antitrust system and would require a lot of work. However, even if one agrees with Khan that antitrust needs to be rewritten and that this is an all-hands-on-deck moment, Khan’s current regime will make that impossible by running out her employees, especially Ph.D. economists.
Imagine yourself as a recent Ph.D. in economics from a hotshot university. You’re 30 years old, and you just spent 6 years in graduate school, earning $20,000. Before that, you may have spent two years as a research assistant to a professor, earning just as little. You’re a top student in your program and have lots of career options in front of you. You could go work at Amazon or Netflix and earn $200,000 a year, base salary. After living on a strict diet of research and Top Ramen in graduate school, that sounds pretty good.
Traditionally, federal agencies, like the FTC, compete for the best economists the same way universities compete. They can’t match the pay of an Amazon, but they can offer economists a valuable perk: the ability to do research and engage with the scientific community as part of the job.
For many economists, who have already demonstrated their passion for research by writing a dissertation and completing a Ph.D., doing research is a huge perk that most private companies don’t offer. The FTC knows this. In their own job postings for PhD economists, the FTC explicitly emphasizes their economists’ ability to do research. To date, that hiring strategy has worked pretty well for them. Many economists at the FTC are top-notch researchers, with thousands of citations, an impressive feat for a full-time researcher at a university. When the FTC hires new PhDs, they are saying “you can work in public service and still be a successful researcher.”
Khan’s recent policies signal the FTC is now less committed to research and independent thinking. Public academic seminars, where economists present their findings to colleagues throughout the profession, are a key part of the research and publication process. If you cut off economists’ ability to present their research and get feedback, you cut off the ability to do research.
The real damage will take some time to show itself. Even if the gag order does not run out the current economists, who may be loyal to the FTC after years, the order will still hurt the agency over time. Any successful agency needs to hire quality employees year in and year out. If this policy persists, the FTC will have trouble down the line hiring and retaining high-quality employees, especially economists.
Khan might not think she needs these economists right now; after all, she has made clear she opposes the economic approach to antitrust. But when the FTC takes companies to court, as we can expect it will do even more often under Khan, it needs expert witnesses to persuasively argue its case. The private companies pay $1,000 per hour for economists at the top of the profession. The FTC must hire top talent too.
If you were against antitrust enforcement and wanted to ruin the FTC from within, Khan’s strategy would be nearly perfect. Step 1: Run out all the competent lawyers and rigorous, scientific economists. Step 2: Bring forth a bunch of cases that are poorly argued and lack an economic defense. Step 3: Lose those cases at the current Supreme Court and set a bunch of precedents against the FTC.
Brian Albrecht is an assistant professor of economics at Kennesaw State University. He holds a Ph.D. in economics from the University of Minnesota. He is a Young Voices contributor and writes a weekly economics newsletter (pricetheory.substack.com). Follow him on Twitter: @briancalbrecht.