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The Economic Wisdom of a Carter-Era 'Good Liberal Democrat' Is Needed Now

Name the former government official, and the administration he worked for, who said this: “Whenever competition is feasible it is, for all its imperfections, superior to regulation as a means of serving the public interest.” No, the quote does not come from a veteran of the Reagan, Trump, or either Bush administration.

Instead, the quote in question is from self-described “good liberal Democrat” and Jimmy Carter alumni Prof. Alfred Kahn.

Among the positions Kahn held in the Carter Administration was chair of the Civil Aeronautics Board (CAB), which regulated airlines, determining which routes they could fly, and what prices they could charge. CAB’s control of prices and routes was supposed to make airline travel accessible to as many Americans as possible, but the lack of price competition made air travel a luxury for all but the well-to-do. CAB’s ban on price competition and control of airline routes also limited the ability of new airlines to enter the market.

It’s unheard of in DC for the head of an agency to assist in dismantling that agency, but Kahn understood that the CAB’s regulations had created and sustained an airline cartel, benefiting big airlines at the expense of ordinary Americans. Kahn was not the only liberal who understood airline regulation was hurting the people and harming the economy. In addition to President Carter himself, airline deregulation was supported by Ralph Nader and Sen. Ted Kennedy (with the assistance of his then-young advisor future Supreme Court Justice Stephen Byer).

Carter, and his liberal allies, did not stop with airlines. Carter also worked with Congress to deregulate trucking and railroads. Carter also made the microbrewery industry possible by repealing an IRS regulation that effectively outlawed home brewing.

Sadly, today’s liberals (though they’ve become so illiberal they’ve adopted the ominous term “progressive”) have forgotten the lessons of Alfred Kahn and have reverted to the “old left” view that the only way to protect workers consumers, and small business from predatory big business is via government domination. Today’s liberals (and sadly even some conservatives) support expanded use of federal laws, like antirust against big businesses, never considering that their actions might hurt those small businesses that can’t afford to deal with regulation the way big ones can.

The leading advocate for this “neo-Brandeisian” agenda (named after Supreme Court Justice and progressive icon Louis Brandies who was the most influential advocate of the “big is per se bad” school of antitrust enforcement) is Federal Trade Commissioner (FTC) Chair Lina Khan. Khan wants to use antitrust to achieve a wide variety of economic, political, and social goals, but her focus is going after “big tech” companies like Meta (parent company of Facebook) and Amazon.

Unfortunately, Khan’s goal of using antirust to rein in big tech is shared by both Democrats and Republicans. Many of these pro-antitrust conservatives, such as Missouri Senator Josh Hawley are supporting Sen. Amy Klobuchar’s “American Online Protection and Innovation Act” (S. 2992). This bill aims to stop big tech (defined as any company with a market cap of $500 billion or more) from “preferencing”—which means favoring their own products and services on their own platforms over those of third-party vendors. This bill would force big tech to restrict small business’s access to their platforms, thus making it more difficult for this small business to reach new customers. The market cap will also discourage investors from making large investments into small but growing tech companies because they know if or when, they become too big they will have to comply with the requirements of S. 2992.

Lina Khan, and fellow Democratic FTC commissioners, are aggressively using antirust against big tech. They recently overruled the FTC’s professional economists and lawyers, and sued Meta to stop them from purchasing the virtual reality company Within Unlimited. The FTC claims that stopping big tech companies from buying smaller companies will increase competition and innovation. That is the opposite of the truth. Investors have thrown so much money at tech companies because of the potential for big payoffs when the business explodes and gets acquired by one of the big tech companies. (This is the entire plot of the show Silicon Valley.)

So, this bill will make it harder for new tech companies to attract capital.

Instead of returning to the era when being “too big” was enough to get a business caught in the antitrust crosshairs, Lina Khan, Josh Hawley, and their allies should follow Alfred Kahn’s example and advocate pro-consumer, pro-competition, and pro-liberty deregulation policy. If Lina Khan became more like Alfred Kahn, it might even cause people to mean it as a compliment when they say Joe Biden is the new Jimmy Carter.