Monday, June 23, 2003

Antitrust News: Status Quo at the FTC

There's been talk in Washington on whether the White House will "consult" with Democrats before making the next Supreme Court appointment, whenever that occurs. Frankly, I'm surprised there's much outrage among Republicans over that suggestion. After all, Democrats get consulted on a wide variety of executive appointments, and in fact even get to make some.

Take the Federal Trade Commission. Under law, no more than three members of the FTC--which functions as a quasi-court akin to the Star Chamber--can be of the same political party. Last September, Commissions Sheila Anthony's term expired, and because she holds a "Democratic" seat, Senate Minority Leader Tom Daschle told the White House who would replace her. Now, the law doesn't require Daschle to be given this power, only that the President not put more than three Republicans on the FTC (in fact, four of the five current FTC commissioners are Clinton appointees, since members serve a seven-year term.) Yet political courtesy seems to trump the Constitution when it comes to given the Senate some nominating power.

Daschle's nominee to replace Anthony is Pamela Jones Harbour, currently an attorney in private practice at Kaye Scholer in New York. For whatever reason, the White House took more than eight months to actually act on Daschle's advice, and the Senate only received the nomination officially on June 12. Harbour should be easily confirmed, given her Democratic support and the inability of Republican senators to provide any scrutiny of the FTC and its work.

Don't get me wrong: Harbour isn't an extremist or some FTC version of Robert Bork. In fact, Harbour's career strongly suggests she's a respected member of the mainstream antitrust establishment. And that's precisely the problem. Her presence on the FTC will simply reaffirm the anti-business, anti-individual rights status quo, and given her Democratic affiliation, she will likely encourage the Commission to lurch in an even more dangerous direction.

The bulk of Harbour's experience was in the New York attorney general's office, a well-known hotbed of activist lawyering. In 11 years there, Harbour rose to the position of deputy attorney general in charge of the public advocacy division. Most of her "victories" came at the expense of private businesses who violated antitrust and other "competition" laws. She argued once before the Supreme Court, in a landmark price-fixing case involving the oil industry.

As antitrust lawyers go, Harbour is successful and well-respected by her colleagues. Again, that's not a good thing in this context. The FTC is already monopolized by lawyers, most of them antitrust specialists. We've seen the results of that approach: Increasing harassment of even small businesses, constant adoption of arbitrary rules to govern whole sectors of the economy, and an institutional culture that is hostile to even the slightest criticism.

Nothing says FTC members have to be antitrust lawyers, or even lawyers at all. Given the Commission's mandate to, in essence, regulate every business in America by fiat, it's not unreasonable to ask that at least one of the commissioners have some practical experience in running a business. None of the current commissioners fit that bill, and neither does Harbour, a careeantitrustst lawyer.

Another interesting facet of Harbour's career: She's a member of New York City's Campaign Finance Board. In her role there, she's supported the Board's efforts to restrict the First Amendment rights of New Yorkers to participate in the political process. For example, the Board has consistenly lobbied (and obtained) greater restrictions on who can contribute, how much they can contribute, and at the same time has tirelessly advocated greater "public"--i.e. government--financing of political campaigns. In 1998, for example, the Board convince the city to quadruple the matching rate of contributions, giving a candidate $4 for every $1 raised from a local contributor. At the same time, the Board shut out more players in the political process by banning organizational contributions, such as those from nonprofit advocacy groups and and political committees. The Board said this was necessary to prevent "the dangers
of corruption" and "erosion of confidence in the democratic process."

I bring this up because, as an FTC commissioner, Harbour will be charged with deciding whether markets are competitive enough. Her work on the Campaign Finance Board suggests she views the free market as inherently anti-competitive, and that government regulators, and not consumers (or voters), should decide who can compete and under what conditions. That's hardly a positive message for the White House to send businesses in the current economic climate, and certainly not at a time when the FTC has become more aggressive in expanding their portfolio and, subsequently, reducing the rights of individuals and businesses.

(It's also ironic that Harbour, the Board member, is concerned with corruption and erosion of the democratic process. Few agencies are as corrupt and anti-democratic as the FTC, which operates largely in secret and generally acts without regard for the rights of American citizens.)

Harbour's by no means the next Hitler or some dangerous radical. But the time for stacking the deck at the FTC with career regulators has to stop. It would be better for the country, and the White House, if Harbour went back to her law offices in New York and the President found a pro-individual rights businessman to take the FTC position and begin waging war on that institution's corrupt culture.

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