Podcast: Agency Power, Antitrust, and the Supreme Court with Ashley Baker
Updated: 35 minutes ago
Ashley Baker, Executive Director of the Committee for Justice, joined Dr. Vance Ginn on Episode 216 of the Let People Prosper Show to discuss a question at the center of today’s debates over the administrative state: how much power should unelected federal agencies have?
The conversation covers Trump v. Slaughter and the end of what remained of Humphrey’s Executor, the Federal Trade Commission’s authority and procedures, antitrust enforcement and merger review, the costs that the regulatory process itself imposes, and why regulations aimed at large companies can end up building a moat that protects incumbents from smaller competitors.
The episode is also available on Apple Podcasts.
Speakers
Ashley Baker
Executive Director, The Committee for Justice
Dr. Vance Ginn (Host)
Host, Let People Prosper Show; President, Ginn Economic Consulting
Audio and video courtesy of the Let People Prosper Show with Dr. Vance Ginn.
Transcript
Ashley Baker: Not referring to this administration—the previous administration—of, “We would like to kill these deals in the boardroom,” so they shouldn’t happen. I mean, first of all, who are you to say that? Especially considering that only, I think, one or two people in the entire agency had any experience in business outside the agency. I mean, like one or two individuals, apparently. First of all, I don’t like that level of presumptiveness coming from any government agency.
Vance Ginn: Hello, welcome back to the Let People Prosper Show. My name is Dr. Vance Ginn. I hope you’re having a prosperous day. Well, today I’m glad to welcome Ashley Baker to the show. Ashley is executive director of the Committee for Justice, where she works on issues dealing with the Supreme Court, technology and regulatory policy, antitrust, and judicial nominations. She also founded the Alliance on Antitrust coalition and has testified before the U.S. Senate on antitrust law.
This conversation is timely because we’re celebrating not only Constitution Day, but there are also major debates over FTC authority, independent agencies, antitrust enforcement, merger review, AI, privacy, and the separation of powers. All these things are colliding right now, so it’s a key issue that we’re talking about. And we also need to think about the future of Humphrey’s Executor, the 1935 precedent that helped shield certain independent agency officials from removal without cause.
Depending on how the courts handle cases like Trump v. Slaughter, which we’re going to talk about today, the balance of power among the president, Congress, courts, and independent agencies could shift significantly. And what would that mean? All this matters because agency power is not abstract. It affects businesses, consumers, prices, innovation, and economic freedom.
So today, Ashley and I are going to discuss what policymakers, staff, think tanks, and thought leaders need to understand about agency authority, antitrust, merger review, technology policy, and why clear legal limits matter for prosperity. So with all that great stuff going on, Ashley, and all the great work that you’re already doing, first of all, welcome to the Let People Prosper Show. And let me go ahead and ask you the first question that I ask all the guests: Why do you do what you do every day?
Ashley Baker: Thank you, and thank you for having me, Vance. So why do I do it? I guess there are kind of two prongs to that question: How did I end up doing all this, and what motivates me? The first part is a little bit more complicated, and the very short answer is by complete accident. I joke with friends, especially with administrative law, that it’s kind of something that just happens to you. It’s not something that you grow up interested in working in.
Kind of by way of background—that’s not in my bio—and things that piqued my interest: actually, coming out of college, I worked in the private sector for a large bank and wealth management firm at the time, for about a year. I was already interested in politics, but I thought I needed to maybe go out in the real world, maybe make some money before doing something like going to law school or taking some job that didn’t pay well.
I did not like it at all. And it’s always great to learn those things sooner rather than later, rather than 10 years later in your career. I learned it within a year. But one takeaway from that—which is not why I was not interested in working there; it just was not for me. I mean, I was an English major. I don’t know why I was going there in the first place.
But the amount of compliance—and this was immediately post-Dodd-Frank—coming from the SEC, from FINRA, the amount of trainings, the amount of things we had to go through, and me, who couldn’t really take any action yet on anything important anyway, because I was still in training. I wasn’t actively managing people’s money. Those torture people who can’t do these things, and are also very ineffective at what they’re supposedly trying to do, and would take up these massive chunks of your day.
So, of course, I was going home and reading about FINRA and trying to figure out what the problems are with self-regulatory organizations and some of the SEC guidance. Dodd-Frank was kind of like my gateway drug, I would say. I already had these views about how markets should work and had my broader political views. But when it comes to regulation specifically, and how they affect people and how badly they affect people, it was that practical aspect of just going through that annoyance, but also the at-home research that it made me do, because I’m always very curious about all of these things. So I would go home and do a deep, deep dive, and that kind of set things off.
And after a while, I did some policy writing and communications work for a while. I ended up somewhere where my boss at the time did something that was really great for me personally and for my career: he allowed me to write on their blog about anything related really to regulatory reform, tech policy, or the Supreme Court, which is basically anything that I woke up and thought was interesting. I had complete permission to do that within the boundaries of what actually interests the organization and its activists.
So I did, starting with what I knew, that being the financial services regulators. But I ended up ranging from things such as the CFPB anti-arbitration rule under the Obama administration to why we have so many agencies regulating and inspecting catfish, because that’s ridiculous too. So I just covered anything that I really just wanted to do a deep dive on, which remained a lot in the financial regulatory sector, and also some FTC.
I’ve always had an interest in the Supreme Court and how it works, and had that backdrop of interest and how those things were intersecting. Although at the time, if someone told me that Chevron would be overruled, I would be like, “Oh, no.” Same with a couple of other cases. It just seemed like such an impossibility that that was ever within reach 12 years ago, which is great. But we still have a lot of work to go.
So, yes, I kind of ventured between those issues and also cases related to those issues. One of the more striking ones at the beginning was the MetLife case under Dodd-Frank, when MetLife was determined to be a systemically significant financial institution, which they were not at all. There are these broader undercurrents between agencies that you see in a lot of these issues, in Dodd-Frank and elsewhere: whenever you give any government body any sort of designating authority, and you have to comply with these things—especially pre-Loper Bright, and pre a couple of other developments that have happened there—you’re essentially whatever they say you are, until eventually you get a judge to say, “No, that’s incorrect,” 10 years down the road.
And I thought that sort of power was insane, and the courts were kind of unable to do that much about it at the time. So that was just being able to do a deep dive into all these issues. And then I went to work for my current organization right before Justice Gorsuch was nominated. And considering his focus and his Tenth Circuit opinions, I was very excited to be working on that from the outside. He had a lot of great stuff to work with, a lot of great views on that.
That further fueled my interest in the courts and regulation. My organization works on the judiciary and nominations and how that intersects, and part of our main mission is to combat judicial activism and to restore constitutional conservatism and take things back to the Constitution. So I was very excited to be working on someone who had so many great lower court opinions to work with on issues I was interested in. The general public was not really interested in Chevron or some of these wonkier issues that I wish would have been the center of attention during later nominations, but that really piqued my interest there.
Vance Ginn: Yeah, I love it. I love it. And, Ashley, you brought up a lot of good points there. I want to dive into some of those as we go through this discussion. I wonder, where did you grow up? Did you know any other lawyers or anything like that? You said you got started with English as a major, and then you went into law school and everything else.
Ashley Baker: Actually, no, I’m not an attorney.
Vance Ginn: Not an attorney.
Ashley Baker: I’m the only non-attorney of the—yes. I just play one on TV and podcasts.
Vance Ginn: Got it. Got it. But I wonder what got you going in that kind of direction. Was it something early on in life, where you said, “Well, maybe I like these sorts of things,” or was this really later on, where you really got into it after the 2008 financial crisis and Dodd-Frank and all those things?
Ashley Baker: I did at one point want to go to law school for a while. I eventually decided against it. So I am happy doing what I’m doing, because I don’t want to litigate. But I grew up in Gastonia, North Carolina. I knew an attorney or two. I’m a first-generation college student, so it’s not like I’m from a family of attorneys or anything. I grew up in a blue-collar neighborhood. In the movie Talladega Nights, where Ricky Bobby is delivering pizzas, that’s Gastonia. That’s like a bad portrayal of it. But I was saying, this isn’t a town full of attorneys, although I knew a few.
But I’ve always liked reading as much as possible, and writing. I’ve always been someone who has never known exactly what I want to do. I never had that specific five-year career plan, but I know what I like to do and I know what I don’t like, and I know what I like to do day to day. And I’ve always had that intellectual curiosity. So finding something that allows me to just dive into the weeds and do what I will with that, and have that autonomy, has really been great.
Vance Ginn: And what about with the Committee for Justice? What all do y’all do? What type of work do you do? And who’s all working there? How large is it? Explain that for the audience.
Ashley Baker: Sure. So, we’re very small. I like to think that we punch above our weight. I like a small place. So, we were founded in 2002, with our primary mission being a lot more narrow at the time, which was to combat the Senate Democrats’ obstruction of President Bush’s federal court nominees, such as Miguel Estrada, Janice Rogers Brown, that group of nominees. We had a great group of well-qualified nominees who were being politically blocked under some unfair practices, and we also worked to persuade the public of why they would be great judges and justices.
So we’ve continued that mission of working to support certain federal and Supreme Court nominations, but obviously we don’t have a vacancy every single year. We did for a couple of years there, but it’s not as much of an ongoing thing. So over the years, we expanded our priorities to include larger issues that are important in constitutional law and separation of powers, but also administrative law and agencies. That was really an up-and-coming issue when I was hired there and joined, and considering that was really my focus, that was brought on as my part of the project.
I kind of approach antitrust from a rule of law and administrative law sort of perspective. I know for some people, their entry point is more tech policy or some sort of policy-related issue, or some sort of economic issue if you’re a business owner. But mine was more about the courts and the intersection of that, and how the law has evolved over the years, and how the agencies operate, and how they should or shouldn’t operate in their enforcement actions. That’s at the forefront of my mind whenever I approach these antitrust issues.
Vance Ginn: Yeah. Speaking of the FTC, the Federal Trade Commission, it’s one of those things where I don’t think most people know anything about it, right? It’s something that’s out there. They’re maybe doing something with antitrust, but do people really know what that’s about? And there’s just so much that’s gone into the FTC, particularly, I think, during the Obama years, and just so much around antitrust and everything else. It started some, I think, with the first Trump administration as well, but it really got on steroids during then, and it’s still around now. There are still some of these cases going on that we could talk about. But what do you think most people, policymakers and others, should know about the FTC? Because it does have a lot of influence on our lives, for consumers and others. What do you like to tell people about the FTC?
Ashley Baker: Right, back to your point about it being boring. I do remember when antitrust was very much considered a boring subject, and it was really hard to get people to listen to anything about any of this.
Vance Ginn: I wish we could get back to that. I wish we could get back to it being boring.
Ashley Baker: We’ll get back to that—the political parts of that. So in terms of agency authority—and some of this applies to the FTC and the DOJ, the FTC being a bit more in the news recently with the Court decision and with more action there, and the DOJ not having a head right now—from a practical perspective, there’s merger review. The DOJ and the FTC have joint merger enforcement capabilities, and that means a lot to a lot of business owners who are getting their deals reviewed.
Many, many deals go through without scrutiny. They go through the process. Many of them go under the threshold; they’re not big enough to raise any concerns. But where it really matters is when it comes to their merger guidelines and their other processes, such as, essentially, the form they have to fill out in order to notify the agencies of the merger under the Hart-Scott-Rodino Act, and whether or not that is, first of all, consistent. Whenever those standards change time after time, that injects a lot of uncertainty into the merger review process.
And whenever there’s a change in enforcement, in terms of the types of cases they are targeting or taking, that’s very different from what they’ve done historically, that is a huge problem for M&A and for deal making, when they don’t understand what the rules are. Up until the Biden administration, really, there were some pretty clear rules of the road under the merger guidelines. They were imperfect at times, but they did what they’re supposed to do. They’re supposed to provide guidance to the companies, or the merging parties, and in turn, if a deal was challenged, provide guidance to the judge in terms of what the rules are.
And those were pretty fair, pretty consistent. They didn’t change every single year. And then in the Biden administration, Lina Khan came in and discarded the merger guidelines without replacement, without explanation—like, which merger guidelines do we provide? It’s uncertainty, really, and that injects that into the process.
And then of course there’s also the consumer protection mandate too. Depending on what they choose to focus on, that could be good or that could be bad. That’s where there’s a lot of potential for good as well. I like to use the example of the Eyeglass Rule and the Contact Lens Rule. If you go to your optometrist for your contact lenses, when you leave your appointment, you sign that little form that says either you received a copy of your prescription or were offered one and that it will be available later on. That way, doctors can’t lock you into only buying them from their office, where they really inflate the prices, and sometimes at a certain point would not provide those prescriptions to outside sellers. So that sort of thing is pro-consumer advocacy that the agency is capable of doing.
So there’s that side, where there’s some good. There’s also a lot that can be done in combating scams and fraud. But it’s the M&A, the mergers, especially when the agency has said a lot of things publicly—not referring to this administration, the previous administration—of, “We would like to kill these deals in the boardroom,” so they shouldn’t happen. I mean, first of all, who are you to say that? Especially considering that only, I think, one or two people in the entire agency had any experience in business outside the agency, like one or two individuals, apparently. First of all, I don’t like that level of presumptiveness coming from any government agency. But also, the process is the punishment, and antitrust litigation moves very, very slowly.
So often that will kill a deal by the end. And particularly in the previous administration, they had a policy against really accepting any sort of settlements. A lot of these issues would be worked out and settled, and some concessions would be made that would satisfy all parties, and they could move on. When that was not a possibility, when it was “litigate or don’t merge,” that is a huge problem. I think we’re starting to move a lot away from that, back. And we can get into this later, but at the state level that’s not necessarily the case. And this always turns over by administration.
Vance Ginn: And so I guess, in general, when we think about the FTC, we think about competition. And some would suggest that over the last few years there’s been this “corporate greed,” right, and that businesses are bad. And so there’s this idea about mergers—I think this was getting into Lina Khan’s sort of idea that big is bad. And she was willing to go away from what has been kind of the gold standard when it comes to antitrust, which is the consumer welfare standard, right? Are there any consumer harms? What are the prices? These sorts of things are more objective metrics than the subjective metrics that she was trying to use during that time.
And to me, that has always been a scary thing, right, when the government has that sort of power, to your point, reducing the amount of liberty and profit and loss. Let the market work out what should be a good merger and a bad merger, instead of these people from up high sending these top-down sorts of policies in place. How do you think we got here, Ashley? Because sometimes it seemed like we had a good thing going for a long time. And now from the right and the left, sometimes there’s this idea that big is bad. So how do we get back to maybe where we were? Are we ever going to get back there? What are your thoughts on that, Ashley?
Ashley Baker: I think it’s more that all mergers are bad—particularly, obviously, most of them are big mergers. Certain industries, too, became more targets, such as the tech industry, pharmaceuticals, and healthcare. And a lot of the ones during the previous administration were not great cases. I’m not saying that the government should never bring any of these challenges whatsoever. However, if you look at the actual win rate under the Lina Khan FTC, it couldn’t be much worse.
Their successes include abandoned mergers, which couldn’t go through with the rest of the litigation, and some others that weren’t actually a victory in court, or were victories on motions that are not actually the outcome of the case. They didn’t do great there, and they couldn’t have had a worse administrative-level record. Eventually, what they were doing was kind of the end of the agency as they thought it was. I would argue a little bit that it’s always kind of been the same.
But it didn’t really work out that well in the end, and it particularly didn’t work out well for small businesses and midsize businesses who wanted to merge. You don’t have those months or years in which you can wait for that deal to happen if you’re the smaller party to that deal. So I think that the uncertainty is really the punishment. And I think, like with any agency, if we must have top-down rules, they need to be clear and they need to be enforced evenly, and that is not what we’ve had.
And it’s not necessarily unique to the FTC. This is something we’ve seen historically, particularly in the earlier decades following the passage of the Sherman Act, when courts and policymakers and regulators were really struggling to figure out what exactly all of this means, given the statute is very vaguely put. It might have been a little bit more specific for a year or two following it, but really, at the end of the day, “any contract in restraint of trade”—that’s any contract. There are so many ways to interpret this, and that’s why it’s so susceptible as an area of law for other people to read their political opinions into it, or their policy preferences or economic preferences, because it is so open-ended.
Vance Ginn: Hmm. Yeah. No, good points. I wonder too—and you were kind of hinting at this—about the amount of cost that it takes for these businesses, right? They’ve got to get some lawyers. They’ve got to go through all these court cases. It’s not just that these mergers don’t happen—and we don’t know what the benefits of those mergers could have been—because maybe they’re like, “Well, we don’t want to agree to this or something else.” And so they just say, “You know what? I’m not going to do it at all.” And what are we missing out on from that?
Because I know in economics, right, we have economies of scale, which most people know about, when you get bigger, and kind of horizontal integration, but also vertical integration, economies of scope, where you can bring down the average total cost by continuing to move up the chain, or sometimes down the chain. So some of those things can be beneficial to consumers and to workers and everything else. But it really does seem like they’ve moved to this kind of arbitrary sort of analysis. Hopefully that’s changing now. But that really can be a huge cost for the business and the consumer, and therefore the economy, and it doesn’t let people prosper, which is the whole point of this show.
Ashley Baker: And with vertical mergers, that’s one area in which few were challenged before recently. I wouldn’t say it never happened, but it was very rare. And also, that’s a deal where the deal needs to happen immediately in order for that transaction, or for that product, to come to market. Particularly if we’re talking about the biopharmaceutical industry, for example, when you’re partnering with a larger firm that can help test your product, help bring it to market—by the time that’s all done, another competitor has a different product. Markets change, science changes, economics change. Shareholders don’t have a ton of tolerance for being stuck in merger litigation either.
Vance Ginn: Mhm. Yep. Well put. Let’s shift a little bit, though, to what the Supreme Court has been doing with agency power. We have Trump v. Slaughter, which is part of a much larger line of cases in which the Court has examined the administrative state. But what really is at stake, then, for the separation of powers, from your practical standpoint? What does this mean for the FTC and other agencies in practice, now that we have this case and the issues that are going around it? Maybe explain that for the audience, and your insights about it.
Ashley Baker: So I’ll say the practical implications first. There’s actually a lot less there. And the biggest thing is that we have the dual enforcement mechanism, and we now have two explicitly executive agencies enforcing the same law. From an efficiency standpoint, too, it would make sense for merger litigation to go under one or the other. I think the DOJ is the proper place for that. You can leave consumer protection at the FTC. That would take Congress to fix. The One Agency Act is a bill that’s been out there with a lot of support for a while. It hasn’t gotten momentum with so many other priorities in Congress, but Representative Fitzgerald has done a great job pushing that forward. I think there are too many cooks in the kitchen on antitrust, and it makes a lot of sense to not decide which agency a deal gets assigned to by a coin toss.
So in terms of agency power, I think the Supreme Court corrected something that was wrong for a long time. It was the wrong opinion to begin with, and it was increasingly not applicable to today’s FTC. And a lot of people aren’t that familiar with what happened in the case itself, which is almost something out of a Seinfeld episode. So when he’s fired by FDR, he just decides, “Well, I don’t think I like being fired. I’m going to find a good reason why I am not fired. I’m going to just show back up at the office the next day.” I’m oversimplifying it a little bit, but that is actually what happened, until he died, and it’s Humphrey’s Executor because of his estate. But just to bring this down to earth a bit, in what other profession can you even do that?
But Article II does vest all power over the executive in the president. And the Supreme Court, when they decided Humphrey’s—I don’t think they were right in the first place. There’s maybe a better argument, but “quasi-judicial,” “quasi-legislative”—what are you, if you’re “quasi”? That’s nowhere to be found in the Constitution. We have three branches of government. Which is it? You don’t get to make up this new piecemeal scheme because they looked at the FTC and the FTC Act and said, “Oh, well, we haven’t seen anything like this before; let’s make up new rules for it,” which I hate when the Court does in general. So I don’t think it applied in the first place.
And over the years, the FTC was granted, by Congress, over several acts over the next couple of decades, a lot more power to enforce laws, and they were able to do things that the Court now recognizes explicitly, like they did in Seila Law a few years ago, as quintessentially executive functions. And when you’re enforcing the law, at that point you are certainly part of the executive branch of government. It’s not as if the FTC has never been political. I mean, Lina Khan and Joe Biden walked in lockstep, along with others in the administration. It’s not that there hasn’t been a political aspect to it.
It does mean something in terms of turnover. Every administration, there’s going to be a lot of change. That’s kind of a pain, but I think that’s part of democracy. That’s something we have to deal with, and that’s something that will work itself out. I still don’t think that concern, of it not being stable enough year to year, is a very valid one. And I do think that under the Constitution the president has to be able to make sure that laws are faithfully executed, and he has to make sure that those who are in agencies under him are able to do that. You can’t do that if you can’t fire them.
Vance Ginn: Yeah. Yeah. It’s true. I know when I was at OMB in the first Trump administration, with Russ Vought, we were working on these different directives and trying to make it easier to fire some of these folks, because you have these career folks who are there forever. And it’s like, why should they have a career job in government just because they’re in government? It doesn’t make any sense. In the private sector, we don’t do that. The only other job that I know of where you can do that is an academic job, right, where you get tenure and then you stay in there forever. But there are problems with that too.
So why would we want all these government agencies—some call it the fourth branch of government—where you have all these regulators and bureaucrats making decisions? And I think after the overturning of Chevron deference and everything else, I’m hopeful that we also get more power back to Congress, which is supposed to be the house of the people, and away from what’s happening in regulation and the bureaucrats and everything else. Do you agree with that, or do you think there’s some nuance that needs to be there? What are your thoughts on that?
Ashley Baker: Yeah, I completely agree with that. And that’s kind of the hard point going forward: How exactly does that happen? How is there a path forward? Because Congress doesn’t legislate. And when they do, sometimes they shouldn’t. Congress is not stepping up to the plate yet. I mean, it’s not something that’s going to happen immediately, and it takes a while for any of these things, obviously, to get through Congress, now that they have to legislate a bit more. But something has to give here.
And I don’t know what exactly the solution to that would be, other than I wish we had members of Congress who cared a lot more about policy than about campaigning. But yes, Congress is a whole other beast of its own. But under our Constitution, it is their job to write the laws, and not agencies.
Vance Ginn: Yeah, definitely. You talked about this a little bit earlier, you mentioned it: states and attorneys general, because we’ve seen a lot of that going on. What should their place be within this sort of antitrust framework of the FTC and others, or just on their own? What could state policymakers be doing, or maybe not doing, when it comes to mergers and acquisitions and other types of things within the antitrust framework?
Ashley Baker: So I’ll divide that up into state policymakers and then state AGs. With policymakers, I’m not trying to say that they don’t take these concerns into account, but there are a lot of cases on the federal and state level that affect constituents in their state uniquely. One example: there are quite a few states concerned about JetBlue-Spirit, the lawsuit that blocked the JetBlue-Spirit merger, which impacted a lot of people in a couple of states just because of the routes that they would need to be able to fly on a day-to-day basis, cost concerns, other issues. Those are the cases that really affect people at a state level.
Another case: we have a merger that would create the first transcontinental railroad, which could impact some states very significantly, in a very good way. It could move shipping through their states a lot faster. It could reduce highway traffic and highway fatalities. Those sorts of cases, those day-to-day things, are the way they should be thinking about antitrust.
And also when it comes to the criminal cases, too, there are a lot of valid concerns, particularly in the meat-related industries, and that’s where there are some things that they should be a bit on top of as antitrust concerns. But in terms of cases that affect their constituents, a lot of these transportation and shipping-type cases are where day-to-day consumers are impacted. Obviously the tech cases too, but that’s a little bit more abstract to get across to the average person, and also some of the concerns are still a little bit far off, in terms of how they conduct their day-to-day life, and how their families’ businesses operate when they’re having to ship products and goods across the country. So the important cases are the boring cases.
And for state AGs, well, I wish I could say a lot to state AGs right now, because that is one big hot area on the forefront of merger enforcement: state action. If you’ve seen the Paramount-Warner Bros. merger in the news, it was cleared by the federal government. It was cleared internationally—the EU cleared it, the UK cleared it, foreign competition authorities—but then a coalition of 12 Democratic state AGs decided to block the deal based on some legally dubious claims, and a deal that would actually revive a dying industry. It’s not that Hollywood’s in the gutter because of this merger. It’s because they haven’t been making good movies for a while, and it’s been on the decline for a very long time. So take that broader context and perspective, and don’t make things just political.
But there has been a huge rise in the politicization of state AG enforcement, sometimes for the wrong reason, sometimes for the right reason. I think in some of these cases it’s probably tempting for AGs to join onto coalitions of other state AGs, and in return, if they win the case, they get to tell their consumers, “This is how much money we got back to the state.” That can be a victory for them; that’s very enticing. But their probability of actually winning a lot of these in the long run is not great. It’s not great for taxpayers. It’s particularly not great when you have to hire outside product liability plaintiffs’ attorneys and the trial bar to represent you, instead of your internal staff, and spend millions of dollars in taxpayer resources on something that’s going to be litigated for years—to what end?
So I think state AGs have been emboldened, because they’ve been successful a couple of times recently at seeking preliminary relief. Those cases were few and far between and were very recent, and those circumstances will not repeat themselves, because the law is not more broadly on their side, even if a particular judge is. Or even if, let’s say, everyone in California loves Hollywood, so that might be on their side for a while. And love of a particular industry has always been a theme in antitrust, for better or worse. I mean, the Major League Baseball exemption—the Supreme Court really loved baseball in 1922, and got that one wrong too, in my opinion.
So I think they need to take a long, hard look at the cases, and also at how they’re going to pan out when they get to the upper courts, the courts of appeals, because some of these companies on the state level are not willing to give up easily. They’re willing to take it all the way to the Supreme Court, and those changes in case law that could happen there might backfire on the state AGs.
Vance Ginn: Yeah. No, good points there. And I know we’ve had an aggressive attorney general here with Ken Paxton, who’s running for U.S. Senate in Texas. For better or worse, he’s been pretty active on this stuff, especially when it comes to AI, which I want to get into here in a minute.
One thing that I wanted to pose to you as just kind of a discussion, right: As a free market economist and someone who is a classical liberal, right, more libertarian, lowercase L, than otherwise, my prior is really, why do we need an FTC? Why do we need somebody deciding that there’s enough competition in the market, when the consumers can determine a lot of this, and profit and loss? Because not only do we have profits that can indicate what you should do, but also losses that can weed out bad actors in the marketplace.
And I know with the Sherman Act and others that are out there, there’s been this case made that, well, we need government to be able to call balls and strikes, and maybe they do need to be a referee. Recently, we’ve seen them become more of a player, though, which is a problem. But I wonder, longer term, do we really need an FTC and antitrust law? Is it really important for us to have that, or is it creating higher transaction costs, a higher cost of doing business, that maybe keeps us from being as successful as businesses and as consumers and as a country as we otherwise would be? And my guess is it’s not going anywhere anytime soon. Just thinking of this as a thought experiment here: If we were coming up with the antitrust policies back in the day and all these other things, do you think we would do it differently today, or would you do it differently?
Ashley Baker: That’s a lot.
Vance Ginn: I know. I know.
Ashley Baker: Well, I don’t entirely disagree. I do lean more to the conservative Republican side, but I do like to tell my libertarian friends that it’s kind of an awfully perfect hypothetical world that you’re living in there. And I get the point, but first of all, that ship has sailed. When you have these agencies—it’s hard to make agencies go away once the government creates them, if we haven’t realized that by now.
I do think there is a place for antitrust law. And I think a lot of that has to do with the fact that there are other government regulations that cause concentration and cause these mergers. And so possibly the consolidation that happens is actually a result of other, often industry-specific, regulations, and that’s something to keep good tabs on. A lot of that led to the origin of all of this to begin with.
Would we have done it differently? It’s hard to say how exactly—if we could have rewritten the Sherman Act, what would it say? That’s like an impossible task. But there would be a bit more clarity there, because there was this whole period following the passage of the Sherman Act in 1890, and about 20 years later courts were like, “Well, how exactly do we interpret this?” Because “any contract in restraint of trade”—that is a contract. It restrains something. How exactly do we apply this? There was this process through the decades that followed that eventually got us to the consumer welfare standard, and then kind of back a little bit.
But that process of discovery through the courts, trying to figure out on a case-by-case basis how exactly to apply the antitrust laws—which is kind of the way that common law develops—is an interesting one, because for a long time it was completely rudderless. Antitrust outcomes, especially in the 1960s and 1970s—Justice Potter Stewart has, I guess, his second most famous quote, or at least I consider it that. Obviously there’s “I know it when I see it.” But: the sole consistency in antitrust litigation under Section 7 is that the government always wins. And that was involving a grocery store merger in which they had about 6 to 7% of the market. That was the case then: in 99% of cases, the government would always win.
So what exactly are the standards you apply there, and what exactly does it apply to? Because there have been a lot of movements over the years to crack down on mergers and consolidations for reasons that aren’t related to competition, in which they bring other concerns: “This is bad for the environment,” “This is bad for democracy,” whatever that means. That it should be used for all these other purposes. And there have been movements in which they try to use antitrust law, or try to change the law through antitrust litigation, to achieve other completely unrelated policy objectives, and view antitrust as a hammer that’s a jack of all trades. At the end of the day, one law can only serve so many masters.
And that’s how we ended up, through the ’60s particularly, rudderless. In the ’70s it started to get back on track. You had Robert Bork with The Antitrust Paradox, and his work leading up to that, and only one year after its publication, the Supreme Court actually specifically called the Sherman Act a “consumer welfare prescription.” So suddenly we had guardrails: behavior that harms the competitive process, and that in turn usually harms consumers, would be illegal in a lot of these cases. So that gave it some sort of guidepost, and it was not as malleable and open to the will of the judges that are interpreting it. So I think that’s really important.
And I think there’s been kind of a pushback on the consumer welfare standard coming from the right as well, in which they say this is some form of conservative judicial activism. First of all, my entire organization was founded to work on judicial activism. Judicial activism is inserting your own policy preferences into your own constitutional interpretation, or into the law, or making up rights that don’t exist. This was statutory construction. This was shielding it from judicial activism; it’s exactly the opposite. Just because it’s not what the statute actually says—well, if you leave it open to only what it says, then the Sherman Act is particularly susceptible to judges that want to use it for their own policy outcomes. So that confined it and kept it away from that. So I think that’s an interesting categorization, because historically, that’s just not at all the case.
Vance Ginn: Yeah. No, that makes a lot of sense. And your point is well taken, too, about the government creating these sorts of large conglomerates through all of their bad policies to begin with. And so you kind of have this situation with antitrust, to look into that and figure out what’s going to be best for the consumers and other places. So that definitely is a good point there that I need to think about some more.
Kind of in closing now, as we’re wrapping up, I wanted to get your quick thoughts on what’s happening with AI policy and antitrust policy dealing with technology. This is really out in the news a lot now, with data centers and AI maybe taking over the world and all these other things going on, and I don’t necessarily want to get into all those discussions. But from a competition standpoint, and what we’re seeing with these sorts of policies, where’s your mind on it, and how should policymakers and others be thinking about this?
Ashley Baker: There’s a lot here. I think a lot of AI is already covered under existing law. A lot of bad behavior is already covered, whether it’s by the FTC or DOJ or SEC or some other agency. A lot of things that are bad behavior are already covered under various other agencies, and AI touches every sector of the economy. So it’s not as if it’s completely without governance right now.
Some of the concerns I’ve heard just in the past week or so: on one side, you have some people pushing, when it comes to AI and also data centers, for some sort of antitrust exemption. I don’t know what that would look like. I think almost all antitrust exemptions are a bad idea, and there are other ways to do that, especially if they’re discussing a statutory one, which is Congress. Yes, sure—AI—Congress is going to give the data centers and AI companies an exemption. That’s not going to happen. So I don’t know what that proposal would actually look like.
There could be better agency guidance surrounding the companies and their impact. Acknowledge that, and we could put some guideposts forward. As much as I’m usually not a fan of guidance, I think here it’s informative. It could better inform the merger guidance and guidelines that we have on the books. That’s one better way to do it, versus creating an exemption.
And then I’ve also heard some things—mostly this is on Twitter, so who knows if this is a serious proposal or not—from David Sacks, who has been great on AI for the most part, and I agree with this from a, taking my antitrust hat off entirely, sort of point of view. He said if the companies want to pause their development, then agree not to build it; they can just go in and do that amongst themselves. Which also does raise some competition concerns.
And one thing we have to look out for in general, whether it’s AI, or at the state level or the federal level, is that antitrust is really susceptible to regulatory capture. And often those who are behind the suit against any company—it’s like the second biggest competitor. It’s not necessarily little tech against big tech. It’s the smaller group that wants to gain a leg up and missed out on innovation; that has often been the case. There’s also the recurring theme of companies that, once they are the dominant firms, are suddenly okay with complying with things. Suddenly everyone was great with GDPR, after not wanting to comply with it, in the U.S.—and that’s thanks to our tech companies, who were very much against GDPR, which is terrible. But once they were able to comply with it—antitrust and all these other regulations can build a moat.
Vance Ginn: Yep. No, great, great points, and I’m concerned about a lot of those things as well. It’ll be interesting to see how things get ironed out, if you will, over the next couple of years. I think this election is going to be really important, and going into the legislative session for a lot of states next year is going to be important. A new Congress, all these different things. We’ve got a lot up in the air. And, Ashley, I’m so glad that you’ve been on the Let People Prosper Show. Thank you for all the work that you’re doing, and God bless you and your family, and keep it going. Hopefully we’ll get together soon.
Ashley Baker: Sounds great. Thank you for having me.
Vance Ginn: For the audience, this conversation matters because FTC authority, antitrust enforcement, merger review, AI policy, privacy, and Supreme Court decisions directly affect entrepreneurship and economic freedom in our daily lives. The goal should not be unchecked agency power or politically driven enforcement, like it typically is today, or often is. The goal should be constitutional accountability, clear legal limits, predictable rules, and a consumer-focused approach that lets competition work, like the consumer welfare standard.
So check out Ashley’s work at the Committee for Justice and all the other stuff that she’s doing. I’ll make sure to put this in the show notes page that you can find at vanceginn.substack.com. You can find out more of my work at Ginn Economic Consulting, vanceginn.com, where I post a lot about these things and much more. So until next time, God bless you, and let people prosper.
