Are the world’s most powerful corporations buying the brains of economists and legal scholars? It certainly sounds that way if you listen to the chief antitrust enforcer at the Department of Justice.
“Among enforcement authorities, I have heard whispers of this problem for years,” Jonathan Kanter, an assistant attorney general, said in an unsettling speech last week at Fordham Law School in New York, according to his prepared remarks.
“Recently,” he continued, “the volume and frequency of these concerns have grown to the point that I think it is time we talk openly, publicly and respectfully about how to address issues that have become too significant for our community to ignore any longer.”
Kanter didn’t exactly say anything about buying brains. That’s my flourish. What he did say was that “all over the world, money earmarked specifically to discourage antitrust and competition law enforcement is finding its way into the expert community upon which we all depend.”
He even said: “Conflicts of interest and capture have become so rampant and commonplace that it is increasingly rare to encounter a truly neutral academic expert.”
Kanter’s speech “sent some shock waves throughout the antitrust community,” John Newman, a University of Miami law school professor who shares Kanter’s concerns, told me.
The shock wasn’t over anything that Kanter revealed, but rather that he chose to speak candidly about an open secret, Newman said. “It was a known thing for antitrust insiders, but everybody kind of went along with it,” he told me. “This cozy little system was working pretty well for at least some people. Nobody with any power ever said ‘boo’ about it.”
Kanter just said “boo.”
Kanter told the Fordham audience that he has no problem with industry advocacy, per se. His own department is filled with lawyers and economists who serve as advocates for the government, and he said he understands that targets of government investigations are entitled to hire experts of their own in their defense.
Part of the problem is inadequate disclosure, he said. “If a paper was shadow-funded or influenced by corporate money, it can pass that influence and whatever flaws or biases it introduced into the papers that build on it,” he said. “This insidious ripple effect is difficult — if not nearly impossible — to detect.”
But Kanter doesn’t think requiring more transparency would solve everything. Money pouring into universities from corporations and foundations influences the way scholars think and write, whether the scholars themselves are fully aware of it or not. “This playbook is not new,” he said. “We saw it play out most tragically with Big Tobacco’s successful campaign to twist scientific research about the harms caused by its products.”
As I said, the influence of corporate money on scholarship is no surprise in antitrust circles. Journalists have been writing about it for years. Check out these articles in The New York Times, ProPublica, Fast Company, The American Prospect and The Wall Street Journal, to cite just a few. But it means more coming from the chief of antitrust at the Department of Justice, who has been turning up the heat on corporations along with his counterpart at the Federal Trade Commission, Lina Khan.
I reached out to several economists and law professors for their reactions to Kanter’s speech. One who readily responded was Dennis Carlton, who ProPublica estimated in 2016 had already then earned about $100 million from consulting work, equity stakes and noncompete agreements.
It’s important to note that no one is accusing Carlton of breaking any rules. Whether the rules need to be strengthened is another matter. He has impressive credentials: He earned a bachelor’s degree from Harvard and a doctorate in economics from M.I.T. before becoming a professor — now emeritus — at the University of Chicago’s Booth School of Business. He published a leading textbook, coedits a journal and served as the chief economist for the Justice antitrust division, the same department Kanter now leads.
The big bucks Carlton earned came from Compass Lexecon, a consulting firm whose predecessor, Lexecon, he joined shortly after its founding in 1977. Through Compass Lexecon, he served as an expert for defendants in some of the most important mergers the government has challenged: AT&T and Time Warner, Illumina and Grail, Microsoft and Activision, and Meta and Within. He doesn’t always win, but he wins often enough that clients are happy to rain money down on him.
There’s no ambiguity about who’s paying Carlton when he testifies for a client such as Microsoft. The issue is more about what he and other scholars should disclose when they write articles, give talks and so on, especially when the clients aren’t directly involved. Policies vary. When Carlton wrote last year for ProMarket, a Chicago Booth publication, there was a thorough disclosure of key clients. There was no disclosure when he wrote an article a year earlier for Network Law Review.
“If it’s just general discussions having nothing to do with a particular case, it seems to me the reputation of the particular individual is going to be what’s important,” Carlton told me. “The only real way an academic can maintain his reputation is if he’s honest,” he said. “I worked against Microsoft and for Microsoft. I just call it like it is.”
Fiona Scott Morton, a Yale Law School professor, was criticized for writing an opinion piece for The Washington Post in 2019, “Why Breaking Up Big Tech Probably Won’t Work,” without disclosing that Apple was paying her. Her defense was that her opinion piece was about social networks, while her work for Apple was about its lawsuit against Qualcomm over chips.
I mention Carlton and Scott Morton because they’re high-profile scholars who have arguments for why what they do is OK. There are other situations that are clearly not OK. Just this week, Tommaso Valletti, a former chief competition economist for the European Commission, wrote about his experience after publishing an academic paper questioning mergers in the agricultural chemicals industry:
Big Pharma first tried to rebut the paper via a big law firm. Having failed, the big law firm went through their normal economic consultants (who failed), then through another economic consultancy (who also failed) who then asked for further (paid) help from academics from at least four universities. The outcome was half a dozen papers, whose authors did not disclose funding or did it in a shady way. These papers were all written in charged language against us, they hid their assumptions or their real meaning, and they had the main purpose of showing the lawyers that ‘there was no consensus’. These papers were not published in scholarly economics journals but a few found their way into practitioners’ journals.
A three-part series in June in The Wall Street Journal explored how Joshua Wright of George Mason University “kept antitrust regulators at bay” on behalf of his tech clients for more than a decade, two years of which he spent at the Federal Trade Commission.
In 2015, Wright became the executive director of George Mason’s Global Antitrust Institute, which put on all-expenses-paid training seminars for foreign officials and judges using donations from Google, Amazon, Facebook and Qualcomm, The Journal reported. Wright resigned from the university over sexual harassment claims against him, but the institute he ran is still in operation, and lists those four companies, as well as Visa, the Allergan Foundation, the Charles Koch Foundation and others among its donors. (Wright has sued two of his accusers for defamation.)
Competition Policy International, a for-profit publisher founded by the economist David Evans, bills itself as “an independent knowledge-sharing organization focused on the diffusion of the most relevant antitrust information and content worldwide.” The International Center for Law and Economics says it believes that “intellectually rigorous, data-driven analysis will lead to efficient policy solutions that promote consumer welfare and global economic growth.” Both organizations solicit research from academics. The I.C.L.E. does not disclose donors, but has received funding from conservative foundations and from the Computer and Communications Industry Association, according to an InfluenceWatch analysis of those organizations’ tax filings. They did not immediately return calls seeking comment.
I could go on, but you get the point. The money that corporations can spend on professors is far greater than their nominal employers, the universities, can afford. The university affiliation is nonetheless valuable because it gives the impression of impartiality. To Newman, the University of Miami law professor, that’s a problem: “People who cloak themselves in the trappings of neutrality are taking advantage of the good will and reputation that professors at universities have been built up over centuries without suffering the sacrifices that go with that.”
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Quote of the Day
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