Sunday, September 27, 2020

Racial (and other) Bias in Antitrust and Consumer Protection

Updated at 3:30pm

Law schools (and presumably companies and government agencies) are rethinking how structural bias might be identified and addressed.  How might this work in antitrust and consumer protection?

  • Lots of state action is structured in ways that create biased outcomes against disadvantaged groups.  Some of the FTC state action related cases have helped to create economic opportunities for disadvantaged groups.  I think in particular in healthcare, teeth whitening, and occupational licenses.  These are cases that the FTC took to the Supreme Court in the past decade.  I wish the FTC were to make a bigger deal about this sort of successful enforcement and to track some of the more problematic state action that impacts disadvantaged consumers.
  • Many consumers from disadvantaged groups suffer from unfair practices (including and especially with regard to non English language based consumer protection).  As a Latin American immigrant, some of what I hear on Spanish language radio or on Spanish language internet deeply troubles me from a consumer protection perspective.  We need more FTC staff who can focus on Chinese, Spanish, Portuguese, Hindi, Tagalog, Vietnamese, etc. related consumer protection abuses.  
  • If products are differentiated, we might imagine that some mergers might have different effects across different classes of consumers.  We might identify some of the various tradeoffs in mergers across various groups of consumers.  This remains understudied both at the policy level and in the academic literature.
  • More competition advocacy. The FTC in particular spent 2% of its budget on advocacy in the 1980s and only 1% since that time.  That is literally the best 1% spent on antitrust and consumer protection - a series of research papers and advocacy work that has done more to reshape law and regulation to protect consumers than any similar amount spent on actual enforcement.  Why not get Congress to give more money for these efforts?  A little bit of extra money can go a long way.
  • Workshops.  One of the best workshops in recent years was the FTC workshop on Big Data, which led to a report on Big Data as a tool of inclusion or exclusion.  One thing that the report identified, long before it was trendy in popular culture, was to note bias through data desserts.
  • I give the FTC a lot of credit for focusing on Native American issues.  See this workshop from 2014.  I don't want to take away from the press on other disadvantaged groups but Native American issues have traditionally been marginalized, even as other groups push for racial justice.  This is a national tragedy as many of the worst health and income inequality outcomes focus on Native American populations.  Why aren't we doing more to highlight Native American issues in antitrust and consumer protection?   
  • Explaining that lower prices (our most basic aspect of consumer welfare) helps low income consumers.  I live near a Super Wal-Mart (11 minutes from my house, less than 3 miles away).  Most antitrust practitioners in NY, DC, and SF live nowhere near a Super Wal-Mart, don't regularly step foot in a Wal-Mart, and have no idea how important price is to people who spend a significant amount of their take home pay on food and related expenses.  Wal-Mart is the number one grocer in the United States.  Their operational efficiencies and supply chain management have revolutionized the ability to get all sorts of products to disadvantaged groups.  Wal-Mart expansion in mergers has always been challenged by existing large supermarket incumbents, among others.  Why don't we focus on this sort of story of inefficient incumbents trying to block entry of a disruptor based on lower prices?  Overall, incumbent repositioning in understudied in both traditional markets and online markets (let me plug my empirical online incumbent repositioning paper here).  Perhaps we should think more about entry and repositioning with regard to disadvantaged groups.
  • Academics are smug.  Tenured entitled professors who live in suburban school districts with great educational spending or who send their kids to private schools are the last people who should be against school choice for low income families to escape failing schools.  The last set of Presidents with children who needed to be schooled in DC all chose private school options (Jenna and Barbara Bush attended a public school in Austin but attended college before their father took office).  I'd love to see hearings by the antitrust agencies of what school choice/competition does to school communities for cost of education and quality based education outcomes.  Most students who benefit from school choice in cities are Black and LatinX from low income families.  
  • Hispanics and LatinX Americans are over 16.7% of the national population, which is roughly 52 million people according to the Census Bureau.  More than half of this population identifies as white.  Our group is the largest non-Anglo community in the US and the fastest growing, which means that we are the largest minority group in the US.  Yet, much of the discussion on race and class is binary - Black and White.  This narrative is false and always has been false, starting from the first permanent settlements in what is now the United States, which predates 1619.  We under-emphasize Latin and Native American related issues involving bias (and I note that the Latin American experience on race for both Native peoples and Blacks is not good either).  With significant growth in Asian Americans, we also underemphasize Asian American issues.  Why not discuss these issues at the ABA Antitrust Section  or at the agencies on a regular basis? This is not to take away from historic racism that the Black community has faced.  Such discrimination has been terrible and significant.  Anti-Black discrimination is an issue that requires significant attention and action.  However, turning a blind eye to other marginalized communities (including genocide against Native Americans) or relegating such communities to second tier status does not help our national reckoning on the importance of addressing structural inequities based on race, ethnicity, gender, sexual identity, religion, and other factors.    
  • I am troubled by those who are unwilling to recognize that Black Lives Matter and I worry a lot about pipeline issues.  Fewer than two percent of the ABA Antitrust Section identifies as Black.  This includes both antitrust and consumer/data protection.  What are we doing collectively to increase the pipeline of Black lawyers and economists in the profession?  My sense is not enough.  It is collective failure on the part of professors, law firms, economic consulting firms, companies, state and federal government, and other stakeholders.  Maybe we should be more like STEM fields, which push outreach in secondary education.  Maybe we need more undergraduate mentoring with funded summer externships.  Scholarships would help.  As is often the case, we have high hopes but oftentimes do not operationalize how to create success.  Maybe we can track such efforts over time to better understand what works and what does not.  Up until this summer, the focus of diversity efforts in this field was on gender.  We are correct to broaden our concern to other disadvantaged groups and I hope that this broader emphasis becomes permanent but that we also remember unique challenges that women and others face.  Diversity of background and expertise whether race, ethnicity, religion, gender and sexual orientation, ideology, geographic origin, or other factors enhances creativity.  There is decades of this type of research across fields.  I want to highlight the work of my UF colleague in management, Dave Ross, who wrote this paper on gender diversity and firm level innovation.  I also note this paper on the importance on racial diversity and innovation in banking, and this paper on ideological diversity, but note that there are countless others.  Basically, if everyone looks like you, sounds like you, has all of the same life experiences as you, and thinks like you, you and your organization (government, private sector, academia) are missing out.

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