Melugin
Jessica Melugin | CEI.org

Weekend Interview: Jessica Melugin

Jessica Melugin is the director of the Center for Technology and Innovation at the Competitive Enterprise Institute.

Federal Newswire:

What does CEI do?

Jessica Melugin:

CEI is a free market think tank in Washington DC and we focus on regulatory issues, [and] pushing back on the regulatory state. We don't really get into much of the social issues. Thankfully, we get to hide out in the nuts and bolts of the hard numbers and what it's costing American taxpayers to float this giant sea of regulations across every industry in America.

Federal Newswire:

Is there a disconnect between government regulators and businesses?

Jessica Melugin:

Yeah, I think there's a problem. If you've never worked in [business] it doesn't seem real. You don't have much of an insight into how business people really need to make decisions about trade-offs and scarce resources. There's an idea that they're trying to screw over their workers or harm their competitors, and that's not what we see out there. 

There's a lot of talk in Washington right now about mergers and acquisitions in tech and in a lot of industries.  It’s rolled over into airlines and healthcare, and it's just sort of a given in Washington, [that] mergers and acquisitions are bad. 

But if you talk to people, especially in Silicon Valley, about the ecosystem of a startup, then how you go and sell your business, and then you take that money and start the next great idea, it's a really virtuous cycle of innovation and success. 

It's the American dream. People working in industry understand that.  There's such a difference between what's happening in the marketplace and what people are wringing their hands about here in Washington,

Federal Newswire:

Can you still make a case for the virtues of capitalism?

Jessica Melugin:

I think that capitalism gets a bad rap here. It's certainly not the most popular thing in the beltway right now, but if you look at the hard evidence for capitalism, it's an incredibly prosperous system. It's peaceful and invites people who might not have anything to do with each other otherwise to trade and exchange and work together. 

It's not perfect and doesn't always come up with the perfect outcome, but it's certainly far and away the best system we've come up with so far about how to lead successful, productive, healthful, wealthy lives. That's what we want for everyone I hope.

We forget, we start beating up on a company because it's big or it makes decisions we don't agree with politically, which I understand. But the basic merits of a free enterprise system should be beyond question at this point. If you look at the empirical evidence, it's lifted more people out of poverty than anything else ever has, not even close.

Federal Newswire:

Does this indicate a misconception in Washington about business? 

Jessica Melugin:

Yeah. Oftentimes politicians mistakenly [believe] that we live in a fallen world, we have scarcity, things aren't perfect, the market is not perfect. They mistake that state of affairs, which is basically the human condition for a political problem that needs their intervention. That's a self-serving reaction and it's also part of human nature, but it's important to have groups like CEI give people the other side of the coin, which is you might end up doing more harm than good even with the best of intentions.

Federal Newswire:

Your organization is focused on the Federal Trade Commission?

Jessica Melugin:

This is America's number one consumer protection agency and they should be busying themselves with fighting fraud and protecting consumers. But we've seen in the last couple years, Chair Lina Khan is an extremist, and [the FTC] is really pushing the boundaries of their power and scope. 

We thought this is something that is a little bit inside the beltway. We wanted to shine some light on it and explain it in a way that it means something to the consumers that are going to be the victims of these bad policies..

They're getting away from the consumer welfare standard and antitrust, which basically says if consumers are being hurt, you have an antitrust case. If not, you probably have something else. 

And we've been under that rule for 40 years. It's really cleaned up US antitrust law. We have probably the best regime in the world, which is why you see so many global tech company leaders are US companies. Those companies probably couldn't exist anywhere else in the form that they do. 

In terms of innovation, success, jobs that they offer, value to people's retirement accounts [these companies] probably couldn't be emulated anywhere else around the world because we have permissionless innovation, and that is such a boon for new products..

Europe doesn't have one in the top 10 of tech companies globally, and there's a reason for that. I think that the regulatory environment is a large part of that and what we see from the FTC is a threat to this environment. 

Federal Newswire:

Is the problem that agencies abuse their regulatory power?

Jessica Melugin:

Well, I think that's always a part of it. There's this risk aversion that regulators have, especially people in favor of really heavy, strong regulation. 

Of course, that's not how the free enterprise system works. You have to be able to take risks. You just want those risks to be centered in private hands so that the individuals with skin in the game can make those decisions. You don't want taxpayers on the hook. 

So the idea that I [must] get permission from regulators to buy a company or merge with a company is something that we just think is bad for the American consumer, and taxpayers shouldn't be funding their own demise in that way. 

Federal Newswire:

Do regulators put too much emphasis on reducing risk to zero? 

Jessica Melugin:

That’s true. The market doesn't give you the perfect solution every time. The genius of the market, among other things, is that it's the fastest to correct. So if I'm a regulator and I make a bad regulation, it is a prolonged if not impossible process to get it right, removed, or altered. 

But if I'm an entrepreneur in the marketplace and I see something isn't working or my customers are unhappy, or if I think of something better, that's a much faster process. 

That leads us to the second advantage, which is that the goal of return to investors throws off a bunch of collateral benefits.

The big revolution in antitrust was keeping the consumer as the goal and the number one priority of antitrust law in the same way that that return to investor[s] should be the goal of capitalism.

Federal Newswire:

What is your view of companies using profits to buy back their stock?  Is the Biden Administration’s negative view of stock buybacks correct?

Jessica Melugin:

You really can't win for losing. Because if you pay out, then you're paying too much out. If you reinvest, then you're just emphasizing your growth and concentration. The biggest favor any administration, any party, anyone could do for free enterprises, just get out of its way. 

It's not rocket science to say a light regulatory approach–[limited to] rule of law, property rights, the US Constitution and the free enterprise system–are pretty darn good models for how to make a productive free society.

Federal Newswire:

Let’s focus on the tech industry for a moment.  Have you noticed the differences between digital book platforms and how you can’t buy certain books on one but you can on the others? This doesn’t cause me harm, so how does this affect people?

Jessica Melugin:

Oh, I think it harms you. Where you say to yourself in the future, am I going to sign up for more disappointment over here, or am I going to stay on this platform where there's more flexibility? I think that consumers have a role to play. 

I always say, it's not that I don't personally have frustrations with things or I don't see other people's frustrations, it's just that I can promise you for however annoying that is, federal agencies will be more annoying. However bad [the] Kindle is making the experience, it's not the post office.

Federal Newswire:

If you’re paying for a service on a social media platform, such as promoting your page, and not all of your followers see your posts, do you think that’s just part of giving up a certain degree of your rights or do you think there’s an inherent problem with this?

Jessica Melugin:

I think that the scope of that discussion is freedom of association. They don't have to contract with you. You don't have to contract with them. I don't want to force Chick-fil-A or Hobby Lobby to be open on Sundays. So I'm in general for letting people do what they will with their businesses and in contracting with other businesses. 

But that's different from fraud, which is being misled. 

Part of what we're seeing now, is that through the Twitter files and hearings on the weaponization of government, we are all becoming smarter, more educated consumers and users of these products.

Federal Newswire:

Should we worry about social media platforms in terms of negative social impacts?  After all, old photographs showed people with their heads buried in newspapers on trains or platforms.

Jessica Melugin:

We like to invent things and then we like to worry a lot about them. The great thing about humanity is we figure it out, and I would rather have that process happen in communities, in families. That allows for innovation and correction, because when you regulate for a problem, you're preventing how the market would respond to that problem.

Federal Newswire:

How do we balance these lengthy, watertight contracts that people are meant to read, but often don't, with the issues of the right to privacy? What's the role of the marketplace and the government here? 

Jessica Melugin:

Information does want to be free and moving, and you need some of that in society. Some non-identifiable information about you is probably really helpful to have out there floating around with targeted ads, you're probably seeing ads for things you might actually be interested in. We're probably okay with that. 

But with targeted ads and things like that, and I hear people in congressional hearings lose their minds about you can find my home address on the internet. There used to be this thing called the phone book. If you didn't want your phone number and your home address and the proper spelling and your middle initial [published], you had to proactively take that out. So some things are a matter of public record.

The thing is, it crosses a line from publicly available information that's helpful and useful commercially into creepy or dangerous. So your financial information, your medical information, that's all very different than “where do I like to shop and could somebody give me a coupon for it?” 

This is not just online. If you use a club card, if you use gas stations, grocery stores, that's all being aggregated and that's just consumer information. It's not personalized and that's different, but sensitive material is something different. 

There right now is a big push to pass federal legislation that is tricky. It has to be done right, because it can't treat your banking information like your shopping information, or like your cancer screening.

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