❮ Return to Our Work

Blog Post | November 13, 2020

Economists-For-Hire Help Monopolists And Big Oil Both

Anti-MonopolyClimateRevolving Door

On Wednesday, The New York Times exposed that a network of seemingly-grassroots campaigns to promote the use of fossil fuels was actually organized by FTI Consulting, a dystopic corporate consulting firm working on behalf of oil and gas behemoths like ExxonMobil. The Times also implicates an FTI subsidiary, Compass Lexecon, in producing academic reports to support these astroturfed campaigns’ talking points. Compass Lexecon employees wrote reports criticizing activist shareholders and university divestment campaigns, tactics often used by the environmental activists FTI was paid to undermine. Some of these Compass Lexecon employees are also professors at well-regarded universities such as the University of Chicago and Arizona State University, where students have campaigned for divestment. Of course, FTI claims neither the firm nor its oil and gas clients “had any influence whatsoever over the form or direction” of these reports.

The Revolving Door Project is plenty familiar with Compass Lexecon, a notorious consultancy in the world of antitrust law. Their employees are often former government officials who use their insider connections and knowledge to help corporations push through the merger approval process. They also produce “research” tailor-made to indicate that a client’s merger would greatly benefit consumers — in other words, they start with the conclusion their client wants, then work backwards to make up a reason for it. We wrote on the revolving door between consulting agencies like Compass Lexecon and the antitrust enforcement agencies for Washington Monthly back in July: 

Economists with antitrust authorities also have a clear path to representing corporate clients through a cottage industry of consultancies. C-Suite executives rarely lose any sleep if the FTC or DOJ start asking tough questions about their corporation’s latest acquisition. They simply cut a check to one of these consultancies and, like magic, a tenured academic or well-regarded economist comes back with numbers showing that merger to be a godsend to consumers. If they’re savvy, they can hire an economist with experience at the very agency they’re seeking to persuade⁠. Our organization has found that at least five members of the Bureau of Economics ended up at an economic consulting group after leaving the FTC.

While it’s not exactly a surprise to hear that Compass Lexecon’s parent company has been astroturfing on behalf of Big Oil, it is further evidence that this crooked firm should have nothing to do with the leadership of the next administration. Washington, D.C. will believe that anyone with an Ivy-League vocabulary and a well-fitted suit is an “innovator” who ought to be taken seriously — but a firm which lies to the media and the courts for profit is only innovating in grift.

Compass Lexecon’s roster of former government officials include the former Deputy Assistant Attorney General in the Department of Justice Antitrust Division, Dennis Carlton, who recently lent his economic and government expertise to help AT&T and Time Warner secure DOJ approval to merge. 

Another notable partner is Jonathan Orzsag, a senior managing director of the firm and brother to former Obama official Peter Orszag. The Orszags helped found Compass Lexecon as it is today: Peter was once the president of Competition Policy Associates, an economic consulting firm that was purchased by FTI Consulting in 2006, which merged it with another consulting firm to create Compass Lexecon. Jonathan Orszag now runs the firm in its current iteration, and was a major “innovator” in its revenue stream by…lowering its ethics standards. ProPublica described Orszag’s leadership in 2016: “At [Jonathan] Orszag’s urging, the firm relaxed its conflict of interest rules, according to multiple people who have worked with or for Compass. Now, Compass Lexecon experts can, and do, advise both sides in disputes.”

Jonathan Orzsag himself was once opposite another Compass Lexecon expert in a dispute. As ProPublica reported and we described in Washington Monthly: 

[A] group of government lawyers hired Compass Lexecon’s Jonathan Baker as a consultant for a case against Apple. In the courtroom, however, Baker found himself arguing against his own boss at Compass Lexecon, Jonathan Orszag, who’d helped to set up Baker’s contract with the Feds. Baker conducted an economic analysis finding Apple artificially inflated e-book prices by 19 percent. Orszag ran a similar analysis and found Apple only had negligibly higher prices of 1.9 percent. Two economists from the same firm, two different answers to the same question. The only difference was who was paying whom.

However damning, we doubt The Times’ report will dampen these economists’ aspirations to join the incoming Democratic administration. The legitimacy of their firm and the work they produce is not based on peer-review or factuality; it’s based on experience with and proximity to the government agencies that regulate Compass Lexecon’s corporate clients. President-elect Biden should disqualify any person affiliated with the firm from joining his administration. Time after time, their grift remains clear: producing economic arguments perfectly tailored to whatever client currently pays them, regardless of ethics, facts or public interest. 

Anti-MonopolyClimateRevolving Door

Related Articles

More articles by Andrea Beaty

❮ Return to Our Work