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Tim Wu to the FTC: What does it mean?

Popular Media As you may have heard, Columbia lawprof and holder of the dubious distinction of having originated the term and concept of Net Neutrality, Tim Wu, . . .

As you may have heard, Columbia lawprof and holder of the dubious distinction of having originated the term and concept of Net Neutrality, Tim Wu, is headed to the FTC as a senior advisor.

Curiously, his guest stint runs for only about four and a half months.  As the WSJ reports:

Mr. Wu, 38, will start his new position on Feb. 14 in the FTC’s Office of Policy Planning, and will help the agency to develop policies that affect the Internet and the market for mobile communications and services. The FTC said Mr. Wu will work in the unit until July 31. Mr. Wu, who is taking a leave from Columbia, said that to work after that date he would have to request a further leave from the university.

Mr. Wu’s claim that the source of the date constraint is Columbia doesn’t pass the smell test.  Now, it is possible that what he says is literally true–and therefore intentionally misleading.  Perhaps he asked only for leave through the end of July and would indeed have to request further leave if he wanted it.  But the implication that Columbia would have trouble granting further leave–especially during the summer!–and thus the short tenure seems very fishy to me.

So what else could be going on, while we’re reading inscrutable tea leaves?  Well, for one thing, it could be that Wu has already signed on for some not-yet-public role at Columbia that he prefers not to imperil.  Maybe associate dean or something like that.

But I have another, completely unsupported speculation.  I think the author of The Master Switch (commented on by Josh and me here) and one of the most capable (as far as that goes) proponents of Internet regulation in the land is being brought in to the FTC to help the agency gin up a case against Google.

I think with Google-ITA seemingly approaching its denouement, the FTC knows or believes that Google is either planning to abandon the merger or else enter into an (insufficiently-restrictive for the FTC) settlement with the DOJ.  In either case, not a full-blown investigation and intervention into Google’s business.  So the FTC is preparing its own Section 5 (and Section 2, but who needs that piker when you have the real deal in Section 5?) (for previous TOTM takes on Section 5, see, e.g., here and here) case and has brought in Wu to help.  Given the switching back and forth between the DOJ and FTC in reviewing Google mergers, it could very well be (I haven’t kept close tabs on Google’s proposed acquisitions) that there’s even already another merger review in waiting at the FTC on which the agency is planning to build its case.

But the phase of the case requiring Wu’s full attention–the conceptual early phase–should be completed by the end of July, so no need to detain him further.

More concretely, I would point out that it says a lot about the agency’s mindset that it is bringing in the likes of Wu to help it with its ongoing forays into the regulation of Internet businesses.  By comparison, I would just point out that Chairman Majoras’ FTC brought in our own Josh Wright as the agency’s first Scholar in Residence.  Sends a very different signal, don’t you think?

Filed under: antitrust, federal trade commission, google, technology Tagged: Federal Trade Commission, google, Tim Wu

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Antitrust & Consumer Protection

On the ethical dimension of l’affair hiybbprqag

Popular Media Former TOTM blog symposium participant Joshua Gans (visiting Microsoft Research) has a post at TAP on l’affair hiybbprqag, about which I blogged previously here. Gans . . .

Former TOTM blog symposium participant Joshua Gans (visiting Microsoft Research) has a post at TAP on l’affair hiybbprqag, about which I blogged previously here.

Gans notes, as I did, that Microsoft is not engaged in wholesale copying of Google’s search results, even though doing so would be technologically feasible.  But Gans goes on to draw a normative conclusion:

Let’s start with “imitation,” “copying” and its stronger variants of “plagiarism” and “cheating.” Had Bing wanted to do this and directly map Google’s search results onto its own, it could have done it. It could have set up programs to enter terms in Google and skimmed off the results and then used them directly. And I think we can all agree that that is wrong. Why? Two reasons. First, if Google has invested to produce those results, if others can just hang off them and copy it, Google’s may not earn the return on its efforts it should do. Second, if Bing were doing this and representing itself as a different kind of search, then that misrepresentation would be misleading. Thus, imitation reduces Google’s reward for innovation while adding no value in terms of diversity.

His first reason why this would be wrong is . . . silly.  I mean, I don’t want to get into a moral debate, but since when is it wrong to engage in activity that “may” hamper another firm’s ability to earn the return on its effort that it “should” (whatever “should” means here)?  I always thought that was called “competition” and we encouraged it.  As I noted the other day, competition via imitation is an important part of Schumpeterian capitalism.  To claim that reducing another company’s profits via imitation is wrong, but doing so via innovation is good and noble, is to hang one’s hat on a distinction that does not really exist.

The second argument, that doing so would amount to misrepresentation, is possible, but I’m sure if Microsoft were actually just copying Google’s results their representations would look different than they do now and the problem would probably not exist, so this claim is speculative, at best.

Now, regardless, I doubt it would be profitable for Microsoft to copy Google wholesale, and this is basically just a red herring (as Gans understands–he goes on to discuss the more “innocuous” imitation at issue).  While I think Gans’ claims that it would be “wrong” are just hand waiving, I am confident it would be “wrong” from the point of view of Microsoft’s bottom line–or else they would already be doing it.  In this context, that would seem to be the only standard that matters, unless there were a legal basis for the claim.

On this score, Gans points us to Shane Greenstein (Kellogg).  Greenstein writes:

Let’s start with a weak standard, the law. Legally speaking, imitation is allowed so long as a firm does not violate laws governing patents, copyright, or trade secrets. Patents obviously do not apply to this situation, and neither does copyright  because Google does not get a copyright on a search result. It also does not appear as if Googles trade secrets were violated. So, generally speaking, it does not appear as if any law has been broken.

This is all well and good, but Greenstein goes on to engage in his own casual moralizing, and his comments are worth reproducing (imitating?) at some length:

The norms of rivalry

There is nothing wrong with one retailer walking through a rival’s shop and getting ideas for what to do. There is really nothing wrong with a designer of a piece of electronic equipment buying a rival’s product and studying it in order to get new ideas for a  better design. 

In the modern Internet, however, there is no longer any privacy for users. Providers want to know as much as they can, and generally the rich suppliers can learn quite a lot about user conduct and preferences.

That means that rivals can learn a great deal about how users conduct their business, even when they are at a rival’s site. It is as if one retailer had a camera in a rival’s store, or one designer could learn the names of the buyer’s of their rival’s products, and interview them right away.

In the offline world, such intimate familiarity with a rival’s users and their transactions would be uncomfortable. It would seem like an intrusion on the transaction between user and supplier. Why is it permissible in the online world? Why is there any confusion about this being an intrusion in the online world? Why isn’t Microsoft’s behavior seen — cut and dry — as an intrusion?

In other words, the transaction between supplier and user is between supplier and user, and nobody else should be able to observe it without permission of both supplier and user. The user alone does not have the right or ability to invite another party to observe all aspects of the transaction.

That is what bothers me about Bing’s behavior. There is nothing wrong with them observing users, but they are doing more than just that. They are observing their rival’s transaction with users. And learning from it. In other contexts that would not be allowed without explicit permission of both parties — both user and supplier.

Moreover, one party does not like it in this case, as they claim the transaction with users as something they have a right to govern and keep to themselves. There is some merit in that claim.

In most contexts it seems like the supplier’s wishes should be respected. Why not online? (emphasis mine)

Where on Earth do these moral standards come from?  In what way is it not “allowed” (whatever that means here) for a firm to observe and learn from a rival’s transactions with users?  I can see why the rival would prefer it to be otherwise, of course, but so what?  They would also prefer to eradicate their meddlesome rival entirely, if possible (hence Microsoft’s considerable engagement with antitrust authorities concerning Google’s business), but we hardly elevate such desires to the realm of the moral.

What I find most troublesome is the controlling, regulatory mindset implicit in these analyses.  Here’s Gans again:

Outright imitation of this type should be prohibited but what do we call some more innocuous types? Just look at how the look and feel of the iPhone has been adopted by some mobile software developers just as the consumer success of graphic based interfaces did in an earlier time. This certainly reduces Apple’s reward for its innovations but the hit on diversity is murkier because while some features are common, competitors have tried to differentiate themselves. So this is not imitation but it is something more common, leveraging without compensation and how you feel about it depends on just how much reward you think pioneers should receive.

It is usually politicians and not economists (other than politico-economists like Krugman) who think they have a handle on–and an obligation to do something about–things like “how much reward . . .pioneers should receive.”  I would have thought the obvious answer to the question would be either “the optimal amount, but good luck knowing what that is or expecting to find it in the real world,” or else, for the Second Best, “whatever the market gives them.”  The implication that there is some moral standard appreciable by human mortals, or even human economists, is a recipe for disaster.

Filed under: business, economics, google, intellectual property, markets, monopolization, politics, technology Tagged: Bing, business ethics, google, Internet search, Joshua Gans, microsoft, Shane Greenstein

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Antitrust & Consumer Protection

American Economic Review’s Top 20 of the Last 100 Years

Popular Media The paper is here (HT: Steve Salop).  The AER’s The Top 20 Committee, consisting of Kenneth J. Arrow, B. Douglas Bernheim, Martin S. Feldstein, Daniel . . .

The paper is here (HT: Steve Salop).  The AER’s The Top 20 Committee, consisting of Kenneth J. Arrow, B. Douglas Bernheim, Martin S. Feldstein, Daniel L. McFadden, James M. Poterba, and Robert M. Solow, made the selections.  The list is alphabetical, of course, but TOTM readers will observe that it starts off particularly well (see here and here).   A few interesting things jump out, e.g. the multiple appearances from Peter Diamond (and James Mirrlees).  Any big errors or omissions?

Here’s the list:

Alchian, Armen A., and Harold Demsetz. 1972. “Production, Information Costs, and Economic Organization.” American Economic Review, 62(5): 777–95.

Arrow, Kenneth J. 1963. “Uncertainty and the Welfare Economics of Medical Care.” American Economic Review, 53(5): 941–73.

Cobb, Charles W., and Paul H. Douglas. 1928. “A Theory of Production.” American Economic Review, 18(1): 139–65.

Deaton, Angus S., and John Muellbauer. 1980. “An Almost Ideal Demand System.” American Economic Review, 70(3): 312–26.

Diamond, Peter A. 1965. “National Debt in a Neoclassical Growth Model.” American Economic
Review, 55(5): 1126–50.

Diamond, Peter A., and James A. Mirrlees. 1971. “Optimal Taxation and Public Production I: Production Efficiency.” American Economic Review, 61(1): 8–27.

Diamond, Peter A., and James A. Mirrlees. 1971. “Optimal Taxation and Public Production II: Tax
Rules.” American Economic Review, 61(3): 261–78.

Dixit, Avinash K., and Joseph E. Stiglitz. 1977. “Monopolistic Competition and Optimum Product
Diversity.” American Economic Review, 67(3): 297–308.

Friedman, Milton. 1968. “The Role of Monetary Policy.” American Economic Review, 58(1): 1–17.

Grossman, Sanford J., and Joseph E. Stiglitz. 1980. “On the Impossibility of Informationally Efficient Markets.” American Economic Review, 70(3): 393–408.

Harris, John R., and Michael P. Todaro. 1970. “Migration, Unemployment and Development: A Two-Sector Analysis.” American Economic Review, 60(1): 126–42.

Hayek, F. A. 1945. “The Use of Knowledge in Society.” American Economic Review, 35(4): 519–30.

Jorgenson, Dale W. 1963. “Capital Theory and Investment Behavior.” American Economic Review, 53(2): 247–59.

Krueger, Anne O. 1974. “The Political Economy of the Rent-Seeking Society.” American Economic
Review, 64(3): 291–303.

Krugman, Paul. 1980. “Scale Economies, Product Differentiation, and the Pattern of Trade.” American Economic Review, 70(5): 950–59.

Kuznets, Simon. 1955. “Economic Growth and Income Inequality.” American Economic Review,
45(1): 1–28.

Lucas, Robert E., Jr. 1973. “Some International Evidence on Output-Inflation Tradeoffs.” American Economic Review, 63(3): 326–34.

Modigliani, Franco, and Merton H. Miller. 1958. “The Cost of Capital, Corporation Finance and the
Theory of Investment.” American Economic Review, 48(3): 261–97.

Mundell, Robert A. 1961. “A Theory of Optimum Currency Areas.” American Economic Review,
51(4): 657–65.

Ross, Stephen A. 1973. “The Economic Theory of Agency: The Principal’s Problem.” American Economic Review, 63(2): 134–39.

Shiller, Robert J. 1981. “Do Stock Prices Move Too Much to Be Justified by Subsequent Changes in
Dividends?” American Economic Review, 71(3): 421–36.

Filed under: armen alchian, economics

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Big Antitrust Casebook News

Popular Media OK.  Big news for me, anyway.  I’m very pleased to announce that I will be joining Andy Gavil, (also my former boss) William Kovacic, and . . .

OK.  Big news for me, anyway.  I’m very pleased to announce that I will be joining Andy Gavil, (also my former boss) William Kovacic, and Jonathan Baker as a co-author of the forthcoming Third Edition of Antitrust Law in Perspective: Cases, Concepts and Problems in Competition Policy.

The new edition should be available for Spring 2012 adoptions, and will contain significant updates reflective of important developments in antitrust law since 2003, including the 2010 Horizontal Merger Guidelines amongst other things.  As the co-authors are also Washington DC-area antitrust profs, I’ve had the opportunity to get to know Andy, Bill and Jon over the past several years and am greatly looking forward to contributing to working with them on the textbook I’ve been using for years!

Filed under: antitrust, law school

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Antitrust & Consumer Protection

The Behavioral Economics of Going to Bed Angry

Popular Media And other lessons in the (applied) economics of marriage (HT: Mankiw). Filed under: behavioral economics, economics, marriage

And other lessons in the (applied) economics of marriage (HT: Mankiw).

Filed under: behavioral economics, economics, marriage

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Financial Regulation & Corporate Governance

Baker on the FCC’s Analysis of the Comcast-NBCU Merger

Popular Media Jon Baker (FCC, American University) has posted an article summarizing the FCC’s analysis of the Comcast-NBCU merger.  Here is the abstract. The FCC’s analysis of . . .

Jon Baker (FCC, American University) has posted an article summarizing the FCC’s analysis of the Comcast-NBCU merger.  Here is the abstract.

The FCC’s analysis of the Comcast-NBCU transaction fills a gap in the contemporary treatment of vertical mergers by providing a roadmap for courts and litigants addressing the possibility of anticompetitive exclusion. The FCC identified the factors any judicial or administrative tribunal would likely consider today in analyzing whether a vertical merger would lead to anticompetitive input or customer foreclosure, and a range of economic methods potentially relevant to applying that template to the facts of a transaction. Notwithstanding the difference between administrative adjudication under a public interest standard and judicial decision-making under the Clayton Act, the legal framework and economic studies the Commission employed promise to influence the approach that antitrust tribunals will now take in evaluating vertical mergers.

Its well worth reading and provides a good summary of the FCC’s analysis of the transaction (which is also worth reading in its entirety).

As we’ve highlighted, however, notwithstanding the fact that the FCC’s general framework for economic analysis of the merger was consistent with modern antitrust analysis (its hard to comment on anything but the general framework of economic analysis without delving deeply into the details, which I have not done yet), its tough to swallow the Comcast-NBCU Order as a “roadmap” or model given the long list of non-merger specific conditions imposed by the Commission (see here for a list).  The breadth of the conditions tends to undermine the claims that FCC merger review process, or components of it, should be exported.  The Joint Concurrence of Commissioners McDowell and Baker notes a similar objection:

The Commission’s approach to merger reviews has become excessively coercive and lengthy. This transaction is only the most recent example of several problematic FCC merger proceedings that have set a trend toward more lengthy and highly regulatory review processes that may discourage future transactions and job-creating investment.

In this instance, our review exceeded its limited statutory bounds. Many of the conditions in the Memorandum Opinion and Order (Order) and commitments outlined in separate letter agreements were agreed to by the parties. The resulting Order is a wide-ranging regulatory exercise notable for its “voluntary” conditions that are not merger specific. The same is true for the separate “voluntary” commitments outlined in Comcast’s letter of agreement dated January 17, 2011. While many of these commitments may serve as laudable examples of good corporate citizenship, most are not even arguably related to the underlying transaction. In short, the Order goes too far.

Filed under: antitrust, economics, merger guidelines, mergers & acquisitions, regulation, scholarship, technology, television

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Antitrust & Consumer Protection

Microsoft undermines its own case

Popular Media One of my favorite stories in the ongoing saga over the regulation (and thus the future) of Internet search emerged earlier this week with claims . . .

One of my favorite stories in the ongoing saga over the regulation (and thus the future) of Internet search emerged earlier this week with claims by Google that Microsoft has been copying its answers–using Google search results to bolster the relevance of its own results for certain search terms.  The full story from Internet search journalist extraordinaire, Danny Sullivan, is here, with a follow up discussing Microsoft’s response here.  The New York Times is also on the case with some interesting comments from a former Googler that feed nicely into the Schumpeterian competition angle (discussed below).  And Microsoft consultant (“though on matters unrelated to issues discussed here”)  and Harvard Business prof Ben Edelman coincidentally echoes precisely Microsoft’s response in a blog post here.

What I find so great about this story is how it seems to resolve one of the most significant strands of the ongoing debate–although it does so, from Microsoft’s point of view, unintentionally, to be sure.

Here’s what I mean.  Back when Microsoft first started being publicly identified as a significant instigator of regulatory and antitrust attention paid to Google, the company, via its chief competition counsel, Dave Heiner, defended its stance in large part on the following ground:

All of this is quite important because search is so central to how people navigate the Internet, and because advertising is the main monetization mechanism for a wide range of Web sites and Web services. Both search and online advertising are increasingly controlled by a single firm, Google. That can be a problem because Google’s business is helped along by significant network effects (just like the PC operating system business). Search engine algorithms “learn” by observing how users interact with search results. Google’s algorithms learn less common search terms better than others because many more people are conducting searches on these terms on Google.

These and other network effects make it hard for competing search engines to catch up. Microsoft’s well-received Bing search engine is addressing this challenge by offering innovations in areas that are less dependent on volume. But Bing needs to gain volume too, in order to increase the relevance of search results for less common search terms. That is why Microsoft and Yahoo! are combining their search volumes. And that is why we are concerned about Google business practices that tend to lock in publishers and advertisers and make it harder for Microsoft to gain search volume. (emphasis added).

Claims of “network effects” “increasing returns to scale” and the absence of “minimum viable scale” for competitors run rampant (and unsupported) in the various cases against Google.  The TradeComet complaint, for example, claims that

[t]he primary barrier to entry facing vertical search websites is the inability to draw enough search traffic to reach the critical mass necessary to become independently sustainable.

But now we discover (what we should have known all along) that “learning by doing” is not the only way to obtain the data necessary to generate relevant search results: “Learning by copying” works, as well.  And there’s nothing wrong with it–in fact, the very process of Schumpeterian creative destruction assumes imitation.

As Armen Alchian notes in describing his evolutionary process of competition,

Neither perfect knowledge of the past nor complete awareness of the current state of the arts gives sufficient foresight to indicate profitable action . . . [and] the pervasive effects of uncertainty prevent the ascertainment of actions which are supposed to be optimal in achieving profits.  Now the consequence of this is that modes of behavior replace optimum equilibrium conditions as guiding rules of action. First, wherever successful enterprises are observed, the elements common to these observable successes will be associated with success and copied by others in their pursuit of profits or success. “Nothing succeeds like success.”

So on the one hand, I find the hand wringing about Microsoft’s “copying” Google’s results to be completely misplaced–just as the pejorative connotations of “embrace and extend” deployed against Microsoft itself when it was the target of this sort of scrutiny were bogus.  But, at the same time, I see this dynamic essentially decimating Microsoft’s (and others’) claims that Google has an unassailable position because no competitor can ever hope to match its size, and thus its access to information essential to the quality of search results, particularly when it comes to so-called “long-tail” search terms.

Long-tail search terms are queries that are extremely rare and, thus, for which there is little user history (information about which results searchers found relevant and clicked on) to guide future search results.  As Ben Edelman writes in his blog post (linked above) on this issue (trotting out, even while implicitly undercutting, the “minimum viable scale” canard):

Of course the reality is that Google’s high market share means Google gets far more searches than any other search engine. And Google’s popularity gives it a real advantage: For an obscure search term that gets 100 searches per month at Google, Bing might get just five or 10. Also, for more popular terms, Google can slice its data into smaller groups — which results are most useful to people from Boston versus New York, which results are best during the day versus at night, and so forth. So Google is far better equipped to figure out what results users favor and to tailor its listings accordingly. Meanwhile, Microsoft needs additional data, such as Toolbar and Related Sites data, to attempt to improve its results in a similar way.

But of course the “additional data” that Microsoft has access to here is, to a large extent, the same data that Google has.  Although Danny Sullivan’s follow up story (also linked above) suggests that Bing doesn’t do all it could to make use of Google’s data (for example, Bing does not, it seems, copy Google search results wholesale, nor does it use user behavior as extensively as it could (by, for example, seeing searches in Google and then logging the next page visited, which would give Bing a pretty good idea which sites in Google’s results users found most relevant)), it doesn’t change the fundamental fact that Microsoft and other search engines can overcome a significant amount of the so-called barrier to entry afforded by Google’s impressive scale by simply imitating much of what Google does (and, one hopes, also innovating enough to offer something better).

Perhaps Google is “better equipped to figure out what users favor.”  But it seems to me that only a trivial amount of this advantage is plausibly attributable to Google’s scale instead of its engineering and innovation.  The fact that Microsoft can (because of its own impressive scale in various markets) and does take advantage of accessible data to benefit indirectly from Google’s own prowess in search is a testament to the irrelevance of these unfortunately-pervasive scale and network effect arguments.

Filed under: antitrust, armen alchian, business, google, markets, monopolization, technology Tagged: antitrust, Armen Alchian, Bing, Danny Sullivan, economies of scale, google, Google Search, Internet search, microsoft, minimum viable scale, network effects

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Antitrust & Consumer Protection

Is Antitrust Too Complicated for Generalist Judges? The Impact of Economic Complexity & Judicial Training on Appeals

Scholarship Abstract The recent increase in the demand for expert economic analysis in antitrust litigation has improved the welfare of economists; however, the law and economics . . .

Abstract

The recent increase in the demand for expert economic analysis in antitrust litigation has improved the welfare of economists; however, the law and economics literature is silent on the effects of economic complexity or judges’ economic training on judicial decision-making. We use a unique data set on antitrust litigation in federal district and administrative courts during 1996-2006 to examine whether economic complexity impacts antitrust decisions, and provide a novel test of the hypothesis that antitrust analysis has become too complex for generalist judges. We also examine the impact of basic economic training by judges. We find that decisions involving the evaluation of complex economic evidence are significantly more likely to be appealed, and decisions of judges trained in basic economics are significantly less likely to be appealed than are decisions by their untrained counterparts. Our analysis supports the hypothesis that some antitrust cases are too complicated for generalist judges.

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Antitrust & Consumer Protection

Epstein on Obama at U of C

Popular Media It’s pretty hard to cycle through the University of Chicago Law School (or at least it used to be back when I was a student) . . .

It’s pretty hard to cycle through the University of Chicago Law School (or at least it used to be back when I was a student) without gaining an appreciation for the extent to which markets, while subject to occasional failures, enhance human welfare by channeling resources to their highest and best ends. It’s also hard to spend much time at Chicago without coming to understand that government interventions, despite the best intentions of the planners, often fail, given planners’ limited knowledge (see, e.g., Hayek) and bureaucrats’ tendencies to act, like the rest of us, in a self-interested fashion (see, e.g., the public choice literature). Indeed, even left-leaning Chicagoans like Cass Sunstein, for whom I have tremendous respect, appreciate these ideas and therefore tend to advocate (somewhat) limited government interventions that are targeted at real market failures and that preserve space for private ordering. (See, e.g., Sunstein’s “libertarian paternalism,” which has occasionally been derided on this blog but is a far cry from the “paternalist paternalism” we’ve been seeing from the current Administration.)

When President Obama was elected, I hoped and expected that his time at Chicago would influence his policy prescriptions. It hasn’t done so. Not only did he push through two of the most market-insensitive and government-confident pieces of legislation in modern history (the stimulus and the health care law), but even his “move to the center” speech following a mid-term shellacking advocated central planning in the form of pick-the-winner “investments” in green technologies, high-speed rail, etc. His answer to economic stagnation isn’t sound money and the creation of institutions that permit entrepreneurs to flourish without fear of excessive regulation and confiscation. Instead, he wants government to step up and push America forward, as it did in the space race with the Russians: “This is our generation’s Sputnik moment!”

I’ve often wondered how Mr. Obama managed to spend so many years at Chicago without absorbing the ideas that seem to saturate the place. Richard Epstein offers an answer in today’s Wall Street Journal (which quotes an interview Epstein gave to Reason TV):

Reason: The economy has lost 3.3 million jobs, consumer confidence is half its historical average, and unemployment is 9 percent. To what extent is Obama responsible for this?

Richard Epstein: He’s not largely or exclusively responsible, but he’s certainly added another nail into the coffin. The early George Bush—I think he got a little bit better through his term—and Obama have a lot in common. Bush wanted a pint-sized stimulus program that failed and Obama wanted a giant-sized stimulus program that failed. Neither of them is a strong believer in laissez-faire principles. The difference between them, which is why Obama is the more dangerous man ultimately, is he has very little by way of a skill set to understand the complex problems he wants to address, but he has this unbounded confidence in himself.

Reason: So he’s the perfect Chicago faculty member.

Epstein: He was actually a bad Chicago faculty member in this sense: He was an adjunct, and we always hoped he’d participate in the general intellectual discourse, but he was always so busy with collateral adventures that he essentially kept to himself. The problem when you keep to yourself is you don’t get to hear strong ideas articulated by people who disagree with you. So he passed through Chicago without absorbing much of the internal culture.

So that’s it….

Filed under: markets, musings, politics

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