In his New York Times column, Thomas Friedman advocates “doing the Cheney-thing on climate — preparing for 1%.” He’s referring to Vice-President Cheney’s reported remark: “If there’s a 1% chance that Pakistani scientists are helping Al Qaeda build or develop a nuclear weapon, we have to treat it as a certainty in terms of our response.”

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It’s been interesting to observe the responses to the hacked emails from the Climate Research Unit at the University of East Anglia. The emails seem to show leading global warming scientists massaging data to generate the result they prefer (i.e., “I’ve just completed Mike’s Nature trick of adding in the real temps to each series for the last 20 years … to hide the decline”), scheming to squelch opposing evidence (i.e., “I can’t see either of these papers being in the next I.P.C.C. report. Kevin and I will keep them out somehow—even if we have to redefine what the peer-review literature is!”), admitting to a need to hide certain data from critics (“If they ever hear there is a Freedom of Information Act now in the UK, I think I’ll delete the file rather than send to anyone”), and even confessing that they were “tempted to beat” up researchers with opposing viewpoints.

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Thanks to all of our participants and readers for the blog symposium–both the posts and the comments were engaging and thoughtful, and I hope these entries will be helpful in the ongoing debate over credit cards and interchange fees.

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The Searle Center Civil Justice Institute has announced the release of its preliminary report on State Consumer Protection Acts: An Empirical Investigation of Private Litigation.   You can read the Executive Summary here.  As the Searle Center State Consumer Protection Acts Task Force Chair, I’ve been involved in the data collection, analysis, and drafting of this project over the last couple of years along with the rest of the Task Force  (the Searle Center’s Executive Director Henry Butler, Jason Johnston (Penn), Jeffrey Jarosh, and Samantha Zyontz) and really is the product of a team effort including the Task Force, Searle Center research assistants (Micah Hughes, Jonathan Hillel, Matthew Sibery, Hayley Smith, and Judd Stone) and Research Coordinator Elise Nelson.   I’m incredibly grateful to have worked with such a skilled group.  This preliminary report is the first research project released growing out of a larger research agenda on state consumer protection regulation.  Some exciting projects are to follow.

Read the full piece here.

A blog symposium hosted by Truth on the Market (www.truthonthemarket.com) and sponsored by the International Center for Law and Economics (www.laweconcenter.org).

I have now had a chance to review the excellent posts on the second day, all of which have a common flavor.  They expand the universe of relative considerations that need to be taken into account to decide whether imposing caps on interchange fees enhances or reduces overall social welfare.  The narrow perspective on this issue, which is difficult enough, is to master the dynamics of two-sided markets to figure out where the fixed costs of running the overall system should be allocated.

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In my first post I discussed the potential for interchange legislation from a consumer protection perspective, that is, would the combination of disclosure requirements coupled with a reduction of interchange fees be likely to improve consumer welfare.   I concluded that from the consumer protection perspective, the case for interchange legislation was weak.  I noted that a highly likely consequence of a direct or indirect reduction in interchange would result in an increase in the cost of credit to consumers (higher finance charges, other fees, annual fees) or a reduction of consumer benefits (loyalty and rewards programs).  The significant risk of a reduction of consumer access to credit, especially given the tenuous state of the economic recovery and the critical role of consumer spending in generating economic expansion and jobs, imposes a significant risk of consumer and social losses without strong evidence of offsetting consumer protection value.  However, consumer protection is not the only possible defense of such legislation.  This post will focus on defense of interchange legislation from a competition policy perspective.

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I take to heart Jim’s claim that fraud is too-little discussed in this realm given its cost, and thus I’ll try my hand at it.

Every discussion of the industrial organization of credit card networks owes a debt to Bill Baxter.  Baxter, a law professor and former Assistant Attorney General in the Antitrust Division of the DOJ, was one of the first (maybe the first?) scholars to discuss the economics of two-sided markets, in a paper, as it happens, on the economics of interchange fees in credit card networks.

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In our earlier post, we observed that the GAO report on interchange got off on the wrong foot when it concluded that interchange fees were rising.  We infer from the silence which greeted our post that everyone agrees with this criticism.  Indeed, yesterday’s posts and comments appear to agree that the GAO’s report does very little to advance the discussion of interchange or the cost of electronic payment.  But we suspect that greater disagreement lies just around the corner.

Read the full piece here.