Sunday, October 06, 2019



‘Big Bad Trusts’ Are a Progressive Myth

Today’s tech titans, like yesterday’s industrial giants, will diminish in time thanks to competition

The resurgence of progressivism in America has brought growing support for a return to Progressive-era trustbusting. Sen. Elizabeth Warren has a plan to break up tech companies like Google, Amazon and Facebook. Berkeley professor Robert Reich, once the resident progressive of the Clinton administration, opines, “Like the robber barons of the first Gilded Age, those of the second”—the tech giants—“have amassed fortunes because of their monopolies.” Even in Amazon’s hometown of Seattle, a newspaper headline declares, “Big tech needs to face a Theodore Roosevelt -style trust busting.”

According to progressive legend, when trusts and cartels in the late 19th century exploited consumers, trustbusters rode to the rescue. Today’s progressives are ready to reincarnate yesteryear’s remedies. The problem with this narrative is that it has little basis in fact.

If the Gilded Age was plagued by anticompetitive behavior, the data should show output falling and prices rising in monopolized industries. In a 1985 study, economist Thomas DiLorenzo tested this hypothesis for industries accused of being monopolistic during the debate on the Sherman Antitrust Act of 1890. He found that output in those industries actually increased by an average of 175% from 1880-90—seven times the growth rate of real gross national product. On average, prices in the so-called monopolized industries fell three times as fast as the consumer-price index. When it comes to the progressive itch to attack large firms, a famous line comes to mind: “Ignorance lies not in the things you don’t know, but in the things you know that ain’t so!”

Steel output grew by 242% from 1880-90, but during the 10 years after the Sherman Act, it grew by only 135%. Other “monopolized” industries with large differences in growth rates in the decades before and after the Sherman Act include copper (330% vs. 133%), petroleum (74% vs. 39%), refined sugar (65% vs. 48%) and cigars and cigarettes (121% vs. 40%).

Prices tell a similar story. On average, in the industries for which data are available, inflation-adjusted prices fell at a faster rate, or rose at a slower rate, in the decade before the Sherman Act than in the decade after it. The real price of steel rails fell by 43% from 1880-90, but fell by only 0.7% from 1890 to 1900. The wholesale price of sugar fell 22.4% from 1880-90 but fell by only 6.1% from 1890-1900. A similar pattern played out for copper, pig iron and anthracite coal.

In reality, the turn of the 20th century was an era of vigorous industrial competition driven by the implementation of new technologies, new sources of supply, and improved management. Economies of scale produced industrial concentration. Most of the trusts and cartels that subsequently formed to keep out competition gradually failed without any government intervention.

The history of the American Sugar Refining trust, which formed in 1887, illustrates this pattern. The Sugar Trust had only fleeting success at limiting production or raising prices over the ensuing 20 years. U.S. refined-sugar production more than doubled from 1887 to 1907. Despite the trust’s efforts to keep them out, competitors built factories and undercut its prices in less time than it took to prosecute a major antitrust lawsuit. In 1893, when the Grover Cleveland administration filed its first Sherman antitrust suit against American Sugar, the margin between the prices of raw and refined sugar was 1.15 cents a pound. By the time the Supreme Court decided the case in 1895, new competitors had driven the margin down to 0.88 cent a pound—a 23% decrease.

Unlike the trusts, tariffs and regulations actually succeeded in squelching competition in the Gilded Age. Standard Oil benefited from tariffs on oil and refined products. Henry Havemeyer, the first president of American Sugar, stated at a congressional hearing in 1899 that “the mother of all trusts is the customs tariff bill. . . . Without the tariff, I doubt if we should have dared to take the risk of forming the trust.”

The first legislative action of the trustbusting era came with the establishment of the Interstate Commerce Commission in 1887 to regulate rail freight rates. Economist George Hilton and historian Gabriel Kolko found that railroads supported federal regulation because their attempts to stabilize rates through cartels had repeatedly failed. Real rail freight revenues fell 17.7% per ton-mile from 1870-90. The Interstate Commerce Act banned price rebates, the mechanism the overbuilt railroad system had used to reduce prices. When trucks began to compete with the railroads, Congress brought trucking under ICC regulation. Whatever its initial impact or intent, over time evidence mounted that transportation regulation actually impeded competition.

By the 1970s, the anticompetitive effects of economic regulation, especially in transportation, were acknowledged by progressives from Ralph Nader to economist Alfred Kahn. In the greatest deregulatory effort of the 20th century, President Jimmy Carter led the opening of competition in the railroad, airline and trucking industries. Peer-reviewed economic studies have consistently shown that the transportation deregulation of the Carter era produced significant price reductions and improvements in service.

The rise of Big Tech is virtually a replay of the rise of scale-driven industrialization at the turn of the 20th century. We’ve seen rapid growth of large firms fueled by technological innovation and economies of scale accompanied by declining prices. This time around, extraordinarily, the new “monopolies” are giving many of their products away.

There are legitimate policy concerns involving Big Tech, such as claims of censorship. But history shows little evidence that breaking up big tech companies or regulating them as monopolies will benefit consumers. Before policy makers repeat the failed experiments of the past, they should determine whether trustbusting is really about protecting consumers or merely about expanding the power of government.

SOURCE 







Book Review: ‘Order Without Design,’ by Alain Bertaud

An Urban Planner Describes the Flaws of His Profession

Who should run cities, economists or urban planners? This is a trick question: the answer is that neither group can fully know how to run such complex systems. But if planner Alain Bertaud had to choose, he’d vote against his own profession.

In his recent book Order without Design: How Markets Shape Cities, Bertaud writes that planners have largely botched urban growth worldwide, and should approach it by using more insights from economics. For decades, Bertaud has trotted the world to study and help plan cities himself. He worked first for the United Nations, then the World Bank, then as a private consultant. He’s now a research scholar at NYU, where he’s learned from that school’s renowned economists.

Economics would be useful to planners, he writes, because it’s scientific. It uses technical, real-world data to create models on how cities behave, and how they would behave if given variables change. This means economists can better understand markets, predict outcomes, and determine best practices based on a defined set of goals.

Planners, by contrast, are “normative”, meaning they shape their premises not through empiricism, but norms and fads from their micro-culture. Their use of terms like “quality of life”, “neighborhood character”, “livability,” and “sustainability” are not technical, but derive from how they and their peers subjectively define these words. This means that planners depend on truisms and pseudo-science to shape policy.

One example Bertaud describes comes from his time spent in Port-au-Prince, Haiti, which in the 1970s was exploding in population, as rural Haitians migrated there to escape poverty. Bertaud was part of a team of U.N. bureaucrats who visited the city to advise on its growth. Many of his colleagues thought the growth should be dispersed nationwide, rather than concentrating in Port-au-Prince.

“At the time,” writes Bertaud, “planners were debating about the optimum size of cities, usually advocating for a size between half a million and a million people.”

Yet the economics literature had already debunked this notion. Economists back then were saying (as they do now) that cities get more productive the more they grow, due to agglomeration benefits, and there was no reason to cap population at one million people. Bertaud didn’t understand these benefits until he met an economist for the first time, while in Haiti. From then on, he became convinced that economists should have a bigger role in educating planners.

If that happened, planners would then be less prone to view cities as tabula rasas that should be designed based on their own cultural tastes, and more prone to view cities as what they actually are: labor markets. This “cities as labor markets” theory is the second big premise of Bertaud’s book.

A city’s fundamental raison d’etre is that it’s where people go to find jobs. Cities grow based on their ability to provide economic opportunity, and decline if that opportunity vanishes. The key role planners should play is not to choose which industries bolster these labor markets, but to set the conditions for growth, by allowing the development of housing and transportation that lets people access and expand these labor markets. Housing and transportation is where Bertaud thinks planners could better apply economic thinking. For example, rather than mandating zoning laws that are arbitrary and fixed, planners should observe the price signals in their markets, and use it as feedback to adjust the zoning. Every few years, zoning regulations should be subject to cost-benefit analyses, to ensure they’re accomplishing their stated goal, not just inflicting financial hardship and high home prices.

For transportation, planners should ignore their preconceived biases about the “right” transport modes and layouts, and instead focus on what will actually shorten commutes and improve mobility. This too can be done through price signals – namely tolls and congestion charging – that more efficiently delineate road space and ease traffic flow. Whether or not this leads to the overwhelming use of rails, buses, carpools or single-occupancy vehicles will vary by city, and depend on how those respective modes are priced.

One flaw of Order Without Design is that Bertaud never really defines “planner”, which causes him to isolate planners for unfair blame. Globally speaking, planners from the U.N. or federal governments may have power over land-use decisions. But in the U.S., policy is made less by professional planners—who graduated from planning schools and have AICP certification—than by politicians. The anti-economic thinking that drives our land-use policy is really more a reflection of the American people and who they vote for than of urban planners, who are largely powerless (if still misguided) advisors.

But the basic message of Bertaud’s book holds. Cities are often viewed and treated like aesthetic or cultural objects, rather than labor markets where people go to work. Their housing and transport grids are planned as such, ignoring this functional role of cities. Introducing economics to the urbanization process would help solve the problems now common in cities worldwide.

SOURCE 





Jeff Jacoby: Instead of resurrecting the 'People's Pledge,' let's bury it for good

REPRESENTATIVE JOE KENNEDY, the youngest member of the Massachusetts congressional delegation, announced last week that he would run against Senator Ed Markey, the oldest member, because, he said, "I've got new ideas and a new approach." Really? In nearly seven years in Congress, Kennedy has emitted few whiffs of originality or unconventional thinking. Why would that change if he replaced Markey in the Senate? In any case, as skeptics promptly pointed out, on political issues there are no meaningful differences between the two left-wing Democrats.

As if to validate the skepticism, Kennedy's first big campaign proposal, delivered in a press release on Tuesday, was a so-called People's Pledge to keep third-party advertising out of the Senate race. That was anything but a new idea: Markey had proposed the exact same thing when he first ran for the Senate in 2013 — and he was only recycling a gimmick from the race between Elizabeth Warren and Scott Brown a year earlier.

But the People's Pledge isn't just a tired, old idea. It's a tired, old, bad idea. It is arrogant and antidemocratic, and its purpose is to squelch free speech — in particular, the form of speech most valued in the American constitutional system: speech about politics, candidates, elections, and issues.

Kennedy wants his rivals (who include attorney Shannon Liss-Riordan and businessman Steve Pemberton, in addition to Markey) to repudiate in advance any "outside" advertising — that is, any advertising from any source other than the candidates' own campaigns. The purpose of the "People's Pledge" is to put teeth into that repudiation. It provides that if an outside organization spends money on TV, radio, or online ads in support of any candidate in the race, the campaign being helped would pay a penalty: It would have to donate half the value of the ad buy to a charity named by the other campaign. Political groups wanting to weigh in on the Massachusetts Senate fight would thus be dissuaded, since the more they spent to assist any candidate, the more cash that candidate would have to forfeit.

Warren and Brown were extravagantly praised when they agreed to this arrangement in 2012. Their pledge was welcomed as a victory for "civility," and the candidates were awarded props for coming up with a way to reduce the influence of money on their high-profile Senate race.

But the "People's Pledge" proved a bust. When all was said and done, the 2012 Brown/Warren race, far from restoring civility to politics, was among the nation's nastiest. And the candidates' agreement did nothing to diminish the importance of money. According to the Center for Responsive Politics, the Brown and Warren battle turned out to be the most expensive Senate campaign in the country. As Rosie Gray reported in BuzzFeed, Brown and Warren's much-admired pledge "appears to have accomplished roughly the opposite of its goal."

So when Markey, running for the Senate a year later, attempted to revive the pledge, his Republican opponent sensibly declined. When Secretary of State Bill Galvin tried the same ploy during his reelection fight in 2018, his Democratic challenger, calling it an "empty gesture," likewise refused.

Now that he's facing a serious challenge to his Senate seat, Markey no longer seems quite so enamored of the idea that third-party advertising should be kept out of the race. His campaign manager agreed only to "review the proposal" made by Kennedy. It's hard to imagine that Markey, facing the toughest reelection fight of his career, will spurn the help of independent groups. One such group, Environment Massachusetts, has already said it will raise $5 million for a campaign "to promote the senator's remarkable record" to the state's voters.

"Remarkable" isn't the word I would choose to describe Markey's congressional career. But if Environment Massachusetts and its supporters want to spend money to sing Markey's praises, why should they be stifled? If the International Brotherhood of Electrical Workers, which has endorsed Kennedy, wants to run ads promoting his virtues, why shouldn't it do so? For that matter, why should any group with strong opinions about the Senate race – charities, corporations, political parties, advocacy organizations, houses of worship, or simply an ad hoc amalgam of interested citizens – be deterred from weighing in?

The winner of the Massachusetts Senate race will have power to influence the lives and livelihoods of tens of millions of Americans, here in the commonwealth and around the nation. Health care, housing, taxes, immigration, foreign policy, judgeships, war and peace — senators have a say in all of them. Which means that virtually everyone has an interest in who gets elected, and compelling reasons, perhaps, to influence the voters' decision. Should they be silenced? Of course not!

Anyone with something to say about the Massachusetts Senate race should be encouraged to say it. No group with strong views on the issues or the candidates should be denounced for spending money to disseminate those views. Robust political expression is the very quintessence of free speech, and in an election campaign, "outside" and "third party" voices are just as legitimate as those of the candidates themselves.

The "People's Pledge" is a terrible idea. Let's hope we've heard the last of it.

SOURCE 






Australia: Evidence of Cardinal Pell's innocence suppressed by the police.  They were always out to "get" him

Cardinal Pell was convicted of pedophilia on uncorroborated evidence

There was an interesting report in The Australian yesterday about two women of irreproachable standing whose testimony was sidelined by Victoria Police during its investigation of George Pell. Inexplicably, the women were not called by the defence. Jean Cornish and Lil Sinozic are not run-of-the-mill observers or blow-ins. Church office-holders and former senior school teachers with a hawkish concern for the safety of children, they were arguably the most authoritative eye-witnesses of all. Like everyone else who was at St Patrick’s Cathedral, they dismiss the claims against Cardinal Pell as impossible nonsense. By now the revelation is not surprising.

At the committal hearing for the case in March 2018, Detective Christopher Reed admitted he didn’t bother taking statements from “nuns, choir members and other church officials which he told the court were favourable to Cardinal Pell.” He also failed to obtain the exact dates the Cardinal presided at mass in 1996. Asked why, under cross-examination by Robert Richter QC, Reed admitted that he executed a warrant at the wrong address. “I didn’t know where the archives were,” he said. It is a concern when a detective in a case of this magnitude doesn’t have the skillset of a Dominoes delivery driver. Surprisingly, Reed and Detective Superintendent Paul Sheridan managed to find their way to Rome to interview Cardinal Pell.

From the start, VicPol’s decisions about whose statements to heed, whose to avoid, who to pursue and who to disregard have been peculiar; some would say suspicious. Remember “the swimmers”? They were the public prosecutor’s B Team. If the “choirboys” failed, the swimmers would be beckoned forth from the red-brick shed of times gone by to regale a second jury with tales of surreptitiously brushed buttocks and sneakily squeezed privates beneath warm waves of sun-drenched, chlorine-flavoured play contemporaneous with the last Shah of Iran. There were, of course, no corroborating witnesses for this malarkey but there were many exculpatory witnesses. Alas for the pool accusers, their case was thrown out by County Court chief judge Peter Kidd in February.

Having hoisted them aloft to make a splash, the ABC (also known as the Keli Lane channel) subsequently abandoned the swimmers. Both video and transcript of its bizarre special on their accusations have been deleted. That’s understandable. As well as actionable, the 7.30 Report episode is embarrassing. The transcript can still be found online, however. If the men were so credible that they merited the combined power and treasuries of the ABC and Victoria Police, why were recollections of “repeated abuse by a female relief teacher” and a “vicious teacher who made him masturbate and perform oral sex” not pursued? Robert Richter asked police if they scorned these allegations (at the high end of seriousness) because officers were only interested in ‘getting’ Pell. “Detective Superintendent Sheridan rejected the assertion, telling the court there could have been a viable explanation.” But he didn’t say, and apparently didn’t know, what it was.

One of three possibilities logically follows: one, the supposed culprits are dead. Two: that Victoria Police allowed two hard-core child rapists to remain unsought so as not to imperil their manic Pell operation. A public failure to find or successfully charge “female relief teacher” and “vicious teacher” would have been fatal to the more banal charges against the Cardinal. Or three: that police concluded the accusations against the mystery teachers were either false or indemonstrable but charged Pell using the complainant duo’s other ‘evidence’ anyway. Whether the latter two scenarios would be justiciable as perversions of the course of justice is for legal officials in Victoria to determine. I’m sure they’ll be all over it any day now.

Were it a leftist beloved of leftists and not Cardinal Pell in solitary confinement – I should say, being tortured in solitary confinement (cf. the UN Special Rapporteur and the ABC, 2014) – the calls for a royal commission would be frenzied and incessant.

SOURCE  

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Political correctness is most pervasive in universities and colleges but I rarely report the  incidents concerned here as I have a separate blog for educational matters.

American "liberals" often deny being Leftists and say that they are very different from the Communist rulers of  other countries.  The only real difference, however, is how much power they have.  In America, their power is limited by democracy.  To see what they WOULD be like with more power, look at where they ARE already  very powerful: in America's educational system -- particularly in the universities and colleges.  They show there the same respect for free-speech and political diversity that Stalin did:  None.  So look to the colleges to see  what the whole country would be like if "liberals" had their way.  It would be a dictatorship.

For more postings from me, see TONGUE-TIED, GREENIE WATCH,   EDUCATION WATCH INTERNATIONAL, AUSTRALIAN POLITICS and  DISSECTING LEFTISM.   My Home Pages are here or   here or   here.  Email me (John Ray) here.  Email me (John Ray) here

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