Having
frequently chatted with economists and read many textbooks and articles on economic
subjects, I marvel at the absolute certainty in answers offered to various thorny
questions. Economists like to create
rules and laws that provide certain solutions, if only the public and
politicians followed their lead.
It should
come as no surprise that absolute economic gospel truth fails both in terms of
practical application and even adherence by economists. Suddenly a firm rule has exceptions, or an
economist conveniently forgets the widespread acceptance of the rule. This dismissive attitude greatly contrasts
with the conventional attitude that economics is a legitimate science. And of
course, economists know best.
Several
questions about economic doctrinal certainty and amnesia come to mind having
read a New York Times article on sponsored briefings of foreign
antitrust enforcement agency officials.
See https://www.nytimes.com/2020/07/24/technology/global-antitrust-institute-google-amazon-qualcomm.html. In Big Tech Funds a Think Tank Pushing for
Fewer Rules. For Big Tech, Daisuke Wakabayashi reports that firms, such as Amazon,
Google and Qualcomm contribute six figure sums for antirust law and policy
briefings organized by institutes and foundations affiliated with George Mason
University’s Antonin Scalia Law School.
Have both
teacher and student forgotten one of the most fundamental rules of economics
that “there is no such thing as a free lunch”? The article reports on the high
quality and cost of the venues hosting the conferences and the meals served. Such opulence juxtaposes with the conferences
I pay to attend. I am used to
rubber chicken, or self-catering in places like Dallas in August and Louisville
in March. Next month, I will participate
in a virtual conference and still had to pay $250 for the opportunity to
present an academic paper via Zoom.
Obviously, I hang out with wrong class of people.
Who, other
than the sponsors and the sponsored organizers and participants, can ignore the
no free lunch rule? There’s a quid pro
quo here, not that there’s anything illegal about it. What unnerves me is the
apparent obliviousness of all involved to a straightforward rule of economics
and human behavior.
While
apparently exempt from the no free lunch rule, organizers of the conferences
surely do not forget to preach the gospel certainty of Chicago School antitrust
policy. This economic doctrine, now widely
embraced by judges and their law clerks, proscribes sanctioning any behavior—no
matter how much it concentrates a market or bolsters the market power of an
incumbent—if some enhancement of consumer welfare occurs. Chicago School devotees concentrate on
consumers’ out of pocket costs and point to declining, or zero costs as proof
positive that a particular market is thriving.
They conveniently ignore offsetting costs like that occurring in the broadband
mediated marketplace when platform operators mine data and sell the surveillance
data to advertisers and data analytics firms.
Oh, and let us not forget the costs to society when privacy, trust,
belief in the rule of law and confidence in the integrity of elections become
questionable.
The Chicago
School doctrine has become unimpeachable, no doubt validated and revalidated in
the numerous free conferences sponsored by stakeholders who fund non-profit academic
institutes that organize law and economics conferences. Some of these events reimburse all travel
expenses and pay several thousand dollar honorariums to speakers and paper
presenters. Sweet indeed.
What is
unsweet and intellectually questionable in my view is the apparent adamancy
with which Chicago School acolytes embrace the doctrine, even as they ignore
the free lunch rule. Anyone who dares to suggest modification or exceptions to
the Chicago School rules is branded an advocate of “Hipster Antitrust,” as
though their insights were nothing more than trendy, undisciplined analysis.
I will stop
with one more question about seemingly unquestionable economic rules: if demand
substantially drops for a good or service and the incremental cost to serve one
additional customer is tiny, then why do the airlines refrain from sizably
discounting fares?
