Just watched your recent interesting exchange with Professor Wu on whether the Standard Oil divestiture made public policy sense.
Wu asserted that the decision was good public policy. You said you were not so sure since the evidence (on competition and consumer welfare) prior to divestiture may have been ambiguous. Wu had a near heart attack at that suggestion which showed me, of course, that he has never read the case, has never read the trial record (it’s 11,000 pages long and the State of Connecticut library in Hartford actually had a copy when I was researching this case back in 1970) and has never read any economist (such as myself) that has done some of that work so that professors such as Wu can be marginally smarter in policy debates.
This is one of the most misunderstood cases in antitrust history. (Even Bork, who gets much of the revisionist case history correct, totally flinches on this case; he does nearly nothing with it.)
The first misunderstanding in almost all of the law texts is that this is the first “rule of reason” antitrust case. That implies that the SC must have sifted through all of the conflicting facts and arguments presented at court and determined that Standard had acted “unreasonably.” Totally False. A modified rule of reason approach was articulated in the case by Justice White in 1911 but, of course, was never applied to the specifics in Standard.
As any antitrust lawyer can tell you this is a job for a lower court anyway, not for the SC; but this case was never remanded. The SC simply decided that the many mergers by Standard prior to 1890 constituted an attempt to monopolize in violation of the Sherman Act and, notice, divestiture follows logically from that reasoning. But whether Standard ever “restrained trade” (as we now understand the meaning of that phrase, i.e. able to reduce industry output and raise industry price) was NEVER determined. Thus whether Standard missallocated resources, charged monopoly prices, repressed innovation, etc…was never decided by the SC or any other court.
Which leaves totally open the question of what was actually going on in the oil industry between say 1880 and 1907 (aside from the many mergers). I determined that this industry (crude oil, transportation, refining, marketing was all very small ( this is pre-gasoline after all); that there were few if any legal barriers to entry and that business organizations entered and left with some frequency, typical of a young and innovative industry; that Standard, despite mergers, always had many rivals in refining (Texaco, Pure Oil, Associated Oil and Gas, Sun Oil, Gulf and many many others) and, of course, there were hundreds of firms in crude oil production and marketing which were never “monopolized”; that costs and prices decreased throughout the period of alleged monopolization (even Ida Tarbell admits this. Indeed I got much of my cost and price information from her “History of the Standard Oil Company”; that Standard’s market share decreased in the 10 year period prior to the antitrust suit (1907); and that, as John McGee argued long ago, that Standard probably did not engage in predatory pricing. There is much much more to this story and I tell a good share of that in “Antitrust & Monopoly.”
Perhaps Wu can make the case that the divestiture in 1911 produced a better result (in terms of all of the things that economists measure) than what would have happened if nothing dramatic had been done. That’s counter-factual so good luck with that!! All I know is that his knowledge of the actual history of the oil industry is quite stunning and I fear for the life of his more curious students.
As I said in the Wu debate itself, I do not know enough about this case and I am agnostic on the question. Still, there is a perspective you don’t usually hear, and so I am passing it along.
I will be doing a Conversations with Tyler with him, if you need it here is some background information. So what should I ask?
My apologies for not having covered this earlier, but I have been traveling and relying on auto-published posts. You will find many fine tributes here on Twitter. I did meet and interact with her several times, and always found her the essence of both impressiveness and graciousness. Arnold Kling has written a nice appreciation.
Do note the latter part of the last sentence, but the entire thesis is interesting:
This paper utilises a unique, purpose-built panel dataset on prominent authors in the UK and Ireland born 1700–1925 to estimate the productivity gains associated with agglomeration of an industry with few capital requirements and no apparent need to cluster geographically. I find the average author experiences productivity gains of 11.94% per annum when residing in London, the only major literary cluster – a gain not associated with living in any of the minor literary clusters. I find evidence of negative selection with respect to productivity, indicating the results are not driven by the self-selection of highly productive authors to London. I find heterogeneity of returns to living in London by birth cohort and Impact Index quartile (a measure of author quality) and that the cohorts who receive the greatest gains from locating in London are those for which there is the strongest evidence of negative selection with respect to productivity.
That is by Sara Mitchell in the Journal of Urban Economics, via the excellent Kevin Lewis.
That is the theme of my latest Bloomberg column, here is one bit:
Each generation has its own form of recency bias, as it is called in behavioral economics. Just after Sept. 11, for example, there was great concern about follow-up attacks. (Thankfully, nothing comparable followed.) Now we worry a lot — maybe too much — about insolvent banks, insufficiently high inflation, and the Chinese shock to U.S. manufacturing.
So what about nuclear war? Looking forward, the reality is that the risks of such a war are quite small in any particular year. But let the clock run and enough years pass, and a nuclear exchange of some kind becomes pretty likely.
I have found that people with a background in financial market trading are best equipped to understand the risks of nuclear war. An analogy might be helpful: Say you write a deeply out-of-the-money put, without an offsetting hedge. This is in fact a very risky action, though almost all of the time you will get away with it. When you don’t, however — when market prices move against you — you can lose all of your wealth quite suddenly.
In other words: Sooner or later the unexpected will come to pass.
Meanwhile, a generation of hypersonic delivery systems, being developed by China, Russia and the U.S., will shorten the response time available to political and military leaders to minutes. That raises the risk of a false signal turning into a decision to retaliate, or it may induce a nation to think that a successful first strike is possible. Remember, it’s not enough for the principle of mutual assured destruction to be generally true; it has to be always true.
Do read the whole thing, which includes a discussion of Steven Pinker as well.
In 1820-1821, commerce between America and Haiti accounted for 4 percent of America’s foreign trade.
“Historians agree that about one in ten slave ships experienced an attempted insurrection during the Atlantic slave trade.”
“Liability for slave ship revolts was one of the maritime perils that underwriters often refused to assume.”
Those are all from Jeffrey R. Kerr-Ritchie’s Rebellious Passage: The Creole Revolt and America’s Coastal Slave Trade.
Eric Peter Kaufmann (born 11 May 1970) is a Canadian professor of politics at Birkbeck College, University of London. He is a specialist on Orangeism in Northern Ireland, nationalism, political demography and demography of the religious/irreligious.
Eric Kaufmann was born in Hong Kong and raised in Vancouver, British Columbia, Canada. His ancestry is mixed with a quarter Chinese and a quarter Latino. His father is of Jewish descent, the grandfather hailing from Prostejov in the modern Czech Republic. His mother is a lapsed Catholic; he himself attended Catholic school for only a year. He received his BA from the University of Western Ontario in 1991. He received his MA from the London School of Economics in 1994 where he subsequently also completed his PhD in 1998.
Here is Eric’s home page. He’s also written on what makes the Swiss Swiss, American exceptionalism, and whether the Amish will outbreed us all.
So what should I ask Eric?
Here is the audio and transcript, this was one of my favorite Conversations. Here is the CWTeam summary:
Knausgård’s literary freedom paves the way for this conversation with Tyler, which starts with a discussion of mimesis and ends with an explanation of why we live in the world of Munch’s The Scream. Along the way there is much more, including what he learned from reading Ingmar Bergman’s workbooks, the worst thing about living in London, how having children increased his productivity, whether he sees himself in a pietistic tradition, thoughts on Bible stories, angels, Knut Hamsun, Elena Ferrante, the best short story (“Tlön, Uqbar, Orbis Tertius”), the best poet (Paul Celan), the best movie (Scenes from a Marriage), and what his punctual arrival says about his attachment to bourgeois values.
Here is one excerpt:
KNAUSGÅRD: You have this almost archetypical artist putting his art before his children, before his family, before everything. You have also Doris Lessing who did the same — abandoned her children to move to London to write.
I’ve been kind of confronted with that as a writer, and I think everyone does because writing is so time consuming and so demanding. When I got children, I had this idea that writing was a solitary thing. I could go out to small islands in the sea. I could go to lighthouses, live there, try to write in complete . . . be completely solitary and alone. When I got children, that was an obstruction for my writing, I thought.
But it wasn’t. It was the other way around. I’ve never written as much as I have after I got the children, after I started to write at home, after I kind of established writing in the middle of life. It was crawling with life everywhere. And what happened was that writing became less important. It became less precious. It became more ordinary. It became less religious or less sacred.
It became something ordinary, and that was incredibly important for me because that was eventually where I wanted to go — into the ordinary and mundane, even, and try to connect to what was going on in life. Life isn’t sacred. Life isn’t uplifted. It is ordinary and boring and all the things, we know.
COWEN: So many great Norwegian writers — Ibsen, Sigrid Undset, Knut Hamsun — there’s nationalism in their work. Yet today, liberals tend to think of nationalism as an unspeakable evil of sorts. How do we square this with the evolution of Norwegian writing?
And if one thinks of your own career, arguably it’s your extreme popularity in Norway at first that drove your later fame. What’s the connection of your own work to Norwegian nationalism? Are you the first non-nationalist great Norwegian writer? Is that plausible? Or is there some deeper connection?
KNAUSGÅRD: I think so much writing is done out of a feeling of not belonging. If you read Knut Hamsun, he was a Nazi. I mean, he was a full-blooded Nazi. We have to be honest about that.
COWEN: His best book might be his Nazi book, right? He wrote it when he was what, 90?
COWEN: On Overgrown Paths?
COWEN: To me, it’s much more interesting than the novels, which are a kind of artifice that hasn’t aged so well.
COWEN: But you read On Overgrown Paths, you feel like you’re there. It’s about self-deception.
KNAUSGÅRD: It’s true, it’s a wonderful book. But I think Hamsun’s theme, his subject, is rootlessness. In a very rooted society, in a rural society, in a family-orientated society like Norway has been — a small society — he was a very rootless, very urban writer.
He went to America, and he hated America, but he was America. He had that in him. He was there in the late 19th century, and he wrote a book about it, which is a terrible book, but still, he was there, and he had that modernity in him.
He never wrote about his parents. Never wrote about where he came from. All his characters just appear, and then something happens with them, but there’s no past. I found that incredibly intriguing just because he became the Nazi. He became the farmer. He became the one who sang the song about the growth. What do you call it? Markens Grøde.
COWEN: Growth of the Soil.
COWEN: Arnold Weinstein has a book on Nordic culture, and he argues that the sacrifice of the child is a recurring theme. It’s in Kierkegaard’s Fear and Trembling. It’s in a number of Ibsen plays, Bergman movies. Has that influenced you? Or are you a rejection of that? Are you like Edvard Munch, but with children, and that’s the big difference between you and Munch, the painter?
I told you we ask different questions.
KNAUSGÅRD: Yeah, yeah. You just said different. You didn’t say difficult.
Knausgaard showed up for the taping carrying a package of black bread, which he forgot to take with him when leaving. So for the rest of the day, I enjoyed his black bread…
Here is a Washington Post obituary. Yes, he did write a bestselling tribute to Churchill, but more importantly he was one of the last representatives of a particular central European notion of history and culture. I much prefer the Times of Israel obituary. Here is Wikipedia. The Last European War and Budapest 1900: A Historical Portrait of a City and its Culture are two of my favorite books by him.
We study the role of economic incentives in shaping the coexistence of Jews, Catholics, and Protestants, using novel data from Germany for 1,000+ cities. The Catholic usury ban and higher literacy rates gave Jews a specific advantage in the moneylending sector. Following the Protestant Reformation (1517), the Jews lost these advantages in regions that became Protestant. We show (i) a change in the geography of anti-Semitism with persecutions of Jews and anti-Jewish publications becoming more common in Protestant areas relative to Catholic areas; (ii) a more pronounced change in cities where Jews had already established themselves as moneylenders. These findings are consistent with the interpretation that, following the Protestant Reformation, Jews living in Protestant regions were exposed to competition with the Christian majority, especially in moneylending, leading to an increase in anti-Semitism.
That is from a new AER piece by Sascha O. Becker and Luigi Pascali.
José Luis Ricón, for blogging and to develop further platforms for information dissemination.
Arun Johnson, high school student in the Bay Area, to advance his work in physics, chemistry, nuclear fusion, and for general career development.
Thomas McCarthy, undergraduate at Dublin, Trinity College, travel grant to the Bay Area, and for his work on nuclear fusion and running start-up programs to cultivate young Irish entrepreneurs.
Natalya Naumenko, economist, incoming faculty at George Mason University, to study the long-term impact of nuclear explosions on health, and also more broadly to study the history of health in the Soviet Union and afterwards.
Paul Novosad, with Sam Asher, assistant professor at Dartmouth, to enable the construction of a scalable platform for the integration and dissemination of socioeconomic data in India, ideally to cover every town and village, toward the end of informing actionable improvements.
Alexey Guzey, travel grant to the Bay Area, for blogging and internet writing, plus for working on systems for improving scientific patronage.
Dylan DelliSanti, to teach an economics class to prisoners, and also to explore how that activity might be done on a larger scale.
Neil Deshmukh, high school student in Pennsylvania, for general career support and also his work with apps to help Indian farmers identify crop disease and to help the blind interpret images.
Here is my previous post on the third cohort of winners, with links to the first and second cohorts. Here is my post on the underlying philosophy behind Emergent Ventures. You can apply here.
It now seems there will be a Conversations with Tyler with him, no associated public event. So what should I ask him?
The men were allowed to come on deck night and day if they wished, but it was the rule to whip the Negro men if they went in the hold with the women. Aboard the Creole, sex was apparently (and, it turned out, wrong) deemed a greater threat than slave rebellion. Gonorrhea, according to slaveholding commonplace, was a disease “generally contracted among Negroes en route who are brought for sale.” A number of different traders had their slaves aboard the ship, and segregating them by sex was a way to keep one slaveholder’s slaves from diminishing the value of another’s by passing a disease — or starting a pregnancy.
That is from Walter Johnson, Soul By Soul: Life Inside the Antebellum Slave Market.
That is the subtitle, the title of this very interesting book is News from Germany and the author is Heidi J.S. Tworek. Here are a few things I learned:
1. “News agencies became the central firms collecting international news from the mid-nineteenth century. The “Big Three” news agencies were all created in this period: Agence Havas in the early 1830s, Telgraphisches Bureau (Wolff) in 1849, and Reuters Telegram Company in 1851.”
2. There were very high fixed costs in telegraphic news gathering, and the telegraph was essential to being a major international news service. Those costs included financing a network of correspondents abroad and the expense of sending telegrams.
3. The three companies colluded, in part to lower the cost of news collection, and maintained a relatively stable cartel of sorts, running from 1870 up through the outbreak of World War II. World War I was a hiatus but not a break in the basic arrangement. The AP was added to the cartel in 1893.
4. These news agencies, being well-identified and somewhat monopolistic, were susceptible to political control, especially from Germany. But note that the British censored information coming from the Boer War.
5. The post WWII era was an exception, and throughout most of modern history it has been difficult to turn a profit by selling news coverage.