A nice post from former guest blogger Craig Pirrong on regime uncertainty and its role in hampering economic recovery. As Craig points out, it’s not the level of government intervention per se that delays investment, but uncertainty about anticipated changes in government intervention. Options theory provides a useful way to see this.

Bob Higgs approves. And here are Craig’s old O&M posts.

. . . for the opportunity to post a few thoughts on O&M over the last few months. (Errors and, especially, omissions are the sole responsibility of the author.) As I told Peter, it was nice to have a location from which to broadcast items from time to time that wouldn’t otherwise make it beyond lunch partners and the unlucky panhandler. As I discovered, even occasional musings take time, and participating, even sporadically, has given me a greater appreciation for the benefits that Peter, Nicolai, Dick, and Lasse provide us O&M consumers. It’s worth every penny!

And so, with gratitude, I take my leave.

Here’s a podcast with my colleagues and good friends Joe Mahoney and Christos Pitelis on public entrepreneurship, part of an ongoing research project on public-private boundaries. Check it out!

Congratulations to O&M friend and former guest blogger Joe Mahoney for his investiture as the Caterpillar Chair in Business at the University of Illinois at Urbana-Champaign. Here is the official announcement, which includes the following summary of Joe’s many accomplishments:

Joseph T. Mahoney is a professor of business administration at the University of Illinois who specializes in corporate governance and organizational economics. He is an editor for several top management journals, a prolific author, frequent advisor to Ph.D. candidates, and a professional consultant. For more than 20 years Mahoney has been an award winning teacher to undergraduates, MBAs and other graduate students. He holds a B.A. in Economics from the University of Pennsylvania, and M.S. and Ph.D. degrees in Business Economics from the Wharton School of Business.

Joseph Mahoney has published more than 50 scholarly articles in respected journals like the Academy of Management Review, Journal of Management, Journal of Management Studies, and Strategic Management Journal. His publications have been cited over 5,600 times by scholars in 65 countries. His book, Economic Foundations of Strategy has been adopted by over 30 top doctoral programs. Mahoney is an editor for the International Journal of Strategic Change Management and the Strategic Management Journal, and he contributes to 21 additional journals. Mahoney’s passionate teaching has garnered him many outstanding teacher awards since coming to Illinois in 1988. In that time he also served on 47 completed doctoral dissertation committees and currently serves on 8 others that are in progress.

You may recall that Joe is also this year’s recipient of the Academy of Management’s Irwin Award. Way to go, Joe!

. . . in which two Irishman sweep fifteen or thirty Italians into an open ditch.

The context is a dispute over a contract for the supply of water to Bayonne, NJ., circa 1896, as reported in The First History of Bayonne, NJ (1904: 92):

At the mayoralty election in the spring of 1895, Egbert Seymour, on the Democratic ticket, was elected Mayor. Several of the Councilmen who were elected at this election, and two or three city officials, were opposed to the new water contract, and attempted a “hold-up.” The trouble reached its height one day during the first year of Seymour’s administration. While employees of the water company were tapping the old mains to make the necessary water connection, some city officials arrived on the scene. Immediately there was trouble.

The New York Times article (Nov. 24, 1896) on the right (click to enlarge) elaborates, amusingly, on the manner in which the holdup was executed.

I have not yet been able to verify it but, according the previous source, “The matter was taken before the Supreme Court of the United States by the water company, and an injunction was obtained against the city. United States marshals were stationed at the scene until the work was completed, to arrest any city official who interfered.” The city eventually bought out the company in 1918.

(Wish that I had found that quotation before completing this.)

The 15th Annual Conference of the International Society for New Institutional Economics will be held this year at Stanford University on June 16-18. The conference is being organized by President-Elect Barry Weingast, and my inside, not-yet-public information is that the conference will have two very interesting keynotes. The ISNIE website has the just-released Call for Papers.

O&M readers are probably already pretty familiar with ISNIE. But its history could provide an interesting case study for students of organization and institutions. First is the institutional entrepreneurship involved in conceiving of and getting the Society off the ground. Obviously, Ronald Coase, Douglass North, and Oliver Williamson — the Society’s first three presidents — were key players. But much credit for the Society’s early success also goes to the group at Washington University at St. Louis, particularly, Lee Benham, and John Drobak, and to Claude Menard at the University of Paris, whose combined efforts assured the Society’s broad reach and inclusiveness. Interesting also from a governance perspective is the problem of balancing the Society’s founding objectives with the desire for responsiveness and accountability to the Society’s members. ISNIE also went through a major technology- (and cost-) induced reorganization as many of the functions performed manually in the St. Louis office were shifted to the web (for which the bulk of the credit goes to the heroic efforts and contributions of current ISNIE Secretary Eric Brousseau). Thanks to the efforts of these and many others, ISNIE as an organization remains strong, and the annual conferences have become excellent opportunities for interaction with top scholars of organization and institutions from around the world. The 2011 conference at Stanford is not to be missed.

My inbox today contained an advertisement for a new Elgar publication: Famous Figures and Diagrams in Economics:

I’m sure that everyone in the O&M-isphere will agree that such a volume is incomplete without

In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it.”

– G.K. Chesterton, The Thing (1929)

*Shouldn’t it be quotation of the day?

At the ASSA meetings in Denver this weekend, O&M impresario Peter Klein gave a typically (for him) enlightening and entertaining presentation on “Institutions and Entrepreneurial Opportunities: A New Approach.” (An audience member gushed afterward that it was one of the best presentations she had ever seen. Perhaps Peter can provide a link to the paper.) To illustrate one of his points, Peter used images of ruins from once-glorious buildings in Detroit such as this one:

Peter’s point was that, though on its face, such abandoned structures would appear to present unrealized entrepreneurial opportunities, such opportunities were probably illusory in light of Detroit’s decline.

In fact, Peter, in a rare lapse, simply failed to look deeply enough into the question. Entrepreneurship is alive and well even in Detroit!

(Sources: top; bottom)

If you have access to The New Palgrave Dictionary of Economics, Online Edition, my entry on Oliver Williamson is now available: Oliver E. Williamson.