The Best and the Brightest
20 February 2010 at 3:41 pm Dick Langlois 3 comments
| Dick Langlois |
I read Peter’s post about paternalism — and the limits of smart people in government — just after I read about the death of Carl Kaysen, long-time MIT economist and one-time Kennedy advisor. Obituaries praise Kaysen for his role as a policy intellectual of great scope, especially in the area of nuclear non-proliferation. But they either fail to mention, or mention with considerable approval, Kaysen’s pivotal role in the famous 1954 United Shoe Machinery case. Kaysen’s view of the case, and of the role of economic analysis in antitrust, is a key example of what Williamson calls the “inhospitality tradition” — that any kind of contract we don’t understand must therefore be anticompetitive. In the eyes of many present-day economists, Kaysen is implicated in having destroyed the American shoe machinery industry and with it the American shoe industry. (The post-mortem is by Masten and Snyder.) Not exactly McNamara in Vietnam, but worth mentioning amid the hagiography of Kaysen, not to mention the reawakened culture of elitist decision-making in Washington.
Entry filed under: - Langlois -, Business/Economic History, Law and Economics, New Institutional Economics, Public Policy / Political Economy.
Organizations and Markets 
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Ram Mudambi | 21 February 2010 at 8:32 pm
I really like Dick’s post. The costs imposed on society by the ;’knee-jerk trust-busters’ will never be known. As a graduate student, I remember being singularly unimpressed by the so-called “welfare gains” of anti-trust, especially in the post WW 2 period.
It always seemed to me that classical anti-trust ignores or under-estimates the intensity of ‘competition for the market’ and exaggerates the power of ‘competition in the market’.
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David Hoopes | 22 February 2010 at 3:31 pm
Where’s Demsetz when you need him? This post made me look for my copy (one of my copies) of Harold’s “100 Years of Antitrust: Should We Celebrate?” Was this ever published? In one of his greatest hits volume? He handed it out to his IO class (most fortunate to have taken). Don’t think I’ve seen the commentaries though.
Harold Demsetz, 100 Years of Antitrust: Should We Celebrate?, Brent T. Upson Memorial Lecture, George Mason University School of Law, Law and Economics Center (1991) (including comments by Robert Pitofsky, Richard Schmalensee, Robert H. Bork and Ernest S. Gellhorn).
Demsetz concludes, “Because of these opposing consequences of antitrust, I see little cause to rejoice greatly or to be remorseful over the 100-year history of the Sherman Act.”
Taken from FTC commissioner Thomas B. Leary’s site.
http://www.ftc.gov/speeches/leary/learythreecheers.shtm
Leary suggests there are some things to cheer about.
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Why Don’t Federal Judges “Hire” Economists More Often? | TRUTH ON THE MARKET | 24 February 2010 at 12:56 am
[…] Dick Langlois’ post on Carl Kaysen’s role in the United Machinery antitrust case reminded me of a question I’ve been meaning to blog about. Langlois writes: Obituaries praise Kaysen for his role as a policy intellectual of great scope, especially in the area of nuclear non-proliferation. But they either fail to mention, or mention with considerable approval, Kaysen’s pivotal role in the famous 1954 United Shoe Machinery case. Kaysen’s view of the case, and of the role of economic analysis in antitrust, is a key example of what Williamson calls the “inhospitality tradition” — that any kind of contract we don’t understand must therefore be anticompetitive. In the eyes of many present-day economists, Kaysen is implicated in having destroyed the American shoe machinery industry and with it the American shoe industry. (The post-mortem is by Masten and Snyder.) Not exactly McNamara in Vietnam, but worth mentioning amid the hagiography of Kaysen, not to mention the reawakened culture of elitist decision-making in Washington. […]