Artificial Intelligence Will Benefit Us Immensely—If We Don’t Get in the Way

IRobotIdeas are becoming more expensive. Larger teams of scientists are taking longer and spending more to discover less. A common theory for these diminishing returns compares exploring the laws of nature to exploring land. Pioneers chart the most accessible areas. Later generations must grope their way across remote and forbidding terrain to find anything new; their expeditions need more preparation, more equipment, and more support. One of the many marks of increasing strain is the advancing age at which Nobel laureates reach their prize-winning breakthroughs. It appears that young scientists need more time to master the growing body of knowledge that lies between them and the frontier of a field.

Scientific discovery drives technological innovation, which in turn drives productivity growth. According to a recent study, the average researcher in the 1930s generated more productivity growth than do 20 researchers today. American spending on research and development has grown ten-fold since the 1950s. American productivity growth, meanwhile, has shrunk. Slowing productivity growth and slowing economic growth go hand in hand. Continue reading “Artificial Intelligence Will Benefit Us Immensely—If We Don’t Get in the Way”

In-N-Out Asks Supreme Court to Look at Labor Regulators’ Mistreatment of Commercial Speech

innout“It’s the only fast food chain I actually like.” That was Anthony Bourdain’s verdict on In-N-Out Burger. It is not an unusual opinion. Thanks to its clean halls, happy employees, and fresh produce, In-N-Out enjoys fanatical brand loyalty. Its new locations attract crowds and helicopters. Its drive-thru lines are measured from space. It is acclaimed far beyond its Southern California homeland.

In-N-Out is not just popular; it’s distinctive. Each location is a kind of motor oasis. The building is decked in neon lights, glossy tiles, and palm-tree listellos. The servers wear white uniforms and soda-jerk hats. The menu is little more than a hamburger, a cheeseburger, fries, and a milkshake. The look is classic. The feel is easy. The faithful are ecstatic. In-N-Out is a Norman Rockwell painting, The Endless Summer, and Saint Becket’s shrine rolled into one. Continue reading “In-N-Out Asks Supreme Court to Look at Labor Regulators’ Mistreatment of Commercial Speech”

Big Business Will (Probably) Save Us

corporateHQIn the 1960s and 1970s, as South Korea and Hong Kong liberalized, India persisted in Jawaharlal Nehru’s vision of state planning and protectionism. No one deserves more blame than Nehru’s daughter, Indira Gandhi, the nation’s third prime minister.

One of Gandhi’s many sins was to limit capital investment. Most factories could not contain more than a few hundred-thousand dollars’ worth of equipment. At its height this control affected more than 800 products, including car parts, clothes, shoes, toys, and toothpaste. While China gained an economic foothold exporting cheap consumer goods, India could not even produce pencils efficiently.

By 2005 large firms employed more than half of China’s manufacturing workers, but only about ten percent of India’s. This is one reason why China’s GDP per capita was equal to India’s in the 1970s, but triple India’s by the 2000s.

In the abstract, at least, most Americans like small businesses and dislike big corporations. In Big is Beautiful: Debunking the Myth of Small Business, Robert D. Atkinson and Michael Lind argue for an attitude adjustment. Continue reading “Big Business Will (Probably) Save Us”

Wake Up, California Millennials: Rent Control is a Generational Con Game

In 2012 the IGM Forum polled some economists about rent control. Each economist was asked to agree or disagshell gameree that rent control promotes affordable housing, and to state the degree of confidence, on a scale of 1 to 10, he invested in his response. Weighted for confidence, 95 percent of the economists disagreed, four percent felt unsure, and one percent agreed. Support for rent control received one vote, with a confidence of 3.

Nobel laureate Angus Deaton, a dedicated analyst of the causes of poverty, voted “strongly disagree,” confidence 9. Richard Thaler, another Nobel Prize winner, likened rent control to geocentrism.

In 1995 California barred cities from imposing rent control on houses or new apartments. This November Californians will vote on Proposition 10, a repeal of that ban. California’s ruling party asked its executive board whether to endorse the measure. Ninety-five percent said yes. Continue reading “Wake Up, California Millennials: Rent Control is a Generational Con Game”

Europe’s Antitrust Demagogues Shake Down Google

thumbnail_imageToday the European Union imposed a $5 billion fine on Alphabet Inc., owner of Google, for antitrust violations. The punishment illustrates the power of that most abiding of monopolists, government, to extract rents and impose deadweight losses.

The EU’s core theory is that Google improperly pressures smartphone manufacturers to bundle Google apps with Android, Google’s free smartphone operating system. Continue reading “Europe’s Antitrust Demagogues Shake Down Google”

Thanks to the Court, Justice Done in AT&T/Time Warner Merger Challenge

DOJOur nation’s federal prosecutors recommend themselves as dispassionate champions of the law. As then-Attorney General Robert Jackson put it: “Although the government technically loses a case, it has really won if justice has been done.” The government, he said, should seek “truth and not victims.” The United States’ top lawyers repeat these sentiments often.

For the Justice Department’s Antitrust Division, seeking “truth and not victims” means prosecuting cases that benefit consumers. And it means winning with strong economic analysis rather than with legalistic maneuvering or chicanery.

By this measure the government’s lawsuit to block the merger of AT&T and Time Warner was a shambles. Continue reading “Thanks to the Court, Justice Done in AT&T/Time Warner Merger Challenge”

Solicitor General Inveighs Against Antitrust-Law Revolution in SCOTUS “Apple v. Pepper” Amicus Brief

app storeEd. Note: With this post we welcome WLF’s newest attorney, Corbin K. Barthold, as a WLF Legal Pulse author.

Many legal disputes pit the affective and sometimes utopian thinking of lawyers against the statistical and efficiency-oriented thinking of economists. The archetypal lawyer subscribes to the maxim ubi jus ibi remedium—“where there is a right, there is a remedy.” The archetypal economist is more likely to agree with Oliver Wendell Holmes, Jr.’s view that “such words as ‘right’ are a constant solicitation to fallacy.”

In antitrust cases, at least, the Supreme Court often sides with the economists. Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), is a good example. It says that only the direct purchaser of an abusive monopolist’s goods or services may sue the monopolist for violating the antitrust laws. Someone who buys a product only indirectly—someone who, say, buys from a retailer who buys from an antitrust-law-violating manufacturer—is out of luck. She may not sue even if the retailer incorporated some of the supracompetitive wholesale price into the retail price. It would be too difficult, Illinois Brick concludes, to accurately apportion damages among distributers, retailers, and consumers. Continue reading “Solicitor General Inveighs Against Antitrust-Law Revolution in SCOTUS “Apple v. Pepper” Amicus Brief”