I’ve previously tiraded about paternalism in my beloved Chicago. I won’t beat that dead horse, but I just can’t ignore the latest liberty restriction imposed by our esteemed aldermaniacs. The members of the aldermen’s Buildings Committee recently voted to extend the city’s smoking ban to performers in theatrical productions.

What a freakin’ embarrassment.

The aldermen remind me of the administrators of my Baptist high school, who routinely censored student theatrical productions. Lest we offend our more sensitive brethren (i.e., those who might give money to the school), we were required to refer to the elderberry wine in Arsenic and Old Lace as sassafras tea. The big dance in Meet Me in St. Louis became a banquet. I’m not kidding. Good Baptists don’t drink or dance.

Not surprisingly, the censored productions lost a bit of their zip and we performers looked like idiots. But there was an even more negative result. A large proportion of my classmates, long forced to adhere to a ridiculously stringent code of conduct, eventually turned into wild heathens. The continual top-down control wore on them until they could take it no more and they rebelled, throwing out the baby of Christian belief itself with the bathwater of one particular brand of Baptist fundamentalism. It’s tragic, but it’s an inevitable result of overly stringent conduct restrictions.

This is one of the reasons I oppose smoking bans: they make smoking more attractive to the most impressionable folks out there, rebellion-prone youngsters. I also oppose them because they remedy no genuine technological externality. People who choose to go to an establishment that permits smoking have decided to accept the risks, inconveniences, and benefits (yes, for some folks there are some) of a smoking-permitted zone. The owner of the property at issue has every incentive to maximize the attractiveness of her venue by selecting the optimal smoking policy.

When it comes to censoring smoking in theatrical productions, these arguments are even stronger. A ban on portrayals of smoking was the end of the slippery slope in the film Thank You for Smoking, in which an anti-Tobacco senator tried to order Hollywood to doctor old movie star portraits so that the actors’ cigarettes were replaced with innocuous items like candy canes and chopsticks. The notion that the government would try to censor art (and history) as part of its anti-smoking crusade seemed ridiculous enough to evoke a few laughs. Now it’s for real, and it’s bound to create more smoking rebels.

With respect to externalities, any theatre patron who is offended by onstage smoking — either because of the “risk” presented (by the way, there’s not one) or the message conveyed — can ask in advance whether the production involves smoking and can spend his entertainment dollars elsewhere if he’s so inclined. People routinely decline to see plays that involve offensive elements. (Should the Board of Aldermen protect the easily offended from The Vagina Monologues?)

Theatre critic Terry Teachout had it right in this weekend’s WSJ:

To perform “[A] Streetcar [Named Desire]” without cigarettes, or “Twelve Angry Men” without a smoke-filled jury room, is to insult the intelligence of audiences who come to see these well-known plays expecting to see them performed as written. … Such a ban isn’t unconstitutional — but it’s stupid, which is even worse. It makes Chicago look like a backwoods burg full of philistine pols with nothing better to do than mind other people’s business. … [S]ince when did Carl Sandburg’s City of the Big Shoulders turn into Nannytown, U.S.A.? As for those Chicagoans who don’t care to have their nostrils brutalized by the smell of a lone cigarette burning halfway across a crowded theater, they have an inalienable right of their own — the right to head for the nearest exit. I urge them to exercise it and leave the actors to go about their stage business undisturbed.

Well said.

See here.

My favorite line of the exchange comes from Rizzo in response to Thaler’s inclusion of private choices by firms to adopt automatic savings plans as examples of “libertarian paternalism”:

“Is New Paternalism primarily about advising private individuals and firms? If so, why use a political term — libertarian — to identify it?  It is simply a management-consulting philosophy.”

Really nothing new in the exchange — but still entertaining.

My apologies for the blogging hiatus. I’ve spent the last ten days grading, traveling, grading, being sick, and hanging out with family in sunny San Diego. But now the grading is done, I’m feeling better, and I’ve had an opportunity to do a little blog-speed catch up. I guess the biggest antitrust news is Twombly, so I’ll start there.

David Fischer has all the Twombly reactions covered over at Antitrust Review. The reactions range from applause (see, e.g. Richard Epstein’s take in the WSJ, indifference (Einer Elhauge guest-blogging at VC describes the decision as “quite insignificant” to the dismay of some commentors), to critical (see, e.g. Randy Picker’s take here).

While I agree with the commentators that have noted that Twombly’s primary legacy will be procedural — the death of the “no set of facts” language in Conley — Twombly’s antitrust-specific relevance will be a function of how courts scrutinize conspiracy allegations at the motion to dismiss stage in applying the “plausibility” standard. The “plausibility” standard may amount to the “plus factor” standard. Maybe something less. Maybe more (but I doubt it). Bottom line: I’m satisfied with the “plausibility” standard, and register myself with the pro-Twombly camp, but it will be interesting to watch how Section 1 claims play out at the dismissal stage over the next few years. For that matter, it might be interesting to see how the “plausibility” standard is applied in non-conspiracy settings as well.

But how does Twombly fit into the recent and revived SCOTUS antitrust jurisprudence? I’ve been thinking a bit about this question and how Twombly maps into themes emerging (or possibly to emerge!) from the jurisprudence (or jurisprudence-to-be) embodied by Weyerhauser, Leegin, Credit Suisse, and maybe even going back to the 2005-06 term to include Independent Ink, Dagher, and Volvo Trucks. As far as extrapolating larger trends from the recent decisions, it is obviously a bit early since many of these cases are still pending and the Court may grant cert on a reverse payment case, but I’ve got a few ideas. Ok, one idea. And its still half-baked (a sensible Leegin decision that relies on empirical evidence regarding the anticompetitive theories of RPM could help the baking process…).  But I’m going to be writing up some thoughts on the latest SCOTUS term this summer for an upcoming issue of Competition Policy International, and will be previewing them here in the weeks to come (likely after having the benefit of the Leegin decision).

I would be curious to know what laptops folks out there are using (with success).  I am shopping for a lightweight (lightweight!) laptop to tote around to conferences and such, and I have absolutely no clue where to start.  I do not use fancy stuff – just Word, Excel, Powerpoint.  And I refuse to use a Mac.  I fear change.  Old dog, new tricks, etc. etc.

Thoughts?

Frankly, I thought the movie, The Corporation, was unabashedly abysmal.  It was a childish caricature, exhibiting no understanding by the filmmakers (or most of the interviewees) of the law, economics, or nature of corporations–to say nothing of capitalism.  The movie is unsophisticated, anti-capitalist tripe.  See Seth Weinberger’s review of the movie from the journal Political Communication for the longer version of this analysis. 

That said, the filmmakers have just provided me–and now you–with one of the most remarkable three minutes of video footage I’ve ever seen:  The Milton Friedman Choir. 

Milton Friedman on corporations says,
Corporations have no social duty
Except to those who own their stock.

Hat tip:  Henry Manne.

As we know, News Corp. has made a bid for Dow Jone, offering $60/sh for the outstanding Dow Jones stock.  The Bancroft family, however, who controls at least a majority of the Dow Jones voting stock, has indicated clearly that it will not vote in favor of this offer, such that the offer, as it currently stands, has no chance of coming to fruition.  News Corp. can up the offer, change the offer, make the offer again, but, without the majority vote from Bancroft (or some percentage of the 52% of votes controlled by the Bancroft block), the News Corp. offer is dead in the water.

The WSJ reports that:
The [Dow Jones] board’s position is that to assess the offer at this point would be futile if the controlling shareholder would vote it down anyway. That is a safe haven — legal experts agree that the board has no obligation to act — but legal precedent indicates that the board could make a recommendation at any time.

Not quite right.  The board absolutely has the obligation to look at the offer.  The judiciary is very deferential only to boards as a presumptive matter.  If a complaining minority shareholder can show that the board did not act in good faith, was not grossly negligent in becoming informed, or acted irrationally, the board may find itself under close scrutiny.  Not assessing an offer at all does not seem to be an act in good faith.

I understand the point that the controlling shareholders have indicated that they would vote down the offer.  That, however, does not change the board’s obligation to do its job.  Mind you, I am not saying a company has to put itself up for play whenever a bid comes in, particularly if the majority of the s/h make clear they are not going to support the bid. Moreover, I am not saying that the DJ board needs to pull in a raft of investment bankers to do fairness opinions on the offer being made.  However, the board members cannot just e-mail each other and say “we’re not for sale, right?”  Even if the board cannot stop the majority s/h from acting or cannot force the majority s/h to support a bid, a board acting “in good faith” is going to at least keep an internal assessment of the offer ongoing, such that if the offer reaches a point where it is just too good too ignore, the board can speak up.  The question at that point then becomes how far the board has to go in agitating in favor of the bid….
Stay tuned.

The FTC’s Bureau of Economics has scheduled a conference that looks very interesting and concerns a subject near and dear to my heart: antitrust in the supermarket!  Sadly, I will not be able to attend as I am going to take a little bit of a paper grading/ battery re-charge vacation for the next few weeks before starting my full-time tour of duty at the Commission.  BE has put together an excellent program:

This one-day conference will look at antitrust analysis of the grocery industry including both historical analysis and analysis of current methods. The roundtable will include both paper presentations and panel sessions. The paper presentations will include recent academic work related to competition in the grocery store industry. The panels will include discussions from various people including academics, antitrust professionals and industry professionals.

Topics will include historical review of the Commission’s actions in this industry, current economic analysis of grocery and retail competition, and recent work on new methods for analyzing grocery and retail competition.

Participants include David Bell (UPenn Wharton), Arie Beresteanu (Duke), Tim Brennan (UMBC), Dennis Carlton (DOJ), Adam Copeland (BEA), Benoit Durand (UK Competition Authority), Paul Ellickson (Duke), Jim Fishkin (Dechert), Tom Holmes (Minnesota), Dennis Lu (Canadian Competition Authority), Dan O’Brien (DOJ), David Scheffman (LECG), Jon Seaton (Loughborogh University), Catherine Tucker (MIT Sloan), Raphael Thomadsen (UCLA), and economists from the FTC.

TOTM readers and … well … maybe just me … might have noticed that the conference agenda does not appear to include anything on a few of my favorite topics:

1. Klein & Wright, The Economics of Slotting Contracts (forthcoming JLE in August).
2. Wright, Slotting Contracts and Consumer Welfare (forthcoming Antitrust LJ).
3. Wright, Antitrust Analysis of Category Management: Conwood Co. v. United States Tobacco (working paper, 2007).

As you may know, this past Friday we (Geoff and Josh) organized the inaugural GMU/Microsoft Conference on the Law and Economics of Innovation. Overall, we were extremely pleased with our first entry in this conference series, The Regulation of Innovation and Economic Growth. We had about 130 register for the conference, including many high level FTC and DOJ officials, academics, and industry representatives. In the end we had about 95 attendees. We also hosted a dinner for about 45 Washington VIPs (several FTC folks, a federal judge, prominent attorneys, representatives from USTR and Commerce, etc.) the evening before at Citronelle. A good time and good conversation were had by all.

The conference started off on the right foot with an opening address from Bob Cooter (Berkeley Law) which pointed to institutional and legal solutions to the “double trust problem” in innovation as a primary factor in unleashing entrepreneurial forces in countries facing high levels of poverty and stagnant growth. The basic point was that various institutions—including importantly IP laws—serve to facilitate the essential melding of ideas and capital necessary to promote innovation and to encourage economic growth. The talk was derived from a book Cooter is currently writing (with Hans-Bernd Schaefer), two draft chapters of which are available here.

The three subsequent panels discussed the innovative process & bundling in technology markets, IP Reform, and Antitrust Regulation of Innovation. The papers are available here. We both took notes on the presentations and share some reflections on the papers and discussions below the fold.

(more…)

From the Conference on Empirical Legal Studies Website:

The Second Annual Conference on Empirical Legal Studies will be held at New York University School of Law in New York, New York on Friday November 9 and Saturday November 10, 2007. The conference will feature original empirical and experimental legal scholarship by leading scholars worldwide, from a diverse range of fields.

The conference is jointly organized by Cornell Law School, NYU School of Law and the University of Texas School of Law. The organizers of this year’s conference are Jennifer Arlen (NYU), Bernard Black (Texas), Theodore Eisenberg (Cornell), Michael Heise (Cornell), and Geoffrey Miller (NYU).

This conference is the first event organized by the newly-created Society for Empirical Legal Studies (SELS).

For details on submitting papers, please click on “Submitting Papers” in the box to the left of this page.

The deadline for submissions is July 1, 2007.

See here for the webcast and here for the agenda. Fellow bloggers Bainbridge and Ribstein participated as well as several other corporate law heavyweights.

Is available here. Here is the description:

Congress passed the Sarbanes-Oxley Act in response to major corporate and accounting scandals–and many consider the act to be the most significant change in corporate governance and securities regulations in the past seventy years.

SOX requirements have brought about far-reaching changes for public corporations, private corporations, and nonprofits. Every manager and director should be aware of how the business landscape will be affected.

The Complete Guide to Sarbanes-Oxley answers in nontechnical language such questions as:

• What does SOX mean to me now?

• Do I have to worry about it?
• How much legal and accounting help do I need?
• What information technology requirements will I face?

If you’re a business owner, you need The Complete Guide to Sarbanes-Oxley!

Interested readers may also want to take a look at Butler & Ribstein’s AEI analysis of the Sarbanes-Oxley Debacle as well as Kate Litvak’s latest empirical examination of the affect of SOX on the cross-listing premium.

One nice thing about being a legal academic is that you can diversify your political portfolio. By that, I mean that you become somewhat indifferent to who’s in office. If it’s folks you agree with, then you’re happy because your preferred policies are being implemented. If it’s folks with whom you disagree, then you’re happy because your job (criticizing bad policy) becomes easier.

I was reminded of this ability to “make lemonade” as I perused the latest issue of Antitrust, the magazine of the ABA’s Antitrust Section. That issue, which is dedicated to “Antitrust in the New Congress,” is chock full of interesting stuff. Among the most intriguing pieces is an interview with Senator Herb Kohl (D-WI), the new chairman of the Judiciary Committee’s Antitrust Subcommittee.

Senator Kohl, it seems, is going to make my job easier.

Over the next few days, I’ll highlight a few of Senator Kohl’s thoughts on antitrust policy. (There’s too much here for a single blog post.) We begin with airline mergers.

Orlando-based AirTran, a discount airline, has been trying for quite some time to acquire Midwest Airlines, a Milwaukee-based airline known for its fantastic service. Midwest has repeatedly rebuffed AirTran’s offers, so AirTran has made a tender offer for Midwest stock. (The current offer expires on May 16.)

Senator Kohl is opposed to the merger and plans to use his antitrust influence to try and thwart it. He explains:

In the case of AirTran’s acquisition plans, I think we have been very clear that if they follow through with their intent to purchase Midwest, they will face hearings in our committee. Midwest is my home state’s local airline. It is headquartered and has its main hub in Milwaukee. And the quality of service they offer to travelers is superior. Their service are [sic] considered to be among the very best in the industry and they have devoted customers like you rarely see in most businesses and certainly not in the airline business. People who use Midwest Airlines truly appreciate the quality of their service in every way — from the type of airplane that they use with only two seats across to the frequency and numbers of destinations they serve from their hubs, which is so important to those of us who live in Milwaukee, to their competitively priced air fares.

So here we have an airline that offers reasonable prices, excellent service in terms of the pilots and the attendants, and gives Wisconsin residents like me excellent connections to the major business centers around the country. Most important to Wisconsin’s economy, Midwest Airlines is a local business, employing thousands of people in high quality jobs, so this airline is really appreciated by all of us in our state.

And now AirTran wants to buy it. And so, we wrote a letter to AirTran, just a couple of days ago. I wrote not only as a Senator, but also as a consumer. We think this would be a bad deal for consumers. We understand it might be good for AirTran’s own business interests and bottom line, but it would harm many thousands of travelers in Wisconsin and elsewhere in terms of quality of service. And in fact, the merger is being opposed by Midwest management.

So as the head of the Antitrust Subcommittee, you can be sure that I’m going to be looking at this deal very carefully should it go forward, including having hearings at our Subcommittee regarding what this deal would mean for consumers and the thousands of people that rely on this excellent airline.

In general, we care about competition in aviation because this industry is so critical to our country’s economy. Airlines are America. America is airlines. Of course, you can say that about other industries, too. But, with respect to airlines, in our modern economy and society, people have to travel. In today’s modern times, the airlines are the lifeblood for our nation’s commerce and our citizen’s [sic] travel.

And therefore, those of us who regulate the industry or have oversight over the industry have to do everything we can to see to it that there is sufficient competition in this industry.

Sen. Kohl’s comments sound like the sort of thing I hear from my non-lawyer friends when I tell them I teach antitrust law. The remarks demonstrate almost no understanding of antitrust’s role and purpose and instead treat antitrust as a just another tool for protectionism.

Sen. Kohl never says a word about the only real point of competition between Midwest and AirTran — i.e., the routes served by both airlines. That’s probably because the airlines compete on so few routes. Comparing the Midwest route map (click on “Midwest Airlines Route Map”) with the AirTran route map (run your cursor over the cities to see the routes from each) reveals minimal competition between these two airlines. Almost all Midwest flights originate or terminate in Milwaukee or Kansas City. AirTran, which has dozens of routes from Atlanta and Orlando, appears to offer only six flights from Milwaukee and four from Kansas City. Midwest flies one Atlanta route and two Orlando routes. Because the two airlines serve different areas (and the areas where there’s significant overlap are subject to intense competition from other airlines), a combined AirTran/Midwest would not have the power to reduce output and raise price above competitive levels. That is all antitrust cares about.

It is not, however, the only concern of politicians who would use antitrust law to achieve non-antitrust ends. Sen. Kohl emphasizes a number of other concerns. For example:

The merger might result in a change to Midwest’s fancy service. Sen. Kohl is exactly right that Midwest offers superior service — e.g., all business class seats, warm chocolate chip cookies, etc. Midwest has become a takeover target, though, because its stock price appears to be low relative to what it could be if it were run differently. In other words, the current service/price combination is not squeezing the maximum amount of value out of Midwest’s assets. AirTran believes, and is willing to bet money on the fact, that it can generate more profit from Midwest’s assets. Absent some ability to charge supracompetitive prices (and, for reasons stated above, this merger would not create such ability), AirTran could do this only if it offered a service/price combination that is more desirable to consumers than that being offered by Midwest. So, while the level of service on Midwest flights might fall post-merger, the total consumer surplus (including that which would be created by eliminating the all-business seating and thereby increasing the number of consumers on each flight) would increase. Antitrust law should not bar this expansion of overall consumer surplus.

The merger might reduce jobs in the Milwaukee area. At least Sen. Kohl is frank about his real concern: “Most important to Wisconsin’s economy, Midwest Airlines is a local business, employing thousands of people in high quality jobs….” The problem is that antitrust is not aimed at protecting jobs. It is an incredibly blunt job-protection tool. Moreover, if antitrust recognized potential job losses as grounds for blocking a merger, practically every merger could be barred. After all, it is the elimination of redundancies that creates the efficiencies that make mergers attractive in the first place.

The merger is opposed by Midwest’s management. Duh. AirTran wants to buy Midwest because it perceives Midwest’s stock price to be low relative to the value that could be produced if the firm were managed differently. That means that AirTran believes Midwest management is doing a bad job, and that current Midwest management will almost certainly be replaced in the merged company. Of course Midwest management opposes this merger! Opposition by a laggard management, though, provides no reason for antitrust authorities to block a corporate combination.

The merger involves a crucial industry. This is the argument of last resort for antitrust interventionists: Even if antitrust intervention would not normally be appropriate here, we must step in in this case because the industry at issue is just so important! We’ve recently seen the argument in connection with oil and gas mergers, but I’ve never seen it applied to airlines — especially in such dramatic terms: “[W]e care about competition in aviation because this industry is so critical to our country’s economy. Airlines are America. America is airlines.” C’mon.

Just imagine what Sen. Kohl will have to say about this.

At his new and excellent blog Hodak Value, frequent TOTM commentor Marc Hodak offers the following in response to a post at the Daily Kos implying that Wal-Mart’s treatment of its workers should give rise to a level of concern similar to that of the Rwandan genocide:

My standard for concern about an organization is somewhat different. If an organization has people beating down the doors to get in, it’s probably not a problem how they’re treating their workers. If an institution has people risking their lives to flee, that’s probably an institution that needs some outside monitoring.

Hodak’s blog is up and running and has lots of great stuff. Check it out.

But back to Wal-Mart for a minute. Hodak’s post got me thinking about some of much milder Wal-Mart rhetoric that has started to fly around since the campaign has started to heat up. The most recent example is presidential hopeful Hillary Clinton’s answer to the “Wal-Mart Question” in the recent debate where she describes Wal-Mart as “a mixed blessing.” Here’s the whole thing:

Well because when Wal-Mart started, it brought goods into rural areas, like rural Arkansas where I was happy to live for 18 years. And it gave people a chance to stretch their dollar further. But as they grew much bigger, though, they have raised serious questions about the responsibility of corporations and how they need to be a leader when it comes to providing health care and having safe working conditions and not discriminating on the basis of sex or race or any other category. Brian, this is all part, though, of how this Administration and corporate America today don’t see middle class and working Americans. They are invisible. They don’t understand that if you’re a family that can’t get health care, you’re really hurting. But to the corporate elite and to the Administration and the White House, you’re invisible.

Clinton starts with the sensible and obvious proposition that Wal-Mart does do at least some good. But notice how the benefits are trivialized: A handful of rural consumers get goods that could not have otherwise and folks can have a “chance to stretch the dollar further.” But the downside is not so trivial, Clinton tells us, because it is “serious problem” that is part of a plot between the Administration and Corporate America to leave middle American behind. Of course it is!!! By the way, Wal-Mart causes crime too.

Luckily, the market provides ample data to test these assertions and distinguish the hand-waving proclamations from the truth.  But who needs evidence when one can rely on the the tried and true causal relationship between firm size and evil: “as they grew much bigger, though, they have raised serious questions about the responsibility of corporations and how they need to be a leader when it comes to providing health care and having safe working conditions and not discriminating on the basis of sex or race or any other category.”

You see, Wal-Mart was all good in its nascent stages when it was not so big  — Guilt-free low prices for families for low and moderate income families!  But those, you see, were the good ol’ days before it grew.  You know, the days when Clinton sat on Wal-Mart’s board, a.k.a. the days when an attack on Wal-Mart and free trade weren’t in the compulsory portion of the campaigning program.  I don’t mean to just pick on Clinton.  Obama has taken the bait to engage in a little Wal-Mart bashing as well at least once.

Here’s a quote from Hillary Clinton from a 1996 interview on C-Span just after endorsing the proposition that ” the unfettered free market has been the most radically disruptive force in American life in the last generation,” where she discusses the good ol’ days of Wal-Mart:

One of the things that Sam Walton believed in was profit sharing. I mean, part of the reason that I appreciated his business philosophy is that the workers at Wal-Mart were able to share in the profits, and the executives, when I was on the board, were very careful to keep their perks down — the kind of offices they had, the way that they lived and the way that they treated their fellow associates at every level in the business. I thought that was a good example.

But then Wal-Mart grew, became evil, and became a serious problem. Never mind the giant consumer benefits that flow from Wal-Mart’s competitive pricing. For example, low generic drug prices. Or how about Hausman and Leibtag’s estimate of consumer benefits from big box retailers that amounts to approximately 20.2% of the average food expenditures. For consumers in the bottom income quintile, this amounts to a welfare increase of approximately 6.5% (and 1.5% averaged across all consumers).  We should all be so lucky to have mixed blessings like this.

But I should be fair to Clinton’s case against Wal-Mart.  Here goes.   Clinton points to three things: (1) health care; (2) working conditions; and (3) discrimination. Oddly, she seems to believe that there is some lcausal link between Wal-Mart’s growth and this trio. I’m fairly certain there is no evidence of that but would love to see it if it is out there. As far as (2) and (3) go, I don’t think any Wal-Mart supporters have argued that Wal-Mart should be immune from labor or discrimination laws. But the public policy debate seems to focus on whether Wal-Mart has some special obligation on these issues because of its size. As Hodak points out, the fact that there appears to be a significant demand for jobs at Wal-Mart is certainly relevant to this analysis, e.g. 15,000 applicants for 400 jobs at the new Chicago Wal-Mart.

So, how about that evidence about Wal-Mart any health care? Jason Furman (NYU, and former economic adviser to John Kerry) offers a thorough review of the available evidence on health care and concludes that “Wal-Mart’s health benefits are similar to or better than benefits at comparable employers.”

Being election season and all, I know I am barking up the wrong tree for wanting more than soundbite treatment of these issues from politicans, e.g. Clinton’s plea that Brian Williams and America see the Wal-Mart issue has part of a conspiracy by the “Administration and corporate America” to ignore and exploit middle class and working Americans. A welfare increase of 6.5% for the lowest income quintile is enormous. How many government programs create that kind of welfare benefit? Can you name one? If there are serious arguments to be launched against Wal-Mart, and surely some of these politicians are serious (right?), they must embrace the reality that Wal-Mart has produced enormous benefits for Americans as a whole and especially lower and middle-lower class Americans.

Furman addresses this issue head on:

Well-intentioned Wal-Mart critics are sincerely interested in an America where workers are better off. They understandably want higher wages and higher benefits for everyone. Wal-Mart’s low prices help to increase real wages for the 120 million Americans employed in other sectors of the economy. And the company itself does not appear to pay lower wages or benefits than similar companies, or to cause substantially lower wages in the retail sector. Although there may be a dispute about the magnitude of the cost savings for consumers, no one disputes that they are large. In contrast, the effect on workers is relatively smaller and far from obviously negative.

There is relatively little scope to pressure Wal-Mart – and almost no scope to pressure other smaller and less visible companies – into paying higher compensation. Even if the campaign resulted in, say, some expansion of health benefits to placate one of Wal-Mart’s most visible public relations problems, the result could well be lower wages. At worst, to the degree the anti-Wal-Mart campaign slows or halts the spread of Wal-Mart to new areas, it will lead to higher prices that disproportionately harm lower-income families.

In the process, some of the campaign’s rhetoric risks undermining public support for making work pay, and in particular for publicly provided health benefits for less-skilled and less experienced workers who earn lower wages. A much better strategy would be to recognize that Wal-Mart is a progressive success story. By acting in the interests of its shareholders, Wal-Mart has innovated and expanded competition, resulting in huge benefits for the American middle class and even proportionately larger benefits for moderate-income Americans.

Obama’s lead economic adviser is Austan Goolsbee — which gives me hope that this is some sort of election rhetoric from Obama that he doesn’t really mean because he gets basic economics.  Maybe Clinton should hire Jason Furman?

David Fischer brings my attention to testimony on HB 1902 which would prohibit “payment for delay” settlements between brand name and generic drug companies.  FTC Commissioner Leibowitz testified on the position of my new employer here.

I also learned from reading Scott Hemphill’s testimony and submission (Columbia Law), which relies upon and includes some of his excellent work documenting the characteristics of these settlements and analyzing their effects.  If you have time to read more than Scott’s 138 page submission … check out Phil Proger’s (JDRP) submission.  Here is Proger’s punchline:

I conclude (1) that reverse payments are not “reverse” and not always anticompetitive; (2) that the proposed solution is not a competitive solution at all, and is contrary to the historical role of Congress in enacting antitrust legislation and the FTC in conducting antitrust enforcement; and finally, (3) that adopting a broadly inclusive per se ban on any settlement “for value” will have unintended consequences that could actually inhibit incentives for generic entry, and may alter the balance between drug innovation and affordability that Hatch-Waxman currently embodies.  For all of these reasons, it is my view that issues raised by H.R. 1902 warrant further study. H.R. 1902 would adopt for the first time the blunt instrument of a per se antitrust rule against specific conduct in a specific industry. Such a step would be a departure for Congress, which has previously (and wisely) decreed that antitrust practices should be measured by competitive standards.