Writing in the Wall Street Journal, Richard McKenzie recommends to Lina Khan that she watch Shark Tank. Two slices:
Never mind that in reality Amazon has a gazillion dedicated customers who search out good deals from millions of sellers worldwide. Antitrust enforcers seemingly can’t abide such a large company. Ms. Khan has even proposed restricting the deals available to buyers on the platform.
This is because Ms. Khan and like-minded regulators are aiming for what they consider market nirvana: perfect competition. This is an entirely theoretical market structure characterized by numerous producers and zero entry costs. The more fragmented and easy to enter a market is, the more efficient in the eyes of an antitrust enforcer. But real-world investors like Mr. [Kevin] O’Leary would disagree.
Mr. O’Leary’s questioning exposes the soft underbelly of progressive antitrust theory. The cruel market reality that Mr. O’Leary understands (and that antitrust enforcers like Ms. Khan seem not to) is that highly competitive markets are the least friendly to investors and consumers. As economist Dwight Lee and I have argued, if an investor gets in on a product in such a market, with signs of future profitability but no entry costs, imitators will immediately spring up. They’ll enter without having to pay the development costs, then expand supply and depress prices to the point that only the imitators’ costs can be recovered—not the original innovators’ and investors’, which can be much higher.
No investor in his right mind would knowingly put his money in a market like that. He might as well torch the cash up front. In this way, a perfectly or even highly competitive market is the least efficient and welfare-enhancing of all market structures, including a monopoly.
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When Ms. Khan attacks successful companies like Amazon, she is dampening the ability of today’s innovators to attract scarce development funds from people like Mr. O’Leary. That’s a threat to consumers.
The ultimate objective of an economy is not to provide jobs per se, but to improve overall living standards. This happens with an ever-increasing availability of quality goods and services that people voluntarily purchase to enrich their lives. Good jobs are a means to this end; they are not the end itself. This reality is easily proven by asking someone who loves his job if he’d continue to do it if it paid nothing. Virtually everyone’s honest answer would be no.
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The best job-creation policy is a strong economy. The government should be content to create a level playing field with transparent rules and strong protection of property and contract rights.
And Vero here continues her just criticism of industrial policy.
David Henderson celebrates the wonders of entrepreneur-driven technological improvement.
Here’s a letter in today’s Wall Street Journal by Joel Zinberg:
Marian Tupy and David Deutsch’s op-ed “We Will Never Run Out of Resources” (July 21) recalls the work of Julian Simon. The late economist famously bet doomsayer Paul Ehrlich in 1980 that the prices for five metals wouldn’t increase over a decade, even if the world’s population grew. Ten years later, Simon won the wager. Prices for the metals declined sharply.
Simon’s book “The Ultimate Resource” debunked predictions that population growth and resource scarcity would make modern civilization unsustainable. Population growth is a boon, it argued, since people and markets would innovate out of scarcities and environmental problems and improve well-being. The Competitive Enterprise Institute gives an annual Julian L. Simon Award to an individual whose work continues to promote the vision of man as the ultimate resource.
Joel M. Zinberg
Senior fellow, CEI
New York
Mr. [Kristian] Andersen’s messages confirm that senior scientists who controlled the purse strings of large funding bodies prompted them to draft the paper after a conference call on Feb. 1, 2020. They were Dr. Fauci, Dr. Collins and Jeremy Farrar of the Wellcome Trust. Shortly before their paper went public, evolutionary biologist and virologist Edward Holmes of Sydney University reported to his fellow authors that “Jeremy Farrar and Francis Collins are very happy” with the final draft. Two of the authors wrote in private messages that they had rushed their paper out under pressure from unidentified “higher-ups.” The role of these senior scientists went unacknowledged in the paper.
When asked at a July 11 subcommittee hearing—before the latest release of messages—about the contrast between their public and private opinions, one of the authors, virologist Robert Garry of Tulane University, replied: “I was doing what scientists often do, and that is take a devil’s advocate position.” Mr. Andersen said that changing your mind in the light of new evidence “is simply the scientific process.”
Yet the newly revealed messages show that the scientists didn’t change their minds. They continued to advocate privately for the devil even after a preliminary version of the paper went online on Feb. 16, 2020. On Feb. 20, Mr. Andersen wrote to an editor at Nature (which was offered the paper first but passed it to Nature Medicine) that new data from pangolins didn’t help refute a lab origin, adding that “we all really, really wish that we could do that (that’s how this got started), but unfortunately it’s just not possible given the data.” Another author, evolutionary biologist Andrew Rambaut of Edinburgh University, wrote: “I literally swivel day by day thinking it is a lab escape or natural.”
On April 16, a month after publication, Mr. Andersen wrote that “I’m still not fully convinced that no culture was involved” and “we also can’t fully rule out engineering”—i.e., that the virus not only was released from the lab but had been genetically manipulated there. He worried about the Wuhan lab’s research on live SARS-like viruses from bats at low biosafety levels: “it’s definitely concerning work, no question about it.”
So why did they publish a paper denying that laboratory origin was plausible? The answer may lie in their messages. In early February 2020, Mr. Rambaut wrote: “Given the s— show that would happen if anyone serious accused the Chinese of even accidental release, my feeling is we should say that given there is no evidence of a specifically engineered virus, we cannot possibly distinguish between natural evolution and escape so we are content to ascribing it to natural processes.”
Mr. Andersen replied: “I totally agree that that’s a very reasonable conclusion. Although I hate when politics is injected into science—but it’s impossible not to.” On Feb. 19, the group became aware that Mr. Farrar had signed a public letter in the Lancet “to strongly condemn conspiracy theories suggesting that COVID-19 does not have a natural origin.”
