Taste is not only a part and an index of morality; — it is the only morality. The first, and last, and closest trial question to any living creature is, ‘What do you like?’ Tell me what you like, and I’ll tell you what you are. . . . ‘Nay,’ perhaps you answer; ‘we need rather to ask what these people and children do, than what they like. . . .’ But they only are in a right moral state when they have come to like doing it; and as long as they don’t like it, they are still in a vicious state. The man is not in health of body who is always thinking of the bottle in the cupboard, though he bravely bears his thirst . . . . And the entire object of true education is to make people not merely do the right things, but enjoy the right things: — not merely industrious, but to love industry — not merely learned, but to love knowledge — not merely pure, but to love purity — not merely just, but to hunger and thirst after justice. . . . What we like determines what we are, and is the sign of what we are; and to teach taste is inevitably to form character. . . . [A] nation cannot be affected by any vice, or weakness, without expressing it, legibly, and for ever, either in bad art, or by want of art; and that there is no national virtue, small or great, which is not manifestly expressed in all the art which circumstances enable the people possessing that virtue to produce.
John Ruskin, Unto this Last, and Other Writings 234-235 (Clive Wilmer, ed. Penguin Classics 2005) (1862).
Author: Ramsi Woodcock
Categories
Ruskin’s Conservatism
As I was thinking over this, in walking up Fleet Street the other day, my eye caught the title of a book standing open in a bookseller’s window. It was — On the necessity of the diffusion of taste among all classes. ‘Ah,’ I thought to myself, ‘my classifying friend, when you have diffused your taste, where will your classes be? The man who likes what you like, belongs to the same class with you, I think. Inevitably so. You may put him to other work if you choose; but, by the condition you have brought him into, he will dislike the work as much as you would yourself. You get hold of a scavenger or a costermonger, who enjoyed the Newgate Calendar for literature, and ‘Pop goes the Weasel’ for music. You think you can make him like Dante and Beethoven? I wish you joy of your lessons; but if you do, you have made a gentleman of him: — he won’t like to go back to his costermongering.’
John Ruskin, Unto this Last, and Other Writings235 (Clive Wilmer, ed. Penguin Classics 2005) (1862).
In the event, it was tastes that diffused, and diffused up rather than down, and taste that disappeared, instead of classes.
Today’s antitrust movement loves to point to the breakup of AT&T as an example of what antitrust enforcers can do when they put their minds to it. The only problem is that the breakup of AT&T was a disaster, and The Wall Street Journal has kindly provided a new example of that today: robocalls.
The breakup of AT&T was a politically-motivated hit, a Nixon-originated project that became the only monopolization case carried through to a conclusion by a Reagan Justice Department that otherwise wanted nothing else to do with antitrust. The target was widely recognized as the standard bearer of progressive managerialism and a leader in progressive labor practices. (Remind you of some other firms that have found themselves in the cross-hairs of an otherwise do-nothing Antitrust Division today?)
The country has little to show for the breakup forty years later. It didn’t eliminate the fundamental bottleneck associated with telephony: the massive last-mile infrastructure required to get calls into consumers’ handsets. That infrastructure is today mostly owned by just three firms, the new AT&T, Verizon, and T-Mobile, because it exhibits great economies of scale.
While the breakup did bring down long-distance rates, that’s a bug, not a feature. The only reason the old AT&T charged high long-distance rates was because the company was engaged in progressive redistribution of wealth, scalping businesses and well-off long-distance powerusers to the end of providing dirt-cheap local phone access and “universal service” to the masses.
Any economist who knows his Ramsey prices will tell you that’s not the most profitable way to set your rates, because long-distance calling is a luxury, but basic phone access is a necessity (911, anyone?). To get the most profit out of the public, you want to charge high prices for the necessity–because people will pay those prices whatever they may be–and low prices for the luxury. The trouble with that from the perspective of distributive justice is that it’s a regressive rate structure: charging the masses high prices and elites low prices.
Which is just what happened after the breakup of Ma Bell.
The court and later Congress forced the Baby Bells that owned the last-mile infrastructure to connect long-distance carriers’ calls, enabling massive entry into the long-distance market and driving down long-distance rates. But consumers don’t just pay for long distance, they also must pay for basic call connection that allows long-distance calls to reach consumers’ handsets.
The price of that went up, for everyone, not just long-distance callers, because the last mile remained a bottleneck, an infrastructure so expensive that few firms can survive in the market. Which is why the Baby Bells, which controlled that infrastructure, never went away.
Liberated from a dominating headquarters weaned on a New Deal politics that demanded the sacrifice of profits in favor of progressive pricing, the Baby Bells now charged whatever they wanted. At last they could enjoy whatever cream they might be able to skim from a public that needs phone service and has nowhere to go. The fact that they dominated regional markets, but not long-distance, gave them the political cover that hulking monopoly Ma Bell never had.
Free to grow fat, they matured into the tri-opoly we have today, one that has distinguished itself in its adherence to the maxim that the greatest reward of monopoly is a quiet life by supplying America with slower mobile internet service than almost any country in the developed world.
But at least we got competition in long distance, right? Now anyone with $10,000 in working capital and a closet to store some routers can be a long-distance provider. Isn’t that a win for local self-reliance?
More like a win for fraud and robocallers, according to the Journal, in a story about the “dozens of little-known carriers that serve as key conduits in America’s telecom system,” connecting robocalls that “in total bilked U.S. consumers out of at least $38 million in 2019.”
The Journal treads lightly here–after all it’s got as much to gain as any newspaper from the current antitrust campaign against the tech giants that have out-competed the paper for advertising revenue in recent years–but it’s hard to disguise the culprit:
These small carriers took hold in the decades following the 1984 breakup of AT&T’s phone system monopoly, which was designed to lower the costs of long-distance calls. They mushroomed during the introduction of internet-based calling services in the 2000s.
The emergence of these small phone companies was in many ways a positive development for consumers who now pay less for long-distance calls. The downside is that the system wasn’t designed to discern between legitimate and illegitimate calls, which are sometimes mixed together as they are passed along. U.S. regulators generally didn’t require these carriers to block calls and in some cases forbade them from doing so as a way of limiting anticompetitive behavior. Some telecommunications experts say that opened the door for smaller carriers to hustle business from robocallers, or simply turn a blind eye to suspect traffic.
Ryan Tracy & Sarah Krause, Where Robocalls Hide: the House Next Door, Wall Street Journal, August 15, 2020.
Would there have been robocalls if we still had Ma Bell? Unlikely for a company that was so obsessed with control over its network that it famously stamped “BELL SYSTEM PROPERTY – NOT FOR SALE” on every handset in America.
(I do have to admit, however, that another communications monopoly still with us today provides something of a counterexample. The largest category of mail delivered by the U.S. Postal Service is advertising.)
Students forced to learn online are demanding tuition reductions. That is a sign that we still believe that there is such a thing as a just price.
The argument for discounts seems to be that the value of the educational product is less when delivered online, so the price should fall. The implication is that product quality, not market forces, ought to determine price.
Economics rejected just price theory when the world rejected God back at the end of the 19th century. In economics, disillusionment was expressed in the realization that price is determined by supply and demand, not value. Think of a diamond whatever you will. But if supply increases, price will fall. And if demand increases, price will rise. Like everything in a world without God, price is relative.
So the economic question posed by the switch to online education is: what’s become of the supply and demand for education in the pandemic?
As an armchair matter, the answer would seem to be: not much.
While some students might choose to forgo school because they believe the quality of online education to be poor, the poor job market suggests that many others will be choosing to return to school. And even if one grants that online teaching is poor in quality, it is more accessible, allowing students who might not have gone to school due to geographic or temporal constraints now to do so. So demand is likely unchanged.
And supply is likely unchanged as well. The poor economy may shutter some schools that were dependent on sports or housing revenues. But the online format allows others to enroll more students from distant markets.
Which suggests that price–tuition–is unlikely to be driven upward or downward by market forces, at least at the industry level.
One complicating factor is competition. The online format could potentially give students more options. It is easier to transfer from a school in California to a school in New York when all that is required is to click on a different Zoom link.
Competition tends to drive prices down. But less so in markets in which the product is highly differentiated. And product differentiation is a huge factor in education, only in education it’s called “reputation.” Students identify with an institution based on legacy status, geographic or sports affiliation, prestige, career networks, and so on, weakening their sensitivity to price in making enrollment choices. The availability of cheap financing (student loans at historically-low interest rates) further reduces the sensitivity to price.
So while competition may put some downward pressure on prices, I wonder if the effect will be large. Schools will likely be able to continue to charge the same tuition rates, despite moving online, because so few students will bail out in response that profits will remain higher than they would be were schools to discount. Indeed, the fact that students are complaining, rather than voting with their feet, suggests that the absence of discounting is not really a dealbreaker for students. It’s more a matter of justice.
But the story does not need to end with market forces. Anger creates social pressure, and that pressure is real.
Although we don’t believe anymore that there is an objectively-verifiable just price, we can still moralize about prices, using the language of progressive law and economics. We can think of the bargaining that takes place between schools and students over tuition as representing a struggle to determine how the two groups share the gains generated by education. To the extent that online education reduces quality, those gains have shrunk. (They have not shrunk at the margin, which is why price is not likely to change much. But they have shrunk inframarginally, reducing the size of the pie.)
In demanding a discount, students are arguing that their share of the gains ought to remain constant. That is, they are arguing that it is not fair to ask them to bear all of the losses associated with constraints placed on the quality of education by the global pandemic, even if market forces dictate that they should.
Schools may reply that their costs have gone up, perhaps because state funding has shrunk, and so they too are suffering losses, leaving students’ share of the gains roughly constant, and therefore just.
So the situation might look something like this:
A.O. Hirschman argued long ago that voice is as powerful a bargaining tool as is exit. Let’s see if that turns out to be true here.
Government and co-operation are in all things the Laws of Life; Anarchy and competition the Laws of Death.
John Ruskin, Unto this Last, and Other Writings 202 (Clive Wilmer, ed. Penguin Classics 2005) (1862).
Anarchy and competition are Nature.
Government and cooperation are Civilization.
One can make out the difference in the data, which describes rather nicely why the former is Death (see the part of the plot up to -2000) and the latter is Life (see the part of the plot starting from -2000, when civilization started to take off).
Ruskin also makes of regulation an axiom. He writes:
The word “righteousness” properly refers to the justice of rule, or right, as distinguished from “equity” which refers to the justice of balance. More broadly, Righteousness is King’s justice; and Equity Judge’s justice; the King guiding or ruling all, the Judge dividing or discerning between opposites (therefore, the double question, “Man, who made me a ruler . . . or a divider . . . over you?”) Thus with respect to the Justice of Choice (selection, the feebler and passive justice), we have from lego, -lex, legal, loi, and loyal; and with respect to the Justice of Rule (direction, the stronger and active justice), we have from rego, -rex, regal, roi, and royal.
John Ruskin, Unto this Last, and Other Writings 191 (Clive Wilmer, ed. Penguin Classics 2005) (1862) (emphasis mine).
To which one might append: regulation.
Thus there are two kinds of governance, that which strives only to prevent discrimination, but which otherwise is laissez faire. It is ultimately juridical in nature, directed at fairness. And then there is regulation, governance as guidance.
The implication is that good government must both equalize and guide. It must not only ensure that each member of a particular fare class has an equal chance of getting the middle seat (lex), but also command that the seat be clean, and wide, and pleasantly lit (rex).
Little wonder that a nation founded by lawyers in revolt against a king would have no concept of regulation and a burning enthusiasm for law. (That’s true across the political spectrum: the urge to “break ’em up” is bipartisan.)
The more so in light of some very bad Twentieth Century run-ins with guidance.
And yet a governance without rex does seem highly problematic, even impossible. For we do always need guidance. Here is a remarkable passage, from Lon Fuller, of all people:
When the idea of freedom from choice is introduced into a philosophic discussion it tends to carry with it overtones of morbidity, escape and totalitarianism. Yet when we encounter it in everyday life we do not view it that way; often it is welcome indeed. There is surely nothing morbid or escapist about the sense of freedom and release that a lawyer experiences when he finds a good secretary capable of taking over the hundred small decisions or choices that have to be made in managing an office and in handling routine correspondence.
There is, in fact, nothing more appalling than the thought of having to choose everything. Anyone who has read an exposition of philosophic anarchism knows what a sense of oppression comes from thinking of society’s being so organized (or unorganized) that nothing is decided in advance for the individual, so that he has to carve his own way through life without the guidance of institutions, or traditions, or legal compulsions. For the man who has to choose everything the burden of choice becomes so unbearable that choice itself loses its meaning.
The apparent contradiction between freedom to choose and freedom from choice is removed when we observe that of the two the first is primary and original, while the second is derivative and dependent for its significance on the first. Freedom from choice is meaningless if choice itself does not exist. If we feel free when we are relieved from choice, it is because we can then exercise choice in a field of our preference where we consider it important that we should decide things for ourselves.
The problem of freedom, then, is the problem of allocating choice.
Lon L. Fuller, Some Reflections on Legal and Economic Freedoms–A Review of Robert L. Hale’s Freedom through Law, 54 Colum. L. Rev. 70, 72 (1954).
The allocator, of course, is the regulator. And so there is no question whether to have rex, anymore than it is possible for each of us to choose which of a thousand components should be included in our iPhones. The inescapable question is: how to ensure that the guidance is wise?
Confucius’s reply has always sounded pretty good to me:
道 之以德、齊之以禮、有恥且格。
Confucius, Analects bk. 2 ch. 3.
Categories
The Reification of Price
Once upon a time, we believed that the law is a real thing in the world, which is why a court could say that a corporation is in Delaware and not in New York.
So too we believed that
the worth of the work may not be easily known; but it has a worth, just as fixed and real as the specific gravity of a substance . . . .
John Ruskin, Unto this Last, and Other Writings 197 (Clive Wilmer, ed. Penguin Classics 2005) (1862).
There are few bargains in which the buyer can ascertain with anything like precision that the seller would have taken no less; — or the seller acquire more than a comfortable faith that the purchaser would have given no more. This impossibility of precise knowledge prevents neither from striving to attain the desired point of greatest vexation and injury to the other, nor from accepting it for a scientific principle that he is to buy for the least and sell for the most possible, though what the real least or most may be he cannot tell.
John Ruskin, Unto this Last, and Other Writings 197 (Clive Wilmer, ed. Penguin Classics 2005) (1862).
Categories
Is the Law Still Enchanted?
[A]ll fields of specialized knowledge or practice like law . . . depend on their internal perspective. The internal discourse of a field represents the language in which the insiders to the field explain or persuade other insiders. In law, the internal perspective may use concepts like precedent, analogy, or doctrine to explain or justify an outcome that a historian might ascribe, for example, to the power of the groups being represented by the parties. So one should not have been surprised to realize that the externalist perspective of [Horwitz’s The] Transformation [of American Law 1780-1860] cheered most historians and brought criticism from the lawyers. But the passionate tone of the criticism uncovered another dimension that did come as a surprise–the extent to which many legal scholars were still deeply invested in a picture of law as the expression of neutral principles.
Morton J. Horwitz, 28 Law & Social Inquiry 1157, 1158 (2003).
I had supposed that the lessons of legal realism had seeped into the consciousness of the legal academy. Still, it was becoming increasingly apparent to me that so much of the legitimacy of legal discourse continued to depend on assuming a sharp separation between law and politics. Most conceptions of the rule of law have been built on the possibility of identifying a clear line between the two. Thus, much of legal scholarship is perennially threatened by an external perspective that is skeptical of the claimed boundaries between law and politics.
I know that in many, many quarters the legitimacy of legal discourse still did depend on assuming a sharp separation between law and politics when Horwitz wrote this in 2003.
But does it still today?
Who today defends the notion that the language of the law alone determines outcomes?
Who today would gladly die on Plain Meaning Hill or Laugh-Test Field?
Who would stake it all on the notion that there are some interpretations of the law so obvious to every American as to make them binding?
As with all disillusionments, the sky has not fallen.
Or has it?
The Great Dying deconcentrated markets:
The complexity of an ecosystem can be estimated by the relative number of species: if a handful of species dominate, and the rest carve out a marginal existence, then the ecosystem is said to be simple. But if large numbers of species coexist together in similar numbers, then the ecosystem is far more complex, with a much wider web of interactions between species. By totting up the number of species living together at any one time in the fossil record, it’s possible to come up with an “index” of complexity, and the results are somewhat surprising. Rather than a gradual accrual of complexity over time, it seems that there was a sudden gearshift after the great Permian extinction. Before the extinction, for some 300 million years, marine ecosystems had been split roughly fifty-fifty between the simple and complex; afterwards, complex systems outweighed simple ones by three to one, a stable and persistent change that has lasted another 250 million years to this day. So rather than gradual change there was a sudden switch. Why?
According to paleontologist Peter Wagner, at the Field Museum of Natural History in Chicago, the answer is the spread of motile organisms. The shift took the oceans from a world that was largely anchored to the spot — lamp-shells, sea lilies, and so on, filtering food for meager low-energy living — to a new, more active world, dominated by animals that move around, even if as inchingly as snails, urchins and crabs. Plenty of animals moved around before the extinction, of course, but only afterwards did they become dominant. Why this gearshift took place after the Permian mass extinction is unknown, but might perhaps relate to the greater “buffering” against the world that comes with a motile lifestyle. If you move around, you often encounter rapidly changing environments, and so you need greater physical resilience. So it could be that the more motile animals had an edge in surviving the drastic environmental changes that accompanied the apocalypse . . . . The doomed filter feeders had nothing to cushion them against the blow.
Nick Lane, Life Ascending: The Ten Great Inventions of Evolution 145-46 (2009).
There is much food for antitrust thought in evolutionary history if you think of firms as representing methods of extracting value from the consumer environment. That makes them like species, all the members of which tend to use the same methods of extracting value from the natural environment. One species of bird uses long bills to get worms. Another uses short bills. And so on.
The Advantage of Incumbency
The Great Dying teaches a number of lessons. First, like the Cretaceous–Paleogene extinction event about which I have written before, it suggests the advantages of incumbency. The fact that less motile organisms have not reattained their former dominant position in the 250 million years of relative competition that has prevailed since the Great Dying tells you that less motile organisms were not particularly competitive relative to motile organisms. And yet for the 300 million years until the Great Dying they dominated, despite the parallel existence of more motile organisms. Why? Perhaps simply because they evolved first.
Industrial organization economists have long warned about these “first-mover advantages,” but the antitrust laws ignore them. The “conduct requirement” in antitrust holds that simply being dominant is not an offense in itself. There are plenty of good reasons for that rule, because it’s easy to use it to punish justified market success. But one bad reason to support the rule is that the dominant firm is always the better firm. If the history of the Great Dying is any guide, incumbency does sometimes protect uncompetitive firms.
Competition’s Good Side or The Virtue of Theft
The Great Dying’s second lesson for antitrust has to do with motility, for motility means, at least in part, predation and theft. Creatures that move can seek out new environments not yet colonized by stationary organisms feeding off minerals or sunlight. But one of the major things that motile organisms also do is to predate. Motility lets you range across the environment eating the organisms that have done the hard work for you of generating energy from light and inanimate matter.
We think of theft as being a problem in the law. We like to say that theft reduces incentives for innovation and economic growth because it means that innovators can’t fully reap the fruits of their productive labors. The plant that has a leaf torn off by some vicious armored predator has done the environmentally-friendly work of converting light to energy without so much as emitting a single carbon atom, and yet here the fruits of its labors have been stolen from it. Fortunately, we say, in the business context the law is there to stop such theft.
But the fact that the flourishing of motility after the Great Dying was correlated with an increase in ecosystem complexity—a reduction in species dominance—suggests that theft is not necessarily bad, at least if deconcentration of markets is your thing.
This is a familiar point, approached from a different angle. Industrial organization scholars have long pointed out that the strength of intellectual property protection matters. Make the patent term too lengthy and innovation will fall below optimal levels, because inventors won’t be able to build on prior art to create the next generation of inventions. It follows that if patent rights are too strong, then theft of intellectual property could actually lead to more innovation, and richer and more complex markets. Similarly, when a monopolist ties up a source of supply and uses it to suffocate competitors, theft would bring more competition to the market.
Antitrust recognizes the importance of theft for competition, although antitrust—probably wisely—doesn’t say so in quite such stark terms.
Every time antitrust enforcers order a dominant firm to supply an essential input to competitors—and antitrust does do that occasionally, even in the United States—antitrust is, objectively speaking, revising a property right. Which is to say: authorizing disadvantaged firms to steal from the dominant firm.
The nice thing is that when you’re the law you get to define the boundaries of the law, so you can plausibly say it’s not theft that you’re authorizing, but rather that the dominant firm’s ownership rights over the essential input never actually included the right to deny the input to competitors.
Regardless how it’s characterized, antitrust’s forced dealing remedy does allow other firms to take the fruits of the defendant’s labors, and for a price that must be less than their value, otherwise the taking would provide no competitive succor to the beneficiaries. That’s legalized predation in the biological sense. The aftermath of the Great Dying suggests that it’s probably justified, at least if the goal is to deconcentrate markets.
Competition’s Bad Side or The Horror of Predation
But at the same time, one must proceed with caution in celebrating the complexification of ecosystems that followed the Great Dying, because complexity and competition are not ends in themselves.
There’s a reason for which biologists also refer to the great age before any predators had evolved, the Ediacaran period, as the “Garden of the Ediacara.” We can view the rise of motility and predation, and the demise of filter feeder dominance after the Great Dying, as leading to a golden age of competition and complexity. It’s the golden age we live in today (or lived in until we started wiping out large parts of it starting with the end of the last ice age).
Or we can view the rise of motility and predation as destroying a peaceful Eden in which life competed principally on the virtuous project of converting the inanimate into the animate, of extracting energy from the physical environment, rather than from other living things.
From this perspective, if over the first 300 million years of the existence of complex life evolution tended to hit a wall, and for eons life did not get much better at converting the inanimate to the animate, then that says something about the limits of biology. It does not tell us that the motility, predation, and theft that followed represented an improvement.
From this perspective, the rise of motility and predation was instead a symptom of evolution’s defeat. When life could no longer advance by getting better at converting inanimate matter to animate matter, it turned on itself, leading to the hell of predator-prey competition that has characterized the past 250 million years. If only there had been a world government in the Ediacaran capable of enforcing the basic rules of criminal and property law!
Life would have stayed happy.
In general, the antitrust laws today are much more sympathetic to this dark view of predation than to the other. Antitrust enforcers for the most part shy away from revising property rights. And the legal system as a whole, of which antitrust is just a part, gives great priority to property. The natural world is, of course, the state of nature. And if there is one thing that separates civilization from the state of nature, it’s the concept of property, the notion that theft is to be curtailed, and that evolution within civilization is to take place along the old Ediacaran lines, with each attempting to better himself other than at the expense of others.
Over its first 300 million years, complex life does seem to have hit a wall in bettering itself through virtuous, non-predatory competition, at least so far as the biochemistry of energy production out of inanimate matter is concerned. Our inability to generate energy other than by burning fossil fuels shows that for all our own ingenuity we humans haven’t managed to outdo nature either. We live off the productive labors of other creatures, including both living plants and those dead so long as to have been ground into oil. That makes us, and the horror we have meant for the planet, the logical extreme end of the triumph of motility and predation after the Great Dying.
But the fact that civilization’s vision, honored however often in the breach, is fundamentally Ediacaran, suggests to me that there is hope. Climate disaster is effectively forcing us to extend the property laws we enforce within civilization to the life outside of it. With luck, the virtuous, non-predatory competition that results will help us achieve the breakthrough that life could not, and allow us to advance into new methods for generating energy from the inanimate.
Not quite: “In 1453, Mehmed II conquered Constantinople, and although his troops plundered what they could carry, the building was saved and turned into a mosque,” writes The New York Times, which makes it sound like the building was saved by sheer luck.
In fact, the Turks treated Hagia Sophia with honor. In contrast to other churches that had been seized and converted into mosques, the conquerors refrained from changing its name, merely adapting it to the Turkish spelling. (“Ayasofya” is the way it is written in Turkey today.) Mehmet, says Ilber Ortayli, director of the Topkapi Palace Museum, the former residence of the Ottoman emperors, “was a man of the Renaissance, an intellectual. He was not a fanatic. He recognized Hagia Sophia’s greatness and he saved it.”
Remarkably, the sultan allowed several of the finest Christian mosaics to remain, including the Virgin Mary and images of the seraphs, which he considered to be guardian spirits of the city. Under subsequent regimes, however, more orthodox sultans would be less tolerant. Eventually, all of the figurative mosaics were plastered over. Where Christ’s visage had once gazed out from the dome, Koranic verses in Arabic proclaimed: “In the name of God the merciful and pitiful, God is the light of heaven and earth.”
Fergus M. Bordewich, A Monumental Struggle to Preserve Hagia Sophia, Smithsonian Magazine, Dec. 2018.