 My topic is market failure mythology, and I'm passing around. I put together about 15 or so articles on this whole topic, market failure mythology. They've been published, I think the first one is 1969 by Harold Dempsey. And so if you're interested in this topic, I thought this would be a good way to follow up. And so, you know, in the 1950s and 60s, the economics profession sort of exploded with theories of market failure, which is why, by the way, my old professors, James Buchanan and Gordon Tullock, my graduate school professors, invented the field of public choice as sort of a counter to the market failure revolution in economics. And one of the things that distinguishes the Austrian school from the public choice school is the Austrians never bought into the fact that of all this market failure literature. Whereas the public choice school, for the most part, says, okay, even if we accept all this, governments fail also. And so the method of analysis in public choice economics is sort of a, they call it a comparative institutional analysis, comparative failures, study of comparative failures, study of imperfect markets and imperfect governments. But the Austrians never bought into the imperfect markets thing like story, like the public choice school has, which is not to say that you shouldn't study public choice economics, that's my background is partly in there. But I wrote down what I think are five, I'm going to talk about some of this literature and I just wrote down what I think are five reasons, or five themes really, that run through this literature that explain why so much of the literature on markets, that says markets fail, say this. And one is called the Nirvana fallacy. And that is a phrase coined by Harold Dempsey in the first article at the top of the list here that I'm handing out is a 1969 article called Information and Efficiency Another Viewpoint. And basically the Nirvana fallacy, Peter Klein might have mentioned this. Does anyone, does the ring a bell? Did Peter Klein mention this? Well, anyways, it's comparing the real world to an unachievable utopian ideal, like perfect competition, for example. And of course, if you compare the real world to an unachievable utopian ideal, the real world is always imperfect or failing. As far as that goes. And it's in Harold Dempsey that's called that the Nirvana fallacy. The second reason is the failure to view markets like the Austrians do as dynamic rivalrous, a dynamic rivalrous process of entrepreneurial discovery. Competition is never ending. It's ongoing. Whereas beginning around the 1930s, the economics profession abandoned the Austrian view of competition. Anybody who wrote on competition from Adam Smith, even before Adam Smith, on until about the 1930s, described competition more or less like the Austrians do, as I just said, dynamic rivalrous process of entrepreneurial discovery. Whereas it was, but that was difficult at the time to model mathematically. And it still is. And so in order to appear to be scientific, the budding mathematical revolution in economics adopted a static model of competition that was more amenable to mathematical manipulation and model building. That's the perfect competition model. And so the way in which the economics profession started looking at markets changed. And all of a sudden, markets were failing everywhere. Because after all, if you look at the new definition of competition, it was no longer rivalry, no longer dynamic. It was many firms, homogeneous products, homogeneous prices, costless entry and exit and perfect information. And that was the new definition of competition. And of course, that's total, that's Nirvana. Even the simplest thing, look at the many firms assumption that was made. What if you had an industry with, say, 50 competing firms and 10 of them are producing lower quality and higher price products than the rest. And as a result, the consumers wisely choose not to purchase those products. Well, then you go from 50 to 40. So you have fewer firms and that's supposed to be a bad thing. But of course, if you look at the real world of competition, that's a good thing. It's a good thing that consumers are in charge and they chose not to buy the high priced crap from these 10 businesses. But the new model of competition said we should be suspicious of this. That there is industrial concentration is occurring. And so it may lead to monopoly. The perfect information assumption. What is that? Well, ignoring elementary economics. There's no such thing as perfect information. Another way of saying that is we don't believe that scarcity exists. If information is costless to acquire, well, then there's no scarcity. There's no study of economics. What are you studying? There's no scarcity out there. And so they ignore that. Ignoring elementary economics. Ignoring reality and history. I'm going to talk about some of these studies where economists just assert a market failure story without ever getting up out of their swivel chair in their academic office and looking outside to see if reality has anything at all to do with their story. And I'm going to quote Nobel Prize winners as saying these things. Not just Professor Smith from Podunk University. The fifth thing, no role for entrepreneurs. Yeah, markets are imperfect because human beings are imperfect. And if we have problems, well, another way of looking at economic problems is from an entrepreneurial perspective, is, well, is there money, is there money to be made in solving this problem? And there often is in the literature on market failure. And so a lot of this literature ignores the fact that entrepreneurs, you know, if there's money to be made in solving a problem, they're going to go after it. They're going to solve that problem. It reminds me of when I lived in Tennessee many years ago, I befriended an elderly gentleman who was a retired, he owned a construction company. And he would, we would get together for lunch about once a month because he wanted to talk economics and he had a degree in agricultural economics from like 1920 or years, ancient history. This is the late 1980s I'm talking about. And so he said that, you know, as sure as if there's a crack in my driveway, it is a certainty that grass will grow out of there. You won't see any dirt or anything. There's a little crack in my driveway like this, grass is going to grow out of there. He said, as sure as that's going to happen, if there's a dollar to be made, some entrepreneur is going to make that dollar somehow, some way. And but the economics literature largely ignores all this, all these things. And if you get into this literature that's on the list that I handed out, these are themes that I see running through all of this literature of why markets are said to fail. So what is this literature? Well, the Nirvana fallacy, the first example of the Nirvana fallacy, the article that Demsets wrote, it's the first one, and Harold Demsets was a UCLA economics professor for many years. And if you ever get into the literature of Harold Demsets, it's very Austrian sounding. He never called himself an Austrian. But even when I was in graduate school and first got exposed to this, then when I was reading the works of Harold Demsets from my stone tablets back in those days, we had to carry very big knapsacks in those days with students, stone tablets. It was very Austrian. It sounded a lot like Israel Kersener and Mises were talking about entrepreneurship. But he was a Chicago school guy, though, and he never admitted that. But he talks about this. He was in a debate with Kenneth Arrow, the Nobel Prize-winning economist, Kenneth Arrow, over the effects of innovation, technological innovation. And Arrow basically, he wrote these articles that had hundreds of equations in them, but came to the conclusion that markets fail when it comes to innovation in a number of ways. And one way in which the markets fail is that innovation creates monopoly. And of course, the standard mainstream story of monopoly is that it restricts output and causes deadweight losses and various other evils. And what Demsets basically said is, well, here's what Kenneth Arrow is saying. Here's the textbook monopoly diagram with a constant cost industry. Kenneth Arrow is saying, if somebody invents a new product or service that no one else has, you went from zero. Here's a quantity zero here where my finger, you know, the pen is. And, but here's the monopoly, and you create your monopoly, at least temporarily. So this is the amount of output, QM, okay. And so that's said to be a market failure because you're creating monopolies through innovation. And it's an ordinary man on the street. It doesn't sound crazy, but this is Nobel Prize winner Kenneth Arrow. But Demsets merely pointed out that, well, what he's saying here is that, if say a hundred people magically had the same idea instantaneously at the same time, then you would get the Nirvana output. This would be the competitive level of output right here because the marginal cost curve would be the supply curve. And here's a demand curve. So that would be QC here would be the level of output. And that would be the Nirvana level of output. If everybody had the same light bulb went off in a hundred mines at the same time, and they all invented the same product, perfect competition would prevail. And so Demsets basically says the real comparison should be yesterday we had none of this, zero. Today we have some output has expanded. Therefore consumer welfare has expanded and profits have expanded. Somebody's made some money. It's all good. The market has succeeded. But what Arrow is doing is comparing the real world QM to the unachievable utopian ideal of QC. And that's the Nirvana fallacy. And so in the Demsets article is much longer than what I just said. It says a lot more than just this. But that's basically the debate that he was getting into with Kenneth Arrow over innovation. And at one point in my career I reviewed a book for the Southern Economic Journal. It was on innovation, the economics of technological innovation. And in one chapter had 69 equations in it. And the concluding sentence of the chapter was that after going through this whole big long model with 69 equations, the author concluded that the more profitable is an investment, the more likely it is that entrepreneurs will put money into it. I'm not making this up. It's the kind of literature you sometimes run into in the economics profession. It's like I went to school for this. I learned this. I would be embarrassed as a fraud if I stood up in front of students and pretended that this was some big revelation. So let me get into some of the literature. Ronald Coase wrote some interesting articles about this. And Coase was another economist that a lot of what things he wrote, they're not necessarily the Coase Theorem. Walter Block and Joe Slarenow and others have criticized Coase Theorem. But other things Coase has written in the field of industrial organization would be pretty consistent with the Austrian method of analysis. And one thing he wrote this famous article called The Lighthouse in Economics. Because at the time, you know, if you took an economics course, Principles of Economics in the 1950s and 60s and 70s, when you get to the chapter on public goods and the free rider problem, an example that was given in almost all the books, especially Paul Samuelson's book, which was by far the biggest seller, was Lighthouses, Public Good. You know, once the light is out there, it's impossible to exclude anybody from it. And it's also said to be difficult if not impossible to force anybody to pay for it because the light is already out there. And therefore there'd be free riders in a free rider problem and you'll never be able to raise enough money privately to have Lighthouses. And for example, here's what Samuelson himself said. Here is a later example of government services Lighthouses. These save lives and cargos, but Lighthouse keepers cannot reach out to collect fees from skippers, boat captains. So we have here a divergence between private advantage and money cost and true social advantage and cost. Let's see. As measured by lives and cargos saved in comparison with one, total cost of the Lighthouse and two extra costs that result from letting one more ship look at the warning light. Philosophers and statesmen have always recognized the necessary role of government in such cases of external economy divergence between private and social advantage. That's a mouthful. And so Samuelson has taught generations of students. Samuelson's book was first published in 1948 and it was by far the best selling principles of economics book for 40 years. And most of the other books in the market during this time were clones of Samuelson. I remember once there was a very bad book by a guy named Campbell that was just as bad as Samuelson's book. But it was the second biggest seller for all those years. So that's what he says. So what did Coase do? Coase did something that Paul Samuelson, the MIT mathematician, did not do. He got off his butt and went to the library and studied the Lighthouse industry, the history of the Lighthouse business up there. And basically what he found is that in England, which is where Coase was British, that for generations private merchants had privately funded Lighthouses because it was in their interest to do so. They didn't want to lose their cargo on the rocks. They didn't want to have a shipment from America arrive in England and crash in a storm. That's the origins of the insurance industry, by the way, that sort of thing. But also, you know, that's the Lighthouses are a form of insurance against that sort of calamity of your shipwrecking after crossing the Atlantic Ocean. And so he found that they were privately financed until the British government stepped in and took over and monopolize the Lighthouses. But Samuelson obviously knew nothing about that. And here's what something that Coase said about this. He says, the question remains, how is it that these great men, he's referring to Samuelson and Coase, and a few others that he quotes, have in their economic writings been led to make statements about Lighthouses, which are as misleading as to the facts, whose meaning, if thought about in a concrete fashion, is quite unclear and which to the extent that they imply a policy conclusion are very likely wrong. And he basically says, what I just said, they never left their faculty offices, they never did the hard work of actually studying Lighthouses. And they didn't. So Coase, in that article that was published in the Journal of Law and Economics, debunked the Lighthouse theory. And another well-known theory, I think Bob Murphy mentioned this briefly in his talk this morning, is roads, private roads, and there's said to be a free rider problem there. In my book Hamilton's Curse, I talked about Alexander Hamilton himself, America's first Treasury Secretary, articulated a version of the free rider problem to make the case for government subsidies for road building and canal building. And so this is a very long argument. But what Bob this morning referred to this in his talk on the Stateless Society, but I don't think he didn't mention the article that he was referring to. I recognize the language that he was saying is the one that's on my list that I handed out by Daniel Klein in Economic Inquiry. And Klein did the same kind of thing that Ronald Coase did. And that he looked at these theories, yeah, what's plausible? There's a free rider problem and people will not invest sufficiently to build roads because you can make a case that roads are a public good. And so he studied the early road building in early America from the year 1800 and the next several decades. And here's what Daniel Klein found. He said the the private road building movement built new roads at rates previously unheard of in America. Over 11 million dollars was invested in turnpikes. They were called turnpikes in New York. 6.5 million in New England. There were four and a half million dollars in Pennsylvania between 1794 and 1840. 238 private New England turnpike companies were built and operated about 3,750 miles of road. New York led all their states in turnpike mileage with over 4,000. He talks about New Jersey, Ohio and other places. So there was there was a lot of privately funded road building that went on. Then he goes on to explain how this happened and that the rate of return to investment in these turnpike companies was only about three or four percent. Whereas you could have made 10 percent elsewhere back in that at that time Daniel Klein says. So why did they invest? Why do these people invest? Well the merchants in these towns understood that if they they had a road that connected their town to other towns there would be more business. And so you know they were entrepreneurial about it. They weren't that stupid. Like the old man that I talked to, my old friend in Tennessee, if there's a dollar to be made some entrepreneur is going to find a way to make it. And so this doesn't take much of an act of genius to realize if we have more people shopping then we might make more sales. And so they invested. And there was also a lot of social ostracism. If you were a merchant and you tried and you were a free rider, people wouldn't do business with you. They wouldn't socialize with you and so forth. So they used social ostracism to get their neighbors and other people in their communities to invest in the turnpike companies and it worked. Daniel Klein quotes Alexis de Tocqueville as famous book Democracy in America in talking about how one of the unique things he noticed about Americans was all these voluntary associations they had, including voluntary associations that were set up to motivate people to build roads. And so the free rider problem is often overcome by efforts like this, but you have to think dynamic. You have to think of competition being a dynamic and not a static thing. You have to think of entrepreneurship, playing a role here, and that's what happens. And so that's the private road story. Another classic article in this literature is by Stephen Chung. Stephen Chung was an economics professor at the University of Washington in Seattle, Washington. And he wrote an article that's on my list here called The Fable of the Bees. Has anybody here ever heard of this, The Fable of the Bees? Nobody, maybe one person. Maybe you've heard of The Fable of the Bees, but not Stephen Chung, I don't know. Well, anyway, the same sort of thing was going on in that there was, in some of the textbooks, when you get to the section on externalities, a story that was told is that, well, here's a case of an externality problem that requires government intervention. What if you had beekeepers and apple orchards in the same vicinity? Well, if the bees pollinate the apple orchards, they create a positive externality for the beekeepers and the apple orchard owner because they pollinate the trees and the trees create more apples. And at the same time, the apple trees provide nourishment for the bees so the beekeeper will get more honey. However, there doesn't seem to be any mechanism that would cause the beekeepers to want to locate their hives next to apple orchards. And so the apple orchard owners and the beekeepers just forego this big profit opportunity. Therefore, we should subsidize beekeeping and maybe centrally plan the whole beekeeping apple orchard business. And here's another Nobel laureate, James Meade, that Stephen Chung quoted. He says this, suppose that in a given region there's a certain amount of apple growing and a certain amount of beekeeping and that the bees feed on the apple blossoms. If the apple farmers applied 10% more labor, land and capital to apple farming, they will increase the output of apples by 10%. But they will also provide more food for the bees. On the other hand, the beekeepers will not increase the output of honey by 10% by increasing the amount of land, labor and capital to beekeeping by 10%. Unless at the same time the apple farmers also increase their output and so the food and so therefore the food of the bees by 10%. We call this a case of unpaid factor, an unpaid factor because the situation is due simply and solely to the fact that the apple farmer cannot charge the beekeeper for the bees food. So the bees are free riding, you know, they can't charge the beekeeper for the bees food, namely the apple blossoms. And so James Mead went on to say, you know, once again we need regulation, we need the government to step in here and micromanage the beekeepers. Well Stephen Chung did the unheard of once again. He got up off his butt and started researching the apple industry. He was in Washington State after all. If you went to the nearest grocery store in Auburn right now and bought apples, you saw a whole bunch of them from Washington State. And lo and behold, what he found is that for many generations, the beekeepers and the apple orchard owners had this all figured out that they had written contracts between the apple orchard owners and the beekeepers. There was so minute in detail that they would even say things like the apple orchard owner is to notify the beekeepers two weeks in advance when they're going to spray pesticides on the apples. So they would harm the bees and the monetary compensation was all written out and so forth. And so once again, the assumption that people like J.E. Mead made is basically, there's no such thing as entrepreneurship. And that business people, they might condemn greedy profit seeking capitalists while at the same time arguing that these greedy profit seeking capitalists just walk around with their heads in the clouds. And it's as though there's $10,000 in cash sitting in front of me and I just walk right past it. I don't pay any attention to it at all. And so it didn't take Stephen Chung much to discover that this is false. And I'll read you one quick quote from him about these contracts. Here's what he found. Contracts between beekeepers and farmers may be oral or written. I have in hand two types of written contracts. One is formally printed by an association of beekeepers. So the trade association actually had model contracts for the beekeepers to you. You'd have to make up your own contract. Another is designed for specific beekeepers with a few printed headings and space for stipulations to be filled in by hand. Aside from situations where a third party demands documented proof of the contract, written contracts are used primarily for the initial arrangement between the parties. Otherwise, oral arrangements are made. And so they're very detailed. And so once again, the problem, there was money to be made. Yeah, there's an external positive externality issue here in the language of economics. But these entrepreneurs figured this out a long time ago. And it's James Mead who had his head in the clouds, not the beekeepers and the apple orchard owners. The next example, market failure mythology, rhymes with fable of the bees. It's called fable of the keys. And you all recognize this. Don't you know what is that? It's the keyboard on the computer or a typewriter. I actually wrote my doctoral dissertation on a typewriter. They had just gotten rid of the stone tablets and typewriters came in. I don't think anybody here except for Dr. Prince knows what a typewriter is besides me. But anyway, there's an economist named Paul David. He used to be at the University of Tennessee. I kind of lost track of him. I don't know if he's retired now or if he's still around at Tennessee. But then he published a couple of articles in which he argued that markets sometimes fail by locking in inferior technology. And exhibit A in this one article of his is very widely cited was the QWERTY keyboard. Because there's a different type of keyboard. It goes by this name, Dvorak. It's a Czech name. I gave a talk at the Prague School of Economics several years ago about this. And I mentioned that and the students all laughed. I wrote Dvorak there because it's a Czech. I don't know why they have so funny. He was an American but he's from Czech, former Czechoslovakia. He was an immigrant and I never got why I thought it was funny to them. But anyway, Paul David made the argument in this article that the Dvorak keyboard was superior to the QWERTY keyboard. Even though consumers, stupid consumers somehow chose to buy typewriters back in those days with the QWERTY keyboard. And that pretty much locked in the QWERTY keyboard because that's what everybody had. And he cited these studies from the U.S. Navy that supposedly proved the superiority of the Dvorak keyboard over the QWERTY keyboard. And so he used that as his exhibit for market failure, exhibit A for market failure. And then along comes some other economists. Steve Margolis is one of them. And say, let me see the right page number here. Stan Liebowitz and Steve Margolis came along and they were skeptical of this. Just like Ronald Coase was skeptical of the lighthouse story. And Stephen Chung was skeptical of the apple orchard and the bee's story. And they looked into it. And here's what they found. Let's see. Anyway, they dug up these Navy, U.S. Navy studies done during World War II that were being cited as proof of market failure. And they say all of these studies suspiciously seemed to be in favor of the Dvorak design, all of them, every one of them. And then they say this. There's a man named Earl Strong, a professor at Pennsylvania State University and one-time chairman of the Office Machine Section of the American Standards Association reports that the 1944 Navy experiment and some Treasury Department experiments performed in 1946 were conducted by a Dr. Dvorak who owned the patent on the Dvorak keyboard. And so Dvorak was a naval officer who had a patent on his keyboard and he did the studies. That's kind of like Ford Motor Company claiming to have done studies comparing Fords to General Motor Cars and concluding that Fords are superior to General Motor Cars. Who would believe that? Paul David would, I assume. But people who are locked in inferior automobiles. And so this doesn't prove that the Dvorak keyboard was not superior, but it should raise some suspicions over this. And so anyway, they did the Margolis and Liebowitz commission their own studies of this and they basically concluded that the two keyboards are not that different. But for whatever reason, the consumers just liked the QWERTY better. It must have been marginally better, marginally more convenient for typing. And so that prevailed. And there wasn't that much of a difference even if you thought the Dvorak keyboard was superior. There apparently wasn't that much of a difference that very many people were willing to relearn how to type on the different keyboard in order to make it more viable. And so that story also went by the wayside. Another story similar to this one was, again, on maybe only a few people in this room remember what a VCR is, video recorders in the early days of home movies. But there were two different types, a beta and VHS of these machines. And a lot of people started saying, well, the beta is superior technology, beta is superior. Consumers disagreed and eventually the beta version of the machine just disappeared. Nobody would buy it. But all the experts were saying that's the superior technology. And you had economists saying the same thing that the market failure is locking in an inferior technology. But the consumers, you know, by the millions, I remember back in these days going into when we back when we used to rent movies from Blockbuster. And they used to divide the movie into the VHS section over here and the beta section over here. And I remember going into one of these shops and the VHS section had like it looked like the library here. So all these movies. And then the beta section was like this. It was like free movies. That was about it. It was just going out of business. And so that was yet another myth about market failure that is out there. And it falls into one or more of these categories. It always seemed to be the explanation for why these economists come up with these myths. Another myth that I've written about. I wrote an article that was published in the quarterly journal of Austrian economics some years ago called The Myth of Natural Monopoly. It's on the reading list there. It's online. You can read it. And I was always a little suspicious of this story about natural monopoly. You know, I was an economic student as an undergraduate like a lot of you are and went to graduate school. You know, became a professor. And I heard this story forever. The basic story is that in the late 19th early 20th century and industries with heavy fixed costs like telephone, electricity, water supply, natural gas. You had a situation where one large company was achieving economies of scale and was was therefore able to underpriced everybody. And it became a natural monopoly. They were coming in natural. Those are the phrase natural meaning free market basically a monopoly. And so that's the basic story. And the second part of the basic story is that therefore government came to the rescue. And what the government did was to create legal monopolies because they said, well, we want the economies of scale. It's a good thing. But we don't want monopoly prices. So we will come in and create monopolies. And then we what we will do is we'll regulate the price so that they'll make a profit but not a monopoly profit. And so that's what that's what rate regulation is supposedly about. Electric power rate regulation, natural gas and so forth. But Harold Dempzitz again did the unthinkable, at least the unthinkable. If you're from MIT or Harvard, one of these places, the market failure capital of North America. The Ivy League schools where a lot of this comes from. He did the unthinkable and once again, got off his butt, left his swivel chair at his UCLA office and went to the library. This was before all human knowledge was on the internet. And you actually had to go to a library to dig this stuff up. And here's what he found about this era of history. Late 19th, early 20th century was what was going on. Six electric light companies were organized in one year of 1887 in New York City. 45 electric light companies had the legal right to operate in Chicago in 1907. Prior to 1895 Duluth, Minnesota was served by five electric lighting companies. Scranton, Pennsylvania had four in 1906. During the latter part of the 19th century, competition was the usual situation in the gas industry in this country, meaning natural gas. Before 1884, six competing companies were operating in New York City. Competition was common and especially persistent in the telephone industry. Baltimore, Chicago, Cleveland, Columbus, Detroit, Kansas City, Minneapolis, Philadelphia, Pittsburgh and St. Louis had at least two telephone companies in 1905. So he demonstrated that this story never happened. And there was this one big monopoly created in the free market. There was vigorous competition. So how did we get monopolies in the public utilities in the United States? Well, I myself did the unthinkable and got off my butt and left my faculty office. And years ago, and I went to the Johns Hopkins Library, which is right down the street from where my office is at Loyola University. I sort of side-by-side there. Well, this was before everyone was online on the internet. When I started my career, I enjoyed digging through libraries to do my research because it gave me an edge because, as I keep saying to you, most economists, especially these Nobel Prize winners, are too lazy to do that. So I thought, I'll do what Ronald Coase and Stephen Chung and these guys, they could come up with some really good information, good scholarships. I'm going to do that. I'm not going to sit around and fiddle with mathematical equations my whole life and tell tall tales of market failure. I'm going to learn how markets actually work. And when I was in graduate school, by the way, I'll never forget, they had a weekly seminar series and they brought in a Princeton economist named Professor Ong NG. He was a big shot mathematical micro-economist and Professor Ong gave a presentation on the hamburger market, a model of the hamburger market. And so we all sat there and he filled up with no computerized math back then. He filled up the whole blackboard with equations and he taught. And one of my professors, Gordon Tullock, at the end, he said, Professor Ong, this doesn't seem to be anything at all like the real hamburger market. And Professor Ong said, I'm not interested in the real hamburger market. I'm interested in my model. And I think Paul Samuelson would have had the same attitude. J.E. Mead would have said the same kind of thing. And Paul David, that's another thing. Maybe I should write that as item number six. I did put ignoring reality on my list here of things to look. So anyway, how did we get the monopolies and telephone, natural gas, electricity? And so forth. Well, here's how one of the things I found out is when I was digging through the Johns Hopkins library, Richard T. Ealy was taught at Johns Hopkins for a while. And at the time, early 20th century, late 90th century, he had written all these articles on electric utilities because it was a big issue of the day. So I found all these collections of articles by Richard T. Ealy among other people and started reading them. And here's how it happened in Baltimore because I found this in the Johns Hopkins library. It's about the history of the gaslight company of Baltimore. From its founding in 1816, its struggle with new competitors and its response was to compete in the marketplace. And so there was vigorous competition in the gaslight industry. And so here's what an economist that Ealy cited, his name is George T. Brown. I dug up George T. Brown, and Richard T. Ealy cited him. And lo and behold, he wrote a whole book about this. And he cites an 1851 editorial in the Baltimore Sun declaring that competition is the life of business, they said. And by 1880, there were three competing gas and light companies in Baltimore. And so but when Monopoly did appear, here's how it happened. In 1890, a bill was introduced into the Maryland legislature that called for an annual payment to the city from the consolidated gas company of $10,000 a year. And 3% of all dividends declared in return for the privilege of enjoying a 25-year monopoly. So in other words, the city came along and said, well, you're struggling with all this competition, we know. And so here's what we're proposing. We will give you a 25-year monopoly if you share the monopoly loot with us, the politicians. So it became a taxing scheme, basically, a way to tax the consumers of the gaslight, eventually electricity, and so forth. That's how the Monotron Monopoly came into being. The story that there were monopolies being created in the free market and enlightened politicians came to the rescue with public interest regulation is a bunch of fooey. It never happened that way. And so once Baltimore showed the way, cities all over the place started saying, oh, yeah, that's a good way to extract more tax revenue. Not only that, that when you get your higher gas bill, the people won't even know it's because of the tax. You don't think it's the greedy capitalists who run the gas company that are gouging them. That's better yet. And so once this happened, I ran across another article by a man called Horace Gray, and he wrote about how once this happened everybody wanted in on the deal. He said, you know, where's this list of businesses? You know, the dairy industry said, we're a natural monopoly. You know, everybody wanted to be declared a natural monopoly to be given a regulated monopoly. In fact, the entire New Deal of Franklin Roosevelt, the first two years of the New Deal, was this. It was the creation of monopolies through the National Recovery Act and the Agricultural Adjustment Administration. And so that's how those monopolies were all created. And that, of course, did nothing but make the Great Depression worse because they were restricting agricultural production and restricting manufacturing. And so that's another myth that I would argue, the whole natural monopoly story. And see, I have two minutes left. Which one should I, I guess I'll end with the socialist pollution story. I have a few others I was going to talk about antitrust, predatory pricing and asymmetric information. Maybe I'll say about asymmetric information. Maybe I'll say something about that instead. There's an article, I didn't put it on the list. There's an article by, they talked about the lemons problem in economics. And the author was Bruce Akerlof, who's the husband of Janet Yellen, another Nobel Prize winning economist. And the lemons problem is published in the American Economic Review in 1970 was about the used car market and asymmetric information. Car salesmen have a lot more information than the buyers do of used cars. And so they're much able to, as a result, to sell us lemons or cars with problems because they have different information. It's asymmetric, it's not symmetrical information. And so therefore, he predicted that the used car market would probably disappear altogether because of this, because people couldn't trust the car salesman. Although at the time he wrote this in 1970s, that problem had already been solved by product warranties. You know, if you buy a used car now, you can't think of anywhere in the United States now other than private, if you buy it from a private individual. But any company that sells used cars offers at least a seven day warranty or most of the 30 day warranty where you can take the car home, have it checked out by your mechanic, and if you see some kind of problem, you bring it back. CarMax is famous for doing that. And that existed at the time. But all I'll say about this is that this whole area, you know, for which Joe Stiglitz won the Nobel Prize again, is that it's all asked backwards to use the scientific term in my opinion, because asymmetric information is another way of saying the division of labor and knowledge in society. It's another way of saying we all have different, we all specialize in something. You know, who knows more about how to manufacture a car, automotive engineers or the car buyers? Who knows more about how to grow food and raise livestock? Farmers and ranchers or people who go to the grocery store and buy steak and vegetables? And who knows more about manufacturing clothing? Clothing manufacturers or you when you go to the mall? We all have asymmetric information is another way of saying the division of labor. And that's what makes markets work. That's how markets work. And in fact, you know, Mises and Rothbard say it's the thing that keeps civilization going is the international division of labor. But somehow these MIT Harvard slash Harvard economists have managed to say that asymmetric information, they call it something else, they call it asymmetric information, is an example of market failure in our market success. Imagine what the economic world would be if we all knew the exact same thing. Why would anybody trade with anybody else if we all had the exact same knowledge and ability to produce things? There'd be no markets in a situation like that. And so I had another article of mine was on I call it the canard of asymmetric information as a source of market failures in the quarterly Journal of Austrian Economics. I think I put it on that list somewhere. I think my time is about up. The fun is over. And if you want to ask one or two questions, I'll take one or two questions. If not, it's kind of late. And we had you had your heavy was that fettuccine Alfredo for lunch. So it's probably nap time for a lot of you. And that's all we'll do that.