Archives For Fred McChesney RIP

Todd J. Zywicki is a George Mason University Foundation Professor of Law at the Scalia Law School at George Mason University and a former Director of the Office of Policy Planning at the FTC.

I was saddened to read of the passing of my dear friend Fred McChesney. An amazing scholar and an even more amazing friend and perhaps the greatest storyteller I’ve ever met. He is largely responsible for me going into law & economics and eventually the academic profession.

When I was deciding whether to pursue my Masters Degree in Economics at Clemson, Roger Meiners connected me with Fred. Fred was by then at Emory and already an established titan of law & economics. Fred had never taught at Clemson, but knew many of the Clemson professors through the Manne law & economics network. I cold-called him at Roger’s suggestion and much to my delight and (now) surprise, we must’ve talked for 30 minutes as he told me all about Clemson and law & economics. That seeming digression changed my life, leading me to UVA as an Olin Fellow and eventually to GMU. If Henry Manne is my intellectual grandfather then Fred McChesney and the crew at Clemson who passed that tradition on to me are my intellectual fathers.

My initial conversation with Fred embodies the spirit of the man — he was already an academic star with an immensely high opportunity cost. And here I was asking him for advice about seeking an MA at a completely different school. Yet rather than brush me off or rush through a hurried conversation, he was eminently patient and helpful. Only when I later became a professor did I realize how rare it was to find a man of his humility and friendliness in the academic profession. Every encounter with Freed from then on had the same spirit.

As for Fred’s intellectual influence on me, that is hard to overstate. Several years ago I published a co-authored book on “Public Choice Concepts and Applications in Law.” The book, of course, discusses Fred’s profound work on “rent-extraction,” one of the most important refinements of public choice theory since its origins. Even better, many years later, when I became Executive Director of the Law & Economics Center, I had the opportunity to organize Law Professor Workshops on Public Choice, at which Fred was one of our star speakers. The professors in attendance invariably left informed — and amused — by Fred’s lectures. As did I!

I always looked forward with anticipation to my meetings with Fred — I’m going to miss him greatly.

David Haddock is Professor of Law and Professor of Economics at Northwestern University and a Senior Fellow Emeritus at PERC.

The day Fred McChesney departed this life, the world lost an intelligent, enthusiastic, and intellectually rigorous scholar of law & economics. A great many of us also lost one of our most trusted and generous friends.

I first met Fred when Emory University, hoping to recruit the then young scholar to the law school faculty, brought him to Atlanta to deliver a research paper. The effort was successful, and Fred joined as an assistant professor in the fall of 1983. Jon Macey joined the law school, also as an entry-level assistant professor, at about the same time. A couple of years earlier Professor Bill Carney and law school Dean Tom Morgan had enticed Henry Manne to Emory to establish a new Law & Economics Center. Although Henry did not know me, upon Armen Alchian’s recommendation he persuaded me to leave Ohio State to join the LEC soon after it commenced operation.

I was only a bit older than Fred and Jon. Each of us had training in economics in addition to our interest in law. We shared a respect for markets. We had noticed how often special interests deflected government interventions away from the public interest that was the ostensible motivation. One might say we three had large Venn diagram intersections of background, interest, and outlook. Fred, Jon and I quickly became friends both at work and – along with our respective girlfriends and eventual wives – at leisure. We began to coauthor journal articles and book chapters, sometimes in pairs and sometimes as a trio.

Alas, though Chris Curran and Matt Lindsay from the economics department shared the law school’s enthusiasm for the LEC, the university administration proved decidedly lukewarm toward Manne’s ambitious blueprint. After flashing onto the national, or rather international, stage for a few bright years, the LEC began to atrophy in the face of limitations issuing from above.

Fred, Henry, Jon and I each spent time at the International Center for Economic Research in Torino, Italy, becoming friends with ICER’s director Enrico Colombatto. Macey moved to Cornell. I spent a year at Yale before returning to join Emory’s economics department. Manne left to become dean of a humble law school in the DC suburbs that had been devoted almost exclusively to teaching. Henry quickly transformed that school into a nationally recognized research and innovative teaching institution now known as the Antonin Scalia Law School of George Mason University, but his departure effectively ended the brief if illustrious history of the Emory LEC.

Fred and I visited the University of Chicago in 1987, and though I then moved directly to Northwestern where I finished my career, Fred returned to Emory for another ten years. The two of us continued to coauthor, sometimes with a third such as Bill Shughart, Terry Anderson, or Menahem Spiegel. I worked diligently to get Fred to Northwestern but Cornell succeeded first, though by then Macey had moved on to Yale. Two years later, Fred finally joined me at Northwestern where both he and Elaine held faculty positions until Elaine’s untimely death.

I have mentioned a number of people. Nearly all of those people have changed location, sometimes repeatedly. Through it all and across the deaths of Elaine, then Henry, and now Fred, we have all remained friends and often continued to work together, though usually at a distance.

Everyone who knew him remembers how easily Fred made friends upon meeting new people. Due to his extensive knowledge of rock music, Fred even became a telephone buddy of the late Casey Kasem, longtime host of the nationally syndicated America’s Top 40. Fred’s cordiality was not only social but extended into the work environment. He was no pushover, demanding careful thought in classroom and seminar, but he made his points calmly without endeavoring to cow or humiliate those with whom he disagreed, a trait that unfortunately is far from universal in the academic world.

Considering Fred’s passion for rock music, perhaps it is appropriate to end this remembrance with a few lightly edited lines from James Taylor’s Fire and Rain:

Just yesterday morning, they let me know you were gone.
The path laid down has put an end to you.
I walked out this morning and I wrote down this song,
I just can’t remember who to send it to.

Won’t you look down upon us, Jesus,
You’ve got to help us make a stand.
You’ve just got to see us through another day.
My body’s aching and my time is at hand and I won’t make it any other way.

Oh, I’ve seen fire and I’ve seen rain.
I’ve seen sunny days that I thought would never end.
I’ve seen lonely times when I could not find a friend,
but I always thought that I’d see you again.

Rest in peace, pal.

Richard Epstein is the Laurence A. Tisch Professor of Law at NYU School of Law, the Peter and Kirstin Bedford Senior Fellow at the Hoover Institution, and the James Parker Hall Distinguished Service Professor of Law Emeritus and a senior lecturer at the University of Chicago.

It was with much sadness that I learned of the all-too-early death of Fred McChesney, whom I have known since the time that he spent at the University of Chicago Law School in the early 1980s when he visited on our faculty. At the time, Fred was at the peak of his powers and he displayed a legal imagination and economic sophistication that few have been able to match, either before or since. Fred’s great skill was being able to take a tough-minded public choice perspective to just about any mundane problem that one might encounter, and then give the entire issue a spin that seemed improbable but made sense. In conversation he was a fount of intellectual energy who had an endless curiosity, and who exhibited a palpable sense of excitement whenever the discussion took an unexpected turn into unknown territory. Those were heady days together, and I still remember the many discussions that we had about Volunteer Fire Fighting in the Nineteenth Century and the wonderful article on the topic that he published with me in the Journal of Legal Studies. I am still grateful over 30 years later for the opportunity to work closely with him during his all too short stay at the University of Chicago.

Fred was a man of exceptionable energy and character.  But there was always a powerful disjunction between the way he carried himself, and the way in which he thought about the larger economic issues that dominated his intellectual life. Fred was not a man for needless subtlety in dealing with human nature. He was always one of the kindest and most communicative of colleagues, but he well understood that while these personal virtues have a great deal to do with the way in which good and honorable people lead their lives, they have far less to do with the way in which various actors, both private and public, act when their function in the political arena, where the stakes are far higher, and their own personal livelihood and success is on the table. In these settings, Fred was of the general view that the fine points washed out, and the dangers of factional politics loomed larger.  

Let me give one example. In his book Money for Nothing, the title expresses with his usual bluntness the dangers that he saw in public affairs. I am happy to report that I was still the editor of the Journal of Legal studies in 1987 when Fred published his widely-cited article Rent Extraction and Recreation Creation in the Economic Theory of Regulation. Like all great articles, Fred’s contribution in this paper had one great idea that seems obvious once it is stated, even if it had never been stated before. Fred well knew that the standard theory of regulation was how well-organized interest groups could pull the political levers in order to gain special favors from the government. He was indeed an ardent believer that actions like that did and could take place on a common basis. But Fred saw that the extraction game was a two-way street. The well-organized group that could extract benefits was also subject to extraction itself—precisely because it was so well organized. Politicians were aware of these possibilities and thus could propose what were called “milker bills” which threatened to impose taxes or regulations on a well-organized firm or industry unless they came across with some campaign contribution, direct or indirect, to the political power groups. Being well organized was a double-edged sword. Once the point is made it cannot be forgotten. The potential domain of political bargains does not have $0 as a lower bound. The payments in question can go in both directions.

Once this simple point is seen, the entire fabric of political negotiation has an extra dimension that we ignore at our peril. The use of this tool helped explain why Fred, with good reason, was so skeptical of so much of behavioral economics. The forces that he was talking about were so pervasive and so powerful that it is hardly likely that they could be displaced by behavioral anomalies, which, if they exist at all, are first found in the laboratory and then are rarely observed in nature. Fred was fond of saying that the behavioral issues were at best a second-order issue, an epicycle on the basic rational choice theory, upon which he was able to deploy neoclassical tools so effectively to explain away many of the more dramatic findings in a 2013 recent article that treated the subject as dealing with “Old Wine in Irrelevant New Bottles.”

Speaking about Fred’s affection with public choice does not negate his many other skills. When I taught antitrust law once some years ago, I gravitated to the book, now in its Fifth Edition, that Fred had prepared with Charles Goetz, which dealt with antitrust law, its interpretation and implementation. The book was an ideal teaching tool, for it understood that it was important to deal with the historical evolution of antitrust law along with its neoclassical foundations in economic theory. Teaching from the book was a pleasure, learning from it was a greater pleasure still.

It is a source of some comfort that Fred remained intellectually active throughout his entire career. It is a source of much sadness to know that he is no longer with us. May his memory be a blessing.

Paul Rubin is Samuel Candler Dobbs Professor of Economics at Emory University.

I first met Fred in about 1977, when I presented a paper at Miami and Fred was a student in the Law and Economics program. We thought alike and became friends immediately. After that, I saw Fred in Washington, when I worked at the FTC, and we were colleagues at Emory, where Fred had a joint appointment in Economics and Law. I was also on the Board of the Southern Economic Association two times (VP, 1995 and President, 2013) and Fred was of course the long-time General Counsel of the organization. In 1995, Fred was instrumental in an important change in the structure of the organization. Additionally, of course, we met at numerous meetings and conferences over the years, and Fred invited me to present papers at both Northwestern and Cornell. I always enjoyed Fred’s great if somewhat cynical wit. I knew that Fred’s health was deteriorating, but I was shocked and greatly saddened to learn of his death.

Fred was one of the first joint-degree Law and Economics scholars, and one of the best of his generation. All of Fred’s work was interesting. I found his paper “Commercial Speech in the Professions: The Supreme Court’s Unanswered Questions and Questionable Answers” (University of Pennsylvania Law Review, 1985) most directly useful in my own work, and I cited it several times. His work on rent extraction, including his Harvard University Press book, was of profound importance and was a fundamental contribution to Public Choice scholarship, and to the understanding of political behavior and institutions. I was also pleased to contribute a chapter to the book he edited with Bill Shughart, The Causes and Consequences of Antitrust.

The worlds of Law and Economics and of Public Choice have lost a great scholar, and many of us have lost a great friend.  

Timothy Muris is a George Mason University Foundation Professor of Law at the Scalia Law School at George Mason University and Senior Counsel at Sidley Austin LLP. From 2000-2004 he was Chairman of the Federal Trade Commission.

I knew Fred for over 40 years, and came to have a deep love and affection for his humanity, vivacity, and keen intellect. In October, 2011, I had the honor of introducing Fred when he was invested in the de la Cruz-Mentschikoff Chair in Law and Economics at the University of Miami School of Law. My remarks follow:

President Shalala, President LaBlanc, Mr. de la Cruz, Dean White, Dean Manne, Dean Gudridge, any deans that I have overlooked, friends of Fred, and last in order, but first in importance today and in our hearts, Fred.

Fred and I met in Washington 35 years ago. Our mutual friend, Senator Phil Gramm, liked to say that he did the Lord’s work in the devil’s city. Fred has done that work in Washington and beyond. Fred came to see me in 1976 at the FTC because he knew we shared many interests and that we would both be at this law school. Neither one of us would be here today without Henry Manne having brought us to Miami, one of the many gifts Henry has given to so many in the law and economics community.

Over the next two years, my first as a professor and Fred’s last two as a student, our life long friendship began. It was built on law and economics, baseball, fine food – especially countless outings at Shorty’s, Miami’s famous barbecue establishment – and myriad other shared interests. We learned together, wrote a joint article, more on that later, and even went on two spring training tours. Six games in three days: baseball, beer, and junk food. We saw The Bird pitch for Fred’s beloved Tigers, and, of course, the Tigers hope to eliminate the Evil Empire in a few hours.

Fred and I also played softball together here at the law school. On one memorable weekend, we won the school tournament, stringing together five or six improbable victories over more talented teams. There is no truth, however, to the rumor that it was Fred’s idea to stall late in the semi­ final because several of our opponents in the final had tickets to the soon-to-start Dolphins game.

In 1981, after a Ninth Circuit clerkship and a short stint with a major D.C. law firm, Fred joined us in the Bureau of Consumer Protection at the FTC. In the 1970s, the Agency had tried to become the second most powerful legislature in Washington, proposing rules to transform dozens of industries. We disagreed. Relying on our law and economics background, we thought that the common-law already provided crucial basic rules for the economy, such as avoiding fraud and deception and keeping your contractual promises. Because of inadequate procedures to enforce those rules in consumer transactions, there was an important role for a federal agency. With Fred’s help, we defined that role and the FTC began the long road to the prominence it enjoys today. There really was a Reagan Revolution at the FTC, and Fred was an important part of it.

Then, Fred began his remarkable academic career, first at Emory, then Cornell, Northwestern, and now Miami. Fred has returned to his original law school home. Let me highlight three themes in the extensive McChesney body of scholarship:

First, rent extraction. Few books have been more aptly titled than Fred’s 1997 Harvard publication, “Money for Nothing: Politicians, Rent Extraction, and Political Extortion.” Most have long understood that politicians offer favors, such as the latest pork barrel project. We see legions of lobbyists trolling Capitol Hill, engaged in rent seeking. But Fred explained that the politicians offer more: not doing something that a particular group finds onerous. Hence, money to politicians for doing nothing. Thus, to Fred, the 1986 Tax Reform Act was the Sistine Chapel of the political art. Not only did that Act simplify the tax code, allowing room for selling thousands of new complexities that plague us today, but the tax writers also threatened numerous onerous provisions that were never enacted. Fred put a new twist on Ronald Reagan’s apt description of Washington mores: “If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.”

Second, Fred has made important contributions to the property rights literature, perhaps best illustrated in his 2003 Princeton book with Terry Anderson, “Property Rights: Cooperation, Conflict, and Law.” Fred’s work on Native Americans is particularly insightful. Various laws have foreclosed these Americans from exercising the full property rights that others have in their land. As Fred documented, the predictable result has been less wealth for these citizens, only partly alleviated by revenues from casinos.

Third, Fred has insisted on applying public choice economics to antitrust, as illustrated by his 1995 Chicago book with Bill Shughart, “Cases and Consequences of Antitrust: The Public Choice Perspective.” For reasons hard to understand, many in the Chicago school of economics thought that government actors were guided by self-interest, except those in the antitrust field. Fred’s work has been a useful correction and reminder of the importance of economic incentives in all aspects of life.

Of course, there is much more. Did you know that some legal clinics not only charge less for routine legal services, but can also increase quality? Our 1979 article, using empirical data on legal clinic performance, explained that through advertising, legal clinics could obtain a sufficient volume. With that volume, they can specialize on certain services, thereby not only lowering price, but improving quality.
Fred also recently explained the benefits of property rights in one’s parking place on the street following Chicago snowstorms. By giving individuals who clear a space on the street for their car property rights, Chicago encourages snow removal, not only in the space involved, but in contiguous spaces because of increased melting next to the cleared land.

Why were the Indian wars on the plains so intense? As Fred explained, the Civil War created an officer class larger and more skilled then in the antebellum years. Those skills were used-or in the case of Custer, misused – against the Plains Indians.

Fred is not only a world class scholar, he is also a world-class individual. Fred makes friends easier than anyone. To eat at Shorty’s with Fred is to become engaged in a conversation with the entire picnic-style table, most of whom you have never met. Fred also knows more about pre­ Beatles rock’n’roll than anyone alive.

And to be with Fred at a baseball game – well, let me tell you about one particular night in 1982, illustrating another skill at which Fred is world-class. The Angels were playing the Orioles in Baltimore, and we were sitting down the right-field line. Jim Palmer was the winning pitcher for the Orioles, causing Fred to predict that we had probably seen the last game Palmer would ever win. This was not the aspect at which Fred is world-class, for Palmer that night began a long winning streak in the last great year of his Hall of Fame career.

No, it was another event that prompts my admiration for Fred’s skills. When the Angels were in the field, we were sitting close to one Reginald Martinez Jackson. Yes . . . Reggie. . . Mr. October. But it was Spring, and Reggie was playing poorly, both at bat and in the field. Fred, in his booming voice, let the slugger know his opinion. I guarantee you that his words can be used in polite company in virtually any setting, except perhaps “bum”! But that night Mr. Jackson did not appreciate the particular order in which Fred used those words. In an event as rare as a triple play, Mr. October yelled back, in words not necessarily suitable for today’s event.

So, there we have it, Fred McChesney: world-class scholar, world-class friend, and world-class fan. The Law School has gained a very special person.

Kieth N. Hylton is William Fairfield Warren Distinguished Professor at Boston University School of Law.

The last time I saw Fred McChesney was at a conference at Notre Dame where we both spoke, three years ago. We laughed heartily about how the stock market fools political observers. When a presidential candidate who will do terrible things to the economy is running, the stock market will tank as he appears to gain credibility as a successor, leading journalists and voters to blame the incumbent president for the market fall. As a result, support quickly snowballs in favor of the economy-killing candidate, who wins handily. As the economy-killing president nears the end of his term, the stock market then soars in anticipation of better fiscal management in the future, leading observers to conclude that the economy killer was very good for the economy after all – how else could he have left us with such a soaring stock market on his way out? This was the sort of joke Fred could be expected to tell, and reflects the sort of thinking that Fred devoted his career to trying to correct. He will be missed.

Louis De Alessi is Professor Emeritus of Economics at the University of Miami.

Fred and I met when he enrolled in my graduate course in Microeconomic Theory at George Washington University. The class was small, I used a Socratic approach, and Fred — as you would expect – was an active participant, asking good questions and making insightful comments. We began to get to know each other, and toward the end of the course he came to see me. He said that he had been intrigued by the range of interesting problems that economic theory could be used to explore, and was thinking of studying for the Ph.D. We discussed his interests and constraints, and it seemed to me that the Department of Economics at the University of Virginia would be a very good fit. I encouraged him to look into it, he did, and decided to go there. I was delighted. He was an outstanding student of great academic promise, and UVA was an excellent springboard.

In 1975 Henry Manne, a good friend, approached me about joining the Law & Economics Center at the University of Miami as co-director of the John M. Olin Fellowship Program. One of his inducements was that Fred was going to be one of the Fellows in the first class, and that helped me decide to accept the offer. When the LEC moved into its own building, Fred had the office directly across the hallway from mine, and we saw a lot of each other. Fred did extremely well in the LEC courses and seminars as well as in the UM School of Law, where he made law review and graduated at the top of his class.

Fred and I became good friends. He inevitably had a good story to tell – usually the long version – and time spent with him was always entertaining and informative. We had other interests in common besides economics, including history and — during his stint at LEC — sailing. He and three colleagues owned an O’Day Daysailer that they docked at our house and used to explore Biscayne Bay and its keys, and occasionally our boats crossed paths.

Fred was thoughtful and kind. He and Tim Muris used to spend an occasional Spring weekend making a tour of baseball Spring training camps in Florida. One weekend they took along my son Michael, a 9-year old baseball fan. Michael had a marvelous time, and my wife Helen and I were deeply appreciative.

After Fred graduated from law school, I followed his career with great interest and I was delighted that he fulfilled his promise. We corresponded, and we met at conferences, meetings, and similar events. We were members of many of the same professional organizations and we had a lot of friends in common, so it was easy and rewarding to keep in touch.  We exchanged reprints and I contributed a chapter to the book on antitrust that he co-edited with William Shughart. For a time I taught a few days a year in a master’s program in Napoli, Italy, and in 1992 I asked Fred to teach a segment on law. We overlapped, and Fred – with his usual flair – opened his first lecture in Italian. The next day he joined my wife and me in Roma, and we spent a day or two wending our way to Torino, where he stayed with us for a couple of days. He was bright, cheerful, witty, and a great companion.

When Fred returned to the University of Miami School of Law, first on a visiting basis and then as a chair professor, I was utterly pleased. We began to meet periodically for mid-morning coffee (Fred always had a banana as well) at a Starbucks with an outdoor patio and spend an hour or two chatting. As usual, he was bubbling with research and writing ideas and travel plans. Life here was good to him for a while. Then a close friend died suddenly of cancer and not too long afterwards his own health began to deteriorate.

The last time we met he did not look well and was quite subdued. I thought it was just a temporary setback, and he certainly seemed to think so. Even after his family moved him to the Washington, DC  area for better care, I expected him to recover, as he had before. His demise was a shock.

Fred had a long and brilliant career. It spanned legal practice with a major law firm, an influential position at the Federal Trade Commission, and a series of distinguished academic appointments. Those in the profession will remember him for his many research contributions as a leading scholar in law and economics. His friends will also remember him for his good humor, warmth, and erudition.  We had been friends for some forty-five years, and I will miss him.

He loved his family, and it is comforting that he was with them at the end.

William C. MacLeod is a partner at Kelley, Drye & Warren LLP, where he chairs the firm’s Antitrust and Competition practice group. He is a former director of the Bureau of Consumer Protection at the FTC.

It is only with hindsight that we can appreciate the naïveté of conventional wisdom. In 1970, when Fred McChesney left Holy Cross College, serious economists were advocating the dismantling of large American companies, supposedly because they had grown too large to compete effectively.  Regulations were multiplying, as were the bureaucracies Congress created to impose them. OSHA, EPA, CPSC, to name a few, were reordering behavior from the factory floor to the family room. A Republican president outdid them all with an executive order freezing wages and prices across the economy, divorcing the dollar from the gold standard, and taxing imports to protect US producers. These measures met the acclaim of the intelligentsia and the media by and large. The learned classes were already concerned that communist economies were performing better than the capitalism in the US.

The legal profession offered a coveted career in those days of expanding government. A regulatory state needs tens of thousands lawyers to promulgate, enforce, observe and resist the rules that direct economic activity and restrict property rights. Fresh out of college, Fred wanted to be a lawyer. He left for the Ivy League and entertained visions of practice in elite institutions of law. The visions evaporated in the drudgery of cases. Fortunately for us, Fred found that preparing for a traditional practice neither challenged his intellect nor inspired his passion.

For those who knew Fred, whose passion for good people and great ideas was unmatched, it is no surprise that the encounter that changed his life came in an economics class. Nor is it a surprise, for those who have heard Louis DeAlessi, that the class was his course in price theory. There Fred started to explore the myriad ways in which people enjoy life, liberty and the pursuit of happiness (or maximize utility within budget constraints, as the economists eloquently put it). Many of those pursuits, this young Washingtonian saw, found riches and faced ruin on Capitol Hill.

Louis told Fred of a place not far away where a future Nobel laureate, James Buchanan, had broken ground in the largely uncharted territory of public choice. Fred packed his bags for Charlottesville and the University of Virginia. By that time, Buchanan had decamped, but UVA remained a hub of the discipline that explored the economic implications of public and private ownership of property, and the costs of collective control of the means of production. Among their many accomplishments, the economists in Rouss Hall examined the Soviet economy through the lens of their new learning, and they were among the first to predict the economic decline of that supposed juggernaut. Rumor has it that they were working for the CIA, economic spies at your service. If you wanted to learn the economic consequences of government activity, UVA was a great place to go.

That is why I went, that is where I met Fred, and that is when he became my friend for life. Together we studied, wrote, worked, and spun rock and roll records, sometimes all at once, as we tried to absorb the wisdom of Bill Breit, Ken Elzinga, Roland McKean, John Moore, Warren Nutter, Roger Sherman and Leland Yeager. We treated the radio station like a lending library for oldies unattainable anywhere else. We took our final exam in public finance the gray day after Bobby Darren died. And we learned to appreciate the magic of markets. Perhaps most gratifying, we saw weary refuges return from Washington’s war on free markets, every one sadder, wiser, and ready to teach a new generation that Hayek and Friedman were right. Not even brilliant believers in the market can run it better than free customers and competitors can.

Charlottesville was paradise, but it couldn’t hold Fred. That great academic entrepreneur and talent scout, Henry Manne, looked to UVA for the core of his team at the Law and Economics Center in the University of Miami. Fred was one of Henry’s first recruits. A year later, I was one of Fred’s. He returned to Charlottesville, helped me pack my old Ford, and joined me for a twenty-four-hour rolling concert with Dion, Chubby, Fats, the Marvelettes, Ronettes and Searchers serenading the countryside all the way.

We enjoyed every minute of L&EC. When judges and professors came to Miami to teach and learn economics at Henry’s Institutes, we welcomed them, and Fred made more friends for life. He wrote his dissertation and published a pathbreaking study with Tim Muris on the economic effects of legal restrictions in the legal profession. Fred joined the law review, played with the champions of UM Intramural Softball, acquired academic honors, and landed a clerkship in the Ninth Circuit Court of Appeals.

Then the elite law firms came calling, but a life of law practice had gained no power over Fred after he’d seen economics. Tim Muris lured him to the FTC, where Fred evaluated enforcement proposals with the eye of an economics professor and supervised the Commission’s advocacy of competition where public and private barriers had kept it at bay. A career capstone for many a student of law and economics, wielding the power of the government was not what Fred wanted to do. He wanted to explain it. He left the FTC and embarked on the career that would make his own name in public choice economics.

I cannot do justice to the body of Fred’s prodigious scholarly contributions in this note. Instead, I will describe just one and invite you to sample another.

To frame the first, remember (as Ken Elzinga’s students all do) Alfred Marshall’s famous illustration of supply and demand: the two forces are like blades of a scissors, neither of which can serve without the other. Public choice for years had recognized how the economic incentives of individuals in the private and public sectors could create thriving throngs of rent seekers, bent on shaping rules to their benefit. One would have thought that the counterpart would have been equally obvious to political economists, but it wasn’t. The literature had largely neglected the other blade of the scissors, until Fred described it in Money for Nothing, Politicians, Rent Extraction, and Political Extortion, which explained that rent seekers need scarce resources. Of course, no entity can create scarcity better than government can. Its ability to do so, Fred observed, spawned eager rent extractors, as well as rent seekers. People with the power to take property or impair its full enjoyment could exact payments simply by threatening to do it. They could even forbear – do nothing – and still reap rewards of extraction, just by posing the threat. If scarcity can be made, and government has been doing it for centuries, markets will form on both sides of it. A young Fred McChesney had lived through a painful episode of socially engineered scarcity in the 1970s. He wrote the book on it twenty years later.

Finally, for an invitation to the economics of property rights, here is a link to a lecture Fred gave thirty years ago in the heart of a country he loved but could not explain. The setting was France, and at the time a socialist government was taking property rights from the private sector and appropriating them for a public purpose. You can see in the lecture that Fred was pondering the mystery he later solved in Money for Nothing. French rent creators were keeping seekers and extractors fully occupied. Consumers and sellers of goods and services suffered the consequences.

A new administration in France is still struggling to repair the damage of the rent creation in the 1980s. Meanwhile, back in the USA, as a new tax code makes its way through the halls of Congress, we all would do well to watch out for politicians, extortion, and rent extraction. They could be coming to a wallet near you.

Thanks, Fred.  We owe you a lot of rent.

Yours always,

Bill MacLeod

As many Truth on the Market readers likely know, law and economics scholar, Fred McChesney, passed away last month. As we prepare to lay Fred to rest later this week, I have asked some of Fred’s friends and colleagues to contribute their thoughts about Fred’s life, and his influence as a scholar and as a friend. Over the next few days we will post those remembrances on the main page (and they will be collected here).

Fred was a lifelong friend, mentor, and intellectual influence — to me, as to so many others. I first met Fred when I was something like four years old, and he has been a significant influence in my life ever since. Like many others, I came to know Fred through my father, Henry Manne, who invited Fred to become one of the first Olin Fellows at the nascent Law and Economics Center at the University of Miami. Whatever his professional success in that role, in those early years he was to me a source of education about good music and a respite from the boredom of the interminable professional gatherings of various LEC events.

Later, as my interests and my career brought me further within Fred’s orbit, he graciously advised me on my studies and my career, and provided his insightful thoughts on my scholarship. Still later, he unhesitatingly agreed to serve as one of the initial members of the board of directors of the International Center for Law & Economics, and, unlike some other members of the board who thoughtlessly saw fit to take government jobs (you know who you are…), served on the board without interruption until his death.  

As others will recount, his scholarship was incredibly influential. It was Fred who explained that rent seeking is a two-way street, and that the price and quantity of political influence is not just some abstract function of what would-be influencers want from the government, but of what politicians and regulators provide — or threaten to impose. Many a critic of crony capitalism will unflinchingly lay blame at the capitalists’ feet, without understanding that there would be little worth influencing if politicians didn’t strategically manipulate the supply of regulation, extracting “money for nothing” simply to forbear from cynically exercising their power to impose regulatory costs. Yet, ignorant of this dynamic — even, remarkably, in the Age of Trump — self-appointed protectors of the public interest go on advocating that the government have more and more authority in order, ostensibly, to combat the unseemly power of private enterprise — without ever seeing that the cure can actually cause the disease. If only they read — and understood — Fred McChesney….    

And Fred was a titan of antitrust and consumer protection law and economics. His contributions to these areas are legion, and they have influenced all of us in the fields — whether we know it or not. Among many others are his articles bringing key economic insights to bear on issues like the faulty (or absent) assessment of materiality in the FTC’s deception actions, the faulty assumption of consumer benefit from the FTC’s Funeral Rule (and other disclosure-based regulations), and the influence of special interests on FTC merger enforcement decisions. His edited volume with Bill Shughart, The Causes and Consequences of Antitrust: The Public-Choice Perspective, and his antitrust casebook with Charlie Goetz (and later TOTM’s own Thom Lambert) are among the standards in the field.

And maybe most important of all, Fred edited the Liberty Fund’s three-volume collection of Henry Manne’s papers and conducted its excellent “Intellectual Portraits” series interview with my dad, as well.

The worlds of public choice, antitrust, consumer protection, and much else have lost a great scholar. And many of us have lost a great friend.

In addition to the encomiums that will appear here, readers should read the wonderful remembrance of Fred by his friend and co-author, Bill Shughart. Also worthwhile are the obituaries in the Chicago Tribune and the Washington Post, and the University of Miami’s tribute to Fred. A remembrance by David Henderson also highlights some of Fred’s best insights.