Bottom-up

It’s that time of the semester again. In the interests of not flunking out of grad school, I’ll be taking another break from blogging to focus on my studies. I’ll be back in June.

A bit of self-promotion, and some other stuff that’s worth reading:

• Justice Stevens announced his retirement a couple of weeks ago. I did a post for Cato looking at his high-tech legacy.
• Last week, Reihan Salam did a nice article for Forbes comparing Stevens’s rulings on copyright and patent law to his 2005 Kelo decision on eminent domain abuse. (and linking to me)
• On Friday, the Free Software Foundation released a movie by Luca Lucarini about software patents. I’d say it’s the best movie on software patents I’ve ever seen, but in fact it’s the only movie about software patents I’ve ever seen. It’s an incredibly dry subject, and Luca did a great job of making it interesting. He weaves together a compelling case for software patent abolition without putting the audience to sleep. The movie also features virtually all of my favorite scholars in this area. I was honored to be among the experts Luca interviewed, and a few seconds of our interview made it into the final version. So I encourage you to check it out. You’ll need software (like Firefox 3.6) capable of playing Ogg Theora files.
• The David Boaz article I linked to last week sparked a ton of discussion around the blogosphere. I remain puzzled about what Arnold Kling means by a “group status issue” and how it differs from a regular political issue. Bryan Caplan emerged as the most extreme advocate of the state-worshiping school of libertarianism, arguing that women were freer in the 1880s because the era featured lower taxes and fewer regulations. I think Will’s responses to Caplan are spot-on: the right to own property, to pursue the profession of their choice, and to decide when to have sex with their husbands seem to vastly outweigh the benefits of a lower capital gains tax rate.
• Julian Sanchez argues that the latest warnings about an “intelligence gap” are probably just as bogus this time as they were the last several times.

A couple weeks ago I linked to Ed Felten’s great post comparing the iPad to Disneyland. Reader Sean L. responded:

If Disneyland had kiosks where you could choose from 10,000 food vendors, no one would be making the argument that the food was bland, even if Disney needed to hand-taste each vendor for approval. To continue the analogy, one might say hungry customers would be better off having access to 100,000 un-tasted food vendors. I think for >99.99% of patrons, 10,000 options are quite enough, and the fact that they’re missing out on 90% of their potential choices — the vast majority no doubt repeats of others — is just fine considering someone has actually tasted the 10% and not gotten ill. The fact that there would be a group of snotty cooks out there complaining they can’t get their own flavor of spaghetti and meatballs on the menu wouldn’t enter into anyone’s mind (and rightfully so.)

At least not until one of those “snotty cooks” wins a Pulitzer prize:

Political cartoons, it turns out, can violate Apple’s license agreement with developers, which states that applications, or “apps,” can be rejected if the content “may be found objectionable, for example, materials that may be considered obscene, pornographic or defamatory.”

Apple alone determines what is objectionable for its online app store, a practice that has come under close scrutiny. In its message to Mr. Fiore in December, the company cited his cartoon’s allusions to torture and to last year’s White House party crashers as examples.

After Mr. Fiore received the Pulitzer Prize for editorial cartooning — and after he mentioned his app’s rejection in an article published on niemanlab.org on Thursday — he was encouraged by Apple to resubmit it. Mr. Fiore did so on Friday morning and is awaiting a response.

The fundamental problem here is that “objectionable” apps, like bad food, is in the eye of the beholder. In a centrally-planned ecosystem, the proprietor gets blamed for every aspect of the customer experience. And so reviewers are going to reject offerings that will offend any portion of its customer base—even if those same products would have been extremely popular with other customers. So you only get bland food and inoffensive apps.

And the problem tends to get worse over time. Last year, Apple got blamed for approving a tasteless but basically harmless “baby shaker” app. Incidents like this push bureaucracies to be increasingly timid and conservative. If an Apple app reviewer approves an app that proves controversial, he might get in trouble with his boss. In contrast, if he rejects an app that some users would have liked, the users will in most cases never find out what they’re missing. At least until the app author wins a Pulitzer prize and makes the whole approval bureaucracy look ridiculous.

Incidentally, the perverse incentives here apply with equal force to government bureaucracies like the FDA and TSA.

I haven’t been following the debate over Sen. Dodd’s financial overhaul closely enough to have an opinion on the overall package, but Mike Masnick flags one aspect of the legslation that seems really troubling. Bob Litan explains:

Under existing law, startup companies can raise money easily and quickly from “accredited investors” — individuals with substantial wealth or income. There is no need for the companies or the investors to gain approval from any state or regulatory official.

All of this would change if Section 926 of the Dodd bill is included in any final reform legislation. That section would require, for the first time, companies seeking angel investment to make a filing with the Securities and Exchange Commission, which would have 120 days to review it. This would both raise the cost of seeking angels and delay the ability of companies to benefit from their funding.

The negative impact of the SEC filing requirement would be aggravated by the proposed doubling of the net worth or income thresholds required for investors to be “accredited.”

It’s hard to overstate how important a favorable regulatory climate is to the success of startups. Some of the most important startups have been founded by 20-somethings without the resources to hire lawyers or navigate regulatory bureaucracies. And startups frequently find themselves within weeks of insolvency before they have a big breakthrough. Having a crucial round of funding delayed by four months can be the difference between success and failure. If this description of the bill is accurate (and I have no reason to doubt that it is), this provision would be very bad for the future of high-tech innovation in the United States.

Cato vice president (and my former boss) David Boaz had a really fantastic essay last week at Reason about libertarians’ unfortunate tendency to sentimentalize an imagined past of lost liberty:

For many libertarians, “the road to serfdom” is not just the title of a great book but also the window through which they see the world. We’re losing our freedom, year after year, they think. They (we) quote Thomas Jefferson: “The natural progress of things is for liberty to yield and government to gain ground.” We read books with titles like Freedom in Chains, Lost Rights, The Rise of Federal Control over the Lives of Ordinary Americans, and yes, The Road to Serfdom.

The Cato Institute’s boilerplate description of itself used to include the line, “Since [the American] revolution, civil and economic liberties have been eroded.” Until Clarence Thomas, then chairman of the Equal Employment Opportunity Commission, gave a speech at Cato and pointed out to us that it didn’t seem quite that way to black people.

And he was right. American public policy has changed in many ways since the American Revolution, sometimes in a libertarian direction, sometimes not…

No doubt one of the reasons that libertarians haven’t persuaded as many people as we’d like is that a lot of Americans don’t think we’re on the road to serfdom, don’t feel that we’ve lost all our freedoms. And in particular, if we want to attract people who are not straight white men to the libertarian cause, we’d better stop talking as if we think the straight white male perspective is the only one that matters. For the past 70 years or so conservatives have opposed the demands for equal respect and equal rights by Jews, blacks, women, and gay people. Libertarians have not opposed those appeals for freedom, but too often we (or our forebears) paid too little attention to them. And one of the ways we do that is by saying “Americans used to be free, but now we’re not”—which is a historical argument that doesn’t ring true to an awful lot of Jewish, black, female, and gay Americans.

But it’s not just a strategic mistake. It’s a mistake.

I think there are at least two factors driving libertarians’ tendency to see the world as losing freedom even as things get more and more free. One is Kerry Howley’s concept of “state worship.” Many of the mechanisms for the subjugation of women, blacks, Jews, gays and lesbians and other disfavored groups during the 19th and 20th centuries were not primarily the work of the state. Yes, we had fugitive slave acts and sodomy laws, but we also had lynchings, anti-Jewish hiring and college admissions policies, domestic violence, and so forth. These latter policies were genuine impediments to liberty, but because they weren’t being perpetrated directly by the state, a lot of libertarians seem to believe their abolition doesn’t count for as much when we’re tallying up the overall state of liberty. But if you’re a libertarian because you’re a liberal—that is, if you believe limited government is a means to the end of liberty rather than an end in itself—then there’s no good reason to draw this kind of distinction.

The other problem is that I think it’s hard to keep a sense of perspective when you’re “in the trenches” thinking about today’s threats to freedom. Libertarian pundits and activists spend the most time on issues where freedom is the most threatened. We don’t pay much attention to issues (like the draft, sodomy laws, or airline and trucking deregulation) where the libertarian perspective has become so mainstream that it’s rarely even a subject of debate. The result is a kind of reverse survivor’s bias, where the grimmest cases get the most attention.

Undue pessimism seems to be a common problem in pro-freedom movements. Tim Wu wrote an excellent article in Slate last week arguing that the iPad represents the final abandonment of the heritage of open technologies Apple inherited from Steve Wozniak. As I’ve written before, I agree with this critique as far as it goes. But I also think it’s important that advocates of open technologies and user freedom not overstate their case. Open technologies are incomparably more popular and deeply entrenched today than they have ever been. There is no real threat that core Internet technologies like TCP/IP, HTTP, HTML, DNS, and SMTP—all of which are open standards—will be displaced by proprietary alternatives. Successful open standards have a habit of rapidly and thoroughly destroying their proprietary competitors. And this means that once an open standard “wins,” it quickly stops being an interesting story. It would be hard to sell Slate on an article pointing out that TCP/IP is still the world’s dominant networking protocol and is likely to be so for the foreseeable future. So instead, all the discussion focuses on those areas where open standards are still the underdog. This leads to the same kind of reverse survivor’s bias that plagues the libertarian movement. And it helps to explain why we get a seemingly endless series of books warning about the decline of the open Internet even as open technologies continue to become more and more dominant.

I’m biased since he’s my advisor, but Ed Felten’s post about the iPad as Disneyland is probably the best critique of the iPad I’ve seen:

There’s a reason the restaurants in Disneyland are bland and stodgy. It’s not just that centralized decision processes like Disney’s have trouble coping with creative, nimble, and edgy ideas. It’s also that customers know who’s in charge, so any bad dining experience will be blamed on Disney, making Disney wary of culinary innovation. In Disneyland the trains run on time, but they take you to a station just like the one you left.

I like living in a place where anybody can open a restaurant or store. I like living in a place where anybody can open a bookstore and sell whatever books they want. Here in New Jersey, the trains don’t always run on time, but they take you to lots of interesting places.

Ed argues that the Disneyland comparison gives us reason to doubt that the iPad model will ever dominate the technology industry:

What makes Disneyland different is that it is an island of central planning, embedded in a free society. This means that Disneyland can seek its suppliers, employees, and customers in a free economy, even while it centrally plans its internal operations. This can work well, as long as Disneyland doesn’t get too big — as long as it doesn’t try to absorb the free society around it.

The same is true of Apple and the iPad. The whole iPad ecosystem, from the hardware to Apple’s software to the third-party app software, is only possible because of the robust free-market structures that create and organize knowledge, and mobilize workers, in the technology industry. If Apple somehow managed to absorb the tech industry into its centrally planned model, the result would be akin to Disneyland absorbing all of America. That would be enough to frighten even the most rabid fanboy, but fortunately it’s not at all likely. The iPad, like Disneyland, will continue to be an island of central planning in a sea of decentralized innovation.

I think part of the reason you’ve seen such a divergent reaction to the iPad between geeks and non-geeks is that geeks have a much better idea of what’s going on “behind the scenes” in the software development process. We know enough about how software gets made to have a pretty good idea of the preconditions for a really vibrant software platform. We know that a platform that’s structured like Disneyland is likely to suffer from Disneyland-like sterility.

But this isn’t something that’s directly observable to ordinary users, for whom software (to say nothing of the processes and communities that behind it) is a black box. So if we iPad skeptics turn out to be right, there won’t be a “eureka” moment where ordinary users realize that the iPad sucks because of its centrally-planned app store. They’ll just notice that some other platform seems to have more cool stuff than the iPad, and gradually switch to the new platform.

This is exactly what happened in the late 1990s when people began abandoning AOL in favor of the open Internet. Very few of those users could have explained the technical or business model differences between AOL’s network and the Internet. All they knew was that for some reason most of the cool stuff was available on websites, not via AOL keywords.

I’m delighted that Jerry Brito has written a thoughtful response to my recent posts about spectrum and property rights. I want to start by reiterating what I have said before: Jerry’s paper on the subject of spectrum commons is a must-read and ably lays out what might be called the standard libertarian view on spectrum policy.

Reading Jerry’s post, I got the sense that we were largely talking past each other. Jerry’s an awfully smart guy, so I’m going to take this as evidence that I didn’t make my argument very well in my last post. So let me see if I can make my argument in a different, and hopefully clearer, way.

Here’s a simplistic and stylized schematic of the current spectrum regime:

The columns represent real property owners, and the rows represent spectrum blocks. Jerry, Tom, and Mary are representative property owners in the Washington DC area, while Susan and Tim own property in the Philadelphia metro area. Each color represents a distinct spectrum licensee. So in this case, we see a 700 MHz spectrum block and a PCI spectrum block, each of which is held by a single owner across all the properties in the chart (these would probably be big companies like AT&T or Verizon). Then we have two different TV channels, which are held by different parties in different metropolitan areas. One of the channels isn’t being used at all in the DC metro area (which is one reason we need spectrum reform!). Finally, we have the WiFi band. I’ve colored these separately to illustrate the fact that, in effect, each of these property owners has a license to transmit within the boundaries of his or her own property.

Now here are two possible changes to the spectrum regime. The first is what I take to be Jerry and Tom’s ideal spectrum policy regime. In this picture, we’ve auctioned all frequencies so that each has been licensed to a distinct private party, with regulations to prevent spectrum users from interfering with users on adjacent frequencies:

And here’s another allocation that we might call the “WiFization” of the electromagnetic spectrum. Here the entire electromagnetic spectrum is allocated for unlicensed use on the WiFi model, with regulations to prevent spectrum users from interfering with geographically adjacent users:

If I’m reading Jerry right, he thinks one of these depicts a free-market system based on property rights, while the other is “command and control” regulation. This strikes me as kind of silly. From a philosophical perspective, these two situations are almost perfectly symmetrical. The only difference is how we’re drawing the property boundaries.

In particular, the difference is not that in one picture the government sets the rules and in the other picture private parties set the rules. In both cases, the government delegates authority to private parties along with some general rules designed to prevent parties from interfering with one another. It’s not obvious that one regime requires significantly more onerous or complex rules than the other.

Indeed, you could imagine implementing the “WiFi” regime using a common-law based non-interference rule rather than a specific power level mandated by the FCC. We could even do away with the FCC altogether! Neighbors would negotiate among themselves about power levels (and cut deals for permission to transmit across each others’ property), with the courts hearing disputes and gradually developing a body of caselaw about reasonable power levels. I don’t know how practical such a regime would be, but it’s certainly not a “command and control” regime.

But let’s get back to the real world, where we do have an FCC and it’s not about bring about either of the sweeping reforms I depict above. I think the heart of Jerry’s argument is this:

I think we have to ask ourselves, why do we (both on the left and the right) dislike command-and-control? The main reason, it seems to me, is what Hayek called the local knowledge problem. A central authority like the FCC can’t possibly have all the information it needs to allocate scarce resources efficiently…

If the resource is controlled by the state, and it is setting the rules, then the only means available to it for setting the rules is a command-and-control process subject to the knowledge problem noted above. On the other hand, a property rights approach to rule setting is dynamic and bottom-up, something I know Tim will appreciate. So, I don’t think that Tom and I are conflating the first order question with the second order question. I think we are conflating a state-governed commons with command-and-control regulation, because that is in effect how the state creates commons.

This is precisely the kind of argument I was critiquing in my pizzaright post. The basic argument is that if the government controls a resource, that’s “command and control,” and it’s subject to Hayek’s knowledge problem. But if a private party controls the resource, we’ll get bottom-up solutions. To see what’s wrong with this, imagine if we implement a “property rights” regime in which we clear out the entire electromagnetic spectrum and auction it off to a single owner. You could call that a “property rights” system, but most people would just call it a monopoly. And this monopoly would be subject to precisely the same knowledge problem as the FCC. Central planning is hard regardless of whether you’re a private company or a government agency.

This problem gets less severe as you auction off more licenses. But it never goes away completely. Granting exclusive nationwide (or even regional) licenses necessarily privileges large-scale, capital-intensive, centralized business models, while hobbling small-scale, bottom-up business models. Unlicensed bands distort the market in the opposite direction.

Of course, clever market participants may discover ways to allow decentralized experimentation using centrally-controlled spectrum blocks. But the point of my pizzaright analogy was that markets never fully overcome these costs. Pizzarights will always skew the pizza market and disadvantage smaller pizzarias. And in exactly the same way, a system of exclusive national spectrum licenses will always be more friendly to top-down technologies like cellular than bottom-up ones like WiFi.

Just to reiterate: that doesn’t mean exclusive licenses are a bad idea. There are some extremely useful applications that can only be accomplished in top-down fashion, and I’d like to see more exclusive licenses auctioned off for those applications. But I would also like to see more spectrum made available for unlicensed use. And I don’t think that makes me an enthusiast for central planning.

I’ve officially accepted a position as a summer intern at Google’s New York office, and I wanted to make a couple of quick blog-related notes.

First, I’m going to try to steer clear of Google-related commentary between now and September. Google has hired me to write code, not to do policy work, so in theory it shouldn’t be a conflict of interest. But in practice I don’t think it’s that simple. On the one hand, I don’t want to risk biting the hand that feeds me. And on the other hand, I don’t want readers to wonder whether I’m watering down my writing to avoid biting the hand that feeds me. So there won’t be a lot of writing about Google the next few months. I also don’t plan to write much about my on-the-job experiences, both because this isn’t that kind of blog and because much of what I do will be covered by my non-disclosure agreement.

With that said, I do hope to continue blogging regularly throughout the summer about non-Google topics. I can’t promise anything—Google might frown on blogging interns, or they might keep me so busy that I don’t have much free time for blogging. But with any luck, blogging volume should increase in early June.

For those not steeped in tech policy, my last post was a satirical look at the spectrum policy debate. In particular, it was inspired by last month’s Tom Hazlett interview on Jerry Brito’s excellent podcast, Surprisingly Free. The quotes in the post are verbatim quotes from the podcast with the obvious pizza-related substitutions.

Tom Lee spotted the key weakness with my pizzaright analogy: when I broadcast, it might interfere with my neighbor’s broadcasts. Pizza-making isn’t like that: my making a pizza doesn’t make my neighbor’s pizza less delicious. So we need property rights in spectrum, but we don’t need pizzarights.

Unfortunately, the world isn’t that simple. The question of whether spectrum is rivalrous is at the heart of the debate over spectrum policy, and it’s hotly contested. Smart people like Kevin Werbach and Yochai Benkler argue it’s not. They argue that with the right institutions, wireless devices can self-organize to share the spectrum, just as human being self-organize to communicate in a crowded room without any centralized control over speech volumes.

Now, to be clear, I think Werbach and Benkler overstate their case. It seems pretty clear to me that there are some wireless applications that require exclusive use, and so I favor the creation and auctioning off of property rights for a significant fraction of the electromagnetic spectrum. But the point of my last post was to critique the common presumption that pro-free-market thinkers should necessarily favor the creation of exclusive, nationwide property rights for the entire spectrum.

To see why this is wrong, it’s worth thinking about the debate over carbon emissions. In a sense, this is also a debate over scarcity. One side favors treating the atmosphere’s ability to absorb carbon as a commons (Jerry would probably call it an “open access” regime, but I use the “common” terminology), allowing anyone to emit carbon dioxide without legal restrictions. The other side believes that this will lead to a tragedy of the commons, and so they favor a property-rights-oriented approach. The weird thing is that the left and right in the carbon debate are on the opposite sides from the positions they occupy in the spectrum debate. In the spectrum debate, a commons is considered a “left-wing” position, while property rights are considered “right-wing.” In contrast, in the carbon debate you find right-wingers advocating a “carbon commons” while left-wingers advocate a property-like regime called cap and trade.

When thinking about the best legal rules to govern the use of a natural resource, there are two steps to the analysis. First, we need to ask whether we need a legal regime of exclusive control at all. If the answer is no, then the resource should be freely available for anyone to use. On the other hand, if the resource is scarce, then we need to figure out whether to employ property rights (like cap and trade or spectrum auctions) or command and control (like traditional EPA or FCC regulations).

Advocates of the free market prefer property regimes to command-and-control regimes. Left-wingers sometimes prefer command-and-control regulation to markets. But there’s not an obviously free market or anti-free-market side in the debate over whether a given resource is sufficiently scarce to merit exclusive control (either government or private) in the first place. This is an empirical question, and in an ideal world people with similar ideologies could wind up on all sides of the debate.

And so it bothers me when free-market economists conflate the two issues and attack proposals for unlicensed spectrum as command-and-control regulation. The FCC’s decision to allow unlicensed spectrum in certain frequencies is not command-and-control regulation. Quite the contrary, it’s a classic case of deregulation—arguably one of the most libertarian things the FCC has ever done. And as a libertarian, I’m happy to see that it has been extraordinarily successful: Hundreds of millions of WiFi cards have been sold, and the technology is integrated into hundreds of successful consumer products, including iPhones, Wiis, and virtually every laptop on the market.

It is important for free-market types to attack “unlicensed” spectrum proposals that actually come with a lot of strings attached. This, I think, is the flaw of the “white spaces” proposal: there’s actually nothing unlicensed about it. While the white spaces rules don’t restrict who may use the spectrum, it does impose detailed rules about the protocols these devices may use. But the fact that a particular “unlicensed” spectrum program worked out poorly isn’t an argument against deregulation in general. And by painting all unlicensed spectrum rules with the same broad brush, free-marketeers malign some of the most successful (and libertarian!) FCC initiatives of the last few decades for no good reason.

Since its creation in the 1930s, the Federal Culinary Commission has tightly regulated the pizza marketplace. Entrepreneurs wishing to open pizzerias have been required to apply to the FCC, specifying the location of their proposed pizzeria, detailing the kinds of pizza that would be offered, and explaining how the creation of a new pizzeria benefitted the public interest. If the FCC determined that a new pizzeria was needed, it would issue a new pizzaright, subject, of course, to periodic renewal to ensure that the pizzaright was being used in the public interest.

In 1959, the noted economist (and future Nobel Laureate) Donald Rose argued that this “command and control” approach was grossly inefficient. He proposed that rather than micromanaging the evolution of the pizza industry, that the FCC should auction off pizzarights to the highest bidder. This would ensure that pizzarights were allocated to their highest-valued uses, and thereby promote economic efficiency.

Rose’s proposal was initially ridiculed, but over the last 50 years this free-market perspective has gradually gradually become the conventional wisdom. In 1994, the FCC conducted its first pizzaright auction, selling a national thin crust pepperoni pizzaright to Dominoes and allowing the firm to grow into the nation’s leading pizza chain. Over the last 15 years, Pizza Hut and Papa Johns have snapped up other key pizzarights and have built out their own national networks. Free-market economists tout the dramatic expansion of the pizza industry as evidence of the benefits of the property rights approach. And they have urged the FCC to finish the job, consolidating and auctioning off the pizzarights that are still scattered among thousands of local pizzerias across the country.

Today virtually everyone agrees that the FCC’s “command and control” regime for managing the pizza industry is antiquated. But a new critique of the orthodox free-market position has arisen on the left. These scholars argue that pizzaright privatization has promoted monopolization of the pizza marketplace. These advocates of a “pizzaright commons” have argued that rather than auction off more exclusive pizzarights, the FCC should focus on allowing more pizzerias to operate on an unlicensed basis. They point to the extraordinary success of the white cheese and spinach pizzaright, one of the earliest to be made available on an unlicensed basis, and now the basis of a thriving market for “WiSpi” pizzerias.

But free-market economists reject a pizzaright commons as command-and-control regulation in disguise. They point out that in practice, “unlicensed” pizzarights invariably come with strings attached. Indeed, the rules for the use of unlicensed pizzarights are often as complex and cumbersome as traditional command-and-control regulation. Free-marketeers point to the recent green spaces proceeding, which sought to allow unlicensed pizzerias in areas that were at least 5 miles from any existing pizzaright holder. The National Association of Pizzerias lobbied aggressively for additional restrictions, and the final rules were so cumbersome that not a single pizzeria has been opened under the “green spaces” regime.

David W Seymore, a leading free-market pizzaright scholar who served as the chief economist at the Federal Culinary Commission in the early 1990s, also points that a pizzaright commons would make it extremely difficult to organize the pizza marketplace. Once the FCC began allowing unlicensed creation of pizzerias, the fragmentation of the marketplace would be very difficult to reverse. “What really should happen now, is that there should be a mechanism, whereby new owners come in to, in essence, have exclusive control of competitive swaths of the pizza market, and therefore have an interest in re-organizing each part of the pizza market in an efficient way,” he said in a recent interview. National pizzaright holders could buy out inefficient regional pizzerias, ensuring that pizzarights were put to their most productive use.

Seymore acknowledges that additional unlicensed pizzarights might be good for consumers, but he argues that the government isn’t well-positioned to determine the best mixture between property rights and commons. He argues that the high prices paid in recent pizzaright auctions demonstrate the robust demand for exclusive national pizzarights. In contrast, he said, “There’s very little evidence, I would say no evidence, that there’s pent-up demand for more small pizzerias.”

After all, if there were really a demand for smaller pizzerias, the appropriate pizzarights could be purchased in the marketplace. Market prices, not bureaucratic fiat, should determine the optimal allocation of pizzarights.