It is an appalling story: A thoughtful academic uses his training and profession’s tools to analyze a major, highly controversial public issue. He reaches an important conclusion sharply at odds with the populist, “politically correct” view. Dutifully, the professor reports his findings to other academics, policymakers, and the public. But instead of being applauded for his insights and the quality of his work, he is vilified by his peers, condemned by national politicians, and trashed by the press. As a result, he is forced to resign his professorship and abandon his academic career.
Is this the latest development in today’s oppressive P.C. wars? The latest clash between “science” and powerful special interests?
Nope, it’s the story of Hugo Meyer, a University of Chicago economics professor in the early 1900s. His sad tale is told by University of Pisa economist Nicola Giocoli in the latest issue of Cato’s magazine, Regulation. Meyer is largely forgotten today, but his name and story should be known and respected by free-marketers and anyone who cherishes academic freedom and intellectual integrity.
Here’s a brief summary: At the turn of the 20th century, the U.S. economy was dramatically changing as a result of a new technology: nationwide railroading. Though small railroads had existed in America for much of the previous century, westward expansion and the rebuilding of southern U.S. railways after the Civil War resulted in the standardization, interconnection, and expansion of the nation’s rail network.
As a result, railroading firms would compete with each other vigorously over price for long-distance hauling because their networks provided different routes to move goods efficiently between major population centers. However, price competition for short-hauls over the same rail lines between smaller towns wasn’t nearly as vigorous, as it was unlikely that two different railroads, with different routes, would efficiently serve the same two locales. The result was that short-distance hauls could be nearly as expensive as long-distance hauls, which greatly upset many people, including powerful politicians and other societal leaders.
Meyer examined those phenomena carefully, ultimately determining that there was nothing amiss in the high prices for short hauls.