Knowledge that Transforms

Five papers explore the effects of regulation, the causes and consequences of its dramatic growth in the United States, and the prospects for deregulation. Specific topics include the impact of public utilities and transportation regulation on prices, output, investment, health and safety regulation, and environmental regulation; the indirect effects of regulation on competition (e.g., on the cost of new capacity and competitive positions of firms); the causes and consequences of major shifts in business-government relationships; conceptual and practical problems in measuring the costs of regulation; and an analysis of the legislative deregulation of the airline industry, with projections for deregulation in the railroad and trucking industries.

It is high praise when so expert a * scholar as Samuel Hollander (1980) hails my canonical classical model (1978) as likely to become locus classicus for the next generation of textbook writers. Like Fletcher I care not who makes a nation's laws if I can shape its textbook writers' songs. But with power comes responsibility. I must weigh and respond to the doubts Dr. Hollander raises about some positions I took in the three-seventeenths of my positivistic text that digresses to interpret particular historical controversies. I shall be brief and deal only with most essential points.

A DAM SMITH'S use of the manufacture of pins to illustrate the benefits to efficiency of the division of labor (1776, Book 1, chap. 1) is famous, but there are few references to the subsequent development of the pin trade in the literature. The purpose of this note is to outline the development of the pin trade since Adam smith's reference to it and to place his comments in a new perspective. Pins have changed very little during the two hundred years since Adam Smith wrote about the trade. This makes possible meaningful measurement of long-term changes in labor productivity, which are described later. First, the structure of the trade, which has changed, is outlined. In an appendix the techniques of production, which have also changed, are described.