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A Great Economist; A Greater Humanitarian

Tuesday, March 8, 2011

Jack Calfee’s scholarship was an instrument of human improvement to combat ignorance and error, reduce pain and suffering, and to discover arrangements that would allow people to live more satisfying and productive lives.

Christopher DeMuth shared the following at Jack Calfee’s memorial service on February 26, 2011, in Washington, D.C.

Many, maybe most, conversations consist of people taking turns talking about themselves. But with Jack Calfee, the pattern was reversed. If you received an email from Jack, it was probably because he had discovered some fact or article in your field of research that he thought might be useful. If he popped into your office, or if you sat with him at lunch in the American Enterprise Institute (AEI) dining room, he would almost invariably want to talk about what you were working on and to offer criticism and suggestions, or just ask you about the triumphs and tribulations of your personal life, or your take on political developments.

The conversations rarely stopped there, however, because Jack's own work was so fascinating, his learning so vast, and his cast of mind so original that one always wanted to turn the table and get him to open up about his own pursuits. When this happened, you were bound to learn something arresting—about problems of empirics or interpretation in a current research project, a recent court decision or action of the Food and Drug Administration, a new discovery in molecular biology, or (equally important to Jack!) in pharmaceutical marketing.

Jack was a meticulous economist and relentless empiricist.

The really striking thing was this: when Jack expatiated on his own work, he continued to be thoroughly outward-looking, rather than inward-looking. He was a meticulous economist and relentless empiricist, but his work was never coolly for its own sake or his own career. It was rather an instrument of human improvement: to combat ignorance and error, to reduce pain and suffering, and to discover arrangements that would allow people to live more satisfying and productive lives. I am certain that Jack's selflessness—his orientation to others and ability to conceive how much better things could be—accounted for the passion he brought to his research, writing, and everyday conversation.

Jack's first subject as a professional economist was advertising and its regulation. Here, his great contribution was to see advertising as part of a conversation. Cigarette advertisements used to carry headlines such as, "Do you love a good smoke but not what smoking does to you? Kent's Micronite filter takes out up to seven times more nicotine and tars." One showed a man in a surgeon's smock, puffing away on a Camel, under the caption, "Lung surgeons need strong nerves." Where others saw deception in such messages, Jack saw something else and far more subtle: cigarette manufacturers were reacting to widespread health concerns among smokers and coming into a conversation where people had abundant other sources of information. The ads were making the best of a bad situation for the sellers—trying to take sales from competitors but defaming their own products in the process. This was in the late 1940s and early 1950s, more than a decade before the first Surgeon General's report on smoking and health and before the Federal Trade Commission found the cigarette ads to be deceptive, because science then lacked evidence that cigarettes were unhealthy. In the years before the FTC banned health-scare advertising, cigarette consumption fell to a low level not seen again until the mid-1980s. Popular knowledge, inadvertently aided and abetted by the cigarette manufacturers themselves, was far ahead of the government's official knowledge.

I am certain Jack's selflessness accounted for the passion he brought to his research, writing, and everyday conversation.

What Jack called "fear of persuasion" in the title of his 1997 book on advertising regulation would remain a central theme of his famous later work on the regulation of pharmaceuticals and medical devices. No industry is more knowledge intensive; in no other sector are suppliers participating in a more information-rich conversation with their customers, practicing physicians. While Jack was a firm critic of many FDA policies, none attracted his ire more than the agency's monstrous practice of forbidding pharmaceutical firms from informing doctors about the off-label uses of their products—even criminalizing the distribution of independent academic articles. Cannot doctors be trusted to judge such information on the product’s merits, and to apply the appropriate discount to self-interested communications from suppliers? Who has as much incentive as the supplier to invest heavily in informing doctors of the latest findings about a drug? Are we all comfortable with a requirement that the government preapprove private communications? Congress has lately taken to naming laws after people who inspired their passage; if it ever rouses itself to waive off the FDA communications police, the law should be titled "Jack's Act."

In recent years, Jack produced a cornucopia of research papers, essays, and blogs on the regulation of new drugs and medical devices, the biotechnology revolution, and intellectual property (including his superlative book with AEI colleague Claude Barfield, Biotechnology and the Patent System). He became deeply informed about advances in the biological sciences and the new and more particularized forms of innovation reshaping medical practice. He admired these developments, both as examples of human ingenuity and progress and for their vast potential for improving health and welfare. But he was not a cheerleader: the insistent lesson of his work was that research, development, and deployment were not manna from heaven but entirely dependent on human institutions: property rights, commercial freedom, and open competition. While he was often called a "free-market economist," his work was anything but doctrinaire. His writings on FDA regulation and biotechnology patents were nuanced, balanced, factual, original, and always offered in the earnest spirit of practical reform.

In the proposals for U.S. price controls, Jack saw the looming possibility of a public health catastrophe of global proportions.

On one subject Jack's passion shined through: the threat of pharmaceutical price controls, addressed in his brilliant 2000 monograph, Prices, Markets, and the Pharmaceutical Revolution. Of course, almost all economists oppose price controls in competitive markets. But Jack, as usual, went beyond the standard arguments, demonstrating how the new, more particular forms of pharmaceutical therapies uniquely depended on the free communication of knowledge and on the pricing freedom essential to such communication. And looming over these developments was the fact that the United States was not only the largest pharmaceutical market but also the only advanced economy without research and development-suppressing price controls. So the rest of the world was free-riding on the innovations our freedoms made possible—and if the last redoubt fell, no one would be left to free-ride on, and all would suffer. In proposals for U.S. price controls, Jack saw much more than one more chapter in the centuries-old saga of perverse price regulation: he saw the looming possibility of a public health catastrophe of global proportions.

Jack Calfee combined brilliant scholarship, intense engagement with critical policy debates, and a kind and outgoing spirit to an extraordinary degree. He set a very high standard for his AEI colleagues and many others. Long may his spirit live. Jack was a great economist, but he was also, and even more, a great humanitarian.

Christopher DeMuth is the D. C. Searle Senior Fellow at the American Enterprise Institute.

FURTHER READING: Calfee’s most recent writing included “Learning a Little about Testing Medical Devices,” with Gabriel Sudduth, “Junk Science and the Anti-Vaccine Fraud,” “Six Ways Not to Reform Health Care,” and "Something Old, Something New: Biotech’s Enormous Potential.” His latest scholarly work included “Why the AARP reports are Misleading or Worse,” “Drug Development in the Balance,” and “Limiting Drug Prices Means Limiting Future Cures.”

Image by Darren Wamboldt/Bergman Group.

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