Last week’s post Danger: Congress at Work on Interchange Fees praised the recent Mercatus/ICLE conference.  An email just arrived from Mercatus with the links to videos of the sessions.  Lots of excellent material.

Thank you so much for attending The Economics and Regulation of Payment Card Interchange Fees, co-hosted by the International Center for Law and Economics and the Mercatus Center at George Mason University, last week.

If you would like to view the video from the conference, you can view the first session with Tim Muris, the second session and discussion with various scholars, the third session on the economic literature concerning payment card interchange fees, or the final presentation with Todd Zywicki.

Also, you can download the recent paper written by Todd Zywicki and Geoff Manne, entitled “The Economics of Payment Card Interchange Fees and the Limits of Regulation.”

If you have any questions, please contact Julie Burden at jburden2@gmu.edu.

There is a little bit of a mix-up in the material described.The background paper is by Zywicki alone, while Zywicki & Geoff Manne produced a different paper, published by the International Center for Law & Economics, The Law and Economics of Interchange Fees and Credit Card Markets (Blog Symposium – Dec. 8/9, 2009).

Also — the Competitive Enterprise Institute published Payment Card Networks Under Assault (Dec. 2009).

At last week’s session, law prof Joshua Wright made the interesting suggestion that the FTC demonstrated the proper reaction when confronted with pressures to regulate poorly-understood business practices when, in reaction to pressure to regulate the practice whereby producers pay retailers for good shelf space, the agency conducted a thorough, high-level inquiry and produced a detailed report, Slotting Allowances in the Retail Grocery Industry: FTC Staff Report (Nov. 2003).  In Wright’s view, this is how regulators should do their jobs. Also, the substance of the slotting report is relevant to the interchange fee issue, so the example is double.

See also Todd Zywicki’s post at Volokh Conspiracy, which notes:

Unintended consequences virtually always follow from an enterprise in economic planning such as the Durbin amendment.  And this one, by guaranteeing that debit card issuers will now lose money, will have more unintended consequences than most.  The result inevitably will be to transfer some of the costs now borne by merchants onto consumers.  It is one thing to acknowledge the presence of unintended consequences and conclude that the benefits of the action exceed those costs.  But it is still another to stand like King Canute and pretend that you can hold back the tide of unintended consequences just because you are a Senator.

Zywicki also quotes Adam Smith, in a passage that should emblazoned on the Washington Monument where our rulers can see it every day:

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.