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6:Lessons From Halacha About Competition and Teaching
by Professor Dennis W. Carlton and Professor Avi Weiss Lessons From Halacha About Competition
and Teaching
Economics has taught how competition among rival firms generally benefits consumers. Restrictions on firms, such as various forms of entry requirements or government prohibitions on competition, often wind up benefiting the lucky firms who obtain the protection from competition. Studies of regulated industries in the United States and elsewhere have shown time and time again how the regulations typically benefit the regulated industry (including the workers in that industry) and harm consumers through elevated pricing and reduced product variety. The lesson from these studies is that, although some government laws and regulations are essential for a well functioning competitive economy, one must be wary of falling prey to pleas, no matter how well meaning, to "protect" consumers from competition.
cherem hayishuv, carries with it an important recognition of the importance of competition.
hasagat g'vul in the Talmud (e.g., see Bava Batra 21b). At issue is whether a retail merchant can prevent another retail merchant from setting up shop nearby. The majority opinion finds that, as long as the entrant is a tax paying member of the community, entry nearby is allowed. But how nearby? The majority allows entry within the same general area but leaves undecided whether entry on the same alley is allowed. The minority view is that an established merchant can prevent entry even in the same general area. But both the minority and majority agree that teachers of Torah are allowed to enter anywhere. Although one can perhaps provide economic rationales to protect merchants from rivals locating too close by (e.g., if an incumbent must spend years investing to develop a reputation to attract buyers to a particular location, then, in the absence of some protection, the firm might not undertake this investment and consumers could be harmed), the clear thrust of the halacha is to protect consumers through competition and not sacrifice consumer welfare by allowing merchants to protect themselves from competition. While there is also a (disputed) view that, if financial ruin of the incumbent would result, entry can be prevented, even in this view, teachers are exempt from entry restrictions.
Bava Batra 21 b). Second, even when succumbing to the (ill conceived) economic reasoning of the guild system, the proponents of the cherem hayishuv must have recognized, as did their forebears, that Judaism's survival depends on Torah education. Maybe it was futile to resist the ability of self-serving merchants to impose entry restrictions to benefit themselves at the expense of consumers, but no such self-serving interest among teachers could succeed in justifying interference with the efficiency of the key to Judaism's success and survival, teaching Torah.
D. Carlton and A. Weiss, "Inferring Values from Jewish Attitudes toward Competition," (1999).A. Levine, Free Enterprise and Jewish Law, Ktav Publishing, (1980) L. Rabinowitz, Herem Hayyishub, Edward Goldston (1945). M. Tamari, With All Your Possessions, The Free Press, (1987).
Dr. Dennis W. Carlton is a Professor of Economics at the University of Chicago and President, Lexecon Inc., an economics consulting firm. Dr. Avi Weiss is a Professor of Economics at Bar-Ilan University.
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