Author: lkiesling

Lynne Kiesling

We did a lot of cooking this weekend, including taking advantage of my Christmas holiday baking — I made double batches of pie dough and pizza dough and froze half of what I made for later. I had also frozen some Michigan tart cherries from the farmer’s market last June, so the mid-February treat was pizza and cherry pie, YUM! Here’s what a cooking weekend chez KP looks like:

The KP Spouse is a master pizza chef, and this was a delicious one — onions, garlic, olives, red peppers, coppa ham, fresh mozzarella. Life is good.

Lynne Kiesling

This is so vile, so disgusting that I am literally nauseated at my desk as I write. One of the ways that independent chefs, caterers and confectioners economize on their substantial fixed costs is by sharing kitchens. In Chicago, the business license treatment of such kitchens from the Chicago Department of Public Health has been uncertain: does the kitchen owner have to be the one with the license, or does each user of the kitchen have to have a separate license?

Last night, due to a paperwork miscommunication and Kafkaesque bureaucratic process of trying to sort this out, the Chicago Department of Public Health destroyed organic fruit purées that Flora Lazar of Flora’s Confections prepared over the summer and preserved to use in her much-touted and anticipated Valentine’s Day confections. These officials tore open the bags and bleached the food so that it could not be put to any use. I’m going to quote Chicago Tribune reporter Monica Eng here at length, because she was there, and her post illustrates exactly how senseless and appalling this destructive CDPH behavior is, but there is more at her post, including a depressing video of the CDPH officials destroying the food, so please do go read more there.

In a sad struggle that unfolded in a West Town kitchen Thursday night, Department of Health inspectors seized, slashed open and poured bleach over thousands of dollars of local peaches, pears, raspberry and plum purees owned by pastry chef Flora Lazar. She’d purchased the fruit from Green City Market farmers last summer and had planned to use it to make local fruit gelees for her business, Flora Confections.

More than $1,000 of food owned by the Sunday Dinner Club caterers was also destroyed by health department inspectors.

Inspectors cited no health problems with any of the food. They even encouraged Lazar’s son to eat the confiscated granola bars from Sunday Dinner Club. They only said the food was prepared by chefs who didn’t have the proper business licenses to prepare and sell it. …

The destruction of organic artisanal granola bars and local fruit from Klug Farm and Hillside Orchards is heartbreaking to any local food advocate. But for Flora Lazar, this setback, the week before Valentine’s Day is devastating.

“This puts me out of business for six months,” a despondent Lazar said. “I have done everything by the rules. Instead of making the food at home, which I could easily do, I sought out and rented space in a licensed kitchen. When they finally said we could apply for a separate license, I did that. I paid my $600 and invited the inspectors here today.”

If Lazar had been less transparent and left her cooler in her car during the inspection, she would probably be cooking today. Inspectors were mostly destroying food that had been prepared before their arrival. But she estimates that her honesty and attempt play by the rules just cost her $6,000 in revenue. She says the fruit purees, harvested at the peak of Midwest ripeness, are “irreplaceable.” …

But until recently the city had no clear policy regarding shared use kitchens, says Kitchen Chicago owner Alexis Levering. When she secured her latest space she said she confirmed with the Department of Licensing that it was zoned for shared use. The department further assured her that as the licenseholder, she would be responsible for any food safety issues associated with her clients, she says.

Later, though, Licensing said her clients would all need to apply for their own licenses, and with each application they’d need to get a new health inspection, giving the little niche kitchen exponentially more inspections than the busiest restaurants in Chicago.

But when Kitchen Chicago users went to the department, they were told again that they couldn’t apply for the license because it was at the same address as Levering’s license. The confusion continued for months until recently, Levering said, a department representative told her that now he would make sure that renters could apply for the licenses. He further told her, however, that any violations committed by one chef would mean a ticket for every cook who rents space in the facility, meaning possibly thousands of dollars reaped by the city for a minor infraction by one cook the others might have never met.

“That’s like giving everyone in the car their own ticket when a driver is stopped by the police,” she said.

This week, it seemed as if the kitchen was finally making progress with the department and, indeed, two of the businesses, Sunday Dinner Club and Flora Confections, had their license applications accepted, paid their fees and were told the inspectors would come Thursday.

The inspectors arrived at 9:30 a.m. and didn’t leave until nearly 5 p.m., when their final act was to destroy hundreds of pounds of local, organic, often unopened cheese, cassoulets, granola bars, frozen fruit purees, baking ingredients and more with a gallon of bleach.

Officials never said that the food posed a health risk. At best it was a victim of paper work confusion among city bureaucrats who couldn’t agree on a policy. But since no one at the city will comment on the situation, part of the story remains unclear.

Francis Guichard who is the CDPH food protection director called this morning to say that her inspectors could not allow the food to move from the building because they could not ensure where it was going. Licensing has still not commented on the issue.

At one point, one of the cooks suggested that the unopened food at least go to the Greater Chicago Food Depository rather than being destroyed. That request was denied. Watching the destruction of all of this perfectly edible food, you’d never know we live in a state where one out of 10 households doesn’t have enough food to eat.

The Health Department inspectors are expected back at the kitchen today to destroy the rest of the food they deem unlicensed.

These so-called “protectors of public health” destroy the inputs into an entrepreneur’s business in her busiest season, despite acknowledging that the destroyed food poses no health risk. These so-called “protectors of public health” destroy perfectly healthy food instead of even giving to hungry, needy people. On what grounds can these so-called protectors of public health have any legitimate claim to be doing valuable work on behalf of the people of Chicago? And I pay how many thousands of dollars in taxes every year to support this kind of wasteful, counter-productive, aggressive, megalomaniacal activity?

If these City of Chicago employees are indicative (and I think they are) of the attitude of city government toward entrepreneurship and toward the value of meaningless bureaucratic gestures that keep income out of the pockets of entrepreneurs and food out of the mouths of people, then I am truly ashamed and embarrassed to call this my home. It adds insult to injury that I pay such high taxes for the privilege of living in such a despotic city. Yes, I mean despotic; we Chicagoans know that there are many dimensions in which such a word is not hyperbole.

I also sympathize with the first commenter on Monica’s post:

And the Government still doesn’t think the Revolution is coming?

Lynne Kiesling

Matt Welch channels his inner Joseph Schumpeter (and his inner Lynne, while we’re at it …) in his post this morning about the evanescence of monopoly. The grit in Matt’s oyster is yesterday’s NYT oped from former Microsoft vice president Dick Brass bemoaning Microsoft’s lack of an innovation-facilitating corporate culture. As someone who studies an allegedly monopoly industry in which the government-protected monopoly status has outlived the actual underlying economic justification for that status, this statement of Matt’s particularly resonated with me:

I’m more interested in a macro fact about monopolies: Namely, unless they’re either run or locked into place by government, they do not last. And even government-run monopolies produce mass consumer defections. … Companies that grow bloated on profits squeezed from a seemingly captive audience end up panicking when those consumers wriggle free to buy and even create competing products. Meanwhile, corporate cultures in (temporarily) uncompetitive industries are the very definition of non-innovative, even in technology companies.

This “macro fact” is one substantial reason why regulated electric utilities are fighting so hard to retain their retail market monopolies, because reducing the entry barriers to those captive customers would enable us to wriggle free. Removing that regulatory shield from Schumpeter’s “gale of creative destruction” would mean they would actually have to, you know, like, … come up with and market customer-focused value propositions so they could actually compete.

Lynne Kiesling

Here’s an example of how a small innovation can have a substantial beneficial impact: Heinz redesigns its ketchup packets to hold three times as much ketchup, and to be squeezed or dipped. No more ketchup splurts on clothes, no more having to get three packets to get as much as you’d like, no more having to open the ketchup for your kids. And, of course, as a Pittsburgher I am doubly proud of this redesign.

Seriously. It’s little innovations like this, and like my other favorite example, the non-drip top on laundry detergent bottles, that bubble up from the market and, in aggregate, are great evidence for the plenitude of free enterprise.

The new packet is also cute, which doesn’t hurt …

Lynne Kiesling

A quick update on the Amazon ebook controversy that continues to roil since my earlier posts on resale price maintenance and on price discrimination. This Technology Review article covers much of the same territory that I did in those posts, with some links to additional author sources, and Simon Owens at Bloggasm has some interviews with Tor Publishing authors on the impact this situation will have on their incomes and their abilities to continue writing. Tor author John Scalzi has an extremely funny satirical screenplay post on the situation (see if you catch the joke in the name of one character!). Kenneth Anderson at Volokh Conspiracy asks several of the same questions I did, and the discussion in the comments is particularly insightful. One of the commenters raised the question of whether Amazon’s market power is sufficient to constitute a monopoly, and that they could therefore be prosecuted under antitrust law for removing Macmillan’s books from their offerings (the consensus seems to be no, correctly). If you are following this story, I encourage you to check them out.

Speaking of Amazon’s market power … from the Technology Review article:

On Sunday, Amazon agreed to accept Macmillan’s new pricing model and said it would once again make the publisher’s titles available through its site.

However, I just checked Amazon’s listing for Hilary Mantel’s Wolf Hall (which is my test book for this story), and it still only lists availability for third-party sellers; there is still no listing for a direct purchase from Amazon, or for a Kindle ebook version of the book. It seems that John Scalzi is engaging in the same research as I am, finding that his Tor titles are listed similarly to Wolf Hall. He’s also landed in the same place as I have in terms of how I will spend my money from here on out:

Q: Do you hate Amazon?

A: My Amazon Prime account suggests that I really don’t. But, you know, look. What this is about to me, and what it’s always been about for me, is the fact that Amazon is punishing authors — a lot of them — for something that fundamentally doesn’t have anything to do with them, that being top-level trade negotiations between two corporate entities. Amazon can choose to do whatever it likes under the law, but admitting “Amazon has a right to do this” doesn’t mean I can’t say “and it’s being dicks to a lot of innocent writers” as well. Both statements are true. As for me, it’s pretty simple: When Amazon reinstates the “buy” buttons to all the Macmillan titles it’s stripped them from, I’ll consider buying something from it again. Until then, I’m taking my personal business elsewhere. I’m not suggesting others have to follow my example. But this is where I’m at.

Yep, me too. I’ve got hundreds of dollars worth of books and other merchandise in my Amazon wish list and shopping cart, and I plan on shopping for them elsewhere for as long as Amazon refuses to have direct links to the Macmillan books. I have been planning on buying several new hardcover books (such as The Enlightened Economy and The Invention of Enterprise), and now I’m going to do so elsewhere, as you can tell from the links that I’ve chosen. In fact, I also canceled my American Airlines MasterCard last November and got an Amazon Visa card instead, which is also now going to lie fallow in my wallet unless absolutely necessary.

I’ll be shopping for books at the online and “meatspace” locations of Barnes and Noble and Powell’s, and I’ll continue buying books from Abe Books. I’ll also shop elsewhere for housewares and electronics, high-priced products that I used to buy with great alacrity through Amazon.

Oh, and by the way, if you want an ebook version of Wolf Hall, Abe Books has one from Bargain Electronic Books in pdf format for $9.49.

Lynne Kiesling

I am pleased and honored to be included among Greentech Media’s 100 movers and shakers in smart grid, thank you very much! This is a list of wonderful people, with many of whom I’ve worked over the past five years during the development of smart grid interoperability principles — including economic market design principles and the potential value creation from a transactive, interconnected network of diverse, heterogeneous producers and consumers. I think the Greentech folks nailed it for me with this observation:

If you ever wondered who is looking out for the consumer in smart grid, fighting in the trenches to ensure that we get the participatory end-user experience (and the market to go with it!) that many of us are envisioning — the answer is Lynne Keisling.

Yep, that’s part of what gets me out of bed in the morning! Thanks again to Greentech Media for the recognition, which I really appreciate (although it’s Kiesling, not Keisling, like the wine but with a K instead of an R …).

Lynne Kiesling

KP readers know the answer to that question: reducing peak demand, load shifting across time, better capacity utilization. But there’s a bit more to it, as you can see in the New York Times article on Idaho Power’s rebates to their customers for reducing their irrigation during peak hours, as well as allowing for direct load control cycling of air conditioners. First, although I am glad to see such “programs” in a largely agricultural and rural customer base, the “energy efficiency program” focus of their strategy shows very little innovative thinking, and does not go far enough; there is no concept of dynamic pricing here, or even of time-of-use pricing, so the retail choices available to customers are not novel or innovative at all. In particular, note this passage:

“It’s clearly iconic in terms of a utility that’s turned the corner,” says Tom Eckman, the manager of conservation resources with the Northwest Power and Conservation Council, a planning group created by Congress. “They have gone from pretty much ground zero to a fairly aggressive program level.”

The company’s efforts are especially striking given that the push for energy efficiency is generally associated with coastal states like California and Massachusetts, not with a state whose electric rates are among the lowest in the country.

But the concept has rung true for Idaho’s farmers, anglers and snowbirds — outdoor types who have helped keep the state nearly free of coal plants. They have been largely receptive to the utility’s arguments that it is cheaper to save energy than to build new power plants.

While these “programs” make economic sense for the reasons we’ve discussed here frequently, note how embedded the entire concept of “energy efficiency programs” is in the traditional business model and culture of the regulated utility. This “energy efficiency program” framing of the retail space is what I would call a top-down sledgehammer approach. There is no concept of dynamic pricing here; this is just an implementation of direct load control (customer gives utility right to control devices, like air conditioner), so I don’t see it as being as innovative as Eckman does in his quote.

Second, the way such programs are being implemented in this industry are still embedded in the regulatory, cost recovery model, consequently with no concept of the fact that reducing costs and increasing sustainability is a way for companies like Idaho Power to increase their profits. You can see this from the fact that the regulators and Idaho Power still view energy efficiency as a cost center, a “program” that will reduce their revenue, so as a regulated firm they have to be paid to do that. The way Idaho Power is implementing this is under a regulatory mandate from the state PUC, and they are charging a monthly “energy efficiency fee” to their customers. This fee is intended to defray some of the revenue loss that might occur when they pay customers to reduce peak demand … but isn’t that reduction supposed to help Idaho Power reduce costs, so why charge customers for it? Welcome to the incongruous world of the incentives facing the regulated utility!

So, for better and for worse, this article gives you some insights into the current, evolving state of play in the electricity industry, and particularly the perverse embedded incentives for cost recovery and risk aversion that are a direct consequence of the economic regulation of electricity distribution companies and their government-granted monopoly in the retail market.

Lynne Kiesling

Yes, you saw that correctly, a turbine. According to Wired:

Jaguar Land Rover is working on the car with British gas turbine manufacturer Bladon Jets and electric motor manufacturer SR Drives. The Technology Strategy Board, which funds business development in the U.K., is underwriting the first serious attempt at a turbine car since Volvo built the Hybrid Environmental Concept in 1993. The goal, according to Bladon, is the “world’s first commercially viable – and environmentally friendly – gas turbine generator designed specifically for automotive applications.”

… But the Jag — like the Volvo — would use a miniature gas turbine only to generate juice for the electric motor. Bladon says its axial flow turbines are small, lightweight and run on anything from natural gas to biofuel. That, it says, makes them a great alternative to the conventional engines used in range-extended hybrids like the Chevrolet Volt.

That’s pretty cool! Previous turbine vehicles didn’t make it because they were noisy, so it will be interesting to see if this venture fares any better.

And I love that one of the commenters on the post told one of my favorite jokes:

Q: Why is it the British don’t make computers?

A: Because they haven’t found a way to make them leak oil yet.

When I was a kid my dad had a 1967 Jaguar XKE (burgundy, with black leather seats). I think it spent more time in the shop than on the road, but it was a gorgeous car.

Lynne Kiesling

[I love the word kerfuffle]

Price discrimination is the basic economics question in the current iPad-induced Amazon-Macmillan kerfuffle, even more basic than the DRM/property rights issues and the antitrust/resale price maintenance issues I discussed in my last post on the matter. Lots of people have weighed in on the subject in the past 36 hours, and I recommend some of them to your attention:

• Laura Miller at Salon provides a good overview to the controversy, including a discussion of how publishers think the agency model will enable them to pay the overhead and author royalties that are the lion’s share of production costs (and that do not vary for ebooks relative to print books), as well as enabling them to avoid books/content becoming “a loss leader to sell gadgets”. The more I think about it, the more I think this “loss leader” point is a big driver in their strategy.
• Charlie Martin writes at Pajamas Media about the death of the print publishing business model; I actually think he may be incorrect about this, for reasons I’ll describe below that have to do with price discrimination, but he lays out some useful details nonetheless.

To see why this controversy is so important, let’s compare the old “wholesale pass-through” pricing model and the new “agency” model. Martin very helpfully provides that comparison in his post, so I’ll summarize here:

• Wholesale pass-through pricing: Retailers negotiate a fixed wholesale price per unit with the publisher, and then set the retail price. In this case, Amazon has negotiated a 50% discount from full hardcover retail for their ebooks and charges $9.99 for most of them, so on any book with a hardcover retail price higher than $19.98 Amazon loses money on that sale. The publisher’s revenue on the sale is 50% of full retail.
• Agency pricing: The publisher pays a percentage-based commission to the retailer, based on a negotiated retail price. Reports indicate that this commission is around 30% (which passes the gross margin smell test for me), so if a $29.95 hardcover sells in ebook version at $15.99, the publisher actually makes less money and the retailer makes more.

Note that under the agency pricing model, Amazon actually makes money on each ebook it sells, which at the moment it does not. The fact that it is fighting so hard to keep low ebook pricing is consistent with the hypothesis that they want to price ebooks below their marginal cost as a “loss leader to sell gadgets”.

But where the economics gets really interesting is considering the book supply portfolio and the demand for specific titles over time. That’s where the dynamic pricing flexibility of the agency model is welfare-creating — it can make Amazon, Macmillan, Macmillan’s authors, and consumers better off relative to the equilibrium with wholesale pass-through pricing, and what’s makes that possible is price discrimination.

Here’s an example: over Christmas I read Wolf Hall by Hilary Mantel (which was truly outstanding and I recommend it very highly). It was released in the US in October with a list price of $27.00. Under wholesale pass-through pricing, Macmillan receives $13.50 from Amazon for every ebook version sold at $9.99, leading to a loss per unit to Amazon of $3.51.

Under agency pricing, Macmillan could, say, commit to pricing the ebook version at $17.99 for the first week, $14.99 to the end of December, and $9.99 thereafter. Under that scenario, those Hilary Mantel fans with low price elasticity of demand would buy in the first week, those who are willing to pay $14.99 would wait a few weeks and then buy it, and those who have more price-elastic demand would wait until the price fell to $9.99, which seems to be a trigger price for a lot of current Amazon Kindle customers. This is an application of third-degree price discrimination, and in the simple static model it results in more output sold and higher profit, but generally lower consumer surplus. In a dynamic sense, though, the welfare of all parties can go up, because the price discrimination may induce the publisher to contract with more authors for more works, making all four parties better off.

Virginia Postrel mentions the price discrimination aspect in her post on the subject:

The other side of the equation is consumer response: How many more copies will people buy if the price goes down? Or, in economic lingo, what is the price elasticity of demand? Book publishers talk (and often act) as though book buyers aren’t particularly price sensitive. The Borders and Barnes & Noble coupons in my email suggest otherwise. So does what little academic research exists on the subject. In a paper looking at people buying physical books using a shopbot, economists Erik Brynjolfsson, Astrid Andrea Dick, and Michael D. Smith found very large elasticities: A 1 percent drop in price increased units sold by 7 percent to 10 percent.

Of course, people who use shopbots are likely to be more price sensitive than average. But there’s anecdotal evidence that prices matter a lot for e-books. As The New York Times reported recently, most of the books on the Kindle bestseller list are being given away for free. And comments on various discussion threads among Kindle users suggest that many are bargain hunters looking for a good, cheap read rather than a specific title.

Rather than cut prices for everyone, Macmillan hopes to be able to price discriminate, so that eager readers pay more than casual ones. It’s a reasonable strategy. But the publisher seems to envision a traditional method of dividing the market: charging more for brand-new titles and lowering prices over time. That approach works for paperbacks, which come out roughly a year after hardback editions. But paperbacks are, of course, physically inferior to hardbacks, while e-books are all the same. Discriminating by publication date works only for titles that are fashion items–you want to talk about Game Change this week, not in six months–or blockbusters with impatient fans (the latest Twilight installment). Most books fall into neither category.

That’s an interesting angle on the topic. James McQuivey from Forrester offers some evidence that may point in the same direction:

In fact, the pricing mess is only going to get messier. Our surveys have found that people are willing to pay as much as $17.81 for a new e-book, but only if the hardback costs $25. That’s the rub. People expect to pay less for digital books, compared to the price of the physical book in the market. But books don’t cost that much. Today I can buy a hardback copy of Elizabeth Gilbert’s Committed on Amazon for $12, a discount of $14.95 from the list price. And the book was just published four weeks ago. So spending $14.99 for the digital version is a bit silly.

So what’s the “new equilibrium”? Retailers and publishers will evolve and adapt as technologies and consumers do, but will it involve content as loss leader, authors contracting with Amazon and disintermediating publishers, or something else. One thing we know is that the Internet has created lots of new ways to price discriminate, and ebooks may be susceptible to that pricing model too, to the benefit of all parties.

Lynne Kiesling

I can always tell when I’m giving a midterm exam in my History of Economic Thought course; my old post on Adam Smith and the “man of system” starts showing up with more hits! Given the nature of public policy, politics, and regulation right now, and the fact that I see the “man of system” almost everywhere I look in those areas, perhaps now is a good time to repost it:

One of the most interesting threads that ran throughout the discussion [at a Liberty Fund Adam Smith seminar –ed.] was the dimensions of Smith’s reference to the “man of system” in Theory of Moral Sentiments (paragraph VI.II.42):

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 chuse 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.

Smith captures a lot of very nice ideas in this passage. The idea that the “man of system” would be so enamored of his own system that he would impose it on others without much regard for their preferences or, to use the phrase of one of the participants, for their moral autonomy, continues to be a powerful criticism of interventionist approaches to government. To put it in my girl-next-door vernacular, how arrogant are you to think that you should impose your system on me?

In addition to the arrogance and conceit, Smith’s passage points to a particular type of knowledge problem (or “epistemological problem”, as one participant referred to it): “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 chuse to impress upon it”. Every individual has his/her own preferences, own view of the good life, own objective function. The “man of system” cannot know, cannot experience the wants, the needs, the social context in which each individual makes choices (individual and collective choices). To the extent that the imposed system creates an environment that does not honor the knowledge problem, it makes both the individual and society worse off. The “man of system” approach to institutional choice is not consistent with that epistemological constraint. Is this an argument for representative government, even with they “tyranny of the majority” problem?

The chess-board metaphor raises the fallacy that our social institutions are so directed and so instrumentalist that they can point us to a specific, shared goal. In chess the objective is shared (and is zero-sum, actually, which points to another interesting aspect of Smith’s writing …), but in human life with the variety and individuality of human action and human knowledge, can we really be said to have a shared social objective? The best shared goal I can imagine toward which we can strive is to be free and responsible people living together in civil society, but that’s an objective at an abstract and meta level, not a directed objective as is implied in the chess metaphor.

One very interesting conversation we had throughout the week relating to this passage revolved around this concept of “system”. In some way, Smith was himself a man of system; Theory of Moral Sentiments laid out a framework for a moral system, Wealth of Nations laid out a framework for an economic system, his essay on astronomy and his essay on the formation of languages both highlight and rely on the importance of system, and systematic analysis. But I think this is a different understanding of the word “system”, and I think a lot hinges on what kind of obligations the system imposes on others.

Note in particular the following part of the passage:

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.

This “man of system” can enact his system over the objections of others. In the moral system/economic system/scientific system of Smith’s analyses, though, one cannot compel participation unless it’s mutually agreeable. In other words, in these systems there is no force, no compulsion, no obligation on an individual to follow against his/her will. An interesting twist on this comes in the account of scientific analysis, because you are not obligated to agree, but as research advances and evidence mounts for a particular theory, it becomes the predominant theory (until disproven and replaced by a better theory, that is).

Perhaps it’s instructive to compare this “man of system” to the man of humanity and benevolence, as Smith did (paragraph VI.II.41):

The man whose public spirit is prompted altogether by humanity and benevolence, will respect the established powers and privileges even of individuals, and still more those of the great orders and societies, into which the state is divided. Though he should consider some of them as in some measure abusive, he will content himself with moderating, what he often cannot annihilate without great violence. When he cannot conquer the rooted prejudices of the people by reason and persuasion, he will not attempt to subdue them by force; but will religiously observe what, by Cicero, is justly called the divine maxim of Plato, never to use violence to his country no more than to his parents. He will accommodate, as well as he can, his public arrangements to the confirmed habits and prejudices of the people; and will remedy as well as he can, the inconveniencies which may flow from the want of those regulations which the people are averse to submit to. When he cannot establish the right, he will not disdain to ameliorate the wrong; but like Solon, when he cannot establish the best system of laws, he will endeavour to establish the best that the people can bear.

Sadly, I fear that too many of our officials and their advisers are men of system, not Smith’s men of humanity and benevolence, who “will respect the established powers even of individuals, …”