(Originally Issued January 1, 2001)

This Commentary was taken from notes for a talk at the National Bureau of Economic Research’s December 8, 2000 meeting of its Market Microstructure Group. I argue that a bias may exist in microstructure (and other) research in favor of conclusions that support regulatory intervention. Since this piece is longer than usual, I present the main argument in the first 4 pages, followed by two addenda. The first addendum suggests research topics that may elucidate the flaws in current market structure theory. The second explores bias in the field of medical research to demonstrate that the tendency in favor of intervention is not confined to the stock market.

    Knowing how I like to wander onto unexpected topics in search of perspective, Bruce¹ said I could talk about anything today – but also suggested I might say something particular about the tendency of research to focus only on what we can observe and measure. So I’ll both wander and try to keep focused on the old missing-the-forest-for-the-trees problem. You know: the age-old phenomenon of missing the big picture while looking in excruciating detail at the minutiae. Do researchers and scientists make this mistake because they like looking only at the little things? Or is it because they don’t have the tools yet to look beyond them? Either or both of these could explain at least some of the phenomenon. But I wonder if there couldn’t also be a subconscious bias in the selection of subjects to look into, or a subtle slant on interpretation. Bluntly, are researchers not just “missing” the forest, but actually avoiding it? Are they looking so intently at the trees as a means of avoiding the implications lurking in the forest? If so, what is their motive? Taking a page from Christie-Schultz,² I’ll ask you to consider if there isn’t a dog that didn’t bark here, too. Just as the lack of odd-eighths pointed to tacit collusion among dealers to maintain wide spreads, are researchers avoiding the forest pursuant to a tacit understanding with regulators to avoid conclusions that would undermine the case for intervention? Just as dealers had a career interest in wide spreads, don’t academics and bureaucrats share a career interest in redesigning the markets?
    Microstructure, perhaps surprisingly, was not the first place I noticed the pattern. In fact, it seems to apply in virtually all major fields of modern human endeavor. In one after another, you will find well-intended interventions based on the best academic and scientific advice, their obvious failure (to laymen, anyway), ostracism of those who flag the failure, and official cover-ups. At every step along the way, there is an uncanny tendency to ignore the big picture. The party line becomes: Even if we did make mistakes, it will do no good to call attention to them now, because that will only undermine support for the good things we are going to do next. In the field of medicine, for example, vaccines – in addition to whatever benefits they have produced – are also alleged to have produced some major disasters. But rather than checking out the charges, health officials often issue facile denials, while cautioning against repeating the charges for fear that doing so will spark an unwillingness to submit to further vaccinations. Surprisingly, at least to those of us who assume that research is generally honest, dispassionate and unbiased, most researchers seem to buy into and support the cover-up – and twist their research to that end.³

Hypocritic Oaths

    Moving back closer to home, some of you know that I have been critical of the SEC’s National Market System.⁴ If you’ve followed my NMS gripes, you probably also know that I was at first perplexed by NMS’s consistency with antitrust. I was perplexed because I had previously assumed, as had other NMS critics, that those who wrote NMS into the Exchange Act must have somehow misinterpreted antitrust. But the more I looked, the more I saw that NMS was in fact an essentially correct expression of competition policy. So either I was wrong about NMS, or antitrust had to go, too. I considered the former for a few minutes, and then went on to figuring out what was wrong with antitrust.

    When I began looking into antitrust a decade ago, I was reading, and often cutting out and saving, an article or two a week from newspapers and magazines (my favorite mode of research). Today the same criteria produce a dozen or more per day. Early on I noticed that a strange quote from Adam Smith kept popping up. Even though I had never read Wealth of Nations, I knew – or thought I did – that Smith was one of the good guys. His “invisible hand” had inspired anti-Government ideologues like me since before the American experiment in freedom and limited Government began. So I was confused when most of the references to Smith involved a quote, not about the invisible hand or any such free market stuff, but about how (and I paraphrase) businessmen can’t even go on a picnic without colluding to fix prices. So I faced a conundrum: either I had misunderstood Adam Smith entirely, and he actually was the father of antitrust, or the economists who were always quoting him to that effect had misunderstood him. So I broke from my usual style and got a copy of Wealth of Nations – and I bet I am the only person you know who read that whole book just to find out what he said next. I won’t keep you in suspense (and again I paraphrase): So prevalent is collusion, that it is impossible for Government to stop it and any attempts to do so will be inconsistent with liberty and justice. And, while you can’t stop collusion and shouldn’t try to, you shouldn’t do anything to officially facilitate it, either.⁵

    Actually, it’s not quite correct to say that the references to Smith didn’t include the invisible hand. They usually mentioned it along with the collusion quote to imply that even Adam Smith, he of invisible hand fame, understood the need for Government intervention to enforce antitrust-style competition policy. In other words, they referenced the invisible hand as a means of discrediting the entire concept – and invoked Adam Smith himself to do so.⁶ Well, with all due respect, not only have such people apparently forgotten the two sentences after their favorite quote, but they’ve forgotten the rest of the book, too. There is no way to read the few references to collusion – including the trustbusters’ favorite – as supportive of antitrust. And every word of the rest of the book is devoted to warning against just such interventions. The Justice Department is doing exactly what Smith said is impossible and inconsistent with justice (how’s that for irony). And, via the rent-seeking frenzies in regulated industries administered by the courts and the alphabet soup of antitrust agencies, our Government is officially facilitating precisely those gatherings Smith warned against. Relieved as I was to find that Adam Smith is still one of the good guys, this first experience with the dog that didn’t bark told me that preserving his principles was going to be much harder than I thought.

    My next experience with this non-barking dog is amusing. I learned from a good friend named Lew Randall, a guy who had taken economics courses as an undergraduate at Harvard and a grad student at Stanford, that Adam Smith has many successors in the libertarian tradition. They’re called “Austrians” – people like Mises, Hayek, Rothbard and Armentano. The funny thing is that none of them were mentioned during Lew’s academic career at those prestigious universities. It wasn’t until afterward that he stumbled on the Austrian School and found to his surprise that “economics does make sense after all.” Later asking one of his former professors if they (the economics faculty) knew about the Austrians, he said sure they did – but they didn’t teach them. No wonder academic research is biased toward intervention.

    An example of this bias can be seen in the argument over “deregulation.” Thirty years ago Richard Posner wrote a book suggesting that “natural monopolies” like electric utilities should be deregulated and henceforth subject “only” to the antitrust laws.⁷ While the book made powerful arguments against utility-style monopoly regulation, the largely tacit assumption was that the only alternative was antitrust regulation. Thus, in keeping with the twisted understanding of Adam Smith, and the failure to acknowledge the Austrian School, the economic establishment gives us only two choices: utility regulation of monopolies, or deregulation and breakup of those monopolies under antitrust. The first is presented as the Government solution; the latter as the free market solution. This sets up what I call The Big Toggle. With supposedly free market types arguing for deregulation and supposedly socialist types arguing against it, public and political support swings back and forth from regulation to deregulation to re-regulation. It is implicitly assumed by the very existence of the Big Toggle argument that the Austrian option does not exist. How could research not favor intervention, when the philosophical argument over regulation is confined to two essentially socialist positions – with antitrust on the right?
    Never mind my own view that we’d be better off with unfettered private monopolies running such network industries as electric utilities, telecommunications, airlines, and oil. And forget that these Big Toggle industries are the ones that are most in the news for their repeated crises, dislocations, price controls, rationing, shortages, Congressional hearings and consumer rage. Just focus on two things: 1) Every move from one node to the other of the Big Toggle produces immediate unintended consequences and stunned surprise among the experts (California blackout threats and price spikes are the best current example). 2) In spite of their obvious cluelessness, the experts never consider that the problem might be with their Big Toggle model. Taken together, these two facts leave little room for any other conclusion than that some tacit understanding must exist among the experts to avoid research that might undermine the case for intervention. While often swearing allegiance to the opening admonition of the Hippocratic Oath – First, Do No Harm⁸ – the experts demonstrate over and over that their real allegiance is to intervention.

The Role of Regulation and the Evolution of Market Design

    The biggest dog-that-didn’t-bark of all is typified in the above heading, which I took from the “Call for Papers” for this meeting. Bluntly, regulation has nothing to do with the evolution of market design; to imply otherwise by putting them in the same sentence implies a complete misunderstanding of the nature of evolution. As with Adam Smith, Darwin’s Theory of Evolution has been turned upside down to justify all kinds of man-made intrusions into the natural order of things. Darwin did not invent the term “evolution,” nor the term “selection.” His unique and grand contribution was to take the concept of selection, as practiced by breeders of sheep, dogs and pigeons, to demonstrate that Natural Selection could produce the most efficiently adapted species. Through variation, competition and survival of the fittest, he hypothesized, all the earth’s complex and beautiful creatures could have evolved. Dog breeders and pigeon fanciers were only examples to explain how selection could modify species. Darwin never suggested that your prize poodle could survive among wolves in the wild. Yet no sooner had he articulated his theory, than his cousin Sir Francis Galton, of all people, founded the eugenics movement. Although always projected as an expression of Darwinian principles, eugenics is in fact the opposite, a throwback to plain old selection that invokes Darwin’s name to justify all manner of interventionist schemes. Some were benign enough; some were outright evil. No one would argue with someone trying to breed a best-in-show dog in his own kennel. Most would draw the line at trying to create a master race. Evil or benign, what all eugenic exercises share is a thoroughly un-Darwinian attachment to intervention.
    Darwin was most poetic in his descriptions of how man could feel sympathy for his fellows. This enabled such winning traits as cooperation, of which hunting in packs was an early manifestation in animals and man. Eventually, of course, man rose above the animals by moving on to more sophisticated forms of cooperation, like gathering, farming, and industry. So it is not surprising that, when the antitrust investigations triggered by Christie-Schultz discovered that Nasdaq dealers were still hunting in packs, the immediate impulse was to ban the practice. It seemed an easy call. Dealers were indeed maneuvering to make more money off their customers by using all of the information and access advantages that came with membership in their market. And – horror of horrors – they were cooperating to set block and IPO prices, not to mention colluding to avoid those mysteriously missing odd-eighths. But there was nothing “tacit” about it. If the good professors had only asked any dealer why there were no odd eighths, he would have told them: “Oh that’s easy – we trade in quarters.” As with all the other dastardly practices the aghast regulators found, dealers were relatively open to discussing why adhering to them was part of how any “professional” and “ethical” dealer behaved. New recruits were specifically taught these habits, and much of it was routinely captured on recorded phone lines. Obviously, they didn’t feel as guilty as the regulators felt they should. Why? They knew they were only doing their own version of what stock exchange members have always done. Indeed, given the success of the Nasdaq market prior to the time the regulators got ahold of it, the real question, the one Darwin – a more humble man than any of today’s regulators – would be asking is: Why is it that this new version of hunting in packs is so effective at raising capital?
    The natural order is not a level playing field. The very concept of order assumes hierarchical forms of organization. There will always be many mysterious arrangements and structures, from hunting in packs to pecking orders, the “purpose” of which, in an evolutionary sense, will always be beyond the capacity of mere mortals to know. Who’s to say, for example, what roles the “unfair” allocation process for IPOs, or upstairs dealer cooperation on their pricing, may have played as part of an efficient capital raising process? The assumption that regulators can eugenically substitute mere selection for natural selection without unintended disasters is the essence of hubris. Did the ban on pricing cooperation encourage the rocketship IPO? Did rocketship IPOs promote the tech stock bubble? The fact that we may never know the answers to such questions is not a sufficient excuse to abandon the natural processes that Adam Smith and Charles Darwin believed are essential for the development of efficient structures.
It is ironic beyond imagining that cooperation, the very trait that Darwin considered most responsible for man’s success in evolutionary competition, is that which is most assiduously banned by interventionist regulators. And it positively insults the intelligence that they invoke Darwin to justify their interventions. But the question I want to ask you – the research community – is why do you let them get away with it? A new survey shows that you are more inclined to see intervention as beneficial than either institutional investors or dealers.⁹ Why? I understand the incentives of regulators to intervene. I understand the political appeal of “fairness.” But why in the world are you providing cover for interventionist schemes with political agendas? What academic theory suggests that level playing fields are efficient?
    The net effect of the endless stream of studies on spreads is to give the impression that getting rid of them – and the dealers who earn them – is a good idea. Not surprisingly, getting dealers out of the middle whenever possible is an explicit goal of NMS. This obviously requires massive intervention, employs many bureaucrats, and confers credibility on the academics whose studies justify the reforms. Missing the forest for the trees, researchers scrutinize the details of declining trading costs ad infinitum without ever asking the big question: So What? To my knowledge, none of the critical implicit assumptions of the National Market System have even been rigorously identified, much less tested and proved. Transparency, automation, trading without dealers, decimalization, demutualization, linkage, best execution, and many more are all treated as aspects of the market that can be improved, feature by feature, mandate by mandate. The blithe assumption that all of the market’s original, naturally evolved features can be replaced one by one without unintended consequences, and that doing this is so important that an essentially socialist process for designing and mandating the changes is justified, defies comprehension – at least by this free market ideologue. The question I would ask you to consider is what role academic research plays in this process. Is there identifiable bias in the selection of research topics or in the interpretation of results? If so, why?
 

First Addendum
 

The Challenge:

    The National Market System (NMS) relies on many assumptions that have never been tested, much less proved. Transparency, for example, is assumed to be beneficial, as are automation, trading without dealers, linkage between markets, best execution, price improvement, and decimalization, to name just a few. Not only are they not proved individually, but each of them is often justified in circular fashion by claiming the need to enhance the operation of one or more of the others. The assumed need for transparency is used to justify decimalization, for example. And all of them, singly and en masse, are regularly used to justify the NMS intervention, itself – and vice versa. None of them, including the term “national market system,” are defined in the law or, for practical purposes, anywhere else.
    Once the core concepts are assumed to be true, the way is open for a boatload of ancillary concepts to take on similar forgone conclusion status by cross-referencing the core concepts. Since trading without dealers is good, automation must be good. Since automation is good, anonymity must be, too. Since the automated systems that provide anonymity are good, but dealers wouldn’t willingly accept them, forcing dealers to accept them with an NMS bureaucracy must be good. Since forcing dealers to accept such anathema features as automation, transparency, and anonymity is good, then seeing them abandon their membership organizations via demutualization must be good, too.
    Once all these cross-referenced forgone conclusions are locked in to everyone’s minds, it even becomes possible to tell the good guys from the bad guys. Dealers are bad guys, because they oppose all the “good” NMS features that disintermediate them. Regulators, academics and the little guy – on whose behalf they fight for automation, transparency, and anonymity – are the good guys. Knowing who the good guys and bad guys are encourages essentially political calls to be made regarding the efficacy of market structure features. Because the good guys want decimals, and the bad guys don’t, decimals must really be good. Because the bad guys don’t want competition from the likes of SOES Bandits, individuals, or ECNs, the more such competition the better. Because the good guys want 24-hour trading and the bad guys don’t, 24-hour trading must be good. And so it is that the assumed efficacy of such features as decimalization, fragmenting competition, and 24-hour trading becomes further set in theoretical stone because of their political popularity.
    The net effect of all the non-defined terms, cross-referential validations, unproved assumptions, and political judgements is that, structurally, the whole NMS edifice lies some-where between a hall of mirrors and a house of cards. If any one assumption can be successfully challenged, NMS might just fade away like a bad dream. With that hope in mind, below are some suggestions of where investigations may prove fruitful in challenging NMS. Each successfully challenged feature, by itself, could lead to bene-ficial course corrections. However, by keeping NMS in mind while testing its features one by one, the root cause of all the problems may, in the end, become clear. That problem is Hubris: the always-unwise willingness to overturn the structures and features created naturally through innovation, competition and survival of the fittest. While the interventionists often seek to call their process “evolution,” as if they were merely aiding an inevitable adjustment to changing conditions or technology, Darwin would have rejected that claim. Redesigning the stock market through regulation is far closer to the perversion of his Theory of Evolution known as eugenics.

Suggested Investigations:

Question Transparency

    Sometimes called the motherhood and apple pie of U.S. stock market regulation, transparency is assumed to be beneficial. Few academics have questioned this, with the notable recent exception of a paper by Madhavan, Porter and Weaver, which shows that a switch from a non-transparent to a transparent system in Canada was harmful on several counts.¹⁰ Hopefully, other countries will offer their markets as guinea pigs too, since it is unlikely, judging by the paper’s reception at the SEC so far, that even a clear piece of empirical evidence such as this will, by itself, bring about a reconsideration of transparency policy. In the meantime, researchers might try looking in the following unusual places for evidence that might falsify the transparency hypothesis. Even if you don’t succeed, the mere act of looking could itself have the beneficial effect of moving the issue back to hypothesis status.
 

    Although the situations are clearly different in some important respects, I suspect the lessons learned in a systematic evaluation of whether transparency makes sense in election reporting will have much to say about the wisdom of transparency in stock trading. Just as waiting to report election returns until after all the votes are in – i.e., as in a call market – will be shown to make sense, continuous transparency in the stock market will be shown to be foolish. It is bound to create distortions, enhance volatility, harm liquidity, generate a sense of unfairness, and encourage fraudulent manipulation. Furthermore, because every buy-side trader and every sell-side trader knows that transparency is unwise strategy, the only way to force it through as policy is with an intrusive bureaucracy that violates our idea of a free market.

Question the Efficient Market Hypothesis

    Maybe it was Walras who got the EMH thing started. I understand he was the 19th century economist who used the call market then at the Paris Bourse as a heuristic to describe how supply and demand crossed at an efficient price. Since then, it appears that all markets have been assumed to efficiently discover price as if they were calls – although almost none of them are any more. Most references to calls in the standard taxonomies treat them as of no more structural significance than what language the locals speak or what currency their trades are denominated in. Any functional advantages or disadvantages calls may have relative to the continuous alternatives seem merely “operational,” having no bearing on whether the price discovered is correct. EMH is, in this view, an immutable Law of Nature. Because the price is always right, regardless of structure, regulatory intervention can be safely undertaken. No need to worry about price discovery or capital formation. EMH plus the Law of One Price (arbitrage) will take care of such things.
    Such assumptions lead regulators, Congress and academics to experiment freely with new market structures to incorporate politically popular fairness features. Their deeply held belief in the Efficient Market Hypothesis gives them confidence that any structural flaws introduced are of no real consequence in terms of efficiency. Apparent evidence of bubbles or other aberrations can be attributed to the irrationality of investors, rather than to any malfunction of the market’s trading mechanism. This view gives interventionists carte blanche to monkey with the structure in order to accomplish such politically popular goals as increment narrowing or other forms of “democratization” that help the little guy at the expense of the big guy (institutions and dealers). Whether a call market or a continuous market, whether a market of infrequent and giant upstairs blocks, or one of anonymous machines spewing multiple tiny prints per second – nothing can go wrong can go wrong can go wrong can go wrong.
But, just in case there is a connection between the efficiency of the market price as discovered and the efficiency of the mechanism that produces it, researchers could explore the implications by asking some of the following questions.

 

Check Out Game Theory

    The practices of stock markets evolved naturally for centuries without Government help. Perhaps for that reason, Government seems bent on attacking each and every settled arrangement or understanding by which trading had proceeded. From information creation, control and dissemination to tick sizes and compensation policies; from payment for order flow to soft dollars; from the hierarchically arranged block trading system, in which size talked to size, to the non-anonymous party-to-party dealing that supported it; from the information and access advantages of exchange members to their special relationships with the institutions they served – all of the these and many more are targeted for mandatory “change.” In spite of their confident willingness to radically alter the structure, regulators seem blissfully unaware of the subtle value of interpersonal, reputation-based arrangements that encouraged its creation and maintenance. They cannot be expected, therefore, to carry over any of them to the new regime.
    Some of the old practices can be modeled with various Game Theory concepts, which describe the often implicit and hidden protocols by which cooperation among parties develops and is maintained. While antitrust regulators may consider many forms of cooperation evil, Darwin himself recognized the central importance of sympathy, which provides the instinctive basis for the cooperation that supports all the social, religious and business institutions that enabled man to rise above the animals. Because Game Theory is both so relevant to the world of trading that is being mandated away, and so clearly not part of any of the theoretical discussions that led to the mandates, there are few more fertile fields for planting seeds of doubt in NMS theories.
    For example, researchers were at first surprised to find examples of “irrational” altruism in Prisoner’s Dilemma games with monetary rewards. Subjects even seek to cooperate with other players they do not know, and will never know (nor will the other players know them) in a one shot game, even though they could make more money personally by defecting (not cooperating). Although a tit-for-tat reciprocation strategy usually works best, whether the other player’s opening move is cooperation or defection, the first move, more often than not, is cooperation. While some Chicago economists may find this perplexing, Darwin would probably not have been surprised to hear that the cooperation gene is hardwired into us all. In any case, researchers have also discovered that the more the players know each other, and the longer the games are played, the more cooperation becomes the default strategy. This is because, in a non-anonymous environment, cheaters can be punished and cooperators rewarded.¹³
    Another fruitful area of inquiry involves the Winner’s Curse, in which a winning bidder pays more than an asset is worth. The literature seems to focus on the seemingly mysterious phenomenon of how bidding excitement pushes winning bidders to overpay relative to the eventually achievable value of an asset, such as a right to drill for oil.¹⁴ A more interesting phenomenon in the market structure context is the special case of what you might call a built-in Winner’s Curse. Here the trading structure is designed – either accidentally or deliberately – such that it is likely to produce immediate regret, because others can get better prices at the same time. Even if this is only a theoretical possibility, its existence places an uncomfortable strategy burden on bidders that can make them shrink from participation.
 

Question Antitrust and Demutualization

    Prevented from engaging in most of their traditional cooperation-enforcement mechanisms, exchanges have lost their raison d’être. Thus, regulatory pressure is the real reason exchanges are demutualizing. It is not, as is frequently alleged by regulators and their supporters, the need to streamline governance, issue stock to finance trading systems, get rid of political obstacles to automation, or any of the other convenient smokescreens. Of course, the exchanges’ members are opposed to those disintermediating enhancements. It was partly to be able to circle the wagons against such threats that memberships were formed in the first place. And of course, if they are not allowed anymore to do what membership exchanges used to do, they will certainly move quickly to proprietary business models. But regulators are the cause of the shift in strategy. Rather than simply allowing new competitors to innovate around the old markets, the basic thrust of regulation is now to force the old ones to change. That is why it is essentially correct to say that the primary reason to demututalize is regulatory pressure. Demutualizing to get rid of the political objections to innovation is simply not an idea bubbling up from the members; it is being forced down their throats by regulators who have left them no choice.
    It is important to recognize that demutualization is an intended – or at least inevitable – consequence of regulatory reform. This recognition is important in order to prevent interventionist regulators from being able to shirk their responsibility for causing demutualization, as if it were only in response to exogenous changes in the competitive or technological landscape. Although such claims are made regularly by regulators, and all too often by their academic supporters, the truth should not be allowed to escape. It is only by remembering that these reforms are man-made that we can avoid the further interventionist takeover by regulatory bureaucracies when they fail. If we forget, then, when demutualization proves disastrous, as I expect it will, the line out of Washington will be: In view of perceived problems accompanying certain restructuring plans of some exchanges, new regulatory authority to oversee certain critical market functions is necessary.
    It is interesting that, as recently as the 1997 “order handling” reforms that grew out of the successful antitrust investigations, regulators were positively boastful that they were able to push through such radical changes. While recognizing how controversial they were, they pointed out that the one thing their supporters and detractors agreed on was that they would result in radical change. Regulators not only agreed, but confidently proclaimed that radical change was their intent. Well, now that we have had day trading, volatility, a drastic separation of growth from value stocks (which began, by the way, with the order handling rules), an explosion of fraud, the collapse of the dot-com bubble and many other strange things happen since their bold statements, regulators no longer seem so anxious to claim credit for it all. Now, to hear them tell it, they are mostly reacting themselves to all these strange developments that technology has brought our way.
 

Second Addendum

Trials and Error

    98 million Americans received a polio vaccine between 1955 and 1963 that was found in 1960 to contain a previously unknown monkey virus called SV40.¹⁵ This gave potentially scary meaning to work done separately in 1960 by a researcher named Bernice Eddy, who showed that minced monkey kidneys – the starting point for vaccine manufacture – caused tumors in mice. For her troubles, Eddy was demoted, stripped of her lab, and forgotten. An official study was whipped up “proving” that, although SV40 was present in the vaccine, this was not a problem, because there was no difference in cancer rates between vaccinated and non-vaccinated humans. Just to be safe, though, new batches of vaccine from 1961 onward were screened for SV40. But the policy was to hush up the story and to continue using the existing contaminated stocks until they were used up. Good thing there was no problem with them, because this resulted in millions of additional human carriers of SV40 by 1963.
    Fast forward to 1993 and an Italian researcher named Michele Carbone studying a rare type of lung cancer.¹⁶ Seems there are SV40 cells present, and not just hitching a ride. Seems they played a role in causing the cancer, too. What about that 1960 study showing it was safe? Well, it turns out that it takes 20 – 40 years for SV40 to start wreaking havoc. Welcome to the Land of Unintended Consequences. As other researchers repeat Carbone’s findings and look for SV40 in other previously unknown and now not so rare cancers, sure enough, it shows up in half a dozen types of brain cancer, a similar number of bone cancers, kidney cancer, uterine cancer, pituitary cancer, thyroid cancer, and more. And we’d better hope it’s not causing all these cancers, because it seems there are now many carriers of SV40 who didn’t get it through vaccination; 6% of newborn children born since 1980, for example, have it in their blood. And, indicating that it may not just be passing from mothers to babies, SV40 is now present in 23% of adult blood samples and 45% of sperm samples.
    Rather than calling for more work to find out how this potentially very troublesome virus may be spreading, what its effects are, and how to prevent them, the medical establishment appears obsessed with trying to discredit the studies of Carbone and others. To do otherwise will, according to scientists at the National Institutes of Health “shake confidence in vaccines.” The party line on SV40 is that the now dozens of peer-reviewed studies showing a link to cancer are wrong, probably due to laboratory contamination. It is ironic that the establishment would so quickly jump to the contamination charge. In a separate incident, they resisted for years a well-founded and eventually accepted contamination claim that invalidated much of their intervention-bound research.¹⁷ Apparently, the rule is, if a contamination story undermines intervention, ignore it; if it supports intervention, embrace it.
    My second story in this vein is that of the MMR vaccine, the combo shot for Mumps, Measles and Rubella. A British specialist in children’s stomach problems named Andrew Wakefield stumbled upon a possible connection between MMR and autism.¹⁸ The more he looked into it, the more it seemed that a connection might in fact exist. Clearly, he thought, this hypothesis was worth further investigation. But also, the more he looked, the more he was accused of undermining confidence in vaccines, and the more his career seemed in jeopardy. Not only did few want to help with further research, or fund it, but he was basically told to shut up. A recent 60 Minutes on the topic repeatedly showed medical officials urging cover-up on the grounds that, whether the MMR-autism connection existed or not, even talking about it might cause mothers to forego having their children vaccinated. To remind you: my point here is not to argue for this or that hypothesis, but to suggest that research may be biased in favor of whatever conclusions would support intervention.
    My third story on vaccines is the most frightening of all, if true. And by “frightening, if true,” I don’t mean that it is frightening if the scary hypothesis is true (although it is), but that it is frightening if the medical establishment is circling the wagons as much as they seem to be to avoid looking into it. The gist of the hypothesis is that an “experimental” oral polio vaccine given to nearly a million Africans in the former Belgian Congo in the late ‘Fifties brought on HIV and AIDS. The disease, in any case, started there, and at about that time. The culprit, it is now generally accepted, was a chimpanzee virus that “jumped” over to man. The only question is whether that occurred via “natural transfer,” such as might come through a monkey bite, or if the jump came with the vaccine.¹⁹ The medical establishment, as you might expect, is backing natural transfer. I’ll spare you the arguments, fascinating and frightening though they are, and just give you one statistic: Of the $2 billion spent annually on AIDS research, only $1 million is spent trying to find out where it came from.²⁰ To improve the chances of finding a cure, wouldn’t it be good to know the origin of today’s greatest medical challenge? Speaking of a cure, much of the rest of that money is looking for a vaccine. Does anyone but me see a loop here?
    When I was a kid, I think we only got 3 or 4 vaccines. Now babies get 26 shots by the time they are 18 months old. As we increasingly rely on vaccines for immunity – a tree-by-tree approach if ever there was one – are we missing the danger of igniting a massive blaze in the forest that is our immune system? These stories all seem to involve suppressions of immune responses; suppressions that, as the first letter in the AIDS acronym suggests, are somehow “acquired.” Could the increase in the number of diseases have something to do with this process, either by creating new ones by accidents like those hypothesized, or by weakening our natural immune systems’ capacity to fight them – or both? Many of the viruses vaccinated against now used to be controlled naturally as children passed them around to friends and family through normal contact in early life. The usual results were relatively mild early infections, lifetime immunity to the contacted viruses (no boosters needed), and versatile immune systems able to mount vigorous defenses against new threats like cancer.²¹ Ever since the polio threat was met and conquered (according to the conventional wisdom, anyway), the model for how we defeated this epidemic that began in the United States has been copied for every other significant viral disease and potential disease the world over. Whether this is wise or not is a question that is never raised by the medical establishment. It should be, because this is serious intervention. What we appear to be doing is nothing less than replacing our natural immune system with a doctor-designed one. Will it work? Is it necessary? What are the dangers? These are forest questions, and the fact that so few researchers ask them is highly suggestive to me of trees-before-forest bias. In fact, not only does the medical establishment fail to ask such big picture questions, but neither to my knowledge have any of the challengers to the conventional wisdom mentioned earlier.
    Since polio provided the modern paradigm for this disease-by-disease approach to health, and is assumed to offer unassailable support for its continuation, another look at the polio experience is in order. How successful was that intervention? Polio had been around for centuries. But it became an epidemic only when the world’s wealthiest and most hygiene-conscious nation had the sanitary facilities and the attitude to prevent normal early childhood infections. We didn’t know, of course, that by preventing early contact with polio, we were also preventing relatively harmless – indeed usually unnoticed – early infections, and the consequent immunization of most individuals and the general public. When the first big outbreak occurred, which began among older-than-infant children from primarily better off New York families in 1916, it was not even considered that increased hygiene might be a cause. And when that epidemic struck 27,000 nationwide, including 8,900 in New York, it seemed only prudent to increase hygiene and prevent contact even further, which is what happened. Hygiene consciousness became hygiene obsession, as an understandably frightened nation placed its hopes in science to find a cure, i.e., a vaccine.
    The largest peacetime mobilization in our nation’s history ensued, as the entire medical community enlisted children in orphanages, prisons, schools – sometimes even their own sons and daughters at home – as test subjects for the various trial vaccines. As in all wars, this one had many casualties. But these were not soldiers dying on foreign soil, nor even children who contracted polio at the proverbial swimming pool. These were children deliberately given trial vaccines who were paralyzed or died. Given the intensity of the fervor to find a cure that such sacrifice demonstrates, it is not surprising that certain obvious facts regarding the origin and development of the disease were overlooked. It was not noticed until later, for example, that the most hygiene conscious groups were the most susceptible. Nor was it noticed that the disease seemed to grow as hygiene consciousness increased, nor that it spread to the lower classes in proportion to the degree in which fear convinced them to imitate the hygiene habits of the wealthy. How could researchers be expected to look into such things, when they could barely distinguish between the two human tragedies of a child naturally getting polio, and one who gets it as the result of a deliberately administered experiment to improve the general welfare or to save other children. No wonder researchers would seldom ask if these trials themselves might be sustaining or spreading the disease, although with hindsight it is clear that this did occur to some extent at least.
    Such was the presumption that vaccines are the answer to the polio threat, that not only were these now generally acknowledged facts overlooked, but the equally obvious dangers of the current course are also ignored. In order to eradicate polio entirely so that vaccinations can be dropped, as was allegedly done with smallpox²² and is the avowed goal of the medical establishment, American schoolchildren are required to be vaccinated. This is assumed to be necessary until all the other countries get rid of their polio through vaccination as we have. This is troubling for several reasons. No natural cases of “wild” polio have been reported in the U.S. since 1979. But that doesn’t mean it’s gone from our shores. We still see up to 10 cases per year of paralysis or death, all of them from the continuing vaccinations. But unfortunately, even as we still recruit our children as soldiers in this war, it is not at all clear that it is winnable. India, for example, has been vaccinated and vaccinated, and still sees 1,000 cases a year. And, while the cost estimates for complete eradication run into the billions, getting there will require that everyone – 100% of all people on earth – submit to vaccination, or are otherwise shown to be non-carriers. If any significant subset of the world’s population balks, universal eradication of polio in the manner described by agencies like the World Health Organization will become impossible without an equally universal mandatory vaccination requirement.
    Even if elimination of this one disease via vaccination were possible, and even if there were no side effects, how will it be possible to copy the polio paradigm for all the others, whether natural or man-made? Is it going to be possible, following this disease-by-disease approach, to find a new vaccine for each strain of each new virus that jumps from the animal kingdom, or a new antibiotic for all the microbes that have evolved their way around the old ones? How will we get everyone in the world to take their shots? How many shots for how many separate viruses will they have to take? Who will pay for them? There may be good and sufficient answers to such questions, but the one thing that is crystal clear is that very few researchers are asking them. Until they do, it will be hard to escape the impression that there are major unintended consequences lurking in that forest. The failure to ask such questions is itself evidence of bias in medical research in favor of conclusions and interpretations that support intervention. This is the dog that didn’t bark – big time!