Back to Berkeley: Prof. Carl Shapiro Returns from Presidential Adviser Post

A familiar face returned to the Berkeley-Haas campus this fall. Haas School economics professor Carl Shapiro, the Transamerica Chair in Business Strategy, served in two high-ranking positions in the Obama Administration.  From March 2009 through February 2011, Shapiro served as chief economist in the Antitrust Division of the U.S. Department of Justice (DOJ). He then moved to the White House, where he advised President Obama as a member of the President’s Council of Economic Advisers (CEA).

Trading in his humongous office with a White House view for a smaller one framed with Berkeley’s Campanile is “a delightful change,” he says.

“I was here at Berkeley for almost 20 years before I went to Washington. It’s a big change. East coast vs. west coast, D.C. vs. Berkeley, wearing a suit vs. wearing a Hawaiian shirt! I’ve always been an academic.  My time in D.C. was an exciting but temporary posting,” says Prof. Shapiro.

Haas NewsWire recently sat down with Shapiro to learn more about what is was like to advise President Obama and make decisions that could potentially affect the country’s economic policies.

What was a typical day as an adviser like?

My days were very fast-paced, with questions arriving all the time, needing a quick answer. And I mean quick.  Academics take months or years to study a problem; we often had hours, days if we were lucky, to come up with our answer. My portfolio as a Member of the CEA was extremely wide-ranging.  I spent a lot of time on housing and housing finance, energy and environmental issues, international trade –especially our trade relations with China –manufacturing, and health care. I also was involved in tax policy and Federal budget issues. Happily, I also had the opportunity to work on topics quite close to my own research expertise – issues involving innovation, intellectual property, and federal research funding. During my time at the CEA, Congress passed the Leahy-Smith America Invents Act for patent reform and authorized the Federal Communications Commission to run “incentive auctions” to redeploy valuable spectrum from over-the-air broadcasting to high-speed wireless Internet access.

Intellectual property and patent law are at the heart of today’s entrepreneurism, especially here in the Bay Area. How effective is the America Invents Act?

The America Invents Act (AIA) is the biggest change to our patent system since the 1950s. The AIA should significantly improve patent quality by providing more stable funding to the U.S. Patent and Trademark Office and by establishing new post-grant review procedures by which patents that have been improperly granted can be challenged. The AIA constitutes a distinct improvement in patent policy, but it was a compromise, leaving unaddressed some of the biggest issues facing the tech industry. The issues we’re seeing, for example in the Apple-Samsung patent infringement case, at the International Trade Commission, and in the patent wars over mobile devices, signal that the patent system is still not working properly.  Plus, the stakes have increased, as we’re now seeing patent portfolios trade for billions of dollars. Now that Congress has spoken, the action will turn to the business community and the courts. As I return to my research and my consulting practice, I plan to delve into these issues.

You were the chief economist at the Antitrust Division at the DOJ for two years, overseeing 60 Ph.D. economists. What is your most memorable experience?

My single biggest area of activity was merger review. We worked intensively on the Comcast-NBC and LiveNation-Ticketmaster mergers. Our job was to figure out whether these mergers –and many others–would have anti-competitive effects and be harmful to consumers.

How do you distinguish between what’s a negative impact and what’s fair for business and free trade?

DOJ looks very closely at mergers between direct competitors in concentrated industries. The authoritative description of how the DOJ and the Federal Trade Commission (FTC) review mergers can be found in the “Horizontal Merger Guidelines” which informs businesses how their mergers will be evaluated by the federal government. One of the things I‘m most proud of during my tenure at the DOJ is that I played a leading role in revising these guidelines. They were 20 years old and no longer reflected enforcement practice or the best economic thinking. Professor Joseph Farrell, a UC Berkeley economist, took the lead at the FTC. Working together we finished the revision after one year, in August 2010.

What will you miss about Washington, if anything?

Serving President Obama, and working in the White House, was a tremendous honor. I certainly miss having regular meetings in the West Wing, not to mention my White House Mess privileges!  Working on such a broad range of fascinating issues was very exciting –and exhausting– on a day-to-day basis.  Dealing with issues outside my area of specialty was a great learning opportunity. I will miss that challenge.  But I’m very happy to be back at Berkeley. I am especially enjoying bringing some of my White House and DOJ experiences into the classroom here at Haas.

Prof. Shapiro is currently teaching “Economics for Business Decision Making” (MBA201A) in the Full-time MBA Program.