Quotulatiousness

August 28, 2014

Digital “ecosystems”, “platforms”, and sunk costs

Filed under: Business, Technology — Tags: , , — Nicholas Russon @ 09:19

The Guardian Technology Blog looks at how digital product vendors attempt to lock you into their own (more profitable) platform or ecosystem:

Depending on your view, the stuff you own is either a boon to business or a tremendous loss of opportunity.

For example, your collection of spice bottles in your pantry means that I could possibly sell you a spice rack. On the other hand, it also means that I can’t design a special spice rack that only admits spice bottles of my own patent-protected design, which would thereby ensure that if you wanted to buy spices in the future you’d either have to buy them from me or throw away that very nice spice rack I sold you.

In the tech world, this question is often framed in terms of “ecosystems” (as in the “Google/Chrome/Android ecosystem”) or platforms (as in the “Facebook platform”) but whatever you call it, the discussion turns on a crucial different concept: sunk cost.

That’s the money, time, mental energy and social friction you’ve already sunk into the stuff you own. Your spice rack’s sunk cost includes the money you spend on the rack, the time you spent buying fixings for it and the time you spent affixing it, the emotional toil of getting your family to agree on a spice rack, and the incredible feeling of dread that arises when you contemplate going through the whole operation again.

If you’ve already got a lot of sunk costs, the canny product strategy is to convince you that you can buy something that will help you organise your spices, rip all your CDs and put them on a mobile device, or keep your clothes organised.

But what a vendor really wants is to get you to sink cost into his platform, ecosystem, or what have you. To convince you to buy his wares, in order to increase the likelihood that you’ll go on doing so — because they match the decor, because you already have the adapters, and so on.

The vendor wants to impose a switching cost on you, to penalise you for disloyalty should you defect to another ecosystem/platform. The higher your switching costs, the worse the vendor can afford to treat you — rather than supplying the best goods at the best price, he can provide the best goods at the best price, plus the switching cost you’d have to pay if you went somewhere else. Or he can offer the best price, but offer goods whose manufacture — and quality — is cheaper by a sum of about the cost you’d have to pay for switching.

August 27, 2014

Disappointingly, SpaceX plays the crony capitalist game with Texas politicians

Filed under: Business, Government, Space — Tags: , , — Nicholas Russon @ 10:28

If you’ve been reading the blog for a while, you’ll have picked up that I’m a fan of SpaceX and other non-governmental organizations in the space race. I wouldn’t go so far as to say Elon Musk is a hero, but I’ve generally been happy about his company’s successes in bringing more private enterprise into the launch business. However, as Lachlan Markay explains in some detail, Elon Musk is not above taking government funds to do things he’d be doing anyway, just like crony capitalists in the rest of the government-industrial complex:

Shortly before a private spaceflight company’s test rocket exploded over southern Texas last weekend, state lawmakers announced millions in subsidies to get the company to continue launching rockets in the Lone Star State.

Space Exploration Technologies, commonly known as SpaceX, will receive more than $15 million in public financing to build a launch pad in Cameron County, near the Mexican border.

The subsidies came after SpaceX’s founder, billionaire tech mogul and pop technologist Elon Musk, made campaign contributions to key state lawmakers and hired lobbyists with ties to Austin.

SpaceX is one of a number of innovative and disruptive startups that, though lauded by some free marketeers for making government-run markets more competitive, are finding themselves drawn to political advocacy, whether out of shrewdness or necessity.

Of the more than $15 million in incentives for a SpaceX launch facility in Brownsville, Texas, announced this month, $13 million will come from the state’s Spaceport Trust Fund.

Initially created in 2002, the fund began to wind down together with the idea of commercial spaceflight. But with the ascendancy of SpaceX and similar companies, Texas looked to secure its place as a destination for commercial spaceflight operations.

Musk took notice. A prolific political donor, he began pouring money into the campaigns of key state lawmakers. On November 7, 2012, he donated $1,000 to state representative Rene Oliveira (D). Two weeks later, he gave state senator Eddie Lucio Jr. (D) $2,000.

The next month, the Associated Press reported that Lucio and Oliveira were working to secure state backing for a potential SpaceX launch pad in Brownsville.

As Drew M. says at Ace of Spades H.Q., it’s not like this is a new thing for businesses or for politicians, it’s just disappointing:

I’m not naive to think this sort of stuff hasn’t gone on forever and will go on forever, it’s simply human nature. That’s why making government at levels as small as possible is so important.

What does continue to surprise me when it shouldn’t is how cheap it is to buy politicians. Remember Team GOP’s hero, Mississippi Senator Thad Cochran’s longtime aide who accepted $20-30K in gifts from Jack Abrahmof in return to ensuring the felon’s clients received millions in government money?

When you think about it it’s really no surprise that politicians sell themselves so cheaply. Unlike honorable whores who sell their own bodies, politicians sell other people’s money. Plus, they make it up in volume.

This bi-partisan rush to hand out everyone’s money for their own gain is part of why I’m drifting away from conservatism and towards libertarianism. Screw them all.

August 26, 2014

Tax inversions: “Canada, it would seem, is the new Delaware”

Filed under: Business, Cancon — Tags: , , — Nicholas Russon @ 08:04

In Maclean’s, Jason Kirby looks for reasons why Tim Hortons is interested in a deal with Burger King:

For starters, let’s consider Burger King’s motivation for buying Tim Hortons. It is not looking for synergies. Don’t expect to see Burger King roll out twinned stores, with one counter selling Whoppers, the other Timbits, as per Wendy’s strategy when it owned Tims. Instead, Burger King wants to avoid paying U.S. taxes. If the deal goes ahead (no agreement has been finalized) Burger King will achieve this through what’s known as a “tax inversion.” It would buy Tim Hortons, then declare the newly merged company to be Canadian. And because companies in Canada enjoy a lower corporate tax rate than those in America — 15 per cent in Canada compared to an official U.S. rate of 35 per cent — Burger King’s future tax bills could be a lot smaller.

Canada, it would seem, is the new Delaware.

So Burger King is buying Tim Hortons, but in doing so, the combined Tim Hortons and Burger King will be financially engineered to be Canadian, at least on paper. A statement released by the companies following the Wall Street Journal‘s initial report on the deal said Burger King’s largest shareholder, 3G Capital, a Brazilian private equity firm, would own the majority of the shares of the newly created company. And you can be sure any tax savings will flow back to shareholders in the form of higher dividends.

It’s clear what’s driving Burger King to pursue this deal. But there’s been far less attention paid to the question: what’s in this for Tim Hortons?

According to Tim Hortons, the answer — as it unceasingly has been for the past two decades — is the pursuit of international growth. In the statement from Tim Hortons and Burger King, the companies said the coffee chain will have ”the potential to leverage Burger King’s worldwide footprint and experience in global development to accelerate Tim Hortons growth in international markets.”

Update: Kevin Williamson points out that relatively few US companies actually relocate to other countries now, but that the number is clearly increasing and knee-jerk reactions to that by politicians may well make it worse.

There are trillions of dollars in U.S. corporate earnings parked overseas, and progressives want the government to shove its greedy snout all up in that, denouncing “corporate cash hoarders” and blaming un-repatriated corporate earnings for everything from the weak job market to chronic halitosis. Harebrained schemes for putting that corporate cash in government coffers abound. So the current balance could quite easily be tipped. And after years of ad-hocracy under Barack Obama et al., U.S.-style “rule of law” may not be as attractive as it once was. A few more arbitrary NLRB decisions or political jihads from the IRS could change a few minds about the value of U.S. law and governance.

The question isn’t whether you can bully Walgreens out of its plan to move to Switzerland. The question is whether the next Apple or Pfizer ever puts down legal roots in the United States in the first place. Right now, the friction works in favor of the United States, but there is no reason to believe that that will always be the case. You think that Singapore wouldn’t like to be the world’s banking or pharmaceutical capital? That Seoul lacks ambition? That the Scots who brought us the Enlightenment can’t run a decent system of law and property rights? Burger King is not talking about moving to some steamy banana republic for tax purposes, but to stodgy, stable, predictable, boring old Canada. Boring and predictable looks pretty good if you’re Burger King, especially when the alternative is unpredictable and expensive. Unpredictable and expensive is what you date when you’re young and stupid — you don’t marry it.

Update the second:

August 21, 2014

Missing the Target, badly

Filed under: Business, Cancon, USA — Tags: — Nicholas Russon @ 08:05

I’d heard lots of good things about the Target chain before they came north to Canada (James Lileks, for example, should be getting a regular cheque from the firm for his regular name-check of the local Target store in his writing). When a new Target store opened in Whitby, Elizabeth and I visited shortly after the doors opened. To say it was disappointing is an understatement. We expected to find a new, clean, fully stocked store with different brands and lower prices. What we found was a new, clean store with exactly the same stuff we’d seen before at pretty much the same prices. In other words, there was literally no reason to come back … and we haven’t been back.

Jason Kirby says that our experience was pretty much what everyone else experienced:

Target Canada is an unmitigated disaster. On that point, everyone, from its customers to investors to the company’s executives, can agree. In reporting its second-quarter results this morning, Target revealed its Canadian operations lost another US$200 million, while same-store sales — a gauge of performance that measures only those locations that have been open for at least a year — fell 11.4 per cent from the same period in 2013.

[...]

In a conference call with Canadian media Wednesday, Target chief financial officer John Mulligan declared: “We bit off way too much, too early. In retrospect, (we would) probably open five to 10 stores last year — refine the operations, refine the supply chain, the technology, get our store teams trained. But again, that’s all hindsight, we are where are right now and we’re focused on moving forward to fix this for our guests.”

[...]

It took Target from early 2011, when it announced the Zellers deal, to March 2013 before it opened its doors and could ring up its first sale. To date, Target has racked up $1.8 billion in losses from its Canadian operations. Here a good breakdown of the losses.

In Wal-Mart’s fiscal 1995 annual report, the retailer said its operating, selling and general and administrative expenses, as a percentage of sales, had risen just 0.2 per cent and 0.3 per cent in each of the previous two years as a result of the Canadian acquisition and launch. By Wal-Mart’s second year in Canada it had already generated an operating profit, having doubled sales per square foot since taking over from Woolco. By year two it boasted a 40 per cent share of the market.

It’s taken three years for Target to admit just how flawed the Canadian expansion has been. An atrocious inventory management system left shelves empty, while Canadians were completely turned off by Target Canada’s decidedly un-Target-like prices on goods.

August 20, 2014

New report calls for Ontario to break up the LCBO

Filed under: Business, Cancon, Economics, Wine — Tags: , , , , , — Nicholas Russon @ 13:33

In the Toronto Star, Richard Brennan reports on a new study by the C.D. Howe Institute calling for the province to join the modern era:

The “quasi-monopoly” LCBO and The Beer Store have hosed Ontario consumers long enough, a C.D. Howe Institute report says.

The right-wing think tank said the Ontario government should strip them both of their almost exclusive right to sell beer, wine and spirits, suggesting the report proves that opening up to alcohol sales to competition will mean lower prices.

“The lack of competition in Ontario’s system for alcoholic beverage retailing causes higher prices for consumers and foregone government revenue,” states the 30-page report, Uncorking a Strange Brew: The Need for More Competition in Ontario’s Alcoholic Beverage Retailing System, to be released publicly Wednesday.

The report includes tables comparing Ontario beer prices to other provinces with greater private sector involvement, particularly with Quebec, where a case of 24 domestic beers can be as much as $10 cheaper and even more for imported brands.

Since 1927, when the Liquor Control Act was passed, the Liquor Control Board of Ontario and the privately owned Brewers Warehousing Company Limited have had a stranglehold on alcohol sale in the province.

“The Beer Store’s quasi-monopoly of beer retailing is … an anachronism,” the report says, referring to the foreign-owned private retailer that is protected by provincial legislation.

August 18, 2014

Worstall confirms that “the UK would lose 3 million jobs in the year it left the European Union”

Filed under: Britain, Business, Economics, Europe — Tags: , , — Nicholas Russon @ 09:15

There you go … proof positive that the UK cannot possibly, under any circumstances, leave the European Union. Except for the fact that the UK would lose 3 million jobs in the year even if it stayed with the EU, because that’s how many jobs it normally loses in a year:

UK Would Not Lose 3 Million Jobs If It Left The European Union

Well, of course, the UK would lose 3 million jobs in the year it left the European Union because the UK loses 3 million jobs each and every year. Roughly 10% of all jobs are destroyed in a year and the economy, generally, tends to create 3 million jobs a year as well. But that’s not the point at contention here which is the oft repeated claim that because we left the EU then therefore the UK economy would suddenly be bereft of 3 million jobs, that 10% of the workforce. And sadly this claim is a common one and it just goes to show that there’s lies, damned lies and then there’s politics.

The way we’re supposed to understand the contention is that there’s three million who make their living making things that are then exported to our partners in the European Union. And we’re then to make the leap to the idea that if we did leave the EU then absolutely none of those jobs would exist: leaving the EU would be the same as never exporting another thing to the EU. This is of course entirely nonsense as any even random reading of our mutual histories would indicate: what became the UK has been exporting to the Continent ever since there’s actually been the technology to facilitate trade. Further too: there have been finds in shipwrecks in the Eastern Mediterranean of Cornish tin dating from 1,000 BC, so it’s not just bloodthirsty and drunken louts that we’ve been exporting all these years.

August 15, 2014

QotD: Mobile phone companies

Filed under: Business, Quotations — Tags: , , — Nicholas Russon @ 00:01

I recently cancelled a contract with a different provider after some gizmo broke. The company first told me the whole thing was my problem, then at the last moment offered me hundreds of pounds to stay. When your phone company starts using the playbook of an emotionally abusive spouse, this is not a market in good working order.

Tim Harford, “Casinos’ worrying knack for consumer manipulation: The spread of machine gambling offers a portent of other economic developments”, TimHarford.com, 2014-01-07

August 14, 2014

The decline of the British pub won’t be stopped by more rules and regulations

Filed under: Britain, Business — Tags: , , , — Nicholas Russon @ 10:01

In sp!ked, Rossa Minogue agrees with the Campaign for Real Ale that the British pub as a fixture of daily life is in rapid decline, but warns that CAMRA’s proposed remedy will not turn things around:

Britain’s pubs are in peril. In 1982, there were almost 68,000 pubs in the UK; today there are fewer than 55,000. They continue to close at a rate of 31 a week.

Pubs in the suburbs are said to be worst affected, with three per cent of all suburban pubs having closed in the past six months alone. A report by the Campaign for Real Ale (CAMRA) blames the closures on lax planning regulations that allow pubs to be bought and converted into other kinds of businesses without having to seek permission from the local council. CAMRA’s answer is to call for more planning regulations that would make it difficult to convert your favourite boozer into a Tesco Metro. Publicans have blamed cheap supermarket booze for eating into their revenues and have backed calls for minimum pricing to make drinking at home less attractive. There are no doubt many other factors at work. The ubiquity of mobile phones, for one, makes it easier to arrange a meeting with a friend at short notice, which means the idea of being the ‘regular’ who pops into a ‘local’ unannounced in the hope of bumping into someone one knows is becoming a thing of the past.

Further regulation, however, is not the answer. In fact, as demonstrated by their enthusiastic support for the smoking ban, CAMRA has failed to see that regulations are one of the main things that are killing pubs. Stricter planning laws would do little to address the underlying reasons why pubs are closing. After all, if pubs were drawing the crowds they needed to be viable, why would they be selling up in the first place? Rising rents have been cited as a cause, but the businesses lining up to take over pub premises don’t seem to have a problem paying them.

Pub culture is under threat, but not by greedy property developers desperate to turn every suburban highstreet into a row of Costa Coffees. Rather, the threat comes from the degradation of public life, a process nudged along by a state that disapproves of our habits.

Ubersplaining

Filed under: Business, Humour — Tags: , — Nicholas Russon @ 08:46

James Lileks on the mindbending phenomenon that is Uber being supported (and even loved) by evil right-wingnuts:

Many people on the right have embraced Uber, the company that lets you call a ride from your smartphone instead of standing on the corner with your hand up looking like a statue of Lenin leading the proletariat to the Future, or maybe to that tapas place downtown. This confuses people who regard conservatives as dumb apes who poke Shiny New Things with a stick and screech in alarm. How can they support Uber? It’s a Cool Thing, and they’re all middle-aged dorks in polyester plaid shorts and black socks with sandals who like to “get down” to bands that sing about pickup trucks, or they’re pale evil men who wear three-piece suits to bed and drift off to sleep fantasizing that they’re slapping the birth-control pills out of the hands of poor women. Uber is good, Uber is an app, for heaven’s sake — how can these cretins possibly be on its side? It’s like finding that all the kale in the country is fertilized by Koch products.

[...]

As for Uber itself, well, let’s take a look at the wonderful world of cars-for-hire. When I lived in D.C. in the 90s, I took a lot of cabs. Now and then you’d get a spotless ride with a courteous older driver who knew every street and alley. When I say “now and then” it was in the sense of “now and then, there’s a presidential election.”

For the most part, the cabs had seats that felt like the thin battered beds of a hot-sheet motel and a sweat-and-barf perma-funk that made you roll down the windows in January. The fare wasn’t set by distance or time, but by zones, which encouraged the drivers to drive fast. While this made for speedy trips, and the not-unpleasant sensation of feeling your cheeks ripple with G-forces as he shot down the Dupont Circle tunnel like someone testing a rocket car on the Salt Flats of Utah, the occasional moments of weightlessness when you hit a bump reminded you that you were doing 50 mph in a car whose shock absorbers didn’t, and whose brakes probably wouldn’t.

When I moved back to Minneapolis I had no occasion to take the cab, except for trips back from the airport. The cars weren’t exactly new; when you looked at the fleet idling in the bays, it made you think, “this is what Havana would look like if Castro took over in 1982.”

August 6, 2014

Atlas Shrugged was not an instruction manual”

Filed under: Business, Economics, Government, USA — Tags: , , — Nicholas Russon @ 08:34

Oh, my. A few corporations are using the “corporate inversion” tactic to get out from underneath punitive taxes and the reaction is to talk about making it harder to escape? Tamara K. explains why this is breathtakingly dumb:

Dude, one of the complaints that nuanced cosmopolitan liberals have with Ayn Rand is that her villains are cartoonish caricatures, and here you go popping out an editorial that could have been written by Wesley Mouch. Tone-deafness on this scale is positively breathtaking. Atlas Shrugged was not an instruction manual, you knob.

I suspect more corporations have been considering the pro and con to corporate inversion recently … and the hysterical reaction to the few that have already taken place may trigger a rush to the exits. Nice work, guys!

August 3, 2014

NLRB decision would “stick a fork in the franchise model”

Filed under: Business, Economics, USA — Tags: , — Nicholas Russon @ 10:08

In Forbes, Tim Worstall explains why the recent decision by the US government’s National Labour Relations Board could destroy the franchising business model widely used by fast food chains:

The National Labor Relations Board (NLRB) made a very strange decision last week to rule that McDonald’s the corporation, was a joint employer of the staff in the franchised restaurants. It was, of course, at the urging of those labour activists who would like to union organise in the sector. Dealing with one national company is obviously going to be easier than dealing with thousands of independent business owners. There’s a number of problems with this decision ranging from the way that it overturns what has long thought to be settled law, to it obviating already signed contracts but perhaps the greatest problem is that it calls into question the entire validity of the franchise system.

[...]

The franchisor though gets paid a percentage of pure sales: what the labour costs at the franchises is is no skin off their nose at all. So they’ll not control it. The only major input that the franchisee can control in order to determine profitability would now become, at best, a join venture and we’ve different incentives for each side of the bargain. That’s just not going to work well. I don’t think that Pudzer is being alarmist in stating that this ruling would stick a fork into the franchise model as a whole. You simply can’t have such a system where the franchisees don’t control any of their inputs.

Of course, it’s still open to someone to argue that the franchise system shouldn’t actually exist, that it would be a good thing if everyone were either a truly independent organisation or part of a large and centrally managed group. But if that is the argument that’s being made, or will be made, then it’s a large enough change that it really needs to happen through political means, not administrative law. That means that if Congress wants to change the rules in this manner then that’s up to Congress. But it really shouldn’t be done by the decision of an administrative agency.

A promise of stability for the Vikings

Filed under: Business, Football — Tags: , , — Nicholas Russon @ 08:49

In the Star Tribune, Jim Souhan looks back at the Minnesota Vikings long, tattered history of leadership struggles, coups d’etat, backstabbings, legal battles, and instability that would embarrass a banana republic in the 1930s:

In the beginning, there was Norm Van Brocklin, and he was angry. So angry that he would scream at Fran Tarkenton when Tarkenton scrambled. So angry that Van Brocklin unwittingly became the Vikings’ cussing precursor to their current coach, Mike “Bleep” Zimmer.

That Norm couldn’t get along with a future Hall of Fame quarterback foretold decades of Vikings history, in which owners, coaches, star players and team executives would scheme to seize influence within the organization.

Today, the Vikings appear to have all of their key decisionmakers on the same page and, for once, that page is not a legal brief.

There have been good times, and calm times, in Vikings history, but rarely were the Vikings good and calm at the same time when anyone other than Bud Grant was in charge.

Grant employed problem players and his team lost big games, but with ol’ Steely Eyes in charge, the Vikings took on the appearance of a lake unruffled by whitecaps.

Since Grant retired, the Vikings have not been the same. They have not returned to a Super Bowl. They have not enjoyed a multiple-season stretch of anything that could be labeled as tranquil.

Les Steckel replaced Grant, and quickly got himself fired by mistaking the NFL for a special forces training center. Grant returned for one season, but finished 7-9. Grant’s longtime protégé, Jerry Burns, another coach who could swear with creativity and stamina, took over and advanced to the brink of a Super Bowl, but retired before new executive Roger Headrick could push him out.

Headrick had replaced Mike Lynn, whose time as the team’s top football executive included feuds between him and the ownership group known as the Gang of 10, members of which spent more time suing one another than watching football. Headrick, a corporate type who mistakenly showed up for a practice in coaching shorts and wearing a whistle, replaced Burns with Denny Green.

Green won right away and for a long time, but by the end of his first season he was the subject of reports about numerous non-football allegations, and soon he would be writing a book threatening to sue for ownership of the team.

Here’s hoping that the Mike Zimmer years will be as calm as the Bud Grant years… oh, and at least as successful.

July 28, 2014

US government department to be replaced by Google

Filed under: Business, Government, Technology — Tags: , , — Nicholas Russon @ 09:18

The National Journal‘s Alex Brown talks about a federal government department facing the end of the line thanks to search engines like Google:

A little-known branch of the Commerce Department faces elimination, thanks to advances in technology and a snarkily named bill from Sens. Tom Coburn and Claire McCaskill.

The National Technical Information Service compiles federal reports, serving as a clearinghouse for the government’s scientific, technical, and business documents. The NTIS then sells copies of the documents to other agencies and the public upon request. It’s done so since 1950.

But Coburn and McCaskill say it’s hard to justify 150 employees and $66 million in taxpayer dollars when almost all of those documents are now available online for free.

Enter the Let Me Google That for You Act.

“Our goal is to eliminate you as an agency,” the famously grumpy Coburn told NTIS Director Bruce Borzino at a Wednesday hearing. Pulling no punches, Coburn suggested that any NTIS documents not already available to the public be put “in a small closet in the Department of Commerce.”

H/T to Jim Geraghty for the link. He assures us that despite any similarities to situations portrayed in his recent political novel The Weed Agency, he didn’t make this one up.

July 23, 2014

The partisan reasons for institutionalized crony capitalism

Filed under: Business, Government, USA — Tags: , , , , — Nicholas Russon @ 07:38

There’s capitalism and there’s crony capitalism: they share a name, but they’re very different creatures. Crony capitalism thrives when government controls a large share of the economy, because then the politicians and bureaucrats have more goodies to share with their “capitalist” cronies. The bigger the slice of the pie controlled by political leaders and unelected regulators, the better the situation for the favoured companies — and that usually means the biggest of the big corporations. In the US government, one of the best examples of institutionalized crony capitalism is the Export-Import Bank (Ex-Im): it exists to allow big corporations like Boeing to sell their products to foreign buyers at highly favourable interest rates, with the taxpayer picking up the risks and the American corporation creaming off the excess profits.

This system works so well — for the businesses being subsidized and the politicians who control the process — that it’s difficult to see it being stopped any time soon. Ex-Im’s enabling legislation is due to be re-authorized later this summer, so this is one of those brief chances to stop it. The problem is that it isn’t just Republicans who support it (because “what’s good for General Motors Boeing is good for America”), but also Democrats … sometimes the very same Democrats who make a lot of speeches about the evils of Wall Street. Jonah Goldberg explains why:

The Left’s anti-big-business populism is very different. It doesn’t want to cut the government’s incestuous relationship with big business; it simply wants to bring business to heel. Big business should do what Washington tells it to do, and when it does, it will get treats. When it doesn’t, it will get the newspaper to the nose. But big business will never be let off its leash, if the Left has its way.

“[Senator Elizabeth] Warren doesn’t have a problem with big banks or corporations,” the Federalist’s David Harsanyi writes. “She has a problem with banks and corporations that make profits in ways that she finds morally intolerable. She is an opponent of dynamism, not cronyism.”

This has always been the central idea behind progressive economics. Bureaucrats and other planners need — or at least want — ever more power to decide how economic resources are arranged and allocated. That doesn’t mean they’re socialists, it just means that corporations need to follow their lead. Indeed, good “corporate citizenship” means acquiescing to the priorities of progressive state planners and whatever their latest idea of “public–private partnerships” might be. The one constant in such partnerships is that business is always the junior partner.

This was the vision behind Woodrow Wilson’s “war socialism,” FDR’s New Deal, LBJ’s Great Society, Bill Clinton’s “Third Way,” and virtually all of Barack Obama’s economic policies. What is Obamacare but an attempt to turn the entire health-care industry into Washington’s well-fed lapdog?

What’s amazing is that people are still capable of shock when it turns out that a policy of treating businesses like dependent lapdogs yields businesses that try to have the government’s lap all to themselves.

July 19, 2014

UPS capitulates, but FedEx will fight

Filed under: Business, Law, USA — Tags: , — Nicholas Russon @ 10:21

Scott Greenfield on an interesting attempt by the US government to get private delivery firms to act as an unpaid arm of law enforcement:

    In the future, everyone will be a cop for 15 minutes.
    – Apologies to Andy Warhol

And if you don’t fulfill your duty, the government will indict you. United Parcel Service decided it was a better business move to pay off the government, at a price tag of $40 million. Federal Express refused. The government has now indicted FedEx for its refusal to capitulate.

[...]

The indictment relates to internet “pharmacies,” that ship drugs to people who may have no prescription and without having been treated by a physician. Not all internet pharmacies are evil, and not all prescriptions filled are wrongful, but the government nonetheless demands that delivery companies be not only its eyes and ears, but its arms and legs, in this battle of its war against crime. If only corporate America would faithfully serve its master, it would make law enforcement’s job so much easier.

The indictment is the typical slinging together of vague back-end anecdotes which, when the salient details are studiously omitted, create the disturbing appearance of complicity, if not exactly wrong-doing. After all, shouldn’t a delivery company know that it’s being used by criminals? Because it’s their responsibility to spy on packages, or see into the hearts of recipients, or know each back office deal of their customers?

Ironically, it’s not that FedEx wants to deliver contraband, but that the government refused to cooperate.

H/T to Amy Alkon for the link.

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