Quotulatiousness

December 5, 2016

QotD: Wine merchants using alarmist tactics to sell wine

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

I’m a mom of three young kids. That means I like to have a glass of wine with breakfast, lunch, and dinner now and then. And since my kids seem to grow out of their clothes and shoes seconds after I’ve purchased them, I like to get a good deal on a box bottle or two. Luckily for me, there is stiff competition in the wine industry, which means I can get wines from around the world at prices I can afford.

Yet with competition comes increased need to attract customers. And some companies are resorting to a new strategy: Alarmism.

Consider the recent suggestion by some wine companies that some corks are not just inferior, but dangerous. That might seem silly to some or just a lousy marketing stunt to others, but it’s a familiar and all-too-effective tactic used on moms who are constantly encouraged to police their homes for threats to their families.

Julie Gunlock, “Wine Alarmists Should Stick a Cork In It: Stop whining about the non-existent dangers of certain wine corks, and start drinking”, The Federalist, 2015-05-19.

November 27, 2016

America’s craft beer revolution

Filed under: Business, History, USA — Tags: , , , — Nicholas @ 02:00

Jerry Weinberger reviews The United States of Beer: A Freewheeling History of the All-American Drink by Dane Huckelbridge:

In rich and full detail, Huckelbridge tells the story of America’s love affair with beer. Even before Europeans set foot on the new continent, Native Americans made beer for fun and religious purposes from a wide variety of vegetable matter. Our Dutch and English forbears brought their beer — and their beer preferences — with them. In 1620, the Mayflower landed in Plymouth, at least in part for want of enough beer for both passengers and crew. When the Arbella sailed into Boston Harbor in 1630, it was laden not just with Puritans but also with 10,000 gallons of beer and 120 hogsheads of malt. The English in New England drank dark and cloudy ales made from fire-roasted malt and top-fermenting yeast. The Dutch in New Netherlands preferred drafts lighter in body and mouthfeel; they added rye, wheat, and oats to the barley. The English put an end to New Netherlands in 1664, but that didn’t end the war — as it would eventually prove to become — between the light and the dark worlds of beer. Huckelbridge approaches his subject from a regional point of view. National tastes sprang from regional ones. Beer tides flowed North to South, turned westward to California, and then doubled back East in the late twentieth century.

Our English forbears came relatively late to the use of hops in beer, as was done on the European Continent in the ninth century. As late as the early sixteenth century, hops were thought of in England as “a wicked and pernicious weed.” In Europe, brewing was done by large, organized monasteries, while in England it remained largely a household craft. The larger European producers had to worry more about consistency and spoilage than did the home-brewing English; the hop, though essential to the taste of beer as we know it, was originally used as a preservative, with the appreciation of bitterness following on the utility of anti-sepsis. As English brewing took on a more industrial tone, the uses of the hop became clear, and so the Pilgrims aboard the Mayflower could drink safe beer rather than brackish and polluted water. By the time of the revolutionary crisis, English economic policy and regulation had increased the price of barley and hops so much that cider and rum began to edge out beer as the preferred drink of New Englanders. The Sons of Liberty — including Samuel Adams and John Hancock — rebelled for beer as much as for independence.

[…]

When American beer recovered, it did so in the Midwest, and in a new form: lager. What we now think of as American beer (Budweiser, Busch, Pabst, Miller, etc.) sprang from the habits and tastes of German immigrants in Midwestern cities. Their lager beers were rich and full-flavored, but were somewhat lighter and milder than “the darker and more fragrant British-style” ales they eventually displaced. Huckelbridge describes in some detail the history of German brewing from Roman times through the sixteenth century, when lager yeast was discovered as an alternative to ale yeast. This new yeast strain originated in the cold forests of Patagonia and made its way by accident to Europe — and especially to Bavaria.

And how American beer got its (well-deserved at the time) reputation for blandness:

In the decades surrounding the turn of the twentieth century, two forces converged to transform our national drink: technological innovation and Prohibition. Before the Volstead Act went into effect in January 1920, technological and economic changes had been at work degrading the quality of American beer. New kiln technology made it possible to roast malts with no direct contact with the heat, which made for fewer notes of smoke and slag. Likewise, temperature controls made it possible to make lighter and “crispier” brews. The use of American six-row barley, which is higher in enzymes than German two-row barley, enabled brewers to employ cheaper, adjunct grains such as corn, wheat, and rice—all of which made for a sweeter and flimsier beer. Pasteurization increased shelf life, lessening the need for preservative alcohol and hops. Artificial carbonation replaced the traditional practice of adding live yeast to the finished brew, which improved taste but was less consistent than artificial carbonation. Add to this the advent of advertising and refrigerated rail transportation, and we were on the verge of becoming the United States of Bland Beer. Prohibition delivered the death blow.

After the Volstead Act’s repeal, America was in the grip of the Great Depression. Beer drinkers—and brewers—focused on the cheap and not the good. The result was a pale and watery brew “served up in cans across the county … and the final product bore only a passing resemblance to the rich and hoppy lagers that German immigrants had first brought to this country.” Prohibition ruined the beer industry nationwide and drove alcohol underground, producing a significant change in American tastes: speakeasies learned to disguise low-quality whiskey and gin in sweet “cocktails.” As a result, a generation of Americans came of age with sweet-tooth tongues allergic to the bitter hop or the malty malt. By the 1950s, America was the land of the macrobrew: thin and flaccid sweet suds, distinguishable only by the brand names on the can.

November 24, 2016

The Ontario government’s anti-Midas touch in energy projects

Filed under: Business, Cancon, Politics — Tags: , , — Nicholas @ 09:54

All governments at every level waste money. It’s one of the things that governments do far better than the private sector. Yet the Ontario provincial government takes wasting money to a state of near perfection in their Wolfe Island offshore wind farm dealings:

A few years ago, I took this photo of some of the onshore wind turbines on Wolfe Island. I don't have any photos of the offshore installations, because they haven't been built.

A few years ago, I took this photo of some of the onshore wind turbines on Wolfe Island. I don’t have any photos of the offshore installations, because they haven’t been built.

In 2010, the government of Ontario, keen to jumpstart its green energy sector, signed a 20-year deal to buy 300 megawatts of electricity from turbines that the New York investors behind Windstream agreed to erect.

Things got messy mere months later in February 2011 when the provincial Liberals, fearing they would lose an election, slapped a moratorium on offshore wind projects, none of which had ever been built. Around the same time, Ontario cancelled two unpopular natural gas power plants, a move that cost provincial taxpayers about $1 billion.

After waiting five years to get approval to build their wind turbines, Mars and his group lost their patience.

“I have a group of very high-net-worth individuals who invest across energy and technology,” Mars said in a series of interviews from his office in Manhattan. “The contract remains in force. We would like to either build it or come up with an amicable solution. We have gotten many mixed messages on this.”

They complained to the Permanent Court of Arbitration under Chapter 11 of the North American Free Trade Agreement. A panel of three arbitrators heard the case in Toronto last February.

“The claimant’s claim that the respondent has failed to accord the claimant’s investments fair and equitable treatment in accordance with international law, contrary to Article 1105 of NAFTA, is granted,” the panel ruled last month.

Police are now apparently probing whether Ontario government employees broke the law when they deleted documents related to the offshore wind project. A source told the Financial Post that Mars will answer police questions in Toronto next week.

So, a billion dollars to cancel two natural gas power plants, then a paltry $28 million that the federal has to pay, as it’s the NAFTA signatory (and the total bill could go up to $568 million or more, with nothing actually being built). As the old saying has it, pretty soon you’re talking real money.

H/T to Ken Mcgregor for the link.

November 23, 2016

When is an American Indian artist not American Indian?

Filed under: Bureaucracy, Business, USA — Tags: , , , , — Nicholas @ 03:00

Answer: when federal bureaucratic rules interact unhappily with state-level bureaucratic rules. Eric Boehm explains why an artist is not legally allowed to market her beadwork as “American Indian-made”:

Peggy Fontenot is an American Indian artist, of that there can be no doubt.

She’s a member of the Patawomeck tribe. She’s taught traditional American Indian beading classes in Native American schools and cultural centers in several states. Her work has been featured in the Smithsonian’s National Museum of the Native American.

In Oklahoma, though, she’s forbidden from calling her art what it plainly is: American Indian-made.

A state law, passed earlier this year, forbids artists from marketing their products in Oklahoma as being “American Indian-made” unless the artist is a member of a tribe recognized by the U.S. Bureau of Indian Affairs.

The Patawomeck tribe is recognized by the state of Virginia, but not by the federal government. Fontenot says she can trace her Native American heritage back to the 16th Century, when the tribe was one of the first to welcome settlers from Europe who landed on the east coast of Virginia. She’s been working as an artist since 1983, doing photography, beading, and making jewelry.

[…]

According to PLF [Pacific Legal Foundation], Oklahoma’s law could affect as many as two-thirds of all artists who are defined American Indians under federal law. The state law also violates the U.S. Constitution’s Commerce Clause by restricting the interstate American Indian art market, the lawsuit contends.

November 17, 2016

Deregulation’s return

Filed under: Business, Economics, Government, USA — Tags: , , , , — Nicholas @ 02:00

I rarely say nice things about Jimmy Carter’s term as president, but he should get more credit for the deregulation that happened under his administration — the lifting of restrictive and obsolete rules over things like railroads, long-distance trucking, and (most important to drinkers) enabling the rebirth of craft brewing — many of the economic benefits were later attributed to Reagan, but Carter did the heavy lifting on several important issues. It’s a hopeful sign that S.A. Miller says Congress and the Senate may be in a deregulatory mode after Trump’s inauguration:

Sen. Rand Paul said Wednesday that he expects a flurry of repeals of Present Obama’s regulations by the next Congress and President-elect Donald Trump.

“You’re gong to find that we are going to repeal a half dozen or more regulations in the first week of Congress, and I’m excited about it because I think the regulations have been killing our jobs and making us less competitive with the world,” the Kentucky Republican said on MSNBC’s Morning Joe program.

Mr. Trump, whose surprise win over Democrat Hillary Clinton sent shock waves across the Washington political establishment, pledged on the campaign trail to tackle over-regulation by the Obama administration.

The federal government has imposed more than 600 major regulations costing Americans roughly $740 billion since Mr. Obama took office in 2009.

Mr. Paul said he viewed many of the regulations under Mr. Obama to be unconstitutional because they were issued without Congress’ approval.

October 29, 2016

Is there a bright side to the sale of Constellation Brands for Ontario wine drinkers?

Filed under: Business, Cancon, Wine — Tags: , , — Nicholas @ 02:00

Michael Pinkus gets an uncharacteristic rush of optimism over the sale of Constellation Brands:

[W]hile it’s nice to see Canada’s Inniskillin and Jackson-Triggs back in Canadian hands what does all this say about the selling of wine in Canada? When the world’s largest holder of wine companies/brands decides to throw in the towel here and sell off their Canadian division, yet still holds the remainder of the wineries and brands they acquired with their 2006 purchase of Vincor to me speaks volumes. Now I’m just speculating here, as I do in many of my commentaries, but could it be that Constellation sees the writing on the wall: that making money in Canada (in general) and in Ontario specifically, will not be as easy as it once was under the Liberal’s new proposed “sharing the retail space plan”. Let’s face it, the real selling feature of Vincor’s Canadian holdings were those Ontario money makers: those off-site stores that were a license to print money in the province … and now if the world’s largest can’t figure it out how in the world are the rest of Ontario’s wineries supposed to do it? Are we about to embark down another rabbit hole of when it comes to the sale of booze in this province?

[…] Just last week, I was asked for my thoughts and I immediately went to the pessimistic side of things: “does not bode well for the selling of wine here in Ontario”; but then after some careful thought I decided there still might be room for optimism, especially if you look at the purchaser. At one point in the process it was rumoured that Peller was in the mix of buyers to take over the Constellation Canadian holdings, but in the end it was the Teachers’ Pension Plan that took it for $1.03 billion. Many on social media lamented that if the teachers do for booze what they did for Toronto sports teams we’re all in big trouble. But I thought of a better angle: Nobody is better at lobbying and twisting the arm of the provincial government to get what they want than the Teachers’ Union … and once they learn how difficult selling wine is, and the antiquated laws we have surrounding it, here in Ontario, they’ll set their sights on making changes, and while the fairly ineffectual Wine Council of Ontario seems to be a mouse nipping at the heels of the governmental elephant, the Teachers’ Union and their Pension Plan will seem like a pack of wolves and hyenas working together to wrestle the elephant to the ground. So while Peller (had they succeeded in their purchase efforts) would have become the largest Canadian winery by far, they would not have been any more effective at invoking change to the system; on the other hand, the Teachers’ Union could play a large and important role at getting laws passed that will loosen up our repressive and antiquated system up; because who is in more need of a drink at the end of the day than a teacher, and it should be easier for them to get it and sell it..

October 24, 2016

QotD: Eliminating the middleman

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

You hear them daily: advertising pitchmen exclaiming on radio and TV that this jewelry store or that furniture retailer “saves you money by bypassing the middleman!”

Seems sensible, doesn’t it? Wholesalers and other middlemen don’t work for free; they must be paid. So if a retailer “bypasses” or “eliminates” the middleman, that retailer has “savings” that it can “pass on to you.”

But if middlemen only raise retailers’ costs, why does anyone ever use such parasites to begin with?

Simply to ask this question about middlemen is to cast doubt on the widespread myth that the dominant effect of middlemen is to raise the retail costs of goods.

It’s true that middlemen must be paid for their services. These services are valuable, however, because they reduce the final prices that consumers pay at retail.

Middlemen who fail to reduce the final price go bankrupt; these middlemen are “bypassed.” But middlemen in general reduce the costs that consumers pay at retail.

To see the value of middlemen, it’s helpful to realize that retailers themselves are middlemen. The furniture store that brags of “eliminating the middleman” by “buying direct from the factory” doesn’t itself manufacture sofas, beds and dining-room tables. That retailer specializes in acquiring inventories of furniture and assembling these inventories in locations that are convenient for you to visit (such as the strip mall down the street).

If it were generally true that middlemen raise consumers’ costs, you’d be foolish ever to buy furniture from a retailer — including the one who “eliminates the middleman.” You would be better off going directly to the factory to shop for furniture.

But you almost never do so. You buy furniture from retailers. The reason you don’t “eliminate the middleman” — the retailer — when you buy furniture is that the middleman saves you money.

To “eliminate the middleman” here would require you to rent a large truck and drive it (depending on where you live) hundreds of miles to the nearest furniture factory. The factory owner might be willing to sell to you a nightstand or chair for less money than you’d pay at retail. But this price discount likely isn’t worthwhile. Not only do you spend time and money driving to and from the factory; once at the factory, you can’t easily compare that factory’s offerings with the offerings of competing furniture producers. To make such comparisons, you’d have to get back in your truck and drive to other furniture factories.

By the time you do all this driving around, the price reduction that you get by “eliminating the middleman” won’t be worthwhile. You’ll bankrupt yourself by trying to save money!

Don Boudreaux, “Ode to the middleman”, Pittsburgh Tribune-Review, 2012-02-22.

October 15, 2016

Unilever attempts to “draw the longbow” over Marmite

Filed under: Britain, Business, Europe — Tags: , — Nicholas @ 02:00

Marmite, an almost uniquely British product, is in the headlines this week over an attempt by manufacturer Unilever to jack up prices due to the drop in the pound against the Euro. As Tim Worstall points out, this is not in any way justified because all of the inputs to the product are produced in the UK (that is, the input prices have not significantly changed regardless of how the pound is doing in terms of the Euro exchange rate):

Personally I love the stuff but even in Britain that puts me in a distinct minority.

The other amusement though comes from the action itself. For what Unilever is doing here is what we in Britain refer to, colloquially, as “taking the piss.”

    Yesterday, the implications of the pound’s fall on prices and retailer margins hit home for the wider public as the country’s leading supermarket engaged in a war over prices with its highest-profile supplier of branded goods.

    Either UK consumers will eat store-branded yeast extract, or they’ll pay more for Marmite, or the impact of the pound’s fall will be shared between supplier and retailer.

This is superficially plausible. Britain imports some 40% of its food and as a result of the Brexit vote the pound has fallen against other currencies. We would therefore expect to see some price rises in food items. Obviously in those imported that have to be paid for in that more expensive foreign funny money. But also in certain domestic foods which substitute for those foreign ones. So, for example, if foreign chicken rises in price then so too will British chicken as demand for it rises–people will substitute away from the more expensive foreign muck to the purer and more delightful domestic production.

However, this really doesn’t hold for Marmite.

    Consumer goods giant Unilever has been accused of ‘exploiting’ British shoppers by withdrawing more than 200 much-loved products from Tesco after the supermarket refused to agree to its 10 per cent price hike. Critics claim the world’s largest consumer goods manufacturer, which makes an estimated £2billion profit a year, is ‘using Brexit as an excuse to raise prices’. The Anglo-Dutch firm, which heavily campaigned against Brexit, claims it has been forced to increase prices as a result of the falling value of the pound in the wake of the referendum.

The reason it doesn’t hold for Marmite is because it is not imported and nor are any close substitutes in any volume. Thus Unilever’s costs have not gone up in any manner at all over this. Quite the contrary in fact, the only flow, other than trivial amounts of Vegemite an Australian version of a similar thing, is of Marmite out of the UK. Meaning that Unilever’s profits on Marmite exports have risen as a result of the pound’s fall. Their costs, revenues and margins in sterling are exactly what they were for domestic sales before that slump in the pound.

    The row is said to have developed when Unilever – which says it faces higher costs because of the fall in sterling – attempted to increase wholesale prices.

It’s simply not true thus the micturation extraction.

October 14, 2016

Twitter’s ailing business model

Filed under: Business, Technology — Tags: , , — Nicholas @ 02:00

I’ve been on Twitter for several years, and I have to admit that along with John Brandon, I’m finding it less useful as time goes by:

What does it mean when a major tech company starts slipping like a seal on wet rocks? Rumors about an acquisition start to rumble then quiet down, the CEO seems beleaguered and frustrated, there’s more news about Internet trolls beating up on people than the firm adding any new features, and an identity crisis becomes so pronounced it obfuscates any real purpose. Who you once were becomes less important; the big news is that you’ve lost all momentum. That’s essentially the story of Twitter, a company that seems perpetually stuck in the past. They created micro messaging and now they can’t seem to do anything else.

I use Twitter all day, but the truth is — tweets are becoming like white noise on a lost FM radio station. A colleague mentioned how the service is mostly used by celebrities, journalists and Donald Trump. That’s a vast oversimplification, but of 20 or 30 friends, not a single one bothers with the service anymore. That means my friends not only removed their account long ago, they don’t browse the feeds anymore and don’t care what anyone posts. Guess what? They’re too busy using Facebook, which provides all of the social networking they will ever need. Twitter has lost the mass market.

The phrase “pedaling backwards” comes to mind. Also, the one about “reliving former glories”. Oh, and you might as well throw in “retracing your steps” to the mix.

My primary use of Twitter these days is my various lists: my Vikings list, my Military list, and my Libertarian list are the ones I most frequently look at. My main Twitter feed? Too busy and too unfocussed to be worth more than a few minutes of scrolling. That, plus the “shadowbanning” of certain controversial users (so they’re not actually banned, but their tweets aren’t being propagated to their followers, who have to actually visit the poster’s feed to see the tweets), help to make the service less than it used to be.

H/T to Andrew Torba on Gab.ai for the link.

October 12, 2016

This generation gap thingy is bigger than I thought

Filed under: Business — Tags: , , , — Nicholas @ 04:00

I’m far from a McDonalds fan … I darken their doors less than yearly, although I’ve had a long-running “joke” that I need to have a Big Mac at least once a year, if only to remind me why I don’t eat at McDonalds more often. But is the iconic Big Mac a victim of its own success? Has it stopped being relevant in the fast food world? Colby Cosh investigates:

The Wall Street Journal reports that a big McDonald’s franchise owner did some market research recently and stumbled upon a surprising fact: only one in five Americans of “millennial” age has ever tried a Big Mac. Those of you who follow me on Twitter know what my reaction was to this news: a paroxysm of skeptical eye-rolling.

The Big Mac might easily be described as the single most successful consumer product of the 20th century. Of all the various kinds of sandwiches that the human imagination has conceived since the lifetime of the 4th Earl of Sandwich (peace be upon him), the Big Mac might be the specific sandwich that has been prepared and eaten the most. It has a recipe that children everywhere can recite by heart. How is it possible that an entire generation has collectively skipped it, never thinking it might have some merit?

Well, whether or not I would have imagined it, the reactions I got when I asked around convinced me quickly that it is probably true. (Big surprise: a businessman’s expensively gathered information about his customer base turns out to be more accurate than some jackass’s wild guess.) Dozens of young people immediately told me that they have never tried a Big Mac. Plenty of these sandwich-spurners were careful to specify, all with evident shame, that they do visit McDonald’s often; at least one had worked there. A few correspondents had specific reasons for avoiding the Big Mac, but for the most part, the prevailing attitude toward the item seemed to be apathy, rather than hostility.

[…]

As it happens, I was raised in the boonies, and we would visit McDonald’s just a few times a year. I have to acknowledge that my fondness for Big Macs is a matter of generational and circumstantial happenstance. They are, even though I’ve certainly had a thousand of the things, still attainably glamorous — a dream of childhood now indulged at will.

Fortunately, my inherited cheapness protects me from a nightmare of special-sauce overdose. I can never order a Big Mac without an inner Presbyterian voice — Socrates’ daimon, with my grandfather’s accent — grumbling that this damned thing should really cost about $2. What the Wall Street Journal has me wondering is how long the Big Mac can remain on the menu at all, if it has really been bypassed by progress and fashion in the manner of marmalade or pickled eggs. If I knew my next Big Mac was my last — though any one might be! — I might pay more like $50.

Colby and I are of a similar generational group, but I’d probably top out at $25 for my “very last” Big Mac.

October 5, 2016

“You have to die to eventually get out of the taxes […] few people are willing to take that step”

Filed under: Business, Politics, USA — Tags: , , — Nicholas @ 02:00

Megan McArdle addresses the social media outrage at revelations from Il Donalduce‘s partial tax returns leaked to the media:

The big news this weekend was the leak of Donald Trump’s 1995 tax returns to the New York Times. The returns showed that in that year, Trump claimed $916 million worth of business losses; those losses, said the Times, “could have allowed him to legally avoid paying any federal income taxes for up to 18 years.”

Liberal social media dissolved into an ecstatic puddle; conservative social media, at least the part that is supporting Trump, angrily denounced the Times for publishing this tripe.

A few sensible people tried to explain that while the story might have well show that Trump was a bad businessman, it didn’t really show any sort of interesting tax shenanigans. And since we had long known that Trump lost a bunch of money in Atlantic City, a story that has been amply and ably covered by folks like our own Tim O’Brien, it didn’t even really offer much news.

Why did people see scandalous tax avoidance in this case? At issue is the “net operating loss,” an accounting term that means basically what it sounds like: When you net out your expenses against the money you took in, it turns out that you lost a bunch of money. However, in tax law, this has a special meaning, because these NOLs can be offset against money earned in other years. You can use a “carryforward” to offset the losses against income made in future years (as many as 15 future years, under the federal tax law of 1995). You can also use a “carryback” to offset those losses against income you made in past years (three in 1995, which when added to the 15-year carryforward term, gives us the 18 years the Times refers to).

To judge from the reaction on Twitter, this struck many people as a nefarious bit of chicanery. And to be fair, they were probably helped along in this belief by the New York Times description of it, which made it sound like some arcane loophole wedged into our tax code at the behest of the United Association of Rich People and Their Lobbyists. They called it “a tax provision that is particularly prized by America’s dynastic families, which, like the Trumps, hold their wealth inside byzantine networks of partnerships, limited liability companies and S corporations.”

Every tax or financial professional I have heard from about the New York Times piece found this characterization rather bizarre. The Times could have just as truthfully written that the provision was “particularly prized by America’s small businesses, farmers and authors,” many of whom depend on the NOL to ensure that they do not end up paying extraordinary marginal tax rates — possibly exceeding 100 percent — on income that may not fit itself neatly into the regular rotation of the earth around the sun.

[…]

Rich people do manage their income to minimize their taxes, and some of the means they use to do so should probably be written out of the tax code. But the wealthy individual who manages to make a lot of money while paying absolutely no taxes on it is more a creature of myth than reality. That myth, like many myths, has some basis in fact: It used to be eminently possible to do, thanks to loopholes in the tax code that allowed people to take advantage of real estate losses, among other things. Those loopholes, however, were mostly closed by that notorious liberal crusader Ronald Reagan, during the 1986 tax reform package.

If Trump managed to pay no taxes for years, the most likely way he did this was by losing sums much vaster than the unpaid taxes. This is fair, it is right, it is good tax policy. There are many valid indictments of Trump as a candidate and as a businessman. But on the charge of unseemly tax avoidance, if this is all the evidence we have, then the grand jury would have to return … no bill.

Some politicians absolutely love tax laws, because they get to write them in ways that force taxpayers (both individual and corporate) to behave in certain ways to minimize the taxes they pay, and then they get to pillory disfavoured individuals or corporations in the media or on the campaign trail when they actually follow those arcane and intricate laws and end up paying “less” tax than the politician thinks they should. Win/win from the political hack’s point of view, but lose/lose for the law-abiding taxpayer.

September 21, 2016

Pathological altruism

Filed under: Business, Law, USA — Tags: , , , , — Nicholas @ 03:00

Amy Alkon on the mainspring of some (possibly many) altruistic actions:

I write about this sort of thing in Good Manners for Nice People Who Sometimes Say F*ck. It’s called “pathological altruism,” and describes deeds intended to help that actually hurt — sometimes both the helper and the person they’re trying to help:

    [Dr. Barbara] Oakley notes that we are especially blind to the ill effects of over- giving when whatever we’re doing allows us to feel particularly good, virtuous, and benevolent. To keep from harming ourselves or others when we’re supposed to be helping, Oakley emphasizes the importance of checking our motives when we believe we’re doing good. “People don’t realize how narcissistic a lot of ‘helping’ can be,” she told me. “It’s all too easy for empathy and good deeds to really be about our self-image or making ourselves happy or comfortable.”

One example of this is The New York Times series on nail salons — intended to help the workers but actually keeping a number of them from being able to get work…work they were able to get before the crackdowns the NYT piece led to. From Reason‘s Jim Epstein:

    Salon owners have also stopped hiring unlicensed workers, whether they’re undocumented or not. By law, every manicurist working in New York State must complete 250 hours of training at a beauty school, which costs about $1,000, and then obtain a government-issued license. This is a barrier to entry, and some aspiring manicurists can’t afford the time or tuition. There are some salon owners in the industry who, up until recently, were willing to hire them anyway because they were desperate for employees and the state rarely checked. Cuomo’s task force changed that.

    Kim sponsored a state law, passed in July, that attempted to remedy the situation. The bill made it legal for nail salons to hire workers as apprentices receiving on-the-job training. After a year, they’re eligible for a state license without attending beauty school.

    Few are utilizing the apprenticeship program. “It needs tweaking,” Kim admits. Despite assurances to the contrary from state officials, Kim says he’s hearing on the ground that when signing up for the program, applicants are being asked their citizenship status, which is scaring off many would-be apprentices.

    Licensed workers legally working in the U.S. have also been hurt by the inspections. “Workers themselves prefer to be paid in cash, and it’s not just at nail salons,” says Kim. Salon owners have started recording every dollar that passes through their shops to avoid getting fined. The inspection task force has had “unintended consequences,” he says.

    The biggest victims, however, are people like Jing Ren, the main character in the Times series. Ren, 20, is undocumented, penniless, and “recently arrived from China.” Instead of paying $1,000 for salon school, she signed on as a trainee at a shop in Long Island. By the end of the article, she’s making $65 per day in base wages.

    When weaving its cartoonish tale of evil bosses and oppressed workers, the Times never considers what would happen if all of the nail salons willing to hire Jing Ren disappeared. Would future immigrants like her be better or worse off?

Oops.

September 18, 2016

When you’re a monopoly, what’s your attitude to customers? “Sod the proles!”

Filed under: Business, Cancon, Wine — Tags: , , , — Nicholas @ 04:00

Rick VanSickle vents about the LCBO’s amazingly tone-deaf marketing:

Sorry, LCBO, but I don’t get you. Such a lame-o release on the birthday of our great country July 1, with paltry few Canadian wines released to celebrate our big day, and presumably a few folks out there looking to party with local wines, and then suddenly in the middle of September, you drop the big one.

What up with that? I mean, the Sept. 17 issue of the Vintages mag, with pages and pages of features on Ontario wines and the biggest selection of local wines of the year — am I missing something? Is this some sort of key date for us in Ontario and Canada?

I want to be there during your obviously very detailed board meetings to listen in on the thinking behind your planning. When you get to, say, July 1, does anyone go: “Hey, that’s Canada Day, let’s flood the aisles with great Canadian wine. It’s what the people want, the people who pay for our largesse, the people we work for.” Well, no, of course not, that’s ridiculous.

Instead, as they count down the calendar, they go: “OK, what do we have for the week of Sept. 17? Why, there’s absolutely nothing going on, so let’s make it the biggest Ontario wine release of the year! Yes, perfect!”

Of course, what does it matter anyway? It’s not like the guy down the street is doing any better because there is no guy down the street. It’s the beauty of a monopoly — guilt-free decisions because there is no wrong decision if you are the only game in town.

For example (stay with me here, we’ll get to the wine), if the government decided it was going to force a shoe-store monopoly on its populace and came to the conclusion at a big swanky retreat where such decisions are made (pure speculation) that it would be so cool to put out a big display of Converse runners at all their stores on the first day of winter. No winter boots, no mukluks, just running shoes and sandals. Wouldn’t that be hilarious? lol.

It’s funny but not really funny. We just accept that it’s wrong and carry on like a monopoly is beyond reproach, beyond accountability.

For the record, the Canada Day Vintages release featured a cover story called: South Side Story: Wines of Southern France with 12 pages of spectacular photography and enticing bottles of French wine proudly displayed with glowing reviews and effusive praise for all.

Progressives who suffer from small-c conservatism

Filed under: Bureaucracy, Business, Politics, USA — Tags: , , , — Nicholas @ 02:00

At Coyote Blog, Warren Meyer explains why many “progressives” are actually driven by very conservative ideas:

Begin with a libertarian goal that should be agreeable to most Progressives — people should be able to live the way they wish. Add a classic Progressive goal — we need more low income housing. Throw in a favored Progressive lifestyle — we want to live in high density urban settings without owning a car.

From this is born the great idea of micro-housing, or one room apartments averaging less than 150 square feet. For young folks, they are nicer versions of the dorms they just left at college, with their own bathroom and kitchenette.

Ahh, but then throw in a number of other concerns of the Progressive Left, as administered by a city government in Seattle dominated by the Progressive Left. We don’t want these poor people exploited! So we need to set minimum standards for the size and amenities of apartments. We need to make sure they are safe! So they must go through extensive design reviews. We need to respect the community! So existing residents are given the ability to comment or even veto projects. We can’t trust these evil corporations building these things on their own! So all new construction is subject to planning and zoning. But we still need to keep rents low! So maximum rents are set at a number below what can be obtained, particularly given all these other new rules.

As a result, new micro-housing development has come to a halt. A Progressive lifestyle achieving Progressive goals is killed by Progressive regulatory concerns and fears of exploitation. How about those good intentions, where did they get you?

The moral of this story comes back to the very first item I listed, that people should be able to live the way they wish. Progressives feel like they believe this, but in practice they don’t. They don’t trust individuals to make decisions for themselves, because their core philosophy is dominated by the concept of exploitation of the powerless by the powerful, which in a free society means that they view individuals as idiotic, weak-willed suckers who are easily led to their own doom by the first clever corporation that comes along.

Postscript: Here is a general lesson for on housing affordability: If you give existing homeowners and residents the right (through the political process, through zoning, through community standards) to control how other people use their property, they are always, always, always going to oppose those other people doing anything new with that property. If you destroy property rights in favor of some sort of quasi-communal ownership, as is in the case in San Francisco, you don’t get some beautiful utopia — you get stasis. You don’t get progressive experimentation, you get absolute conservatism (little c). You get the world frozen in stone, except for prices that continue to rise as no new housing is built. Which interestingly, is a theme of one of my first posts over a decade ago when I wrote that Progressives Don’t Like Capitalism Because They Are Too Conservative.

September 9, 2016

Apple may learn the lesson of “option value” with the latest iPhone release

Filed under: Business, Economics, Technology — Tags: , , — Nicholas @ 03:00

Megan McArdle explains why some Apple fans are not overjoyed at the latest iPhones:

You’ve probably been thinking to yourself, “Gee, I wish I couldn’t charge my phone while also listening to music.” Or perhaps, “Gosh, if only my headphones were more expensive, easier to lose and required frequent charging.” If so, you’re in luck. Apple’s newest iPhone, unveiled on Wednesday, lacks the familiar 3.5-millimeter headphone jack. You can listen to music through the same lightning jack that you charge the phone with, or you can shell out for wireless headphones. The internets have been … unpleased with this news.

To be fair, there are design reasons for doing this. As David Pogue writes, the old-fashioned jack is an ancient piece of technology. It’s been around for more than 50 years. “As a result,” says Pogue, “it’s bulky — and in a phone, bulk = death.”

Getting rid of this ancient titan will make for a thinner phone or leave room for a bigger battery. Taking a hole out of the phone also makes it easier to waterproof. And getting rid of the jack removes a possible point of failure, since friction isn’t good for parts.

For people who place a high value on a thin phone, this is probably a good move; they’ll switch to wireless earbuds or use the lightning jack. But there are those of us who have never dropped our phones in the sink. We replace our iPhones when the battery dies, an event that tends to occur long before the headphone jack breaks. There are people in the world who take their phones on long trips, requiring them to charge them while making work calls, and they won’t want to fumble around for splitters or adapters. Some of us do not care whether our phone is merely fashionably slender or outright anorexic. For these groups, Apple’s move represents a trivial gain for a large loss: the vital commodity that economists call option value.

Option value is basically what it sounds like. The option to do something is worth having, even if you never actually do it. That’s because it increases the range of possibility, and some of those possibilities may be better than your current alternatives. My favorite example of option value is the famous economist who told me that he had tried to argue his wife into always ordering an extra entree, one they hadn’t tried before, when they got Chinese takeout. Sure, that extra entree cost them money. And sure, they might not like it. But that entree had option value embedded in it: they might discover that they like the new entree even better than the things they usually ordered, and thereby move the whole family up to a higher valued use of their Chinese food dollars.

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