Quotulatiousness

February 11, 2017

Ici Londres: Protectionism never works

Filed under: Economics — Tags: , , — Nicholas @ 02:00

Published on Feb 8, 2017

February 8, 2017

Seeing the elephant (economic edition)

Filed under: Cancon, Economics, Politics, USA — Tags: , , , , — Nicholas @ 04:00

Stephen Gordon says it’s a dangerous fantasy to think that the Canadian economy could cope with a Prime Minister who tries to “get tough” over Il Donalduce‘s trade concerns:

Pierre Trudeau once described the Canadian relationship with the United States as “like sleeping with an elephant. No matter how friendly and even-tempered the beast … one is affected by every twitch and grunt.” It is now Prime Minister Justin Trudeau’s bad luck – and ours – to be bunking down with a surly and irascible elephant.

It’s worth dwelling on just how asymmetric the economic relationship is between Canada and the United States. It’s sometimes pointed out that Canada is the largest market for U.S. exports, and that’s true as far as it goes. But U.S. dependence on the Canadian export market is an order of magnitude smaller than Canadian dependence on exports to the U.S. Exports of goods and services to the U.S. accounted for 22.8 per cent of Canadian GDP in 2015; U.S. exports to Canada were only 1.9 per cent of U.S. GDP.

There’s not much that could or should have been done to reduce this dependence on the U.S. market. All the factors that determine the volume of trade flows — physical proximity, market size, linguistic and cultural ties, similar legal systems and so forth — all point to the U.S. It’s always been a good idea to promote trade links with other countries, but the U.S. would still be our dominant export market even in a world in which the Comprehensive Economic and Trade Agreement and the Trans-Pacific Partnership were already in place.

So it really doesn’t make sense to think that a Canadian Prime Minister can “stand up” and “fight back” against U.S. sanctions, or that Canada’s bargaining position would be somehow strengthened if another person were running the government. The trade numbers would still be the same.

February 4, 2017

“Buy American!” is great politics, but terrible economics

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

Colin McNickle explains why protectionist policies like “Buy American” are good for politicians but bad for producers and consumers:

Lost in all the rah-rah-sis-boom-bah-ing of President Trump wanting to use American steel only in the Keystone XL, Dakota Access and other U.S. oil pipelines is this fundamental economic fact:

The price of that steel will be higher. In some cases, markedly so. And we all will be made poorer. Not in effect, but actually.

How so?

As Hoover Institution scholar David R. Henderson once explained it:

“Almost all economists say [‘Buy American’ is] nonsense. And the reason is: We should buy things where they’re the cheapest. That frees up more of our resources to buy other things, and other Americans get jobs producing those things.”

The “problem” of other countries selling goods at or below cost (in other words, making part of the value of the good a gift to the purchaser) is only a problem for uneconomic domestic producers … it’s great for consumers of that good:

… as Tori K. Whiting, a trade and economics scholar at the Heritage Foundation, reminded in September:

“In response to alleged unfair trade practices, domestic steel producers are advocating for broad import restraints and immediate action by the U.S. government to protect the domestic industry. …

“The U.S. manufacturing and construction industries rely on domestic and foreign steel to create finished products. Tariffs on steel imports limit choices and increase costs for these industries. Those costs are ultimately borne by American consumers and act as a tax on everyday goods made from steel,” she reminded.

And as fellow Heritage legal scholar Alden Abbott added, “(A)nti-dumping is in fact a form of special interest cronyism that imposes high costs on Americans and thwarts beneficial competition.”

“Buy American” makes for great political rhetoric. But the reality is that most Americans would find their pocketbooks heavily pinched if the practice became pervasive and America’s overall standard of living would fall.

January 26, 2017

Autarky is not the answer

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

Warren Meyer on the idiocy of Trump’s economic nationalist notions:

Think about the corollary of Trump’s economic nationalism, particularly if everyone followed this same approach. If one skews all the rules and taxes and prohibitions so everything must be sourced domestically, then if a country does not have some particular resource or skill domestically, it is out of luck. No domestic rare earth metals? Sorry.

But governments and powerful people seldom calmly accept that something they critically need is not available. They will be tempted to go and take it. The worst, most violent empire building of the last 100-150 years has occurred when countries have pursued economic nationalism. Think of the colonialism of the late 19th century. Today we happily trade with South Africa and other countries for valuable resources, but in that time of economic nationalism, if a country wanted access to these resources, it felt it had to control the land and the people. Hitler in the 1930’s wanted to make Germany self-sufficient in agricultural goods and certain other resources, and the only way to do that was to go and grab other people’s land and resources.

The best example of all of this phenomenon is, I think, Japan in the 1930’s. Japan felt that it was resource poor and under Trump’s theory of economic nationalism, it felt it had to control oil and other resources it did not have domestically. So it plotted to go take it. When the US instituted a trade embargo in these very goods to punish Japan’s aggressiveness in China, it just accelerated Japan’s thinking in this area, convincing it for good it had to control these resources, and it was soon invading the oil-rich islands of what is now Indonesia. This example is all the more telling because Japan actually found true prosperity after the war when it traded peacefully for these resources. Unfortunately, it adopted economic nationalism, via MITI, of another form and helped manage themselves into a 20-year recession, but that is another trade-related story for another day.

January 25, 2017

Protectionism can save jobs … at the cost of even more jobs than it “saves”

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

Mark Perry provides some context to the claim that protectionist policies can save American jobs:

According to Team Trump’s website, we’re told that “blue-collar towns and cities have watched their factories close and good-paying jobs move overseas, while Americans face a mounting trade deficit and a devastated manufacturing base. By fighting for fair but tough trade deals, we can bring jobs back to America’s shores, increase wages, and support U.S. manufacturing.”

Actually, it’s been capital investments in labor-saving technologies like robotics and increasing worker productivity that have led to the large majority of US factory job losses, not trade or outsourcing, as I documented recently here. And there’s been no devastation of America’s manufacturing base; to the contrary, real US manufacturing output has reached all-time high levels in recent quarters.

What’s Trump’s solution to the loss of US manufacturing jobs? America’s “first authentic protectionist to win the White House since the 1920s” has outlined a series of protectionist trade measures including tariffs (30-40-50%), “tougher trade deals” (likely trade deals to protect US manufacturers from foreign competition), “Buy American” policies, and border adjustment taxes, among other strategies to “save American jobs.”

Here’s a relevant question to ask: How have protectionist trade policies in the past worked out for the US economy and how expensive is it to save American jobs with the protectionist trade policies Trump is proposing? We can find some answers to those questions in a Federal Reserve Bank of St. Louis research article published in 1988 by three economists “Protectionist Trade Policies: A Survey of Theory, Evidence and Rationale,” which presented a summary of the empirical evidence on trade protectionism from the 1986 book published by the Institute for International Economics Trade Protection in the United States: 31 Case Studies. Even though the research and empirical results are from the 1980s, this article and book provide useful empirical evidence on the costs of protectionism to bring some much-needed sanity to the debate on trade policy to counterbalance the favorable treatment being given to protectionism these days.

Click to see full-size table.

January 21, 2017

Trump and libertarian concerns

Filed under: Government, Liberty, USA — Tags: , , , , , — Nicholas @ 03:00

At Reason, Peter Suderman can only come up with nine reasons for libertarians to be worried about Il Donalduce‘s new regime:

Here are nine reasons why libertarians should be very concerned about a Trump presidency:

1) He has repeatedly promised to deport 11 million undocumented immigrants upon taking office, relying on a “special deportation force” to carry out the task. And even in the occasional moments in which he has seemed to recognize that this task would be logistically impossible, he has continued to insist that he will deport several million people right away, and that other undocumented immigrants who are in the country will not have a path to citizenship unless they leave the country first.

2) More generally, Trump’s attitude toward immigrants and outsiders ranges from disdain to outright hostility. He has called for a ban on Muslim immigration and the closure of mosques, and he opened his primary campaign by declaring that Mexican immigrants to the U.S. were rapists and criminals.

3) Trump has also promised to build a massive, expensive wall along the southern border, and has insisted that Mexico will pay for its construction, an absurd notion that is already crumbling, as the incoming administration has asked Congress, not Mexico, to pay for the wall.

4) Trump has made clear that his administration will take a much more aggressive stance on trade as well. During the campaign, he floated the idea of a 45 percent tariff on Chinese goods, which would be deeply harmful to consumers and the U.S. economy. Since winning the election, his administration has raised the possibility of a 10 percent tariff on all imports, a policy that could spark a global recession. After winning in November, he said he would pull the nation out of the Trans-Pacific Partnership trade agreement on day one of his presidency.

On the other hand, Nick Gillespie and Veronique de Rugy are a bit more upbeat about libertarian causes in Trump’s America:

Donald Trump is nobody’s idea of a libertarian but his presidency provides a tremendous opportunity to advance libertarian policies, outcomes, and aspirations in our politics and broader culture. Those of us who believe in reducing the size, scope, and spending of the federal government and expanding the autonomy, opportunities, and ability of people to live however they choose should welcome the Trump era. That’s not because of the new president’s agenda but because he enters office as the man who will inevitably close out a failing 20th-century model of governance.

Liberal, conservative, libertarian: We all understand that whatever the merits of the great political, economic, and cultural institutions of the last 70 years — the welfare state built on unsustainable entitlement spending; a military that spends more and more and succeeds less and less; the giant corporations (ATT, IBM, General Motors) that were “beyond” market forces until they weren’t; rigid social conventions that sorted people into stultifying binaries (black and white, male and female, straight and mentally ill) — these are everywhere in ruins or retreat.

The taxi cab — a paradigmatic blending of private enterprise and state power in a system that increasingly serves no one well — is replaced by ride-sharing services that are endlessly innovative, safer, and self-regulating. Libertarian Party presidential candidate Gary Johnson’s campaign slogan — Uber everything — was the one self-evident truth uttered throughout the 2016 campaign. All aspects of our lives are being remade according to a new, inherently libertarian operating system that empowers individuals and groups to pursue whatever experiments in living they want. As one of us (Nick Gillespie) wrote with Matt Welch in The Declaration of Independents, the loosening of controls in our commercial, cultural, and personal lives has consistently enriched our world. The sharing economy, 3D printing and instantaneous global communication means businesses grow, flourish, adapt, and die in ways that perfectly fulfill Schumpeterian creative destruction. We live in a world where consuming art, music, video, text, and other forms of creative expression is its own form or production and allows us to connect in lateral rather than hierarchical ways. Pernicious racial and ethnic categories persist but they have been mostly supplanted by a tolerance and a level of lived pluralism that was unimaginable even 20 years ago, when less than [50%] of Americans approved of interracial marriages. Politics, Welch and Gillespie wrote, is a lagging indicator of where America is already heading and in many cases has already arrived.

January 1, 2017

QotD: Currency Manipulation

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

One of the critiques of any trade deal of late is that there should be penalties for countries guilty of “currency manipulation.” The concern is that countries will devalue their currency in an effort to make their own exports cheaper to other nations while making it harder for other countries to export back to them. As an example, if the Chinese were to do something that cuts the value of the Yuan in half vs. the dollar, their products look very cheap to American consumers while American-produced goods suddenly look a lot more expensive to Chinese consumers.

I have two brief responses to this:

  1. I find it hilarious that anyone in the United States government, which has a Federal Reserve that has added nearly $2 trillion to its balance sheet in the service of cramming down the value of the dollar, can with a straight face accuse other nations of currency manipulation. In practice in today’s QEconomy, currency manipulation means another country is doing exactly what we are doing, but just doing it faster.
  2. As an American consumer, to such currency manipulation by other countries I say, Bring it On! If China wants to hammer its own citizens with higher prices and lower purchasing power just to subsidize lower prices for me, I am happy to let them do it. Yes, a few specific politically-connected export businesses lose revenues, but trying to prop them up is pure cronyism. Which is one reason I think Elizabeth Warren is a total hypocrite. The constituency of the poor and lower middle class she presumes to speak for are the exact folks who shop at Walmart and need very price break on everyday goods they can get. Senator Warren’s preferences for protectionist trade policies and a weak dollar will hurt these folks the most.

Warren Meyer, “Currency Manipulation”, Coyote Blog, 2015-05-26.

July 30, 2016

The alienated parts of the old Republican coalition

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

In the New York Review of Books, Jonathan Freedland looks at some of the significant factions of the Republican party who have not embraced Il Donalduce:

Yet this is not solely a revolt of “values conservatives” against the brash, thrice-married vulgarian from Queens — a battle of Iowa against New York, as Cruz likes to frame it. There are other fault-lines. Neoconservatives such as Bill Kristol (or Robert Kagan, who says he will vote for Hillary Clinton) oppose Trump too, as do foreign policy realists such as Brent Scowcroft. Some of this is personal: Scowcroft and others feel a strong loyalty to the Bush family, whose animus toward Trump is incandescent thanks to the billionaire’s trashing of Jeb. But policy substance has also played its part in Trump’s improbable achievement: he has managed to turn many disparate Republican strands — Log Cabin types and evangelicals, neocons and Bush 41 stalwarts, Wall Streeters and military brass — against him. (That these different elements have not been able to cohere around an alternative candidate or program helps, in part, to explain Trump’s success, but it does not make their opposition any less real.)

Trade is a crucial example. The GOP has long been the party of free trade; in 1993, Bill Clinton could only pass NAFTA with Republican votes. But now its nominee denounces such trade as a destroyer of American jobs, apparently seeing commerce as something the US should do to, rather than with, other countries. The result was the astonishing sight of a Republican presidential nominee, in his acceptance speech, bidding for the voters of an avowed socialist, Bernie Sanders, “because,” as Trump put it, “we will fix his biggest issue, trade deals.” The issue was hardly debated in Cleveland, but the shift is remarkable all the same. Trump has refashioned the GOP as the party of protectionism, advocating an approach Republicans previously denounced as a threat to American prosperity.

Similarly, Republicans have for decades enjoyed an advantage on national security, obliging the Democrats to match them on strength and military commitment. Trump has broken from that too. He implies a rupture not only from the neocon, democracy-spreading policies associated with Bush the son, but also with the engaged internationalism of Bush the father. Trump is seemingly uninterested in America’s traditional status as sheet-anchor of the international system, central in a series of interlocking alliances that have maintained relative order and stability since 1945. Instead, he took time out from Cleveland to tell The New York Times he did not believe in the cardinal principle underpinning NATO — that an attack on one member is an attack on all — and that, as president, he would only defend one of the Baltic states from hypothetical Russian invasion if he deemed that state to have been paying its proper dues. Put aside the huge implications of such a shift for global security. Trump is turning his back on decades of Republican Party doctrine.

That’s true on the scale of government, too, with Trump implicitly advocating gargantuan powers for an imperial presidency: “I alone can fix this problem,” he says of crime, ISIS, immigration and much else. That’s quite a change for a party that has long regarded it as an article of faith that government is the problem and never the solution.

[…]

Republicans alarmed at these developments are not quite sure what will be worse: for Trump to lose or for Trump to win. Some have persuaded themselves that a Trump victory is best for America, simply because Hillary Clinton must not be president. (One Utah delegate, anguished about Trump’s “rough edges,” told me he believed Clinton was “evil.”)

But others are terrified by the possibility of a Trump victory. If that happens, they fear, the upheaval of 2016 will become permanent: the Republican Party will be reshaped in Trump’s image. It will be protectionist, nativist, authoritarian, and the vehicle for an exclusively white rage. Richard Tafel recoils so sharply from that prospect, he is talking seriously of forming a new party of the center-right. He’s already had conversations with “some of the wealthiest” CEOs and others, worried that Trumpism does not respect the prudent, cautious, free-market conservatism they value. For millennials especially, Tafel says, Trump is making the Republican Party a “toxic brand.”

The biggest challenge to forming a new political party is that the current system is completely rigged in favour of the two big parties to the extent that even long-established third parties like the Libertarians and the Greens still have to spend vastly disproportional efforts (and funds) just trying to get their candidates onto the ballot. A new “centre-right” party would face the same problem — and neither of the two big beneficiaries of the current system will be eager to see their institutional advantages eroded.

July 21, 2016

QotD: The economic folly of mercantilism

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

At the heart of [Trump’s] argument is the belief that selling to countries is good and buying from them is bad, the crude mercantilist fallacy that Adam Smith’s Wealth of Nations debunked in the same year that America embraced the Declaration of Independence. Smith, the brilliant British political economist, argued that unless people start eating gold bullion, the point of wealth is to buy not sell; to consume not produce. If China starts shipping free plasma TVs to America, a few American companies may be thrown out of business, but American consumers will be better off. What’s more, they’ll be able to spend their savings on goods from other companies. The only folks that protectionist policies benefit are crony capitalists who face less competition — the very thing that Trump says he’s fighting.

Shikha Dalmia, “Donald Trump’s free-trade follies”, The Week, 2016-06-30.

July 17, 2016

QotD: Regulating Napa County

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

… at each tour we typically got the whole backstory of the business. And the consistent theme that ran through all of these discussions was the simply incredible level of regulation of the wine business that goes on in Napa. I have no idea what the public justification of all these rules and laws are, but the consistent theme of them is that they all serve to make it very hard for small competitors or new entrants to do business in the county. There is a board, likely populated by the largest and most powerful entrenched wine makers, that seems to control the whole regulatory structure, making this a classic case of an industry where you have to ask permission of your competitors to compete against them. There are minimum sizes, in acres, one must have to start a new winery, and this size keeps increasing. Recently, large winemakers have started trying to substantially raise this number again to a size greater than the acreage of any possible available parcel of land, effectively ending all new entrants for good. I forget the exact numbers, but one has to have something like 40 acres of land as a minimum to build a structure on the land, and one must have over 300 acres to build a second structure. You want to buy ten acres and build a small house and winery to try your hand at winemaking? — forget it in Napa.

It took a couple of days and a bunch of questions to put this together. Time and again the guide would say that the (wealthy) owners had to look and wait for a long time to find a piece of land with a house on it. I couldn’t figure out why the hell this was a criteria — if you are paying millions for the land, why are you scared to build a house? But it turned out that they couldn’t build a house. We were at this beautiful little place called Gargiulo and they said they bought their land sight-unseen on 3 hours notice for millions of dollars because it had a house AND a separate barn on it grandfathered. Today, it was impossible to get acreage of the size they have and build two structures on it, but since they had the barn, they could add on to it (about 10x the original size of the barn) to build the winery and still have a separate house to live in.

This is why the Napa Valley, to my eye, has become a weird museum of rich people. It seems to be dominated by billionaires who create just fantastically lovely showplaces that produce a few thousand cases of wine that is sold on allocation for 100+ dollars a bottle to other rich people. It is spectacularly beautiful to visit — seriously, each tasting room and vineyard is like a post card, in large part because the owners are rich enough to care nothing about return on capital invested in their vineyards. The vineyards in Napa seem to have some sort of social signalling value which I don’t fully understand, but it is fun to visit for a few days. But in this set-piece, the last thing the folks who control the county want is for grubby little middle-class startups to mess up their carefully crafted stage, so they are effectively excluded.

I know zero about wines, but from other industries this seems to be a recipe for senescence. It would surprise me not at all to see articles get written 10 years from now about how Napa wines have fallen behind other, more innovative areas. I have never been there, but my friends say newer areas like Paso Robles has an entirely different vibe, with working owners on small plots trying to a) actually make a viable business of it and b) innovate and try new approaches.

Warren Meyer, “My Nomination for Corporate State of the Year: Napa County, California”, Coyote Blog, 2016-07-08.

July 7, 2016

First Opium War – I: Trade Deficits and the Macartney Embassy – Extra History

Filed under: Britain, China, History — Tags: , , — Nicholas @ 03:00

Published on 18 Jun 2016

The British Empire’s grasp on the Americas was slipping right at the time when they needed those resources most. The massive amounts of tea they imported from China had created a huge trade deficit, but the Chinese were reluctant to let any Europeans trade outside of the Canton port strictly controlled by the Hong. So Britain sent a formal embassy led by Earl George Macartney.
____________

In 1792, Great Britain had just come out of an expensive war that cost them their control over many of their colonies in North America. Other wars had also cost them their access to the silver mines of South America, which had been helping fund so much of their trade with the Qing Dynasty of China. European traders all wanted greater access to China, but the Emperor was wary of letting outsiders too far into his country and kept them all penned up at the port of Canton, which was strictly regulated by the Hong business group. A flourishing blackmarket trade grew, but Britain wanted more. One trader, acting on his own initiative, grew bold enough to approach Beijing and attempt to get a hearing over his trade grievances, but the Chinese considered this a huge breach of protocal and an offense to the Emperor. Britain had to do something, however: they imported over 10 million pounds of tea each year, equal to 10% of the government’s annual spending, and the fact that China did not have anywhere near as great an interest in British products meant that they were running an enormous trade deficit they could no longer sustain. The Crown appointed an official envoy, Earl George Macartney, with orders to end the Canton system, establish an embassy, and acquire rights to an island that would be under British control in the same way that the Porutuguese controlled Macao. The mission failed spectacularly. Although Macartney got permission to sail north and meet the Qianlong Emperor in his summer palace at Jehol, he refused to perform the traditional kowtow which was required upon meeting the Emperor. He presented gifts from the British court, but the Chinese interpreted these gifts as tribute, not trade enticements, and decided they had no need for nor interest in what he offered. Since he failed to get them to agree to any of his three requests, Britain wanted to find another way to address the trade imbalance with China. Soon, this would lead them to start bringing in opium.

June 25, 2016

Canada’s massively counter-productive protectionist racket

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

At (of all places) the CBC, Neil Macdonald explains why the Canadian government maintains a ridiculously low limit on what Canadians can purchase from other countries without packages being subject to duty, tax, delay, and possible damage:

As any Canadian who’s ever naively bought anything on the American version of eBay (or, for that matter, any U.S. retail website) must by now know, Ottawa is determined to spoil your bargain.

If the purchase is a penny over $20 Cdn, a federal customs agent can intercept it, open it, delay it, add federal and provincial sales taxes, and, depending on the origin of the merchandise, perhaps pile on some duty charges — basically protectionist taxes.

By the time the government is done, the price of the package can easily rise by 50 per cent. And of course customs brokers usually have to wet their beaks, inflating the final cost of the average package by another 20, 30 or 40 per cent.

Basically, Ottawa has ensured that shipping across our border is such an expensive, paperwork-heavy pain that a lot of American merchants and eBay sellers simply don’t bother shipping to Canada.

The system actually seems designed to be burdensome and sclerotic.

Normally, you’d assume it’s all about increasing the federal government’s tax revenues … the CRA must be raking in the bucks, right? Not at all:

… by keeping that purchase threshold at $20 instead of giving Canadian shoppers a break and raising it to $80, Ottawa spends about $166 million to collect $39 million in additional taxes and duties.

Think about that: Ottawa’s customs officials spend a net $127 million of taxpayers’ money annually, basically to keep Canadians trapped inside the Canadian retail corral.

H/T to SDA for the link.

June 18, 2016

QotD: The origin of the push for a minimum wage

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

Few policies have origins as ugly as that of the minimum wage. “Progressive” intellectuals in the early 20th century supported the minimum wage because they believed it to be an effective policy detergent to help cleanse the gene pool of ‘undesirables.’ By pricing low-skilled, ‘undesirable’ workers out of jobs, ‘undesirables’ are less likely to successfully pro-create and to immigrate. The fact that the minimum wage, by pricing ‘undesirables’ out of work, thereby artificially raises the incomes of white workers was considered to be an added benefit of this social-engineering device.

Business owners and labor unions in higher-wage regions of the United States supported the minimum wage because it would dampen the competition they were under from businesses and workers in lower-wage regions of the United States.

The ethics of these early supporters of the minimum wage were despicable. But say this much for these racist, protectionist creeps: they understood economics better than do many people today (including some economists) who believe either that the law of demand is uniquely inoperative in the market for low-skilled workers or that the American market for low-skilled workers is monopsonized.* Each belief is as inexplicable as it is unsupportable.

* And monopsonization of the labor market is only a necessary condition for a minimum wage to not destroy employment opportunities for some workers; it is not a sufficient condition.

Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2016-06-01.

June 13, 2016

QotD: The absurdities of many occupational licenses

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

In 2012, the Institute for Justice — a public-interest law firm advocating libertarian causes — looked at the number of occupations that require licensing. Specifically, the institute looked at occupations typically filled by lower- and middle-income workers. These are not your airline pilots, your certified public accountants and your neurosurgeons; they’re the nations interior decorators, auctioneers and florists. (Yes, you read that right: In at least one state, these occupations cannot be practiced without a license.)

Why, you might ask, is the state requiring a license to decorate an interior? Are customers at risk of death from collapsing piles of pillow shams? Must we fear that they will be blinded by the decorator’s decision to pair fuchsia chiffon drapes with a chartreuse brocade sofa? Do we worry that without the threat of losing their license to keep them on the straight and narrow, these fly-by-night operators might be tempted into purchasing furniture from unlicensed auctioneers, and sourcing their floral arrangements from black-market florists?

Well, no. Mostly, these regulations benefit folks who are already plying the trade. They get helpful state legislators to protect them from competition by instituting tough licensing requirements. Their income goes up; the consumer’s wallet suffers. And people who want to follow their dreams into the industry get shut out if they lack the time to study for the licensing exams, the capital to pay the licensing exam fees (which can run in to the hundreds of dollars), or the social capital to know how to work the system.

Megan McArdle, “You’re Gonna Need a License for That”, Bloomberg View, 2016-05-17.

April 2, 2016

Canada’s new frontier in patriotism: ketchup

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

Colby Cosh gently pokes fun at the latest outbreak of manufactured patriotic fervor:

An enterprising Toronto man wants to sell us all “Ketchup Patriot” T-shirts, so that the virtuous among us might assert the correct position on the hot issue of whether it is right to eat products made with dubious foreign tomatoes.

This presents me with a dilemma: I agree with the many words already written in this space, and in the Financial Post, about the preposterousness of tomato isolationism; on the other hand, I am pretty sure our future as a country has less to do with mid-grade agricultural products destined for pureeing than it does to do with insta-auto-robo-printing of faddish social-signalling paraphernalia. You have to admire the spirit of enterprise wherever it emerges. The best answer ever given to Che Guevara’s philosophy was the Che Guevara T-shirt.

The “Ketchup Patriot” view favours French’s brand ketchup, which is now made from tomatoes grown in the area around Leamington, Ont. Leamington is practically a creation of the H.J. Heinz Co., which was a major employer there for decades, but fled to the United States in 2014. Few Canadians are employed in the growing of tomatoes, mind you: migrant workers flown into local dormitories and paid around $10 an hour seem to do most of the hard work on Leamington-area farms and in greenhouses.

French’s, best known for selling mustard, is owned by the Reckitt Benckiser Group PLC of Slough, Berkshire. This “Ketchup Patriotism,” the closer you look at it, becomes more and more a matter solely of dream terroir. Canadians don’t get the profits, don’t pick the tomatoes and don’t even can the ketchup — that happens in Ohio, although French’s, obviously aware that it has a whole country by the tail, has hinted at plans to open a new cannery somewhere in Ontario. All we do, for the moment, is own the land. This ketchup has a mystical Canadian essence, one I defy anyone to detect in a blind taste test.

One may not detect the “distinctive Canadian ‘terroir'”, but having actually tasted Heinz and French’s products, there’s a reason that Heinz is the default ketchup for most people.

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