Quotulatiousness

October 9, 2014

“Political barriers make it harder to innovate with atoms than with bits”

Filed under: Bureaucracy, Law, Technology — Tags: , , , , — Nicholas Russon @ 08:30

Virginia Postrel on the barriers that slow down — or completely stop — innovation in far too many non-digital fields:

… I sympathize with science-fiction writer Neal Stephenson and venture-capitalist Peter Thiel, whose new books lament the demise of grand 20th-century dreams and the optimistic culture they expressed. “I worry that our inability to match the achievements of the 1960s space program might be symptomatic of a general failure of our society to get big things done,” writes Stephenson in the preface to Hieroglyph, a science-fiction anthology hoping “to rekindle grand technological ambitions through the power of storytelling.” In Zero to One, a book mostly about startups, Thiel makes the argument that “we have to find our way back to a definite future, and the Western world needs nothing short of a cultural revolution to do it.”

Their concerns about technological malaise are reasonable. As I’ve written here before, “political barriers have in fact made it harder to innovate with atoms than with bits.” It’s depressing to see just about any positive development — a dramatic decline in the need for blood transfusions, for instance — greeted with gloom. (“The trend is wreaking havoc in the blood bank business, forcing a wave of mergers and job cutbacks.”)

When a report about how ground-penetrating radar has mapped huge undiscovered areas of Stonehenge immediately provokes a comment wondering whether the radar endangers the landscape, something has gone seriously wrong with our sense of wonder. “There’s an automatic perception … that everything’s dangerous,” Stephenson mused at a recent event in Los Angeles, citing the Stonehenge example, “and that there’s some cosmic balance at work — that if there’s an advance somewhere it must have a terrible cost. That’s a hard thing to fix, but I think that if we had some more interesting Apollo-like projects or big successes we could point to it might lift that burden that is on people’s minds.”

Postrel argues that Stephenson’s fix would not work, and that our nostalgia for the early days of the Space Age blind us to the reality that most Americans in that era did not believe that the money for the Apollo missions was well spent (with the brief exception of July, 1969). She makes the point that our culture has changed significantly and those attitudinal changes are much more of the reason for today’s hesitancy and doubt about progress:

We already have plenty of critics telling us that our creativity and effort are for naught, our pleasures and desires absurd, our civilization wicked and destructive. We live in a culture where condemnatory phrases like “the ecosystems we’ve broken” are throwaway lines, and the top-grossing movie of all time is a heavy-handed science-fiction parable about the evils of technology and exploration. We don’t need Neal Stephenson piling on.

The reason mid-20th-century Americans were optimistic about the future wasn’t that science-fiction writers told cool stories about space travel. Science-fiction glamour in fact worked on only a small slice of the public. (Nobody else in my kindergarten was grabbing for You Will Go to the Moon.) People believed the future would be better than the present because they believed the present was better than the past. They constantly heard stories — not speculative, futuristic stories but news stories, fashion stories, real-estate stories, medical stories — that reinforced this belief. They remembered epidemics and rejoiced in vaccines and wonder drugs. They looked back on crowded urban walk-ups and appreciated neat suburban homes. They recalled ironing on sweaty summer days and celebrated air conditioning and wash-and-wear fabrics. They marveled at tiny transistor radios and dreamed of going on airplane trips.

Then the stories changed. For good reasons and bad, more and more Americans stopped believing in what they had once viewed as progress. Plastics became a punch line, convenience foods ridiculous, nature the standard of all things right and good. Freeways destroyed neighborhoods. Urban renewal replaced them with forbidding Brutalist plazas. New subdivisions represented a threat to the landscape rather than the promise of the good life. Too-fast airplanes produced window-rattling sonic booms. Insecticides harmed eagles’ eggs. Exploration meant conquest and brutal exploitation. Little by little, the number of modern offenses grew until we found ourselves in a 21st century where some of the most educated, affluent and cultural influentially people in the country are terrified of vaccinating their children. Nothing good, they’ve come to think, comes from disturbing nature.

Emphasis mine.

October 1, 2014

The CRTC tries bully boy tactics to stay vaguely relevant in the 21st century

Filed under: Bureaucracy, Business, Cancon, Media — Tags: , , , — Nicholas Russon @ 11:08

Richard Anderson perfectly captures the scene as the Canadian Radio-television and Telecommunications Commission (CRTC) attempts to browbeat Netflix into “voluntary” compliance with its (possibly extra-legal) demands:

Caudilho Jean-Pierre Blais of the CRTC actually ordered Netflix to hand over their confidential information. Acting as if he was a judge in a criminal trial instead of a busybody interfering with a successful business that is violating no one’s rights. It’s questionable as to whether the CRTC even has the legal power to make such a request. Netflix is not a broadcaster in any traditional sense of the word. The story behind the story is that a Trudeau-era regulatory framework is running smack up against the modern world.

With technology speeding past the CRTC Mandarins they are confronted with three options: 1) Acquiesce and watch as time turns them into a medieval guild during the industrial revolution. 2) Lobby the government to explicitly expand their powers over the internet. 3) Say to hell with the rule of law and see what they can get away with.

Option 1 ain’t happening because too many cushy jobs are at stake. Option 2 ain’t happening because the Tories may not understand capitalism but they don’t actively hate it. This leave us with option 3. As you can tell it is by far and away the worst option. This isn’t just a bad for consumers story it’s a bad for freedom story as well.

At the moment much of the media is focused on the pick and pay cable model debate. But the debate is little more than a statist three card monte trick, the government’s crude attempt to legislate business into behaving like what they think a free market should look like. The future, however, is being decided in the Netflix case.

September 30, 2014

French restaurant food quality is declining – send in the regulators!

Filed under: Bureaucracy, Business, Europe — Tags: , , , — Nicholas Russon @ 08:07

Tim Harford on the recent French government attempt to “fix” the declining quality of food served in restaurants:

“Each time I visit the city the food gets worse and worse.” Tyler Cowen, economics professor, foodie and author of An Economist Gets Lunch, despairs of Paris. Cowen isn’t the only person to lament the state of French cuisine. This may be why — in a quintessentially French move — the nation’s government has introduced a new law in an attempt to improve standards.

The quixotic law in question is public decree No. 2014-797, more popularly known as the “fait maison” rule, in which restaurants may use a new saucepan-with-a-roof-and-chimney logo on the menu beside any dish that is made on the premises. More accurately, the restaurants must use the saucepan-with-a-roof symbol to denote house-made dishes, but the definition of house-made is rather whimsical, thanks to French legislators.

The entire affair seems unlikely to improve French cuisine but it does provide a nice lesson in practical economics: regulation is a superficially appealing answer to life’s problems but often fails to provide real solutions.

[...]

A third problem is that the regulation may produce unintended consequences. Consider a chef who offers a fresh fruit crumble alongside a selection of factory-made cakes and puddings. By law, he or she must display the fait maison logo beside the crumble, implicitly damning all his or her other dishes. Such chefs might decide to offer no house-made dishes at all, rather than bring unwelcome questions to the forefront of their customers’ minds.

Policymaking is flawed and crude while the world is subtle and unpredictable. That is why regulations are often rigged from the start, are only peripherally related to the real matter of concern and have a tendency to backfire.

September 28, 2014

This is why you rarely see “Made in India” on manufactured goods

Filed under: Bureaucracy, Economics, India — Tags: , , , , — Nicholas Russon @ 11:13

At The Diplomat, Mohamed Zeeshan talks about India’s self-imposed disadvantages in manufacturing both for domestic and export consumption:

Indian Prime Minister Narendra Modi’s maiden Independence Day speech was laced with inspiring rhetoric. But of the many things he said, the one slogan that inevitably caught public attention was this: “Come, make in India!” With those words, Modi was trying to make the case for turning India into the world’s next great manufacturing hub. Understandably, the Indian populace was thrilled.

India is one of the world’s ten largest economies (and is third largest on a purchasing power parity basis), with a total annual output of nearly $2 trillion. As much as 57 percent of this output is produced by a service sector that employs just 28 percent of the population, largely concentrated in urban parts of the country. That is no surprise, because most Indians lack the skills and education to join the more knowledge-intensive service sector. What they need is what successful developing nations all over the world have had ever since the Industrial Revolution: a robust and productive manufacturing sector.

Yet India’s manufacturing sector contributes just 16 percent to the total GDP pie (China’s, by contrast, accounts for almost half of its total economic output). Victor Mallet, writing in the McKinsey book Reimagining India, recently offered an anecdote that was illuminating. “One of India’s largest carmakers recently boasted that it was selling more vehicles than ever and that it was hiring an extra eight hundred workers for its factory,” he wrote, “But the plant employing those workers belongs to the Jaguar Land Rover subsidiary of Tata Motors and is in the English Midlands, not in job-hungry India.”

Mallet goes on to make a point that has been made frequently by Indian economists: The world doesn’t want to “make in India,” because it is simply too painful. There’s bureaucratic red tape, a difficult land acquisition act, troublesome environmental legislation, a shortage of electricity, and a lack of water resources. The only thing India doesn’t seem to lack is labor, but that merely adds to the problem. As Mallet points out in the same essay, aptly titled “Demographic dividend – or disaster?”, “India’s population grew by 181 million in the decade to 2011 – and (despite falling fertility rates) a rise of nearly 50% in the total number of inhabitants is unavoidable.” But the number of jobs being added to feed that population is inadequate.

However, the labor dividend is still important. India doesn’t need to reduce the number of hands on deck. It needs to weed out the challenges that stop them from being productive.

September 21, 2014

The Roosevelts and the foundation of the Imperial Presidency

Filed under: History, Media, USA — Tags: , , , , — Nicholas Russon @ 10:15

Amity Shlaes on the recent Ken Burns documentary on Teddy Roosevelt, FDR, and Eleanor Roosevelt:

“He is at once God and their intimate friend,” wrote journalist Martha Gellhorn back in the 1930s of President Franklin Roosevelt. The quote comes from The Roosevelts, the new Ken Burns documentary that PBS airs this month. But the term “documentary” doesn’t do The Roosevelts justice. “Extravaganza” is more like it: In not one but 14 lavish hours, the series covers two great presidents, Theodore Roosevelt, who served in the first decade of the last century, and Franklin Roosevelt, who led our nation through the Great Depression and to victory in World War II. In his use of the plural, Burns correctly includes a third Roosevelt: Eleanor, who as first lady also affected policy, along with her spouse.

[...]

Absent, however, from the compelling footage is any display of the negative consequences of Rooseveltian action. The premise of Theodore Roosevelt’s trustbusting was that business was too strong. The opposite turned out to be true when, bullied by TR, the railroads promptly collapsed in the Panic of 1907. In the end it fell to TR’s very target, J. P. Morgan, to organize the rescue on Wall Street.

The documentary also neglects to mention that the economy of the early 1920s proved likewise fragile — casualty, in part, to President Woodrow Wilson’s fortification of TR’s progressive policies. Presidents Warren Harding and Calvin Coolidge poured their own energy into halting the expansion of an imperial presidency and sustaining the authority of the states. This endeavor, anti-progressive, also won approbation: In 1920, the Harding-Coolidge ticket beat Cox-Roosevelt. The result of the Harding-Coolidge style of presidency was genuine and enormous prosperity. The 1920s saw the arrival of automobiles, indoor toilets, and the very radios that FDR would later use so effectively to his advantage. Joblessness dropped; the number of new patents soared. TR had enjoyed adulation, but so did his mirror opposite, the refrainer Coolidge.

When it comes to the 1930s, such twisting of the record becomes outright distortion. By his own stated goal, that of putting people to work, Roosevelt failed. Joblessness remained above 10 percent for most of the decade. The stock market did not come back. By some measures, real output passed 1929 levels monetarily in the mid 1930s only to fall back into a steep depression within the Depression. As George Will comments, “the best of the New Deal programs was Franklin Roosevelt’s smile.” The recovery might have come sooner had the smile been the only New Deal policy.

So great is Burns’s emphasis on the Roosevelt dynasty that William Howard Taft, Woodrow Wilson, Warren Harding, Calvin Coolidge, and Herbert Hoover come away as mere seat warmers in the White House. Especially puzzling is the neglect of TR’s progressive heirs, Taft and Wilson, who, after all, set the stage for FDR. This omission can be explained only by Burns’s desire to cement the reign of the Roosevelts. On the surface, the series’ penchant for grandees might seem benign, like the breathless coverage of Princess Kate’s third trimester in People magazine. In this country, elevating presidential families is a common habit of television producers; the Kennedys as dynasty have enjoyed their share of airtime. Still, Burns does go further than the others, ennobling the Roosevelts as if they were true monarchs, gods almost, as in Martha Gellhorn’s above mentioned line. Burns equates progressive policy with the family that promulgates it. And when Burns enthrones the Roosevelts, he also enthrones their unkingly doctrine, progressivism.

September 13, 2014

Ohio State University’s bureaucratic approach to student-to-student intimacy

Filed under: Bureaucracy, Law, USA — Tags: , , , — Nicholas Russon @ 10:46

US colleges and universities are struggling to come up with new and innovative ways of regulating how their students interact in intimate situations. Ohio State University, for example, now requires that students who engage in sexual relations must agree on why they want to have sex to avoid the risk of sexual assault charges being brought:

At Ohio State University, to avoid being guilty of “sexual assault” or “sexual violence,” you and your partner now apparently have to agree on the reason WHY you are making out or having sex. It’s not enough to agree to DO it, you have to agree on WHY: there has to be agreement “regarding the who, what, where, when, why, and how this sexual activity will take place.”

There used to be a joke that women need a reason to have sex, while men only need a place. Does this policy reflect that juvenile mindset? Such a requirement baffles some women in the real world: a female member of the U.S. Commission on Civil Rights told me, “I am still trying to wrap my mind around the idea of any two intimates in the world agreeing as to ‘why.’”

Ohio State’s sexual-assault policy, which effectively turns some welcome touching into “sexual assault,” may be the product of its recent Resolution Agreement with the Office for Civil Rights (where I used to work) to resolve a Title IX complaint over its procedures for handling cases of sexual harassment and assault. That agreement, on page 6, requires the University to “provide consistent definitions of and guidance about the University terms ‘sexual harassment,’ ‘consent,’ ‘sexual violence,’ ‘sexual assault,’ and ‘sexual misconduct.’” It is possible that Ohio State will broaden its already overbroad “sexual assault” definition even further: Some officials at Ohio State, like its Student Wellness Center, advocate defining all sex or “kissing” without “verbal,” “enthusiastic” consent as “sexual assault.”

Ohio State applies an impractical “agreement” requirement to not just sex, but also to a much broader category of “touching” that is sexual (or perhaps romantic?) in nature. First, it states that “sexual assault is any form of non-consensual sexual activity. Sexual assault includes all unwanted sexual acts from intimidation to touching to various forms of penetration and rape.” Then, it states that “Consent is a knowing and voluntary verbal or non-verbal agreement between both parties to participate in each and every sexual act … Conduct will be considered “non-consensual” if no clear consent … is given … Effective consent can be given by words or actions so long as the words or actions create a mutual understanding between both parties regarding the conditions of the sexual activity–ask, ‘do both of us understand and agree regarding the who, what, where, when, why, and how this sexual activity will take place?’”

Update:

September 12, 2014

Welcome to Indiana, here is your regulatory compliance brewpub menu

Filed under: Bureaucracy, Business, USA — Tags: , , , — Nicholas Russon @ 08:00

Indiana, like most states, has some odd laws still on the books from the immediate post-Prohibition era, including a “food requirements” rule that specifies that any establishment that serves retail alcoholic beverages must also maintain a restaurant on-site. That restaurant is required to serve certain specific food items. This is how the Bank Street Brewhouse complies with the law:

Indiana regulatory compliance menu

As you can see, this fully complies with the wording of the rule which requires “a food menu to consist of not less than the following:”

  • Hot soups.
  • Hot sandwiches.
  • Coffee and milk.
  • Soft drinks.

H/T to Katherine Mangu-Ward who has more on the ridiculous requirements.

September 10, 2014

Ontario’s bid to impose a Netflix or YouTube tax

Filed under: Cancon, Media — Tags: , , , , , — Nicholas Russon @ 08:28

Michael Geist reports on the Ontario government’s pitch to the CRTC to impose additional tax burdens on foreign online video services:

As CRTC Chair Jean-Pierre Blais anticipated, the Government of Ontario’s call for regulation of online video services attracted considerable attention, including comments from Canadian Heritage Minister Shelly Glover roundly dismissing the possibility. Glover stated:

“We will not allow any moves to impose new regulations and taxes on internet video that would create a Netflix and Youtube Tax.”

Last night, I received an email from a spokesperson for Ontario Minister of Tourism, Culture and Sport Michael Coteau that tried to soften the call for online video regulation. The spokesperson stated:

“The presentation today provided important elements for CRTC consideration as it undertakes its review. The government is not advocating for any CanCon changes, or that any specific regulations be imposed on new media TV, until more evidence is available.”

I asked for clarification on what “more evidence” means. The spokesperson responded that there will be over 100 presentations at the CRTC hearing and that all need to be heard from before moving forward.

Yet a review of the Ontario government submission to the CRTC and its prepared remarks yesterday make it clear that the government strongly supported immediate regulatory reforms and that the need for “evidence” is actually a reference to revenue thresholds that would trigger mandatory payments by foreign online video providers.

September 4, 2014

How post-Prohibition restrictions still plague many states

Filed under: Law, USA — Tags: , , , , — Nicholas Russon @ 17:07

The American craft beer boom continues, but making the beer is only the start of the process of getting the beer into the hands of eager consumers. CEI’s Michelle Minton explains how rules crafted for the end of Prohibition now artificially restrict the craft beer marketplace, reduce consumer choice, and add unearned profits to favoured corporations:

After Prohibition ended, Americans could sell, produce, import, and transport alcoholic beverages, but home-brewing was still illegal until 1978 when then President Jimmy Carter signed legislation to legalize brewing in the home for personal or family use. In that year, the number of breweries was at its lowest point after the repeal of Prohibition. But in the 1980s, after states began to legalize brewpubs, the number of brewers began to rise. This development, along with easy access to capital in the 1990s and 2000s, aided efforts of modern craft breweries to change the laws in their home states so that they could brew more, self-distribute, and start the microbrew revolution.

[...]

Another hindrance for craft brewers are franchise laws, enacted among the states in the 1970s and 80s due to fears of brewers’ market power. With less than 50 brewers in the nation at the time — most of them large — there was a fear the big brewers could hold wholesalers hostage by threatening to walk away unless distributors bowed to the brewers’ demands. Since then, however, the landscape has completely shifted.

Although the number of wholesalers nationwide has declined, those remaining are larger and more powerful than almost all of the breweries in the nation. Yet, the laws remain, giving the wholesalers “virtual carte blanche to decide how the beer is sold and placed in stores and bars,” according to Brooklyn Brewery founder Steve Hindy.

In almost every other industry, a manufacturer unhappy with a distributor’s performance or price can terminate a contract in search of a better fit. This is not the case for beer manufacturers. Brewers wishing to switch from one distributor to another must go through long and costly legal battles. Hindy, for example, paid $300,000 to get out of a contract with a New York wholesaler. Yuengling COO Dave Casinelli’s experience was similar. In a phone interview, he noted that in his 24 years with the company, he couldn’t recall any attempt to switch wholesalers that didn’t end up with some legal ramifications.

Most state franchise laws not only make leaving a wholesaler hard, but they also create regional monopolies, known as “exclusive territories,” where a brewer is prohibited from selling through more than one distributor within a given area. This undermines incentives for wholesalers to compete by improving performance, increasing efficiency, or lowering prices. After all, distributors have little or no fear that a brewer will leave — because most of them can’t. As for consumers, they end up paying more because of this lack of competition.

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.

August 12, 2014

“Ayn Rand-obsessed pot smokers who want to hide their money from the tax man”

Filed under: Liberty, Politics, USA — Tags: , , , , — Nicholas Russon @ 08:06

J.D. Tuccille on five libertarian issues that should matter just as much to non-libertarians:

Are libertarians just Ayn Rand-obsessed pot smokers who want to hide their money from the tax man? That’s what many critics of the libertarian movement, and its seemingly looming moment in American history (as reported by the New York Times) would have you believe. But maybe we’re smoking that grass because we’re all too aware of what government officials do with that money (and to us all) when they get their hands on it (Ayn Rand did provide some cautionary tales, if you care to read her books).

Below are just five of the many issues on which libertarian journalists, independent think-tankers, state-challenging politicians, and freedom-loving litigators, among others, have worked to preserve and extend our liberty over the years. These are issues that matter to us. We think they should matter to you too — and they already may.

America’s Insane Incarceration Rate

“Every ten or eleven people that you meet, someone is going to either know someone in prison, has been in prison with a record, or you met them and they are going off to prison,” Michael Stoll, co-author of Why Are So Many Americans in Prison?, told Reason last year.

Those who now fill the nation’s jails, prisons, and detention centers, says the Prison Policy Initiative, number about 2.4 million people.

[...]

The Insane War on Drugs

The easiest way to get thrown behind bars in recent years has been by using, buying, selling, or merely possessing an intoxicant that doesn’t meet politicians’ approval. Prohibition of alcohol may have failed, but the impulse to prohibit — and to penalize those who don’t or won’t get with the program, continues in laws against marijuana, cocaine, methamphetamine, and myriad other substances.

[...]

Whatever the Hell Happened to Police in This Country

You can’t have prisons groaning full of people busted for drug violations without somebody to put them there. That somebody is inevitably law enforcement in all its various permutations—though you might be forgiven for thinking it’s an occupying army, given the military tactics, equipment, and mindset that so many police departments have adopted.

[...]

Small Business-Killing Meddling

Government officials don’t have to unleash uniformed minions on you to make your life miserable — they can do the same thing with a web of red tape and a plague of inspectors. The challenge of making an honest living can become almost impossible when burdened with bureaucracy.

[...]

Peace

You can’t enjoy life, liberty, and prosperity if your ass has been shot off in some politician’s bloody military adventure. And libertarian-oriented lawmakers feature prominently among the “wacko-birds” denounced by uber-hawk, Sen. John McCain (R-Az.). Specifically, Sen. Rand Paul (R-Ky.) and Rep. Justin Amash (R-Mich.) ranked proudly among those called out for opposing drone assassinations and unprovoked interventions in other countries’ affairs.

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.

July 26, 2014

QotD: French “ultra-liberalism”

Filed under: Bureaucracy, Europe, Government, Quotations — Tags: , , , , — Nicholas Russon @ 00:01

The French press, media and intellectuals castigate ad nauseam what they call the ‘ultra-liberalism’ of the present-day western world: and their characterization, as intellectually lazy as it is inaccurate, now goes virtually by default. Very few are the commentators who see through its inaccuracy. That a country whose public sector accounts for more than half of economic activity, and which is as highly-administered as France (and, it must be said, often well-administered, for who would not rather go on the Paris Metro than the New York Subway?), cannot plausibly be described as ‘ultra-liberal,’ ought to be perfectly obvious even on the most casual reflection, but alas it is not. If France is ultra-anything it is ultra-corporatist, but even that would be an exaggeration. And so present discontents are laid at the door of ultra-liberalism, though in fact a considerable proportion of the resentments and discontents of the young who approve of M’Bala M’Bala are attributable to the rigidity of the French labor market, which is caused precisely by an illiberal nexus of protections and restrictions.

The problem, then, is not ultra-liberalism but insufficient liberalism. The difference between France and other western countries, incidentally, is one of degree and not of type, though even degree can be important: illiberalism in the French labor market has in a matter of a few years turned London into one of the largest French-speaking cities in the world.

Theodore Dalrymple, “Illusions of Control in the Omnicompetent French State”, Library of Law and Liberty, 2014-01-07

July 15, 2014

The economic side of Net Neutrality

Filed under: Business, Economics, Technology — Tags: , , , , — Nicholas Russon @ 07:41

In Forbes, Tim Worstall ignores the slogans to follow the money in the Net Neutrality argument:

The FCC is having a busy time of it as their cogitations into the rules about net neutrality become the second most commented upon in the organisation’s history (second only to Janet Jackson’s nip-slip which gives us a good idea of the priorities of the citizenry). The various internet content giants, the Googles, Facebooks and so on of this world, are arguing very loudly that strict net neutrality should be the standard. We could, of course attribute this to all in those organisations being fully up with the hippy dippy idea that information just wants to be free. Apart from the obvious point that Zuckerberg, for one, is a little too young to have absorbed that along with the patchouli oil we’d probably do better to examine the underlying economics of what’s going on to work out why people are taking the positions they are.

Boiling “net neutrality” down to its essence the argument is about whether the people who own the connections to the customer, the broadband and mobile airtime providers, can treat different internet traffic differently. Should we force them to be neutral (thus the “neutrality” part) and treat all traffic exactly the same? Or should they be allowed to speed up some traffic, slow down other, in order to prioritise certain services over others?

We can (and many do) argue that we the consumers are paying for this bandwidth so it’s up to us to decide and we might well decide that they cannot. Others might (and they do) argue that certain services require very much more of that bandwidth than others, further, require a much higher level of service, and it would be economically efficient to charge for that greater volume and quality. For example, none of us would mind all that much if there was a random second or two delay in the arrival of a gmail message but we’d be very annoyed if there were random such delays in the arrival of a YouTube packet. Netflix would be almost unusable if streaming were subject to such delays. So it might indeed make sense to prioritise such traffic and slow down other to make room for it.

You can balance these arguments as you wish: there’s not really a “correct” answer to this, it’s a matter of opinion. But why are the content giants all arguing for net neutrality? What’s their reasoning?

As you’d expect, it all comes down to the money. Who pays more for what under a truly “neutral” model and who pays more under other models. The big players want to funnel off as much of the available profit to themselves as possible, while others would prefer the big players reduced to the status of regulated water company: carrying all traffic at the same rate (which then allows the profits to go to other players).

July 12, 2014

Sriracha factory dispute – “THIS PROBLEM NEEDS TO BE TAKEN CARE OF NOW, NOT LATER!!!!!”

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

Sriracha rooster sauceSriracha fans were relieved when the Huy Fong plant in California was allowed to re-open after a farcical ‘elf-and-safety’ shakedown (original story here). Reason‘s Zenon Evans has more on the behind-the-scenes bullshit that triggered the near-national panic among hot sauce consumers:

The public just got some new insight into one of the last year’s spiciest (and fishiest) political kerfuffles: the push by the city council of Irwindale, California to shut down Huy Fong Foods, the makers of Sriracha hot sauce. The tireless freedom-of-information requesters at MuckRock yesterday published internal council documents, revealing theatrically furious communication among the local government officials and a desire to exploit regulations to force the company into submission.

[...]

The newly revealed memos and emails show that some members of government were actually “happy to report the scent of chilies” emanating when production began in 2012, but, a year later Ortiz and Councilman David Fuentes, who also lived near the factory (and also ultimately recused himself from the matter), saw a total shutdown as the first and only appropriate course of action.

“I just received notice that the odor at this place is very strong. We must proceed with SHUT DOWN immediately,” demanded Ortiz in an email, despite the fact that he had previously applauded how much safer that part of town had become since the $80 million business moved in.

Fuentes was even more adamant. “THIS PROBLEM NEEDS TO BE TAKEN CARE OF NOW, NOT LATER!!!!!,” he emailed his fellow council members in October. Notably, he also suggested that “if we need to shut them down for non compliance, then let’s do what we have to do.”

Although it’s not clear exactly what Fuentes meant by “non compliance” or if the council made moves based on his plot, the city did sue Huy Fong and got a judge to order a partial shutdown in November, even though that the judge acknowledged a “lack of credible evidence” regarding the health risk claims. Likewise, California’s health regulators stepped in and changed their own food rules in December as they demanded a 30-day hold on operations, which created fear of a national Sriracha shortage.

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