“Progressives’” hostility to free trade would be amusing were its consequences less baneful: deeply distrustful of the motives of business people, and convinced that profits are ethically suspect, Sandersnistas and many other “Progressives” are in the front lines of the troops who are intent on using trade restrictions to protect business people from competition and, thus, to enhance business people’s prospects of earning excess profits – profits that truly are ethically unjust because they are the fruits of the forced removal from consumers of choices on how they, consumers, may spend their own money. (Of course, the very same economically damaging and ethically unjust consequences spring from trade restrictions supported by Trumpkins and many other conservatives. The tales that each of these economically ignorant groups tell to each other to justify their mercantilist policies differ, but the policies and the harmful results are identical.)
Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2016-07-30.
April 8, 2018
QotD: Just and unjust profits
April 7, 2018
Car rental agencies look to government to quash upstart “personal vehicle sharing” companies
Steven Greenhut discusses yet another entrenched industry trying to get the government to protect them from disruptive competitors:
Real capitalism is a tough sport where entrepreneurs risk their capital in hopes of winning customers.
The “crony” version of it involves politicians rigging the rules to assure that the “right” people are winners. We see this ugly process on high-profile national issues, such as when Donald Trump promotes tariffs to boost steel makers at the expense of companies that use steel products. But most of this nonsense proceeds quietly in legislative committees, without garnering any headlines or vocal opposition.
One awful but illustrative example popped up recently in the California state Capitol. Assembly Bill 2246, by Assemblywoman Laura Friedman, D-Glendale, apparently is part of a national effort by rental-car companies to snuff out a burgeoning industry that just happens to be threatening its business model. The bill would redefine “personal vehicle sharing” companies as “car rental companies” — and then slam them with reams of new regulations. Similar measures have been proposed in Idaho, New Hampshire, Maryland and Maine.
Rental-car companies are facing the same challenges as other established business models in this internet and app-based age. Capitalism — the real sort — is defined by “creative destruction,” as economist Joseph Schumpeter called it. New companies are free to offer better products and services that appeal to customers. This is creative as new ideas flourish and consumers get a broader choice and lower prices thanks to competition. But it’s also destructive. Complacent old companies suddenly are forced to improve their offerings or shut their doors. The consumer is king.
For example, I recently grabbed a taxicab rather than my usual Uber and noticed the oddest thing. The cabbie had a modern app-based system for taking my credit-card payment. Until recently, paying by credit card was a hassle because cab services didn’t really want to take your card. I’ve also noticed a fleet of nice new cabs around my city. And the cab I took even sent an email with a receipt and a rating system. Sound familiar?
April 6, 2018
Kevin Williamson fired for expressing a view shared by at least 40% of Americans
Katherine Mangu-Ward responds to Williamson’s short tenure at The Atlantic after they found themselves shocked and horrified when it was discovered that he really was an outspoken anti-abortion conservative:
Williamson expressed the view that abortion is murder and should be punished to the full extent of the law (although he also later indicated that he has mixed feelings about capital punishment). I do not share his view. But by declaring Williamson to be outside the Overton window of acceptable political discourse because he believes strongly that abortion is a serious, punishable crime, The Atlantic is essentially declaring that it cannot stomach real, mainstream conservatism as it actually exists in 21st century America.
Williamson uses colorful and sometimes rash language. He didn’t have to detail the grisly form of punishment he would inflict on women who decide to terminate their pregnancies. He chose to do so because he enjoys provoking a reaction. But The Atlantic knew that about him before it hired him.
[…]
It is, of course, the perfect right of The Atlantic‘s editors to publish whomever they wish. Reason staffers are all libertarian, under a big-tent understanding of that term (not to brag, but we are repping the pro-life view). That’s written into our mission as a magazine. But if The Atlantic purports to capture a broad spectrum of American political views, Williamson’s firing is a sign that it hasn’t yet figured out how to do so. And the reader outcry against him (and his rightish heterodox kinfolk at The New York Times) is a sign of a market that has grown increasingly squeamish about a genuinely inclusive journalistic vision.
I have personally been the beneficiary of this doublethink on ideological diversity for years. When institutions recognize the need to have a nonliberal somewhere in their midst, they look across the landscape and discover that the closest thing to conservatism that they can tolerate is a relatively mild-mannered, young(ish), female, pro-choice libertarian. Which is to say, not a conservative at all.
The Atlantic publishes lots of interesting heterodox voices, of course. And I’d like to think I do provide ideological diversity in situations where I’ve been called in. But putting me on a panel is not nearly the same thing as giving the conservative side of the American political spectrum a hearing.
April 5, 2018
Amtrak decides to abandon one of its few profitable sidelines
Kevin Keefe discusses the recent Amtrak announcement that it will be discontinuing support for private railcar movements on Amtrak trains:
Amtrak’s announcement last week that it intends to shut down most of its haulage of private cars and its support for special trains was a stunner. Within hours, hundreds or perhaps thousands of people working in the heritage end of railroading scrambled to react.
It hasn’t taken long for a credible protest movement to take root. An official objection was made to Amtrak on behalf of the American Association of Private Car Owners, and a similar move is expected from the Rail Passenger Car Alliance. Railfan social media has erupted with protest exhortations. As of this morning, more than 7,000 people have signed a petition at change.org.
Meanwhile, in this moment of limbo, a number of plans have been put on hold. The Fort Wayne Railroad Historical Society has postponed ticket sales for its September 15-16 “Joliet Rocket” trips on Chicago’s Metra, featuring Nickel Plate 2-8-4 No. 765. The operators of West Virginia’s famed New River Train fall foliage trips — a 51-year tradition — are faced with closing up shop. Like all private-car owners, the Washington, D.C., Chapter, NRHS, might wonder when its heavyweight Pullman Dover Harbor might once again turn a wheel. Countless other organizations face the same dilemma.
In announcing the new policy, Amtrak President and CEO Richard Anderson cited three main reasons why the company feels this move is necessary: operational distractions from providing for special moves, a failure to capture “fully allocated profit margins,” and delays to paying customers on scheduled trains.
One thing Anderson didn’t mention in his announcement, but should have: the subsidy the American taxpayer gives to prop up his corporation every year. In 2017, that largesse amounted to $1.495 billion.
Anderson’s complaints about the effects of special moves are specious. Amtrak has plenty of “operational distractions,” but most of them have little to do with factors related to private cars or special trains, the grateful operators of which strive mightily to make their moves seamless. As for delays, why isn’t Anderson pointing the finger at the real culprits, some of their Class I partners for whom delaying a passenger train is second nature? As for relative profitability, if it’s true that the “special trains” business operates in the black, how can Amtrak walk away from it? Where else does Amtrak make a profit?
March 31, 2018
QotD: Workshops and how to avoid them
Kingsley Amis, a man whom, for reasons neither interesting nor publishable, I did not much admire, once said that the word “workshop” summed up all that was wrong with the modern world. He was right, and his comment was both shrewd and prescient. Courses, conferences, away-days, workshops, team-building weekends – they’re all part of the same pathology, and they’ve spread like bacteria on agar gel.
With a regularity bordering on the boring, from many sources, I receive flyers offering me courses to improve myself. I am far from supposing that I cannot improve or be improved, but most of these courses seem more designed to relieve me of money than anything else. They come with pictures of the course leaders (or trainers), happy and smiling and, to my eyes at least, deeply crooked.
A learned journal to which I subscribe always arrives with invitations to courses and conferences. Some, naturally, are of interest: those given by people who are acknowledged experts in their field, and who will provide a convenient digest of the latest research in it. But a high proportion of them are about what one might call para-work: activity that has nothing, or something only very tangential, to do with the ostensible aims of one’s profession.
Theodore Dalrymple, “Workshops and why you must avoid them”, The Social Affairs Unit, 2009-11-18.
March 29, 2018
March 28, 2018
QotD: Rent-seeking through “health concern” trolling
Producers too often shamelessly use whatever excuses are at hand to justify their prodding the state to prevent consumers from patronizing rival producers. Trumped-up health ‘concerns’ are a prominent set of easy excuses when the good in question is food or drink. “Those foods offered by our rivals are likely to kill or injure our beloved consumers!” cry rent-seeking producers, feigning an overriding concern for the health of the public. “For the health of our citizens, our rival producers must be stopped from selling their foul foods in our market!” Conveniently, of course, when such restrictions are implemented the favored producers no longer must compete as vigorously for consumers’ patronage. (Question: What does diminished competition do to producers’ incentives to maintain the safety of the foods they sell to the public?)
Anyway, here’s a history lesson: today’s expressed concerns about the safety of genetically modified foods and the calls for governments to restrict consumers’ freedom to buy these foods are, in their essence, nothing new. In the late-19th century similar ‘concerns’ over the safety of American beef and pork were used by some beef and pork producers to sic state restriction on rival beef and pork producers. European ranchers and farmers, disliking the competition from American ranchers and farmers, played the safety card as means of securing protection from their American rivals. Likewise within the U.S.: local butchers and local slaughterhouses throughout the U.S. played the same safety card as a means of securing protection from the upstart and wildly successful Chicago meatpackers such as Swift and Armour. That this safety card was illegitimate – that is, that charges of unsafe beef and pork were unwarranted – doesn’t matter if enough people believe the charges. The widely believed myth of dangerous foods enables the state to protect powerful producers from competition.
Cronyism and rent-seeking are nothing new. But they are perhaps becoming more widespread as the scope of state involvement in private affairs expands.
Don Boudreaux, “If Only We Could Be Protected From the Disease of Rent-Seeking”, Café Hayek, 2016-07-14.
March 27, 2018
Metrics are merely a tool. Like any tool they can be misused.
A big problem with depending on metrics is finding things to count that are actually useful measurements of whatever you’re tracking. A lot of bad management decisions can be traced to poorly chosen metrics. As a general rule, just because something can be measured doesn’t automatically mean that measurement will be useful. Tim Harford reviews a recent book on metrics:
Jerry Z Muller’s latest book is 220 pages long, not including the front matter. The average chapter is 10.18 pages long and contains 17.76 endnotes. There are four cover endorsements and the book weighs 421 grammes. These numbers tell us nothing, of course. If you want to understand the strengths and weaknesses of The Tyranny of Metrics you will need to read it — or trust the opinion of someone who has.
Professor Muller’s argument is that we keep forgetting this obvious point. Rather than rely on the informed judgment of people familiar with the situation, we gather meaningless numbers at great cost. We then use them to guide our actions, predictably causing unintended damage.
A famous example is the obsession, during the Vietnam war, with the “body count” metric embraced by US defence secretary Robert McNamara. The more of the enemy you kill, reasoned McNamara, the closer you are to winning. This was always a dubious idea, but the body count quickly became an informal metric for ranking units and handing out promotions, and was therefore often exaggerated. Counting bodies became a risky military objective in itself.
This episode symbolises the mindless, fruitless drive to count things. But it also shows us why metrics are so often used: McNamara was trying to understand and control a distant situation using the skills of a generalist, not a general. Muller shows that metrics are often used as a substitute for relevant experience, by managers with generic rather than specific expertise.
Muller does not claim that metrics are always useless, but that we expect too much from them as a tool of management. For example, if a group of doctors collect and analyse data on clinical outcomes, they are likely to learn something together. If bonuses and promotions are tied to the numbers, the exercise will teach nobody anything and may end up killing patients. Several studies have found evidence of cardiac surgeons refusing to operate on the sickest patients for fear of lowering their reported success rates.
March 22, 2018
QotD: “Sustainability”
Today on the radio I heard an ad for a DC-area supermarket chain that boasts that it now has on sale – as in, selling for a reduced price – “sustainably farmed fish.”
I really dislike the word “sustainable” (and all of its variations) as used today to signal holier-than-thou environmental ‘awareness.’ As Robert Solow said about this concept,
It is very hard to be against sustainability. In fact, the less you know about it, the better it sounds.
But advertising “sustainably farmed fish” – implying, as it does (rather bizarrely), that unsustainably farmed fish are common – is especially annoying. While the absence of property rights in oceans and other large bodies of water, and in uncaught fish, might well lead to overfishing (that is, to a genuinely unsustainable manner of acquiring fish for human consumption), the very essence of a fish farm implies property rights in the fish stocks. And where there are property rights there is sustainability. A fish farmer is no more likely to allow his stock of fish to be depleted than is the owner of Triple Crown winner American Pharaoh to allow his horse to be slaughtered for sport, or than are you to allow the cost of motor oil to prevent you from ever changing the oil in your car.
[…]
It’s depressing that those people who today are most likely to worry about resources being “unsustainable” – people who are most likely to prattle publicly about “sustainability” – are those people who also are most likely to disparage private property rights and to argue for government policies that weaken and attenuate such rights. Such people are those who are most likely to wish to further collectivize the provision not only of environmental amenities such as park space and animal conservation, but also of health care, of education, of housing, and of a host of other private goods and services. Such people also are those who are most likely to protest prices made higher by market forces, and to applaud rent-control and other government-imposed price ceilings on a variety of consumer goods and services.
In short, the people who today howl most frequently and loudly for “sustainability” are those who most frequently and loudly oppose the legal and economic institutions – private property and market-determined prices – that alone reliably promote genuine sustainability.
Don Boudreaux, “‘Sustainability’ is Fishy”, Café Hayek, 2016-07-26.
March 20, 2018
QotD: “Trade-adjustment assistance”
So-called “trade-adjustment assistance” sounds lovely, but this sound is deceptive. Such ‘assistance’ is a policy of socializing losses while keeping gains privatized – which means, therefore, that it is a policy that creates moral-hazard problems. More generally […] the economic and ethical case against trade-adjustment assistance is fraudulent because there is nothing unique about international trade in destroying particular jobs, businesses, and industries. Why should the worker who loses his job in the steel factory to increased imports of steel receive government assistance while the worker who loses her job in the aluminum factory to increased domestic production of carbon-fiber materials be denied such assistance? There is no good reason to treat the two cases differently.
Neither worker is entitled, economically or ethically, to any such ‘assistance.’
Of course, someone might argue that both of these workers should receive government assistance. Apart from such a policy intensifying moral-hazard problems (“Is your firm’s bankruptcy really due to changing patterns of economic activity rather than to your own incompetence as a business owner?”) – and also apart from the need to give such assistance now to the many people who will lose businesses and jobs because of the resulting increase in taxes that must be raised to pay all of this ‘assistance’ (Why should workers and businesses who suffer as a result of changes in government polices be treated differently than those who suffer as a result of changes in private economic activities?) – such a policy of assistance is premised on the false and economically calamitous assumption that the ultimate goal of economic activity is to ensure the well-being of existing producers rather than to satisfy as many consumer desires as possible. The serious pursuit of any such policy would grind the economy to a standstill, and all but the powerful elite into crushing poverty.
Don Boudreaux, “Quotation of the day…”, Café Hayek, 2016-07-14.
March 19, 2018
QotD: Unintended consequences, recycling division
The hallmark of science is a commitment to follow arguments to their logical conclusions; the hallmark of certain kinds of religion is a slick appeal to logic followed by a hasty retreat if it points in an unexpected direction. Environmentalists can quote reams [!] of statistics on the importance of trees and then jump to the conclusion that recycling paper is a good idea. But the opposite conclusion makes equal sense. I am sure that if we found a way to recycle beef, the population of cattle would go down, not up. If you want ranchers to keep a lot of cattle, you should eat a lot of beef. Recycling paper eliminates the incentive for paper companies to plant more trees and can cause forests to shrink.
Steven Landsburg, The Armchair Economist, 1993.
March 18, 2018
QotD: National flags
If you have never investigated or thought through this odd phenomenon of national anthems, it might not occur to you that it is not OK to tamper with the lyrics. There was a time not so long ago when national flag etiquette was fairly severe. Flags were seen as essentially military emblems, and their use was informed by military protocols. When flags started to be turned into clothing and ironic art in the 1960s, and were exposed to the demoralizing effects of marketed consumer kitsch in the 1970s, these developments were greeted with unease. Not so much in Canada, of course: our flag was invented as a marketing device in a time of consumerism, and it had not been used to soak up oceans of blood, so it lacks the sobering associations other flags have. It had a virgin birth. We are quite welcome to slap it onto a backpack or a truck bumper.
The point is that flags can now be visually remixed with near-total freedom by artists and designers and inserted into all sorts of contexts with relatively little discomfort. If you want to put Donald Trump in an editorial cartoon with a gore-oozing Stars and Stripes, no contemporary American will kick up too much fuss. Yet the taboos around anthems, as Remigio Pereira discovered, seem to have grown stronger. And even as someone who was instinctively furious with him, I am not quite sure how this happened, or why.
Colby Cosh, “Let’s talk about anthems”, National Post, 2016-07-14.
March 17, 2018
Toys ‘R’ Us did for toys what Borders and Barnes & Noble did for books
We have lived through the golden age of the big box store, and the less-fit are now going to the wall. Virginia Postrel looks at the history of Toys’R’ Us and how it changed the toy market:
I wasn’t a Toys ‘R’ Us kid.
By the time the big box wonderland arrived in my hometown, I was a 25-year-old business reporter living 900 miles away. So instead of conjuring up memories of dolls, bikes and video games, the chain’s imminent demise reminds me of what the world was like before it arrived: Most toys were available only around Christmas and even then the choices were limited unless you lived in a big city. We got my doll house in Atlanta.
Toys ‘R’ Us changed that. “They got a million toys at Toys ‘R’ Us that I can play with,” boasted its famous jingle. “The selection — more than 18,000 different toys in every store — is almost inconceivably vast,” wrote David Owen in a 1986 Atlantic article on the toy business. “There’s an enormous opportunity in America if you’re willing to make a commitment to inventory,” founder Charles Lazarus told him.
Indeed there was.
What Toys ‘R’ Us did for toys, Home Depot and Lowe’s did for hardware; Best Buy and Circuit City for electronics and music; Borders and Barnes & Noble for books; Bed, Bath and Beyond and Linens n’ Things for home goods; and Staples, Office Depot and Office Max for office supplies. The rise of category killers in the 1980s accustomed consumers of all ages to unprecedented variety and choice—in any season and just about any locale. In less populated areas, Walmart filled in the gaps.
By internet standards, the selection Owen termed “inconceivably vast” now looks paltry. “I stopped by my local Best Buy to do research, and found they stock something like 30,000 different titles,” I wrote in 1999. Looking at that text today I wondered if the number was a typo. A mere 30,000? Surely there was a missing zero. Or two.
March 16, 2018
Mostly Weekly Series Finale: Creative Destruction
ReasonTV
Published on 14 Mar 2018In the final episode of the webseries, we tackle how markets make and break stuff.
—–
In free and open markets people are able to make new technologies and business models, which displace older, established ones. That process of starting new companies and jobs destroys some professions while creating others.
It’s entirely understandable that people who lose their jobs want to keep them. But industries like manufacturing, coal mining, and mall retailers aren’t dying out because of competition from China, they’re being outmoded by automation, cheaper fuel sources, and online sales.
Despite the uncertainty that markets bring, they also create new jobs and entirely new professions. There aren’t gangs of unemployed lamplighters roaming the land; their descendants became Uber drivers, social media coordinators, and webseries producers.
In the end, it’s better for everyone to look at the world as it is and to move forward than to try and halt progress through the force of law.
Mostly Weekly is hosted by Andrew Heaton with headwriter Sarah Rose Siskind.
Script by Andrew Heaton and Sarah Rose Siskind with writing assistance from Brian Sack.
Edited by Austin Bragg and Sarah Rose Siskind.
Produced by Meredith and Austin Bragg.
Theme Song: Frozen by Surfer Blood.
March 15, 2018
QotD: The self-harming reality of tariffs
Unintended harm to American companies is a recurring problem with tariffs, even those meant to protect American jobs from competition that our government deems unfair. After Bush imposed steel tariffs, steel-consuming industries pointed out that they employed far more Americans than the steel industry itself, and argued that the net effect of the policy on jobs was negative.
Anti-dumping laws, which put tariffs on foreign imports that are supposedly being sold at too low a price, usually target intermediate goods and therefore make the downstream American producers that use them less competitive. Daniel Ikenson, a trade-policy analyst at the Cato Institute, notes that the government, perversely, is forbidden by law from considering the impact of tariffs on these producers before levying the tariffs.
Then there’s the question of costs. Gary Hufbauer and Sean Lowry, a senior fellow and research associate, respectively, at the Peterson Institute for International Economics, calculated [PDF] that Obama’s tariffs on Chinese tires cost American consumers at least $900,000 for every job they saved for one year. That’s before taking account of job losses caused by lower spending by consumers on other products and by retaliatory Chinese tariffs. This very high cost per job, they point out, is consistent with research on other instances of trade protection.
In an interview, Hufbauer notes that our efforts to protect industries from competition have typically not resulted in their revival and impose extremely high costs for any jobs they save. He cites the textile and maritime industries, both of which have been protected for decades, as examples of these disappointing results.
Ramesh Ponnuru, “The High Cost of U.S. Protectionism”, Bloomberg View, 2016-07-01.
