When oil prices are high there is a rush of investment into oil based enterprises from multi-nationals to frackers. No bad thing but there is always a real danger of over investment leading to the exploitation of very marginal resources. A lower oil price will strand some of that investment and, just as importantly, postpone a great deal of it. Which frees up investment for other, potentially more useful, purposes.
The second thing which happens is that governments become addicted to the joys of relatively painless oil royalties. This looks like revenue but, because it is drawn from a diminishing resource, is actually a rather dangerous drawing down of capital. A lot of oil “revenue” is seen as general revenue and is spent on non-capital expenditures. With a booming oil sector governments are tempted to think the exaggerated revenues are available for general expenses and will continue to be. Which means that government budgets are set based on a purely extractive draw down of a province’s or nation’s capital. This is a poor idea.
Not to take anything away from the bright guys who are fracking and mining their way to oil fortunes, the reality is that extracting oil does not leave much in the way of useful, secondary industry, much less innovation. Which, in turn, means that when the oil is no longer profitable to extract there is no residual, non-oil, economy left behind. If a government spends the oil revenue as it comes in, or worse uses it to secure loans, when the oil revenue dries up there is nothing to cover the spending or the debt.
[…]
The golden lining of additional pressures on nasty states like Russia, Iran and Venezuela is likely not as significant as the prevention of malinvestment and governmental squander. In time, as various emerging economies continue to grow, demand will drive the price of oil upwards again. With luck investors and governments will not make the same mistakes twice.
(One unalloyed good arising from the collapse of the price of oil is that so called clean energy renewables like wind and solar look even sillier with their present technology. I suspect wind will always make zero economic sense; I have more hope for photo voltaic solar as new materials promise significantly higher efficiency. And those same materials in a different configuration promise radical gains in battery efficiency for that daily occurrence known as darkness. Again, a low oil price will dampen the insane over investment in these marginal technologies.)
Jay Currie, “Oil Wars”, Jay Currie, 2014-01-03
January 16, 2015
QotD: The impact of lower oil prices
January 15, 2015
Why the EFF can’t do an iPhone version of their mobile app
Last week, the Electronic Frontier Foundation‘s Corynne McSherry had to break the sad news to Apple iPhone users that due to Apple’s incredibly restrictive developer rules, the EFF cannot produce an iPhone version of their mobile app:
As we have been saying for years now, the [Apple] Developer Agreement is bad for developers and users alike. Here are a few of the terms that we are worried about:
Ban on Public Statements: Section 10.4 prohibits developers from making any “public statements” about the terms of the Agreement. This is particularly strange, since the Agreement itself is not “Apple Confidential Information” as defined in Section 10.1. So the terms are not confidential, but developers are contractually forbidden from speaking “publicly” about them.
Ban on Reverse Engineering: Section 2.6 prohibits any reverse engineering (including the kinds of reverse engineering for interoperability that courts have recognized as a fair use under copyright law), as well as anything that would “enable others” to reverse engineer, the software development kit (SDK) or iPhone OS.
App Store Only: Section 7.3 makes it clear that any applications developed using Apple’s SDK may only be publicly distributed through the App Store, and that Apple can reject an app for any reason, even if it meets all the formal requirements disclosed by Apple. So if you use the SDK and your app is rejected by Apple, you’re prohibited from distributing it through competing app stores like Cydia.
No Tinkering with Any Apple Products: Section 3.2(e) is the “ban on jailbreaking” provision that appears to prohibit developers from tinkering with any Apple software or technology, not just the iPhone, or “enabling others to do so.”
Apple Owns Your Security: Section 6.1 explains that Apple has to approve any bug fixes or security releases. If Apple does not approve such updates very quickly, this requirement could put many people in jeopardy.
Kill Your App Any Time: Section 8 makes it clear that Apple can “revoke the digital certificate of any of Your Applications at any time.” Steve Jobs once confirmed that Apple can remotely disable apps, even after they have been installed by users. This contract provision would appear to allow that.
We have some other concerns as well, but these top the list.
January 13, 2015
The mess over the new copyright rules was avoidable
Michael Geist says that the fiasco with the new Canadian copyright notice scheme was not necessary and that the minister should have paid closer attention:
Last week I posted on how Rightscorp, a U.S.-based anti-piracy company, was using Canada’s new copyright notice-and-notice system to require Internet providers to send threats and misstatements of Canadian law in an effort to extract payments based on unproven infringement allegations. Many Canadians may be frightened into a settlement payment since they will be unaware that some of the legal information in the notice is inaccurate and that Rightscorp and BMG do not know who they are.
The revelations attracted considerable attention (I covered the issue in my weekly technology law column – Toronto Star version, homepage version), with NDP Industry Critic Peggy Nash calling on the government to close the loophole that permits false threats. Nash noted that “Canadians are receiving notices threatening them with fines thirty times higher than the law allows for allegedly downloading copyrighted material. The Conservatives are letting these companies send false legal information to Canadians in order to scare them into paying settlements for movies or music no one has even proved they’ve actually downloaded.”
With the notices escalating as a political issue, Jake Enright, Industry Minister James Moore’s spokesman, said on Friday the government would take action. Enright said that “these notices are misleading and companies cannot use them to demand money from Canadians”, adding that government officials would be contacting ISPs and rights holders to stop the practice.
Rumour confirmed – Guild Wars 2 expansion coming
NCSoft, the Korean company that owns ArenaNet has registered a trademark for a Guild Wars 2 expansion called Guild Wars 2: Heart of Thorns. Here’s the Reddit thread.
January 12, 2015
Virginia Postrel on “the power of seemingly trivial inventions to utterly transform our notion of ‘normal’ life”
In The Weekly Standard, Virginia Postrel reviews Packaged Pleasures by Gary S. Cross and Robert N. Proctor:
Toward the end of the nineteenth century, a host of often ignored technologies transformed human sensual experience, changing how we eat, drink, see, hear, and feel in ways we still benefit (and suffer) from today. Modern people learned how to capture and intensify sensuality, to preserve it, and to make it portable, durable, and accessible across great reaches of social class and physical space.
Eating canned peaches in the winter, buying a chocolate bar at the corner newsstand, hearing an opera in your living room, and immortalizing baby’s first steps in a snapshot all marked a radical shift in human experience. Replacing scarcity with abundance and capturing the previously ephemeral — these mundane pleasures defied nature as surely as did horseless carriages.
It’s a keen insight and a valuable reminder of the power of seemingly trivial inventions to utterly transform our notion of “normal” life. Cross and Proctor carry their theme through chapters on cigarettes, mass-market sweets (candy, soda, ice cream), recorded sound, photographs and movies, and amusement parks. The somewhat eccentric selection reflects the authors’ scholarly backgrounds. In his previous work, Cross, a historian at Penn State, has focused primarily on childhood and leisure, which presumably explains the amusement parks. Proctor, a historian of science at Stanford, has written extensively on tobacco and cancer, including in his Golden Holocaust: Origins of the Cigarette Catastrophe and the Case for Abolition (2012).
The authors are at their best when showing how incremental improvements cumulate to create dramatic technological and cultural changes. They start with the packaging itself. “Industrial containerization,” they write, “made it possible to distribute foods throughout the globe; think only of what it would be like to live in a world without tin cans, cardboard cartons, and bottled drinks.” The “tubularization” represented by cylinders such as cigarettes, tin cans, and soda bottles (not to mention lipsticks and bullet shells) transformed manufacturing and marketing as well as distribution, giving producers easily fillable containers that could be labeled, branded, and advertised.
Historians unduly slight packaging technologies, the authors suggest, because “tubing the natural world” developed so gradually. Although the metal can dates back to 1810, it took nearly a century of refinements in stamping, folding, and soldering to achieve the design that changed the world: the “sanitary can,” which used crimped double seams and no interior solder to create an airtight seal. This was the design, Cross and Proctor write, that “allowed a wide range of tinned food to reach urban populations, especially as rival processors introduced ever-cheaper and more attractive foodstuffs festooned with colorful labels and catchy brand names.”
The oldest game … as a video game
Elizabeth Nolan Brown on an interesting video game in development:
First, choose your city: Toronto, Vancouver, or Montréal. Next, decide whether avatar Andrea (Andréa, if you chose Montreal) will work on the streets, in a massage parlor, or as an escort. Then try to get screwed literally without being figuratively fucked by the cops—an ultimately no-win situation when it comes to The Oldest Game. Developed by a team of Canadian academics, the project is meant to highlight how the country’s new prostitution law, C-36, makes life more difficult and dangerous for Canadian sex workers.
The law, which took effect in December 2014, “continues to criminalize various aspects of sex work, often removing safeguards and strategies that place sex workers in dangerous situation, placing at risk the very vulnerable people the bill ostensibly exists to protect,” note the game’s creators.
Through various encounters with clients, colleagues and law enforcement in three difference Canadian cities, players will experience how the legislation changes the way sex workers live and work, and play through the additional challenges sex workers will face when trying to remain safe.
Sandra Gabriele, a Concordia communications professor and one of the project’s co-leads, is interested in using games as a form of journalism.
Published on 10 Dec 2014
On December 6th 2014 (the National Day of Remembrance and Action on Violence Against Women in Canada), Bill C-36 officially came into force. Replacing Canada’s previous laws on sex work, which were struck down as unconstitutional on On December 20th, 2013, the new bill have drawn a great deal of criticism for placing sex workers at even greater risk than they faced under the old legislation. The Oldest Game, a newsgame about sex work developed at Concordia University in Montreal QC, demonstrates how Bill C-36 will impact the lives of sex workers in Canada. Developed by Lisa Lynch, Sandra Gabriele, Amanda Feder, Martin Desrosiers, Stephanie Goddard, Ben Spencer, Esther Splett and Natalie Zina Walschots. Follow is on Twitter at @The OldestGame and visit our website, http://www.theoldestgame.com !
January 11, 2015
Is more immigration the answer? It depends on how you frame the question
Jay Currie looks at one of the traditional way of looking at the benefits of immigration — as providing society with workers who will “do the jobs Canadians/Americans won’t do” and wonders if that’s actually true in today’s increasingly technological world:
The elite refrain seems to be that if we want to maintain our welfare system, pensions, healthcare and the like we have simply no choice but to import drafts of tax serfs to make up our declining numbers. Is that true?
Here are a few ideas to extend the independence of the Boomers and reduce the need for immigrants at any cost.
- Postpone retirement to 70 or even 75: the boomers parents are extending life expectancy rapidly. 90 is the new 70. Greater activity, a keener sense of healthy life style choices and, as Doug Coupland put it, “Vitamin D and baby aspirin and (mum’s) going to live forever.” Boomers are nuts to be thinking of retirement at 60 unless they really are too sick to work. So don’t. Pushing back the retirement and pension ages saves a lot of pension money and reduces the need to bring in more people.
- Have more children. Not something the boomers can do but our kids can and should. But to do this we need a lot of very family friendly policy. Income splitting is a cute idea but hardly a huge incentive to family formation. Big tax deductions for kids number three, four and five could help a bit. But those are governmental changes.
[…]
- Where possible transfer wealth early. There are a lot of older boomers whose parents have died and left good big whacks of dough. And those same boomers are coming to the end of their mortgages. Here is a hint: offer your kids some money. And not, ideally, as a loan. An outright gift is more useful. Don’t tie it to real estate either. There is going to be a massive correction in Canadian real estate but even if there wasn’t tying a gift to what is usually a debt and endless expense is a poor idea.
[…]
- Build houses and condos which can adapt to the changing needs and means of families. Everything from in-law suites to legally easy house splitting needs to be done to drive down the price of housing in Canada. Yes there is a correction coming but that does not change the fact there are many cities where housing is unaffordable. Build rental housing for families. Build up market rental housing. Encourage density. Make it possible to rent with a 1/5 of your average income rather than 1/2.
- Use technology in place of people. A lot of the jobs “Canadians just will not do” should not be done at all by anyone. From self cleaning toilets – already done in Japan – to robotic floor cleaners and fast food “servers” there are lots of jobs which can and will be done by robots. Pushing that sort of technology will reduce the need for more immigrants.
[…]
If you actually look at those numbers seriously and, instead of 10% use 5%, you’ll see that 900,000 low skill jobs are going to get eaten by robots and IT over the next decade. 90,000 a year. Now, look at the naturalized Canadian number for 2014 again 260,000. If half our new citizens are entering the labour force that is 130,000 new workers per year in an economy which will be shedding 90,000 jobs per year. Does that make any sense at all?
January 10, 2015
The four kinds of healthcare spending
Megan McArdle explains why healthcare costs more than you think it should:
Milton Friedman famously divided spending into four kinds, which P.J. O’Rourke once summarized as follows:
- You spend your money on yourself. You’re motivated to get the thing you want most at the best price. This is the way middle-aged men haggle with Porsche dealers.
- You spend your money on other people. You still want a bargain, but you’re less interested in pleasing the recipient of your largesse. This is why children get underwear at Christmas.
- You spend other people’s money on yourself. You get what you want but price no longer matters. The second wives who ride around with the middle-aged men in the Porsches do this kind of spending at Neiman Marcus.
- You spend other people’s money on other people. And in this case, who gives a [damn]?
Most health-care spending in the U.S. falls into category three. In theory, the people who are funding our expenses — the proverbial middle-aged men in Porsches, except that they’re actually insurance executives and government bureaucrats — have every incentive to step in, cut up the charge cards, and substitute a gift-wrapped box of Hanes briefs with the comfort-soft waistband. In practice, legislators frequently intervene to stop them from exercising much cost-control. The managed care revolution of the 1990s died when patients complained to their representatives, and the representatives ran down to their offices to pass laws making it very hard to deny coverage for anything anyone wanted. Medicare cost-controls, such as the famed Sustainable Growth Rate, fell prey to similar maneuvers. The only system that exhibits sustained cost control is Medicaid, because poor people don’t vote, or exit the system for better insurance.
The result is a system where everyone complains that we spend much too much on health care — and the very same people get indignant if anyone suggests that they, personally, should maybe spend a little bit less. Everyone wants to go to heaven — but nobody wants to die.
Unfortunately, this is what cost-control actually looks like, which is to say, like people not being able to spend as much on health care. Oh, to be sure, we could achieve this end differently — instead of asking patients to pay a modest share of their own costs (the article suggests that this amount is less than 10 percent, in the case of Harvard professors) — we could simply set a schedule of covered treatment, and deny patients access to off-schedule treatments, or even better, not even tell them that those treatments exist. But people don’t like that solution either, which is why medical dramas are filled with rants about insurers who won’t cover procedures, and the law books are filled with regulations that sharply curtail the ability of insurers to ration care. And the third option, refusing to pay top-dollar for care, would be a bit tricky for Harvard to implement, given that they run exactly the sort of high-cost research facilities that help drive health-care costs skyward. Nor do I really think that the angry professors would be mollified by being given a cheap insurance package that wouldn’t let them go see the top-flight specialists their elite status now entitles them to access.
Instead, they persist in our mass delusion: that there is some magic pot of money in the health-care system, which can be painlessly tapped to provide universal coverage without dislocating any of the generous arrangements that insured people currently enjoy. Just as there are no leprechauns, there is no free money at the end of the rainbow; there are patients demanding services, and health-care workers making comfortable livings, who have built their financial lives around the expectation that those incomes will continue. Until we shed this delusion, you can expect a lot of ranting and raving about the hard truths of the real world.
January 8, 2015
Copyright is to culture what salt is to snails
Mike Masnick included a fascinating chart in this story:
What it shows is that while new books are available for sale, they quickly go out of print and are basically not available — until you get down to 1923, at which point the works are in the public domain. Think of all those works that are no longer available to buy in that major gap in the middle. Heald has since updated that research to show how serious a problem this is — and demonstrating how the arguments against letting these works into the public domain make no sense. He demolishes the arguments made by some that a public domain will be either “under” or “over” exploited (yes, both arguments are made), as neither makes much sense.
It appears that copyright is doing similar damage in Europe. At the latest Chaos Communications Congress in Germany, Julia Reda, the European Parliament member from the Pirate Party gave a talk on the state of copyright law today (you can see the video here and included a similar graphic concerning books available in Europe:
January 5, 2015
QotD: Hollywood elites and the mere bourgeoisie in the audience
… Hollywood movies are made by the elite for the elite, and that it is only with reluctance, or to pay the bills, does Hollywood turn out nutritious fare meant to please and sate the coarse palate of coarse commoners like me, as the popular blockbusters mentioned above.
I do not mean to dwell on this point, I merely ask that you, ladies and gentlemen of the jury, accept it as uncontested, since surely the counselor for the Defense of Hollywood dare not claim the actors and studios like us, want to be like us, or like what we like. Their entire claim to be an elite, and superior in taste, intellect, and moral insight to the pathetic bourgeoisie is dashed if they do not discriminate themselves from bourgeoisie tastes.
With these assumptions explicit, let us ponder the question.
Why are comic book movies better than Hollywood movies?
[…]
What is difficult is learning to appreciate and savor the artistic genius of Jack Kirby and Steve Ditko, of JRR Tolkien and CS Lewis, who wrote comic books and paperbacks, fairy stories and science fiction marketed to children. I have worked hard to lower my taste to appreciating the things as common and simple as fairy tales, and all the simple and true things under heaven. I hope one day my taste will be as coarse as that of St. Peter, who was a fisherman.
The elite of our culture have not yet shouldered that difficult task. We all know that the elite are out of touch with the tastes of the common man, but how far out of touch they are is something of a shock.
Allow me to quote from J.R.R. TOLKIEN by Jeremy Mark Robinson:
Philip Toynbee declared, in 1961, that Tolkien’s ‘childish books had passed into a merciful oblivion’, a wonderful statement, just a tad inaccurate. In 1997, The Lord of the Rings was voted the top book of the 20th century by readers in a British bookstore’s poll (Waterstone’s). 104 out of 105 stores and 25,000 readers put The Lord of the Rings at the top (1984 was second).
The results of the poll angered many lit’ry critics in the UK. Howard Jacobson, Mark Lawson, Bob Inglis, Germaine Greer and Susan Jeffreys, were among those irritated by Lord of the Rings‘ success among readers. The Daily Telegraph readers’ poll came up with the same results. The Folio Society also ran a poll (of 50,000 members), and Middle-earth was top again (Pride and Prejudice was second and David Copperfield was third).
It was Tolkien’s incredible popularity that annoyed some critics and journos. Writers are nothing if not bitchy and envious of other people’s success, and British journalists have a long tradition of knocking down anyone who’s successful. So the popularity of The Lord of the Rings served to underline many of the prejudices of the literary establishment and media in the UK:
(1) That people who liked Tolkien were geeks, anoraks, sci-fi nuts, college students, hippies, and so on.
(2) That Tolkien’s fiction was juvenile, reactionary, sexist, racist, pro-militaristic, etc.
(3) And it was badly written, simplistic, stereotypical, and so on.
(4) And it was in the fantasy genre, which was automatically deemed as lightweight, as ‘escapist’, as fit only for adolescent boys. And so on and on.
What Mr. Robinson reports of these polls is underscored and emphasized by some that film critic and conservative commentator Michael Medved mentions about movies.
Allow me again to quote, this from a talk Mr. Medved gave at Hillsdale College:
In years past, Hollywood also turned out popular and sympathetic portrayals of contemporary clergymen. Bing Crosby, Pat O’Brien and Spencer Tracy played earthy, compassionate priests who gave hope to underprivileged kids or comforted GI’s on the battlefield. Nearly all men of the cloth who appeared on screen would be kindly and concerned, if not downright heroic.
In the last ten to fifteen years mainstream moviemakers have swung to the other extreme. If someone turns up in a film today wearing a Roman collar or bearing the title “Reverend,” you can be fairly sure that he will be either crazy or corrupt — or probably both.
John C. Wright, “Supermanity and Dehumanity (Complete)”, John C. Wright’s Journal, 2014-12-13.
January 4, 2015
When companies bought into the open plan workspace model
In the Washington Post, Lindsey Kaufman recounts her experience when her workplace changed to the “open-office model”:
A year ago, my boss announced that our large New York ad agency would be moving to an open office. After nine years as a senior writer, I was forced to trade in my private office for a seat at a long, shared table. It felt like my boss had ripped off my clothes and left me standing in my skivvies.
Our new, modern Tribeca office was beautifully airy, and yet remarkably oppressive. Nothing was private. On the first day, I took my seat at the table assigned to our creative department, next to a nice woman who I suspect was an air horn in a former life. All day, there was constant shuffling, yelling, and laughing, along with loud music piped through a PA system. As an excessive water drinker, I feared my co-workers were tallying my frequent bathroom trips. At day’s end, I bid adieu to the 12 pairs of eyes I felt judging my 5:04 p.m. departure time. I beelined to the Beats store to purchase their best noise-cancelling headphones in an unmistakably visible neon blue.
Despite its obvious problems, the open-office model has continued to encroach on workers across the country. Now, about 70 percent of U.S. offices have no or low partitions, according to the International Facility Management Association. Silicon Valley has been the leader in bringing down the dividers. Google, Yahoo, eBay, Goldman Sachs and American Express are all adherents. Facebook CEO Mark Zuckerberg enlisted famed architect Frank Gehry to design the largest open floor plan in the world, housing nearly 3,000 engineers. And as a businessman, Michael Bloomberg was an early adopter of the open-space trend, saying it promoted transparency and fairness. He famously carried the model into city hall when he became mayor of New York, making “the Bullpen” a symbol of open communication and accessibility to the city’s chief.
These new floor plans are ideal for maximizing a company’s space while minimizing costs. Bosses love the ability to keep a closer eye on their employees, ensuring clandestine porn-watching, constant social media-browsing and unlimited personal cellphone use isn’t occupying billing hours. But employers are getting a false sense of improved productivity. A 2013 study found that many workers in open offices are frustrated by distractions that lead to poorer work performance. Nearly half of the surveyed workers in open offices said the lack of sound privacy was a significant problem for them and more than 30 percent complained about the lack of visual privacy. Meanwhile, “ease of interaction” with colleagues — the problem that open offices profess to fix — was cited as a problem by fewer than 10 percent of workers in any type of office setting. In fact, those with private offices were least likely to identify their ability to communicate with colleagues as an issue. In a previous study, researchers concluded that “the loss of productivity due to noise distraction … was doubled in open-plan offices compared to private offices.”
I work in the software industry and it’s been nearly 20 years since I last had a private office. Every company I’ve worked for since then has either consciously been moving in the open office direction, or unwilling to spend money to partition open space in whatever office space they had. Sometimes, I even get nostalgic for cube farms…
January 3, 2015
Last year, “a Kentucky judge did something no federal judge has done since 1932”
It’s been a very long time since a federal judge in Kentucky anywhere in the United States has struck down a “certificate of necessity” (CON) regulation:
Mighty oaks from little acorns grow, so last year’s most encouraging development in governance might have occurred in February in a U.S. district court in Frankfort, Ky. There, a judge did something no federal judge has done since 1932. By striking down a “certificate of necessity” (CON) regulation, he struck a blow for liberty and against crony capitalism.
Although Raleigh Bruner’s Wildcat Moving company in Lexington is named in celebration of the local religion — University of Kentucky basketball — this did not immunize him from the opposition of companies with which he wished to compete. In 2012, he formed the company, hoping to operate statewide. Kentucky, however, like some other states, requires movers to obtain a CON. Kentucky’s statute says such certificates shall be issued if the applicant is “fit, willing and able properly to perform” moving services — and if he can demonstrate that existing moving services are “inadequate,” and that the proposed service “is or will be required by the present or future public convenience and necessity.”
Applicants must notify their prospective competitors, who can and often do file protests. This frequently requires applicants to hire lawyers for the hearings. There they bear the burden of proving current inadequacies and future necessities. And they usually lose. From 2007 to 2012, 39 Kentucky applications for CONs drew 114 protests — none from the general public, all from moving companies. Only three of the 39 persevered through the hearing gantlet; all three were denied CONs.
Bruner sued, arguing three things: that the CON process violates the Constitution’s equal protection clause because it is a “competitors’ veto” that favors existing companies over prospective rivals; that the statute’s requirements (“inadequate,” “convenience,” “necessity”) are unconstitutionally vague; and that the process violates the 14th Amendment’s protections of Americans’ “privileges or immunities,” including the right to earn a living.
January 1, 2015
The Laffer Curve at 40
In the Washington Post, Stephen Moore recounts the tale of the most famous napkin in US economic history:
It was 40 years ago this month that two of President Gerald Ford’s top White House advisers, Dick Cheney and Don Rumsfeld, gathered for a steak dinner at the Two Continents restaurant in Washington with Wall Street Journal editorial writer Jude Wanniski and Arthur Laffer, former chief economist at the Office of Management and Budget. The United States was in the grip of a gut-wrenching recession, and Laffer lectured to his dinner companions that the federal government’s 70 percent marginal tax rates were an economic toll booth slowing growth to a crawl.
To punctuate his point, he grabbed a pen and a cloth cocktail napkin and drew a chart showing that when tax rates get too high, they penalize work and investment and can actually lead to revenue losses for the government. Four years later, that napkin became immortalized as “the Laffer Curve” in an article Wanniski wrote for the Public Interest magazine. (Wanniski would later grouse only half-jokingly that he should have called it the Wanniski Curve.)
This was the first real post-World War II intellectual challenge to the reigning orthodoxy of Keynesian economics, which preached that when the economy is growing too slowly, the government should stimulate demand for products with surges in spending. The Laffer model countered that the primary problem is rarely demand — after all, poor nations have plenty of demand — but rather the impediments, in the form of heavy taxes and regulatory burdens, to producing goods and services.
[…]
Solid supporting evidence came during the Reagan years. President Ronald Reagan adopted the Laffer Curve message, telling Americans that when 70 to 80 cents of an extra dollar earned goes to the government, it’s understandable that people wonder: Why keep working? He recalled that as an actor in Hollywood, he would stop making movies in a given year once he hit Uncle Sam’s confiscatory tax rates.
When Reagan left the White House in 1989, the highest tax rate had been slashed from 70 percent in 1981 to 28 percent. (Even liberal senators such as Ted Kennedy and Howard Metzenbaum voted for those low rates.) And contrary to the claims of voodoo, the government’s budget numbers show that tax receipts expanded from $517 billion in 1980 to $909 billion in 1988 — close to a 75 percent change (25 percent after inflation). Economist Larry Lindsey has documented from IRS data that tax collections from the rich surged much faster than that.
QotD: Henry Ford and the doubled wages – the real story
In 1913, turnover reached an unbelievable 370 percent, and Ford hired more than 50,000 people to maintain an average labor force of about 13,600. When profits swelled, he paid well for labor, creating an uproar when he doubled the basic wage to $5.00 a day, which triggered a virtual stampede of job seekers. Paying higher wages for labor was not altruistic in Ford’s eyes. Moreover, it wasn’t simply that Ford was trying to pay his workers “enough to buy back the product,” although he did preach a high-wage doctrine after the stock market crash in 1929. Rather, paying relatively high wages was, for Ford, a matter of smart business. He regarded well-paid skilled workers as important as high-grade material. By paying workers well, he effectively lowered his costs because higher wages reduced turnover and the need for constant training of new hires. (At the time, the newspapers saw Ford’s wage increase as an extraordinary gesture of goodwill.)
Mark Spitznagel, The Dao of Capital: Austrian Investing in a Distorted World, 2013.
December 31, 2014
The (awful) people of Whole Foods
Many years ago, when we lived on “the Danforth”, we were occasional patrons of “The Big Carrot”, an early retail store for the self-consciously “alternative” set. If you wanted gluten-free, or dairy-free, or fair-trade, they were almost the only game in town in the late 80s and early 90s. The selection may not have been great at times, but they did try to provide a variety of foods that you couldn’t get at the mainstream supermarkets of the day. The employees seemed to be mostly good, helpful folks, but almost to a person the customers were incredibly self-centred, self-righteous, arrogant, and intolerant. I don’t know how the staff put up with the constant childish antics and unending whining from the customers. Whole Foods is a much bigger enterprise than Toronto’s Big Carrot … and they seem to have attracted exactly the same customer base:
The problem with Whole Foods is their regular customers. They are, across the board, across the country, useless, ignorant, and miserable. They’re worse than miserable, they’re angry. They are quite literally the opposite of every Whole Foods employee I’ve ever encountered. Walk through any store any time of day—but especially 530pm on a weekday or Saturday afternoon during football season — and invariably you will encounter a sneering, disdainful horde of hipster Zombies and entitled 1%ers.
They stand in the middle of the aisles, blocking passage of any other cart, staring intently at the selection asking themselves that critical question: which one of these olive oils makes me seem coolest and most socially conscious, while also making the raw vegetable salad I’m preparing for the monthly condo board meeting seem most rustic and artisanal?
If you are a normal human being, when you come upon a person like this in the aisle you clear your throat or say excuse me, hoping against hope that they catch your drift. They don’t. In fact, they are disgusted by your very existence. The idea that you would violate their personal shopping space — which seems to be the entire store — or deign to request anything of them is so far beyond the pale that most times all they can muster is an “Ugh!”
Over the years I have tried everything to remain civil to these people, but nothing has worked, so I’ve stopped trying. Instead, I walk over to their cart and physically move it to the side for them. Usually, the shock of such an egregious transgression is so great that the “Ugh!” doesn’t happen until I’m around the corner out of sight. Usually, all I get is an incredulous bug-eyed stare. Sometimes I get both though, and when that happens, I look them square in the eye and say “Move. Your. Cart.” I used the same firm tone as Jason Bourne, with the hushed urgency of Jack Bauer and the uncomfortable proximity of Judge Reinhold. From their reaction you’d think I just committed an armed robbery or a sexual assault. When words fail them, as they often do with passive aggressive Whole Foods zombies, the anger turns inward and they start to vibrate with righteous indignation. Eventually, that pent up energy has to go somewhere, and like solar flares it bursts forth into the universe as paroxysms of rage.
