Marginal Revolution University
Published on 23 May 2017In this video, we examine the causes behind the Great Depression with the help of the aggregate demand-aggregate supply model.
In 1929, the stock market crashed and an air of pessimism swept across America — making bank depositors nervous. What would you do if you thought your money might not be safe with the bank? You’d probably want it back in your own hands. What happened next? A run on the banks.
Along with the Stock Market Crash of 1929, it’s one of the iconic moments of the early days of Great Depression. However, the Great Depression was an incredibly complex downturn in which the economy experienced a series of aggregate demand shocks. By the end of this video, you’ll walk away with a better understanding of the many factors behind the Great Depression and how to apply the AD-AS model to a real-world scenario.
March 22, 2019
Understanding the Great Depression
February 3, 2019
The CBC, Netflix, and the questionable role of mandatory “CanCon”
Chris Selley explains why the CBC’s own shows are appearing on Netflix and how this undermines the raison d’être for government-funded CBC television:
To the vast majority of Canadians, including those who support the CBC, the idea that Netflix represents any kind of threat — and should thus be taxed or forced to carry minimum amounts of Canadian content or otherwise regulated, as various groups urge — will just seem irretrievably bizarre. Whether or not it’s a good idea, CanCon only works in a restricted market where channels broadcast specific things at specific times. Back in the day you might just find yourself bored enough to watch or listen to something you didn’t really want to, and it might just be Canadian.
No one watches anything on Netflix that they don’t want to — no one single, anyway — so there’s no earthly reason to put stuff there if people don’t want it. The irony, though, is that there’s a ton of Canadian content on Netflix, precisely because people want to watch it. And as University of Ottawa professor Michael Geist explained in a blog post on Friday, Netflix makes it very easy to find: Not only are there direct links to Canadian TV shows and films, but it algorithmically detects a user’s preference for CanCon and recommends other titles.
Goodness, just look at all the Canuck shows: Baroness Von Sketch Show, Workin’ Moms, Mr. D, Kim’s Convenience, Schitt’s Creek, Intelligence … hang on a tic, those are all CBC shows! How did those imperialist Silicon Valley pigdogs get their filthy hands on it? Because as more and more Canadians cut the cord, Netflix is a perfectly logical place for CBC and the production companies it works with to showcase their work — not just to Canada but to the world. In short, there doesn’t seem to be any problem or threat here at all, to anyone — just success, and the opportunity for more.
We cut the cord about six months ago, and haven’t missed broadcast TV in the slightest (so I hear … I wasn’t watching much TV even before then). I watch Minnesota Vikings games on DAZN and The Grand Tour on Amazon Prime, and that’s just about all my screen time (YouTube and other online video sources more than compensate).
January 31, 2019
Coming soon for Canadians – mandatory maple-flavoured search results
Michael Geist relates the ongoing efforts of ACTRA to get the federal government to mandate high visibility for Canadian content in search engines:
The escalating battle being waged for new Internet taxes to fund Canadian content does not stop with proposals for new fees on Internet access and online video services. Cultural groups also want to increase the “discoverability” of Canadian content by mandating its inclusion in search results. According to the ACTRA submission to the broadcast and telecom legislative review panel, it has been calling for search engine regulation for the past 20 years:
ACTRA stated during the 1999 CRTC process that Internet search engines would become the gateway for consumers to access the vast array of entertainment and information now available from around the world. We argued then the CRTC should regulate them.
It now argues for mandated inclusion of Canadian content in search results for cultural content under threat of economic sanction:
Regulating search engines would be difficult, but ACTRA recommends the government approach search engines like Google, Bing and others, and request they ensure Canadians are offered some Canadian choices in their search results. While it is neither possible nor appropriate to interfere in the final selection made by individuals, Canadian consumers should have a real choice, including Canadian films, television programs and music. We expect companies would concur with the government’s reasonable request to be seen as good corporate citizens. If a particular search engine does not agree to this request, the government should impose an appropriate regulatory constraint or burden, such as amending the Income Tax Act to discourage Canadians from advertising on search engines that fail to comply.
January 29, 2019
Bell Canada wants the feds to crack down on Virtual Private Networks
Michael Geist discusses some revelations from Bell’s communications with the federal government during the NAFTA negotiations:
Just days after Bell spoke directly with a CRTC commissioner in the summer of 2017 seeking to present on its site blocking proposal to the full commission, it asked Canadian Foreign Affairs Minister Chrystia Freeland to target VPNs as Canada’s key copyright demand in the trade talks. Its submission to the government stated:
The Canadian cultural industry has long been significantly harmed by the use of virtual-private-network (VPN) services, which facilitate the circumvention of technological protection measures put in place to respect copyright ownership in other jurisdictions such as Canada…When the ability to enforce rights in national markets breaks down it inevitably favours the largest markets (which become the de facto “global” market) at the expense of smaller open economies like Canada. This harms Canada both economically and culturally.
Canada should seek rules in NAFTA that require each party to explicitly make it unlawful to offer a VPN service used for the purpose of circumventing copyright, to allow rightsholders from the other parties to enforce this rule, and to confirm that is a violation of copyright if a service effectively makes content widely available in territories in which it does not own the copyright due to an ineffective or insufficiently robust geo-gating system.
This is precisely the concern that was raised in the context of the Bell coalition blocking system given fears it would expand to multi-use services such as VPNs just as a growing number of Internet users are turning to the technology to better safeguard their privacy and prevent online tracking.
In fact, the Bell submission went even further than just VPNs, urging the government to consider additional legal requirements on ISPs to enforce copyright rules:
Notice-and-notice has been a very incomplete solution to the problem of widespread digital piracy. While we do not believe it should be eliminated, the Government should explore other ways to secure the cooperation of service providers whose services are used for piracy (such as the site-blocking regimes required in Europe and also in place in many other countries throughout the world).
January 23, 2019
QotD: Regulation doesn’t scale well
A nation state is, with certain exceptions such as Kiribati, a very large entity. A modern “nanny state” is conducted on a scale beyond anyone’s comprehension. The single measure that might be good for a given town in, say, West Virginia, cannot possibly be good for another in Idaho, and adds debilitating paperwork at both ends. Meanwhile, the scale of the regulation is so great, that small family operators right across the country, lacking huge resources for lobbying and propaganda, will inevitably be scrood. For the truth is big guvmint and big bidnis interface only with each other.
David Warren, “The no-brainer chronicles”, Essays in Idleness, 2017-02-16.
January 5, 2019
Leave the Strand Alone! Iconic Bookstore Owner Pleads With NYC: Don’t Landmark My Property
ReasonTV
Published on 4 Jan 2019Leave the Strand Alone! Iconic Bookstore Owner Pleads With NYC: Don’t Landmark My Property
More from the article at Reason:
If New York City moves ahead with a proposal to landmark the home of the Strand Book Store, it would be putting a “bureaucratic noose” around the business, says owner Nancy Bass Wyden. “The Strand survived through my dad and grandfather’s very hard work,” Wyden says, and now the city wants to “take a piece of it.”
Opened by her grandfather, Benjamin Bass, in 1927, the Strand is New York City’s last great bookstore — a four-story literary emporium crammed with 18 miles of merchandise stuffed into towering bookcases arranged along narrow passageways. It’s the last survivor of the world-famous Booksellers Row, a commercial district comprised of about 40 secondhand dealers along Fourth Avenue below Union Square.
On December 4, 2018, the New York City Landmarks Preservation Commission held a public hearing on a proposal to designate the building that’s home to the Strand as a historic site. If the structure is landmarked, Wyden would need to get permission from the city before renovating the interior or altering the facade.
“It would be very difficult to be commercially nimble if we’re landmarked,” Wyden tells Reason. “We’d have to get approvals through a whole committee and bureaucracy that do not know how to run a bookstore.”
Wyden’s outrage derives in part from her family’s decades of struggle to keep the business alive.
The Strand survived, she says, because of “my grandfather and my dad’s very hard work and their passion … Both worked most of their lives six days a week” and they “hardly took vacations.”
December 1, 2018
CAFE killed the North American passenger car
The move by GM to close many of its remaining car manufacturing facilities in Canada and the US is a belated rational response — not to the market, but to the ways government action has distorted the market. In the Financial Post, Lawrence Solomon explains how, step-by-step, the CAFE rules have shifted drivers out of sedans and wagons and into minivans, pickup trucks, and SUVs:
Before the U.S. government introduced Corporate Average Fuel Economy (CAFE) standards to increase the distance cars could travel per gallon of gas, sedans and full-size station wagons were popular and SUVs were unknown. CAFE, which effectively governed the entire North American market thanks to the Canada-U.S. Auto Pact, incented manufacturers to artificially raise the cost of large passenger cars in order to favour smaller, more fuel-efficient vehicles. It soon claimed its first victim: the full-size station wagon, whose flexible interior accommodated both passenger and cargo needs, and which, at its peak, came in 62 models to satisfy different tastes.
But, although CAFE priced the station wagon out of the market, the market still demanded a vehicle that offered its flexibility. Enter Lee Iacocca, the chairman of Chrysler, who helped develop the minivan and convinced the U.S. government to deem it a truck rather than a passenger vehicle, thus exempting it from the strict CAFE standards that killed the station wagon. The minivan took off — the first 1984 model, built in Windsor, sold 209,000 its first year — followed by the SUV, which also was deemed a truck rather than a passenger vehicle. By 2000, the passenger car had less than half the market. Today it accounts for only about a third.
CAFE standards didn’t only claim certain car models as victims, they also made the whole industry a victim by making it dependent on government whims and then handouts. CAFE also distorted the market by creating credits for ethanol and electric vehicles and by creating a lobbyist’s dream through ever-changing regulations that led car manufacturers to continually game the system to favour their own vehicles over those of competitors.
Perversely, by improving mileage, CAFE also increased distances travelled and emissions of pollutants such as carbon monoxide and nitrogen oxides. The 2025 CAFE targets (since cancelled by President Trump) ran to almost 2,000 pages and were estimated to add an average of US$1,946 to the cost of a vehicle. Tax loopholes also helped accelerate SUV sales — like all light trucks, they were exempted from the gas-guzzler’s excise tax and also given preferential tax treatment as business vehicles.
November 20, 2018
Remy: The Legend of Stan Lee
ReasonTV
Published on 19 Nov 2018Remy recalls a time when experts were claiming “Hitler was a beginner compared to the comic-book industry,” and how Stan Lee took a stand.
Written and Performed by Remy
Video Produced by Meredith and Austin Bragg
Music tracks and background vocals by Ben Karlstrom
November 10, 2018
Remy: I Love L.A. (Parody)
ReasonTV
Published on 9 Nov 2018Remy updates the iconic Randy Newman anthem for 2018.
Parody written and performed by Remy
Camera and editing by Austin Bragg
Music tracks, background vocals, and mastering by Ben KarlstromReason is the planet’s leading source of news, politics, and culture from a libertarian perspective. Go to reason.com for a point of view you won’t get from legacy media and old left-right opinion magazines.
—-
LYRICSNice fall day
In L.A. County
Sitting watching all the leaves change
Temperature dipping into the low 70’s
I dress accordinglyRoll down the window
Put down the top
You know what
Maybe roll it up on second thought
That guy was higher
Than the pension of a state employeeCan’t use straws here
No fois gras here
You can’t park here
Lots of laws hereEvery toilet
Barely flushing
But the sun is shining all the time
Looks like another bill to payI love L.A.
We Love it“Definitely recommend this crystal here.
Oh and this one is our number one seller.”
“What’s that for? Anxiety?”
“No. Typhus.”
“Ah”Public school graduates
Can barely read
And when they try to park
Well this is what they seeSweet regulations
Ain’t nothing like em nowhereBeachside
We love itMountainside
We love itRiverside
We…eh….Fixed streets
We love em
We love L.A.“Unfortunately I’ll have to fail your restaurant.
I found a rat in the kitchen.”
“That wasn’t a rat that was my, uh,
emotional support rodent.”
“Well why didn’t you say so!”“And this right here is a great hemorrhoidal crystal.
Uranus is in retrograde.”I love L.A.
We love it
November 7, 2018
Quebec cabbies sue provincial government for declining revenues and lost capital cost due to Uber competition
William Watson makes the argument that it’s the ripped-off taxi customers who should be suing, not the cabbies:
There are at least two problems with the court case, one technical, one regarding fairness. The technical one: Cabbies want compensation for both declining revenue and the capital loss on their permits. But that’s double-counting. The permit is an entitlement to earn the revenues. Its value falls only because expected revenues have fallen. Give operators one or the other, if the law eventually says you must, but not both. They can have their compensation but not eat it, too.
The fairness question concerns where the taxi cartel’s surplus came from all these years, which is no mystery: It came from taxi users. But what are we, chopped liver? Why don’t we start a class action suit of our own to get back all the money ripped off from us over decades of artificially restricted taxi supply?
Basic fairness would certainly require that. Unfortunately, the law may not. The taxi drivers’ case against the government is that, despite statutes on the books about needing a taxi permit in order to provide taxi services, when Uber came along the government decided not to enforce the law. That created two classes of taxi driver: Uber drivers, whom the government turned a blind eye to, and regular taxi drivers, whom it continued to subject to close regulation. That double standard was an unfairness, yes, but a minor one compared to the long-lasting aggravated rip-off of consumers.
Bottom line: Taxi drivers lobby for and get a law allowing them to overcharge their customers. When in a bout of good policy sense (a “Taxi Spring” you might say) the government decides not to enforce it, the taxi drivers set about suing taxpayers instead. However unfair that may seem — and it’s exasperating! — I suppose, in the end, supply-and-demand must take notice of the principle of rule of law.
November 4, 2018
QotD: LEED indulgences
I am not religious but am fascinated by the comparisons at times between religion and environmentalism. Here is the LEED process applied to religion:
- 1 point: Buy indulgence for $25
- 1 point: Say 10 Our Fathers
- 1 point: Light candle in church
- 3 points: Behave well all the time, act charitably, never lie, etc.
It takes 3 points to get to heaven. Which path do you chose?
Warren Meyer, “When Sustainability is not Sustainable”, Coyote Blog, 2013-07-30.
November 3, 2018
“[I]t makes no sense to punish Americans with tariffs in order to convince foreign governments to stop punishing their citizens with tariffs”
Veronique de Rugy discusses the mercantilist errors that still influence politicians and voters on free trade policies:
There are many changes to domestic policy that could help protect Americans from the predations of protectionism. For instance, when considering whether or not to grant U.S. firms “trade remedies,” such as countervailing duties, officials should have to take into account the consequences for American consumers of any tariffs they’re thinking of imposing. Policy makers aren’t currently required to do that, and one agency — the International Trade Commission—is actually forbidden from doing so.
This must change. Recent developments prove that it’s dangerous to simply assume all U.S. presidents and a critical mass of legislators will remain committed to the principles of reciprocal free trade. Buyers of imported goods or products made with imported materials — which, to be clear, is all of us — can’t depend on the economic acumen of the policy makers deciding whether or not to impose tariffs. Instead, consumer protections need to be built into the regulatory process. Because there are virtually always more workers in consuming industries downstream of the trade barrier than there are in the sector receiving the protection, a requirement to take the harm to consumers into consideration would make it very hard to impose protectionist policies.
Some free trade sympathizers have floated the possibility of Congress reclaiming its power to impose tariffs from the White House. Sen. Mike Lee (R–Utah), for instance, has introduced the Global Trade Accountability Act, which would require congressional approval for tariff increases or other “unilateral trade actions.” Unfortunately, if this otherwise well-designed bill became the law of the land, it would be akin to guarding the hen house with a hungry dog instead of a fox.
An extensive literature shows that moving tariff-setting policy away from Congress (and its parochial, locally focused interests) was a critical part of reducing protectionist influence in Washington. President Trump is terrible on this issue, but in general, a president is more likely than are members of Congress to consider the interest of the entire country — and, hence, to support broad trade liberalization.
November 2, 2018
Operation Choke Point
In Forbes, John Berlau details how expansive regulatory powers and vindictive bureaucrats make doing business in the United States less “free enterprise” and more “shame if something were to happen to it”:
Every Halloween, there exists the temptation for bloggers, pundits, and commentators to describe routine events in the news with adjectives like “scary” and “frightening.” Sensitive to sounding clichéd or inflammatory, I try usually to avoid using such terminology in my descriptions of the policy process.
Yet after reading through new documents introduced into a lawsuit stemming from the Obama administration’s “Operation Choke Point,” I find that “scary” and “frightening” actually fit. These documents show that powerful bank regulatory agencies engaged in an effort of intimidation and threats to put legal industries they dislike out of business by denying them access to the banking system.
While I am often outraged about things the government does, now I am truly scared and frightened about the ability of government bureaucrats to shut down arbitrarily whole classes of businesses they deem to be “politically incorrect.” As one who champions the FinTech sector and the benefits it can bring, I also worry that such powers may be uses to shut down innovative new industries, such as cryptocurrency, that carry some perceived or real risks.
Choke Point was a multi-agency operation in which several entities engaged in a campaign of threats and intimidation to get the banks that they regulate cut off financial services – from providing credit to maintaining deposit accounts — to certain industries regulators deemed harmful a bank’s “reputation management.” The newly released documents – introduced in two court filings in a lawsuit against Choke Point — show that the genesis of Choke Point actually predated Barack Obama’s presidency, and began when President George W. Bush was in power.
[…]
When the Obama administration came into power, the FDIC would expand the definition of “reputation risk” even further, and other federal agencies, bureaus, and departments would soon jump on the proverbial bandwagon. Much of Operation Choke point would again be accomplished by “guidance documents,” which my Competitive Enterprise Institute colleague Wayne Crews refers to as “regulatory dark matter,” since they have legal force but allow regulators to bypass the sunlight of the notice-and-comment process of a formal rule.
In 2011, an FDIC guidance document featured a chart of business categories engaged in what it called “high-risk activity.” These included “dating services,” “escort services,” “drug paraphernalia,” “Ponzi schemes,” “racist materials,” “coin dealers,” “firearm sales,” and “payday loans.” The FDIC would post this and similar lists in other guidance documents and on its web site.
A staff report of the House Government Reform and Oversight Committee puzzled over many of these categories. “FDIC provided no explanation or warrant for the designation of particular merchants as ‘high-risk,’” the report observed. “Furthermore, there is no explanation for the implicit equation of legitimate activities such as coin dealers and firearm sales with such patently illegal or offensive activities as Ponzi schemes, racist materials, and drug paraphernalia.”
October 28, 2018
QotD: Revolutionary price controls and the plight of Washington’s army at Valley Forge
By the end of 1775, Congress had already increased the nation’s money supply by 50 percent in less than a year, and state paper issues had already begun in New England. The Congressional Continental bills followed what was to become a sequence all too familiar in the western world: runaway inflation. As paper money issues flooded the market, the dilution of the value of each dollar caused prices in terms of paper money to increase; since this included the prices of gold, silver, and foreign currencies, the value of the paper money declined in comparison to them. As usual, rather than acknowledge the inevitability of this sequence, the partisans of inflationary policies urged further accelerated paper issues to overcome the higher prices and searched for scapegoats to blame for the price rise and depreciation. The favorite scapegoats were merchants and speculators who persisted in doing the only thing they ever do on the market: they followed the push and pull of supply and demand. In another familiar attempt to deal with the problems of inflationary intervention, they outlawed the depreciation of paper, or the rise of prices.
[…]
State and local governments presumed to know what market prices of the various commodities should be, and laid down price regulations for them. Wage rates, transportation rates, and prices of domestic and imported goods were fixed by local authorities. Refusing to accept paper, accepting them for less than par, charging higher prices than allowed, were made criminal acts, and high penalties were set: they included fines, public exposure, confiscation of goods, tarring and feathering, and banishment from the locality. Merchants were prohibited from speculating, and thereby from bringing the needed scarce goods to the public. Enforcement was imposed by zealots in local and nearby committees, in a despotic version of the revolutionary tradition of government by local committees.
Price controls made matters far worse for everyone, especially the hapless Continental Army, since farmers were thereby doubly penalized: they were forced to sell supplies to the army at prices far below the market and they had to accept increasingly worthless Continentals in payment. Hence, they understandably sold their wares elsewhere; in many cases, they went “on strike” against the whole crazy-quilt system by retiring from the market altogether and raising only enough food to feed themselves and their own families. Others reverted to simple barter.
Murray N. Rothbard, Conceived In Liberty, Volume IV, 1979.
October 19, 2018
Ontario’s lack of retail cannabis stores – “What have they been smoking at Queen’s Park?”
In the Financial Post, William Watson points out the weirdness of Ontario’s decision to delay the opening of legal cannabis stores until next Spring:
For several years now, dozens of dispensaries have been operating quite openly. (They call themselves dispensaries to further the narrative that, like your grandmother’s rye, marijuana is for medicinal purposes.) Only now, with pot use becoming legal, are these dispensaries being shut down — although Toronto’s chief of police says not right away, as he doesn’t have [the] person power to do it all at once.
If they don’t shut down, they may forfeit their chance at a licence to sell pot legally once licensed retail operations do finally start in the province on (when else?) April 1st of next year — 166 days after legalization. Why would they not be granted a licence? Not because they trafficked in marijuana when its use was strictly illegal, if seldom prosecuted. But because they continued to traffic in marijuana after it became legal but before the government gave them a licence, an offence that will be prosecuted slowly, if at all.
Silly me. I thought marijuana legalization would simply say that after a certain date the police wouldn’t arrest you for having such-and-such an amount of marijuana in your possession. End of story.
[…]
Countrywide, as the Financial Post’s Vanmala Subramaniam recently reported, a big roadblock to timely legal supply has been the need to seal products with federal excise revenue stamps. But there’s only one supplier and the stamps come without adhesive. Stamps! In 2018!
In American movies of the 1930s and 1940s, moonshiners and bootleggers waged war against “revenuers,” federal agents charged with levying excise taxes on booze. It seems the revenuers have now taken charge of Canada’s marijuana industry. You might plausibly argue that the former illegal market operated in the interests of consumers. There seems little doubt the new legal market will operate in the interest of governments, their unions and their revenue departments.
When cops did enforce the country’s no-toking laws, they could plausibly tell themselves they were doing it to protect young people and other innocents. Now when they enforce the laws they’re doing it to protect legally privileged producers against producers who find themselves offside with often arbitrary licensing laws. Protecting kids was one thing. Protecting cartels is quite another.
