ReasonTV
Published on 26 Apr 2018The U.S. Cattlemen’s Association petitioned the USDA to declare that “meat” and “beef” exclude products not “slaughtered in the traditional manner.”
April 28, 2018
Lab-Grown Meat Is Coming to Your Supermarket. Ranchers Are Fighting Back.
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April 12, 2018
Alex Tabarrok profiled in the Washington Monthly
Alex Tabarrok is a friend-of-a-friend (does that make us “friends once removed”?) I’ve read lots of his blog posts and watched many of his videos, but I’ve never actually met him in real life, so this profile was quite interesting:
Tabarrok came by his libertarianism early. When he was growing up in Toronto, his family would debate political and ethical issues over dinner every night. One evening the Tabarroks were debating the moral value of rock and roll. “I said, ‘Well, look at this band, Rush: they even quote this philosopher Ayn Rand in their songs,’ ” he recalled recently. “My mother said, ‘Oh yeah, you’d probably like her,’ and I felt embarrassed because I was using this in an argument and I actually hadn’t read any Ayn Rand before.” Tabarrok thinks his mother probably regrets her suggestion to this day.
Tabarrok made his way to the U.S. for graduate studies at George Mason, returning there as a professor in 2002. He now directs its Center for Study of Public Choice and is the economics chair at GMU’s Mercatus Center, a research institute heavily funded by Charles Koch and cofounded by Richard Fink, a former Koch Industries executive. The center, which boasts ties to prominent right-wing groups like the American Legislative Exchange Council, funds research to promote free-market policy solutions and the rollback of regulations. (Mercatus is Latin for “market.”) The Wall Street Journal has called Mercatus “the most important think tank you’ve never heard of.”
A few years ago, Tabarrok got a new toy to play with. Until recently, there was never great data available for researchers who wanted to empirically study the effects of regulation. But, in 2014, two other Mercatus Center research fellows developed a new public-use database called RegData, which captures everything published in the Code of Federal Regulations each year. Measuring regulation has always been surprisingly tricky, because when an agency puts out a rule, it can contain any number of new individual legal requirements. RegData addresses that problem by scrubbing the Code for key words such as “shall,” “required,” and “may not.” The theory is that this more accurately measures the number of regulations than simply counting the total number of pages in the Code, as past studies tended to do. RegData also uses artificial intelligence techniques to predict which industry each regulation will affect. The upshot is that, for the first time, economists could more confidently measure federal regulations over time and by industry. In theory, that would make it easier to build the case that regulations were hurting the economy.
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April 10, 2018
Structural Unemployment
Marginal Revolution University
Published on 8 Nov 2016Unemployment comes in many forms. Sometimes, like we saw with short-term, frictional unemployment, it can actually indicate a healthy, growing economy. But what about persistent, long-term unemployment? That’s not so good.
When a large percentage of those who are considered unemployed have been without a job for a long period of time and this has been true for many years, it’s considered structural unemployment.
Structural unemployment can result from shocks to an economy that drastically alter the labor market. These shocks are not all bad – the rise of the Internet is one such example. Regardless, it can take a while for an economy to adjust to big changes.
These adjustments tend to happen faster in the United States than in Europe. This is most likely due to differences in labor regulations, and how those regulations affect a country’s ability to respond to shocks.
The United States’ employment law known as the “at-will doctrine” makes it so that an employee can quit, or an employer can fire, at any time for any reason. It’s legally much harder to terminate an employee in many European countries. This makes hiring riskier in Europe, resulting in a less dynamic labor market that isn’t able to quickly respond to shocks.
As you might guess, structural unemployment tends to count for a higher percentage of total unemployment in Europe than in the United States. This remains one of the most serious issues facing many European economies today.
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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?
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April 5, 2018
QotD: ESR’s “Iron Laws of Political Economics”
Mancur Olson, in his book The Logic Of Collective Action, highlighted the central problem of politics in a democracy. The benefits of political market-rigging can be concentrated to benefit particular special interest groups, while the costs (in higher taxes, slower economic growth, and many other second-order effects) are diffused through the entire population.
The result is a scramble in which individual interest groups perpetually seek to corner more and more rent from the system, while the incremental costs of this behavior rise slowly enough that it is difficult to sustain broad political opposition to the overall system of political privilege and rent-seeking.
When you add to Olson’s model the fact that the professional political class is itself a special interest group which collects concentrated benefits from encouraging rent-seeking behavior in others, it becomes clear why, as Olson pointed out, “good government” is a public good subject to exactly the same underproduction problems as other public goods. Furthermore, as democracies evolve, government activity that might produce “good government” tends to be crowded out by coalitions of rent-seekers and their tribunes.
This general model has consequences. Here are some of them:
There is no form of market failure, however egregious, which is not eventually made worse by the political interventions intended to fix it.
Political demand for income transfers, entitlements and subsidies always rises faster than the economy can generate increased wealth to supply them from.
Although some taxes genuinely begin by being levied for the benefit of the taxed, all taxes end up being levied for the benefit of the political class.
The equilibrium state of a regulatory agency is to have been captured by the entities it is supposed to regulate.
The probability that the actual effects of a political agency or program will bear any relationship to the intentions under which it was designed falls exponentially with the amount of time since it was founded.
The only important class distinction in any advanced democracy is between those who are net producers of tax revenues and those who are net consumers of them.
Corruption is not the exceptional condition of politics, it is the normal one.
Eric S. Raymond, “Some Iron Laws of Political Economics”, Armed and Dangerous, 2009-05-27.
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March 29, 2018
March 24, 2018
March 22, 2018
Unaccountable federal agency refuses to answer to the senator who wanted it to be unaccountable in the first place
Perhaps this is a teaching moment for Senator Elizabeth Warren, says A. Barton Hinkle:
If Massachusetts Sen. Elizabeth Warren had taken a page out of Virginia Delegate Nick Freitas’ book, she might not be in the pickle she is today.
Warren is spitting mad at Mick Mulvaney, the Office of Management and Budget director who does double duty heading up an agency whose creation Warren championed: the Consumer Financial Protection Bureau (CFPB). The CFPB’s previous director was an ideological ally of Warren. Since Mulvaney took over, Warren has ripped the agency’s decisions. Warren said Mulvaney is giving “the middle finger” to consumers, and she railed at Mulvaney’s indifferent response to the 10 (!) letters she has sent him demanding answers to more than 100 questions.
The other day she tweeted that she is giving Mulvaney “one last chance.” Yet as The Wall Street Journal points out, she has only herself to blame for her apparent impotence.
Time and again during debate over the CFPB, conservatives and libertarians warned that its powers were too great and that its accountability to the other branches of government was too limited. But that was just the way Warren and other supporters wanted things. Neither Congress nor other political forces could influence an unaccountable regulatory agency. Now Warren finds herself thwarted by the very lack of oversight she championed.
Be careful what you wish for.
[…]
Philosopher John Rawls famously invented a mechanism for doing just that: the “veil of ignorance”: If you are designing the rules for a society, you should assume that you know nothing about your place in that society. If your race, age, physical abilities, mental prowess, and so forth are all a complete mystery, then you are likely to design a political-economic system that is fair to all. Just in case you wind up at the bottom of the social pile.
Having a president who makes policy through signing statements, his “pen and phone,” and other forms of executive action, for example, seems brilliant when the opposing party controls Congress. It seems less so when the opposing party controls the White House.
Should intelligence agencies keep tabs on Islamists who might pose a threat of domestic terrorism? Then don’t be surprised if a different administration turns the focus to right-wing militias.
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February 26, 2018
QotD: Regulations in the EU
As for the idea that the individual should be as free as possible from state coercion, this is regarded as the ultimate Anglophone fetish. Whenever the EU extends its jurisdiction into a new field — decreeing what vitamins we can buy, how much capital banks must hold, how herbal remedies are to be regulated — I ask what specific problem the new rules are needed to solve. The response is always the same: “But the old system was unregulated!” The idea that absence of regulation might be a natural state of affairs is seen as preposterous. In Continental usage “unregulated” and “illegal” are much closer concepts than in places where lawmaking happens in English.
Daniel Hannan, Inventing Freedom: How the English-speaking peoples made the modern world, 2013.
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February 22, 2018
QotD: The importance of defining your terms
If you don’t understand these [gun-related] terms already, why should you care? You should care because when you misuse them, you signal substantially broader gun restrictions than you may actually be advocating. So, for instance, if you have no idea what semi-automatic means, but you’ve heard it and it sounds scary, and you assume that it means some kind of machine gun, so you argue semi-automatics should be restricted, you’ve just conveyed that most modern handguns (save for revolvers) should be restricted, even if that’s not what you meant.
It’s hard to grasp the reaction of someone who understands gun terminology to someone who doesn’t. So imagine we’re going through one of our periodic moral panics over dogs and I’m trying to persuade you that there should be restrictions on, say, Rottweilers.
Me: I don’t want to take away dog owners’ rights. But we need to do something about Rottweilers.
You: So what do you propose?
Me: I just think that there should be some sort of training or restrictions on owning an attack dog.
You: Wait. What’s an “attack dog?”
Me: You know what I mean. Like military dogs.
You: Huh? Rottweilers aren’t military dogs. In fact “military dogs” isn’t a thing. You mean like German Shepherds?
Me: Don’t be ridiculous. Nobody’s trying to take away your German Shepherds. But civilians shouldn’t own fighting dogs.
You: I have no idea what dogs you’re talking about now.
Me: You’re being both picky and obtuse. You know I mean hounds.
You: What the fuck.
Me: OK, maybe not actually ::air quotes:: hounds ::air quotes::. Maybe I have the terminology wrong. I’m not obsessed with vicious dogs like you. But we can identify kinds of dogs that civilians just don’t need to own.
You: Can we?Because I’m just talking out of my ass, the impression I convey is that I want to ban some arbitrary, uninformed category of dogs that I can’t articulate. Are you comfortable that my rule is going to be drawn in a principled, informed, narrow way?
So. If you’d like to persuade people to accept some sort of restrictions on guns, consider educating yourself so you understand the terminology that you’re using. And if you’re reacting to someone suggesting gun restrictions, and they seem to suggest something nonsensical, consider a polite question of clarification about terminology.
Ken White, “Talking Productively About Guns”, Popehat, 2015-12-07.
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February 21, 2018
QotD: Regulation
… “regulation” could also be described as high-handed and ignorant interference in the mutually advantageous deals contracted voluntarily among the miserable serfs of the state, interference at best inspired by antique theories of natural monopoly and using antique policies appropriate to obsolete technologies, and at worst by conspiracies to benefit existing rich people, backed by state violence. Much of regulation, looked at coldly, would fall under such a definition, if not immediately on its passage, then after a few years of technological change or regulatory capture.
Deirdre N. McCloskey, Bourgeois Equality, 2016.
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February 18, 2018
The legal loophole that allows profiteering scumbags like Martin Shkreli to gouge the public
The US pharmaceutical market is a long way from a freely competitive environment, largely due to the amount of regulatory oversight required by lawmakers and enforced by the Food and Drug Administration (FDA). Among all the regulatory checks and balances, there’s one weird trick that allows predatory companies to reap excess profits legally — the “restricted distribution” loophole:
For immunocompromised adult patients who have the toxoplasmosis parasite, the FDA recommends taking 50 to 75 milligrams of Daraprim a day for up to three weeks, followed by half that dosage for an additional four to five weeks. So at the high end, an adult course of Daraprim therapy for a U.S. patient used to cost around $1,350 total.
While that might not seem cheap, it was a drop in the bucket compared to the cost after Turing Pharmaceuticals, Shkreli’s company, bought the rights to Daraprim and jacked the price up to $750 per pill in 2015. That move increased the cost of one course of treatment to around $75,000.
At that point you might have expected another company to jump in and start offering a generic version of the drug. But Shkreli used a regulatory loophole to keep that from happening.
You see, when a generic manufacturer wants to create a cheap version of a branded drug, it has to buy thousands of doses from the manufacturer in order to run comparison tests. Generic manufacturers use the results of these tests to prove to the FDA that their version is identical to the branded drug that the agency has already approved.
More often than not, the company that holds the marketing and distribution rights to a branded drug will sell those comparison doses to the generic manufacturer without being obstructionist, because that’s the trade-off for receiving a 20-year monopoly by way of a drug patent: The branded manufacturer gets to charge whatever they want for years and years without facing competition, and in exchange for that government-backed monopoly, it’s supposed to sell equivalency samples to generic companies.
But what if the company is run by an unscrupulous asshole like Martin Shkreli? Then it might opt to put the drug into what’s called “restricted distribution,” which means no distributor anywhere can sell comparison samples to a generic manufacturer.
The FDA originally created the concept of restricted distribution to limit the availability of drugs that might be dangerous. Methadone, for instance, was first approved in the 1940s as a painkiller. In the 1970s, the FDA restricted its availability because regulators didn’t want the opioid used for anything other than the treatment of opioid dependence. Even today, methadone can be dispensed only in highly regulated settings and only for one approved reason.
In 2007, Congress empowered the FDA to create an entire system of safety controls beyond restricted distribution, and the agency now requires the manufacturers of certain substances to develop Risk Evaluation and Mitigation Strategies (REMS) to prevent misuse and abuse of potentially problematic compounds.
The list of approved drugs that the FDA says must have an REMS is here. Daraprim is not on that list. You can’t get high off it. It’s not habit forming. Yes, the FDA label says it can be carcinogenic after long periods of use, and that it might cause birth defects if used in high doses by pregnant women. These potential effects are serious, but there is no post-market data suggesting that Daraprim is causing more harm than benefit in the intended patient population. Shkreli’s company put Daraprim into restricted distribution to boost their profits, not protect patients.
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February 14, 2018
QotD: Portuguese quality of life … or “Is Portugal a shithole?”
You see, you can judge a country’s status as an … ah… excrement sinkhole by figuring out “Migration out or in?”
In Portugal this picture is complicated. They are suffering “brain drain” as their youngest, brightest and most educated decamp for Germany, England, or even Brazil (where the picture is also complicated) but at the same time they receive immigrants from Africa, Brazil, South America, China and, weirdly, Russia (I’ve never figured out if these are descendants from people who took their crappy cars when the wall came down, and drove until they hit the ocean (or drove/walked till they hit the ocean) or whether they’re a fresh migration. I know the first existed, but I haven’t sussed out the other particulars.)
So, Portugal is not a shithole. What it is is a country so tied down by regulations, rules, and the ever present weight of tradition (Portugal, like many Baltic countries produces way more history than it can consume locally) that it works at cross purposes to itself.
Looking at what Portuguese (at least some) can do abroad, in terms of insane amounts of work and sometimes success, one assumes that if Portugal could eschew its perennial fascination with socialism, it would … well… I don’t know, but it would be scary for good or ill.
I mean for a country tied up with socialism (first national, then international) for the best part of a century, it’s not doing badly at all. Look at it this way: it hasn’t gone Venezuela. And the gentleman in the back who just said that’s because they can’t do anything efficiently, not even socialism, is just being mean. Yes, the Portuguese have been locked in a tragic fight throughout history with their traditional enemies, the Portuguese, but that’s no reason to look down on them.
Sarah Hoyt, “On Shaking The Dust From One’s Sandals”, According to Hoyt, 2018-01-17.
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February 8, 2018
QotD: Minimum prices for wine, a thought experiment
Consider this hypothetical (which, given the poor quality of today’s punditry and publicly discussed economics, is not as far-fetched as it might at first seem): Ostensibly to help raise the incomes of hard-working vintners of low-quality wines – vintners many of whom have children to feed and sick parents to care for, and many of whom also are stuck in their jobs as owners of low-quality vineyards – Congress passes minimum-wine-price legislation: no wine may sell for any price less than $1.00 per fluid ounce. Roughly, that means that the minimum price of a standard-sized – 750ml – bottle of wine becomes $25.00. Armed officers of the state will use deadly force against anyone and everyone who insists on disobeying this diktat.
If proponents of the minimum wage are correct in their economics, then the only effect of this minimum-wine-price diktat will be distributional. Consumers – including retailers and restaurants buying from wholesalers – will continue to buy as much wine, and the same qualities of wine, that they bought before the diktat took effect. The only difference is that, with the diktat in place, owners of low-quality vineyards earn higher incomes, all of which are paid for by consumers who dip further into their own incomes and wealth to fund this transfer. Easy-peasy! Problem solved!
But who in their right mind would suppose that a minimum-wine-price diktat would play out in the manner described above? Who would not see that a wine buyer, obliged to pay at least $25 for a standard-size bottle of wine, will buy only higher-quality wines – wines that before the diktat took effect were fetching at least $25 per bottle (or some price close to that)? Many wine buyers who before the diktat were confronted with the choice of paying either $8.99 for a bottle of indifferent but drinkable chardonnay and $25.00 for a bottle of much more elegant and enjoyable chardonnay opted for the less-pricey bottles. They did so not because they prefer to drink chardonnay that is indifferent to chardonnay that is elegant – they in fact do not have this preference. Rather, they did so because the greater elegance of the pricier chardonnay was not to them worth its higher price. So the low-quality chardonnay found many willing buyers.
Don Boudreaux, “Quotation of the Day…”, Café Hayek, 2016-06-02.
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February 3, 2018
Arizona’s legally protected blow-drying cartel
Eric Boehm reports on the fantastic lengths protected businesses will go to to protect themselves from “unlicensed” competitors, even in such areas as hair drying:
Brandy Wells never anticipated the amount of vitriolic abuse she would receive over — of all things — her public support of a proposal to let people blow-dry hair without a state-issued license.
“I’ve been called a cunt, a bitch, an ass, trashy, a puppet, a pawn, repugnant,” Wells says. “And my favorite: ‘your logic on deregulation of cosmetology is much like your hair, dull and flat.'”
Wells says she’s received several attacks from cosmetologists on social media accusing her of being “uneducated” or “clueless” about cosmetology because she doesn’t work in the industry. It’s true that Wells isn’t a licensed cosmetologist (though she does, in fact, know how to use a blow-dryer, she confirmed to Reason), but that’s actually the precise reason why she’s speaking up.
Wells serves as the lone “public member” of the Arizona State Board of Cosmetology. That means she is the only member of the seven-person board who does not work in some capacity as a cosmetologist or with a connection to a cosmetology school. Last month, she voiced her support for House Bill 2011, which would removing blow-drying from the state’s cosmetology licensing requirements. Under current law, using a blow-dryer on someone else’s hair, for money, requires more than 1,000 hours of training and an expensive state-issued license. Blow-drying hair without a license could — incredibly — land you in jail for up to six months.
In response, Wells says, members of the cosmetology profession have sent messages to her employer, the Arizona Chamber of Commerce, suggesting that she should be fired — fired because she thinks people can safely blow-dry hair without 1,000 hours of training!
The cosmetology board is “a group of special interest bullies,” said Arizona Gov. Doug Ducey, a Republican, in his recent State of the State address. The board, Ducey said, “is going after people who simply want to make a living blow-drying hair. No scissors involved.”
This week, the fight over the so-called “blow-dry bill” spilled into the state legislature. The state House Military, Veterans, and Regulatory Affairs Committee held its first hearing on the bill, and licensed cosmetologists packed the room to speak one-by-one about the potential dangers of letting unlicensed professionals blow-dry hair
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