Quotulatiousness

August 15, 2015

Still suffering from the injustices of a caste system? Just apply capitalism

Filed under: Bureaucracy, Economics, India — Tags: , , , — Nicholas @ 03:00

Swaminathan S. Anklesaria Aiyar explains how the introduction of free market practices is rapidly undermining the ancient caste system in India:

Karl Marx was wrong about many things but right about one thing: the revolutionary way capitalism attacks and destroys feudalism. As I explain in a new study, in India, the rise of capitalism since the economic reforms of 1991 has also attacked and eroded casteism, a social hierarchy that placed four castes on top with a fifth caste — dalits — like dirt beneath the feet of others. Dalits, once called untouchables, were traditionally denied any livelihood save virtual serfdom to landowners and the filthiest, most disease-ridden tasks, such as cleaning toilets and handling dead humans and animals. Remarkably, the opening up of the Indian economy has enabled dalits to break out of their traditional low occupations and start businesses. The Dalit Indian Chamber of Commerce and Industry (DICCI) now boasts over 3,000 millionaire members. This revolution is still in its early stages, but is now unstoppable.

Milind Kamble, head of DICCI, says capitalism has been the key to breaking down the old caste system. During the socialist days of India’s command economy, the lucky few with industrial licenses ran virtual monopolies and placed orders for supplies and logistics entirely with members of their own caste. But after the 1991 reforms opened the floodgates of competition, businesses soon discovered that to survive, they had to find the most competitive inputs. What mattered was the price of your supplier, not his caste.

August 8, 2015

Election issue – the Netflix tax, “much ado about nothing?”

Filed under: Business, Cancon, Media, Politics — Tags: , , , , , — Nicholas @ 04:00

Michael Geist looks at the major federal party leaders’ reactions to discussion of a “Netflix tax”:

As part of the digital strategy discussion, I stated that questions abound, including “are new regulations over services such as Netflix on the horizon?”

Prime Minister Stephen Harper addressed that question yesterday with a video and tweet in which he pledged that the Conservatives will never tax digital streaming services like Netflix and Youtube. Harper added that the Liberals and NDP have left the door open to a Netflix tax, but that he is 100% opposed, “always has been, always will be.” Both opposition parties quickly responded with the NDP saying they have not proposed a Netflix tax and the Liberals saying they have never supported a Netflix tax and do not support a Netflix tax.

So is this much ado about nothing?

Not exactly. First, there are groups and provincial governments that support a Netflix tax or mandated contribution to fund the creation of Canadian content. These include the Ontario and Quebec governments along with many creator groups. Earlier this year, I obtained documents under the Ontario Freedom of Information and Protection of Privacy Act that showed that the Ontario government spent months working toward a recommendation to expand the regulation of new media, including Canadian content requirements and increased regulation of foreign online video providers.

Second, while the Liberals and NDP have not proposed a Netflix tax, they have called for requirements that online video providers disclose revenues, Canadian content availability, and subscriber numbers to Canadian regulators. This is a very soft form of regulation that Netflix and Google have rejected as beyond the power of the Broadcasting Act. Providing information to allow for more informed regulatory analysis does not seem particularly unreasonable, but the companies unsurprisingly fear that that analysis could ultimately lead to calls for more regulation or payments.

Third, the real Netflix tax is the prospect of a levying sales taxes on digital products such as music downloads or online video services. It was the Conservatives that raised this possibility in the 2014 budget, launching a consultation on the issue that garnered supportive comments from companies such as Rogers, which noted that Canadian-based online video services such as Shomi operate at a disadvantage since they collect GST/HST, but Netflix does not. With many countries moving toward some form of digital taxation (as I noted in a January 2015 column on the issue, the real challenge lies in the cost of implementation), it seems inevitable that Canada will do the same in order to level the playing field and recoup a growing source of revenue. The Conservatives would presumably seek to differentiate between a generally applicable sales tax and a tax or fee targeting online streaming services, though many may feel it is a distinction without a difference.

August 4, 2015

Alex Tabarrok explains the “Happy Meal fallacy”

Filed under: Business, Economics, Food, Law — Tags: , — Nicholas @ 04:00

Another post from last month that I’m just getting around to linking:

Some restaurants offer burgers without fries and a drink. These restaurants cater to low-income people who enjoy fries and drinks but can’t always afford them. To rectify this sad situation a presidential candidate proposes The Happy Meal Act. Under the Act, burgers must be sold with fries and a drink. “Burgers by themselves are not a complete, nutritious meal,” the politician argues, concluding with the uplifting campaign slogan, “Everyone deserves a Happy Meal!”

But will the Happy Meal Act make people happy? If burgers must come with fries and a drink, restaurants will increase the price of a “burger.” Even though everyone likes fries and a drink they may not like the added benefits by as much as the increase in the price of the meal. Indeed, this must the case since consumers could have bought the meal before the Act but chose not to. Requiring firms to sell benefits that customers value less than their cost makes both firms and customers worse off.

The Happy Meal Fallacy is fairly obvious when it comes to happy meals but now let’s consider the debate over the gig economy and the hiring of employees versus contractors. Employees are entitled to benefits that contractors are not. Thus the standard conclusion is that classifying workers as contractors “is great for employers but potentially terrible for workers.” Wrong. Employees get their wages with fries and a drink while contractors get wages only. Would a law requiring firms to provide all workers with fries and a drink help workers?

If firms are required to provide benefits to contractors they will lower the contractor wage. But how do we know the extra benefits aren’t worth the reduction in wages? If the extra benefits were worth more to workers than they cost firms, firms would have eagerly provided these benefits as a way of increasing profits. Firms can profit whenever buyers are willing to pay more for a product than its cost. Benefits are a product that workers buy from firms.

August 3, 2015

Why Do Governments Enact Price Controls?

Filed under: Economics — Tags: , , , , , , — Nicholas @ 04:00

Published on 25 Feb 2015

If price controls have negative consequences, why do governments enact them? Let’s revisit our example of President Nixon’s wage and price controls in the 1970s. These price controls were popular, as is demonstrated by Nixon being re-elected after they went into effect. The public didn’t think that the price controls were to blame for things such as long lines at the fuel pump. Without knowledge of the economics behind price controls, the public blamed foreign oil cartels and oil companies for the shortages.

In this video we’ll also address questions such as: do price controls — like rent controlled apartments and the minimum wage — help the poor? Are there better ways to help the poor? If so, what are they? Let’s find out.

July 22, 2015

Price Floors: Airline Fares

Filed under: Economics — Tags: , , , — Nicholas @ 04:00

Published on 25 Feb 2015

In this video, we cover how price floors lead to wasteful increases in quality and a misallocation of resources. Using the real-world example of airline regulations from 1938-1978, we show how price floors can be used to restrict entry and reduce competition within an industry. When the Civil Aeronautics Board regulated airline fares, airlines couldn’t compete on price so they instead had to compete by increasing quality. This may sound like a good thing, but we’ll show how this actually created quality waste since the cost of that quality was higher than the value to the customers. Price floors also lead to the misallocation of resources by preventing competition and responsiveness to consumer demand. In this video, we’ll show you how consumers are negatively affected by price floors.

July 10, 2015

A new and exciting (if you’re a lawyer) aspect of photography

Filed under: Europe, Law, Liberty — Tags: , , , — Nicholas @ 03:00

As a casual photographer, I think very little about taking a photo of a building or landscape visible from the sidewalk or other public place. This casual attitude may become a relic of the past if EU regulators have their way, as Brian Micklethwait explains:

Basically, some EU-ers are talking about making it illegal to profit without permission by taking a photo, in public, of a publicly visible building or work of art, and then posting it on any “profitable” blog or website. The nasty small print being to the effect that the definition of “profitable” is very inclusive. For the time being, it would exclude my personal blog, because my blog has no income of any kind. But does Samizdata get any cash, however dribblesome, from any adverts, “sponsorships”, and so forth? If so, then me placing the above photo of the Shard at Samizdata might, any year now, become illegal, unless Samizdata has filled in a thousand forms begging the owners of the Shard, and for that matter of all the buildings that surround it, to allow this otherwise terrible violation of their property rights, or something.

“Might” because you never really know with the EU. At present this restriction applies in parts of the EU. It seems that a rather careless MEP tried to harmonise things by making the whole of the EU as relaxed about this sort of things as parts of it are now, parts that now include the UK. But, the EU being the EU, other EU-ers immediately responded by saying, no, the way to harmonise things is to make the entire EU more restrictive. Now the MEP who kicked all this off is fighting a defensive battle against the very restriction she provoked. Or, she is grandstanding about nothing, which is very possible.

Being pessimistic about all this, what if the restriction does spread? And how long, then, before the definition of “for profit” is expanded to include everything you do, because if it wasn’t profitable for you, why would you do it? At that point, even my little hobby blog would be in the cross hairs, if I ever dared to take and post further pictures of London’s big buildings.

Some better news for me is that if this scheme proceeds as far as it eventually might, my enormous archive of photographs of people taking photographs will maybe acquire a particular poignancy. It will become a record of a moment in social history, which arrived rather suddenly, and then vanished. Like smoking in public.

July 1, 2015

QotD: The CRTC, Canada’s most fascistic government body

Filed under: Bureaucracy, Cancon, Media, Quotations — Tags: , , , , — Nicholas @ 01:00

The CRTC is an even more odious organization. Back in 1920s both the Canadian and American governments declared the broadcast spectrum to be public property. So a technology pioneered and commercialized by the private sector, in both countries, was essentially nationalized by the state. Since it was a new industry it lacked the ability to effectively lobby Washington and Ottawa. The result has been that a large and important sector of our modern economy now lives and dies at the whim of an unelected government agency: The CRTC.

Of all the organs of Canadian government the CRTC has always struck me as the most fascistic. You could rationalize socialize health care, public education and government financed infrastructure as doing useful things in a terribly statist way. The CRTC is at an exercise in make work at best. At worse it’s an attempt to impose indirect censorship on the Canadian people. Beneath the reams of government drafted euphemisms the blunt truth behind the CRTC is that we mere Canadians are not clever enough, not patriotic enough or sufficiently sensible to watch and listen to the right things in the right way.

The existence of the CRTC explains much of the timorousness of Canadian broadcasting. The Americans did away with the Fairness Doctrine in 1987, thereby triggering the explosion in talk radio in the early 1990s. While Canada never had an exact equivalent, the regulations surrounding who could and could not receive or retain a license were sufficiently vague to make such a rule unnecessary. A nod and a wink from the right people at the right time was enough to indicate what type of broadcasting would or would not be acceptable.

The result was an insufferable group think that could no more be defined than challenged. There were unwritten rules of etiquette that forbade serious discussion from talking place on a whole host of issues: Abortion, capital punishment, race relations, linguistic issues and any frank discussions of our socialized health care system. It wasn’t that these discussions didn’t take place in a public forum, the newspapers and magazines were largely unregulated, but broadcasting was the late twentieth century’s pre-eminent mass media. It’s where ordinary people got their news and opinions.

Richard Anderson, “And All Must Have Prizes”, The Gods of the Copybook Headings, 2014-09-24.

June 30, 2015

Extending the ADA to the web

Filed under: Law, Liberty, Politics, Technology, USA — Tags: , — Nicholas @ 02:00

Amy Alkon discusses why the notion of expanding the Americans with Disabilities Act to cover the internet would be a terrible idea:

So few people understand how laws passed can be used — and easily misused. Stretched into something they were never supposed to be (or not what they were said to be about, anyway).

For example, Title IX was supposed to be about allowing girls equal participation in school sports. The Obama admin has turned it into a system of campus kangaroos courts removing due process from men accused of sexual assault.

Next in line for strrretching is the Americans with Disabilities Act.

[…]

Bader gives some examples from Walter Olson, from his testimony to Congress, of awful changes that would ensue, like that amateur publishing would become “more of a legal hazard.” They’d go after websites like mine, that make a few shekels from Amazon links and a few more from Google ads. I need this money to supplement the money that’s fallen out of newspaper writing; also, I love the people who comment here and the discussion that goes on. It’s what keeps my eyes pried open at 11 p.m. when I need to post a blog item half an hour after I should have gone to bed for my 5 a.m. book- and column-writing wakeup time.

Also, added in the morning, after waking up worrying about this all night — making something “accessible” for a tiny minority could ruin it for everyone.

And what sort of understanding do we really owe people? I don’t do well with complex physics and I have limited attention for things I don’t understand that don’t grab my interest enough to figure them out. Should physics websites dumb themselves down for Amy Alkon’s brain? How many scientific websites will be brought down by disabled people going around to them like the quadriplegic lawyer in the wheelchair filing profit-making suits and closing classic hamburger stands and other businesses in California over ADA claims?

June 29, 2015

Price Ceilings: Shortages and Quality Reduction

Filed under: Economics, Government — Tags: , , , , , — Nicholas @ 03:00

Published on 25 Feb 2015

Price ceilings result in five major unintended consequences, and in this video we cover two of them. Using the supply and demand curve, we show how price ceilings lead to a shortage of goods and to low quality goods. Prices are signals that indicate to suppliers how much is being demanded, but when prices are kept artificially low with price ceilings, suppliers have no way of knowing how many goods they should produce and sell, leading to a shortage of goods. Quality also decreases under price controls. Do you ever wonder why the quality of customer service at Starbucks is generally better than at the DMV? The answer lies in incentives and price ceilings. We’ll discuss further in this video.

More on the “self-driving truck” issue

Filed under: Business, Economics, Railways, Technology, USA — Tags: , , , , — Nicholas @ 02:00

In the comments to this post, Tom Kelley provided a worthwhile digression on the topic that I felt deserved a wider audience, so with his permission, here’s Tom’s response:

Given that the trucking industry has been my sandbox for quite some time, I can safely extend Megan’s prognosis to also include the low long-term risk of job losses due to self-driving vehicles.

Frankly, I have to be wary of any “expert” who can’t even get the name of his source (the American Trucking Associations — yes, plural — not the American Trucker Association) transcribed correctly.

Apart from the myriad technical issues standing in the way of driverless trucks, the insurmountable barrier is anti-competitive trucking regulations passed on behalf of the government’s favorite white elephant, the rail industry. Invariably, these regulations are tarted up under some guise of safety (Let’s see, was it a truck or a train that blew the town of Lac-Mégantic off the map??? Hmm).

The bottom line is that any change that would have the slightest possibility of making trucking more productive is quickly met with massive dis-information campaigns, and even more massive lobbying from the rail industry. Even the most minor dimensional changes designed to reflect the current realities of truck freight transportation stand little if any chance of making it past regulators with a permanent disdain for free enterprise.

We can’t have electronically actuated brakes on trucks because the regulators have no grasp of brakes or electronics, and somebody wants to replace the driver with electronics? Seriously? Of course these same folks seen to have no problem flying cross-country at 500 MPH in a commercial jetliner that is literally flown by wire.

And even if the government types were perfect actors in this little tale, then you have the American tort law system, run/regulated by, for, and about the trial lawyers. Even with professional truck drivers who can deftly avoid putting incompetent car drivers on their way to a Darwin award, hundreds of four-wheeler drivers still manage to commit suicide-by-truck every year, followed quickly by their otherwise destitute estates suing innocent trucking companies for millions.

Can’t you just hear the jury summation now: “The eeevvilll trucking company wanted to save a few pennies by outsourcing the driver’s job to a microchip! The must be punished! My client, a fourth cousin of the homeless man who jumped off a bridge in front of a truck MUST be awarded $10 million for the pain and suffering from losing a relative he never met. No justice, no peace!”

No insurance company in their right mind would insure a driverless truck for real-world operation.

There’s no question that the technology is available to make the concept work, I was on-board numerous autonomous vehicles of all sizes back in 1997.

It will take several major societal shifts before any serious degree of autonomy makes it into real world trucking operations.

June 27, 2015

QotD: The corporate tax game

Filed under: Bureaucracy, Business, Law, Quotations, USA — Tags: , , , , — Nicholas @ 01:00

You can think of corporate taxation as a sort of long chess match: The government makes a move. Corporations move in response — sometimes literally, to another country where the tax burden is less onerous. This upsets the government greatly, and the Barack Obama administration in particular. Treasury Secretary Jack Lew has written a letter to Congress, urging it to make it stop by passing rules that make it harder to execute these “inversions.”

I’ve got a better idea: What if we made our tax system so attractive to corporations that they would have no interest in moving themselves abroad?

The problem with this extended chess game is that every move is very costly. First, it adds to the complexity of the tax code. With every new rule — no matter how earnestly said rule attempts to close a “loophole” — it becomes harder to know whether you are in compliance with the law. This is true on both sides; corporate tax law has now passed well beyond the point where it is possible for a single expert to be familiar with its ins and outs. This makes it harder to plan business expansions, harder to forecast government revenue, and it requires both sides to hire more experts in order to determine whether corporations are compliant. It also means more lawsuits, and longer ones, as both sides wrangle over how this morass of laws should be applied to real-world situations.

You can think of it this way: Every new law has possible intersections with every other tax law in existence. As the number of laws grows, the number of possible intersections grows even faster. And each of those intersections represents both a possible way to avoid taxes and a potential for unintended consequences that inadvertently outlaw something Congress never intended to touch. This growing complexity makes it more and more difficult for either companies or lawmakers to forecast the ultimate effects of new tax laws.

Megan McArdle, “We Don’t Need a Corporate Income Tax”, Bloomberg View, 2014-07-16.

June 24, 2015

QotD: Surge pricing

Filed under: Business, Economics, Quotations — Tags: , , , , — Nicholas @ 01:00

New York just killed every economist’s favorite thing about Uber: surge pricing. Sure, many economists also love convenient car service at the touch of a button. But black-car services have been around for a long time. Explicit surge pricing — which both creates new supply and rations demand — has not, but it’s long been a core feature of Uber Technologies Inc.’s business model. While it can be annoying at times (during a recent rainstorm, I noticed a sudden epidemic of drivers canceling rides, which I suspect was due to the rapidly rising surge price), it also allows you to be sure that you will be able to get a taxi on New Year’s Eve or during a rainstorm as long as you’re willing to pay extra.

Sadly, no one else loves surge pricing as much as economists do. Instead of getting all excited about the subtle, elegant machinery of price discovery, people get all outraged about “price gouging.” No matter how earnestly economists and their fellow travelers explain that this is irrational madness — that price gouging actually makes everyone better off by ensuring greater supply and allocating the supply to (approximately) those with the greatest demand — the rest of the country continues to view marking up generators after a hurricane, or similar maneuvers, as a pretty serious moral crime.

Megan McArdle, “Uber Makes Economists Sad”, Bloomberg View, 2014-07-09.

June 18, 2015

Nutrition … what we thought we knew is wrong, again

Filed under: Food, Government, Health, Science — Tags: , , , — Nicholas @ 04:00

At Real Clear Science, Ross Pomeroy explains how historical “expert knowledge” and government cheerleading pointed in exactly the opposite direction of today’s experts and government regulators:

For decades, the federal government has been advising Americans on what to eat. Those recommendations have been subject to the shifting sands of dietary science. And have those sands ever been shifting. At first, fat and cholesterol were vilified, while sugar was mostly let off the hook. Now, fat is fine (saturated fat is still evil, though), cholesterol is back, and sugar is the new bogeyman.

Why the sizable shift? The answer may be “bad science.”

Every five years, the Dietary Guidelines Advisory Committee, composed of nutrition and health experts from around the country, convenes to review the latest scientific and medical literature. From their learned dissection, they form the dietary guidelines.

But according to a new editorial published in Mayo Clinic Proceedings, much of the science they review is fundamentally flawed. Unlike experiments in the hard sciences of chemistry, physics, and biology, which rely on direct observational evidence, most diet studies are based on self-reported data. Study subjects are examined for height, weight, and health, then are questioned about what they eat. Their dietary choices are subsequently linked to health outcomes — cancer, mortality, heart disease, etc.

That’s a poor way of doing science, says Edward Archer, a research fellow with the Nutrition Obesity Research Center at the University of Alabama, and lead author of the report.

“The assumption that human memory can provide accurate or precise reproductions of past ingestive behavior is indisputably false,” he and his co-authors write.

Two of the largest studies on nutritional intake in the United States, the CDC’s NHANES and “What We Eat,” are based on asking subjects to recall precisely what and how much they usually eat.

But despite all of the steps that NHANES examiners take to aid recall, such as limiting the recall period to the previous 24 hours and even offering subjects measuring guides to help them report accurate data, the information received is wildly inaccurate. An analysis conducted by Archer in 2013 found that most of the 60,000+ NHANES subjects report eating a lower amount of calories than they would physiologically need to survive, let alone to put on all the weight that Americans have in the past few decades.

May 16, 2015

Charles Murray and Jonah Goldberg on civil disobedience in America

Filed under: Books, Bureaucracy, Government, Liberty, Media, USA — Tags: , , — Nicholas @ 04:00

Published on 11 May 2015

The American ideal of limited government on life support. Is it time for civil disobedience? Charles Murray says yes. Murray has been writing on government overreach for more than 30 years. His new book, By The People, is a blueprint for taking back American liberty. Jonah Goldberg sits down with Murray to discuss civil unrest in Baltimore, the scope of the government, and why bureaucrats should wear body cameras.

According to AEI scholar, acclaimed social scientist, and bestselling author Charles Murray, American liberty is under assault. The federal government has unilaterally decided that it can and should tell us how to live our lives. If we object, it threatens, “Fight this, and we’ll ruin you.” How can we overcome regulatory tyranny and live free once again? In his new book, By the People: Rebuilding Liberty Without Permission (Crown Forum, May 2015), Murray offers provocative solutions.

QotD: The true nature of government

Filed under: Government, Quotations, USA — Tags: , — Nicholas @ 01:00

The governments of these United States, from the federal to the local level, have managed to insinuate themselves between citizens and their property at every point of significance. In that, our governments are very much like most other governments, liberal and illiberal, democratic and undemocratic. We have allowed ourselves to be in effect converted from a nation of owners to a nation of renters. But while medieval serfs had only the one landlord, we have a rogue’s gallery of them: the local school board, the criminals at the IRS, the vehicle-registry office, etc. Never-ending property taxes ensure that as a matter of economic function, you never really own your house — you rent it from the government. Vehicle registration fees and, in some jurisdiction, outright taxes on automobile ownership ensure in precisely the same way that you never really own your car: You rent it from the government. Stock portfolio? Held at the sufferance of politicians. A profitable business? You’ll keep what income they decide you can keep. Your own body? Not yours — not if you use it for profitable labor.

A Who down in Whoville? You should be so lucky: Welcome to Whomville, peon.

Kevin D. Williamson, “Property and Peace”, National Review, 2014-07-20.

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