Category: free trade & free markets

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free trade & free markets media and media people

Apple Abjectly Apologizes for Arrogance

Apple is a huge company, selling gadgets around the world. One of its biggest markets turns out to be China, which is also a supplier of many components. And working within a quasi-capitalist/quasi-post-communist dictatorship does have its problems.

Yesterday we learned that Apple’s head honcho, Tim Cook, has openly apologized to Chinese consumers.

He did it under pressure . . . from China’s state-run media.

The non-paranoid way of looking at this is that Apple has fallen down on the job of Chinese consumer support. The company’s 17,000 outlets, including eleven Apple-branded stores, just do not service consumer complaints well enough.

This may be true.

But the pile-on by the media looks a little different than, say, the piling-on by America’s media against successful companies here. It has the odor of concerted plan, “commandment from on high.”

And it is well known that China — which tries to plan its economy as much as humanly possible, with the iron fist of totalitarian law — when it gets really serious, gets serious indeed.

So, Tim Cook’s abject apology echoes not so much Apple’s rare apologies in America, but the apologies made by targets of China’s Cultural Revolution, a generation or two ago, at least if the BBC has it right:

State broadcaster CCTV and the state’s flagship newspaper, People’s Daily, had portrayed Apple as the latest Western company to exploit Chinese citizens.

Last week the paper ran an editorial headlined: “Strike down Apple’s incomparable arrogance.”

Even Apple’s (or Microsoft’s) critics in the West don’t sound that strident.

For the record, I have complaints with all gadgets, all systems, all suppliers. I can truly be nonpartisan on this.

And this is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies

Kentucky Grass

While the Supreme Court’s hearings on gay marriage stole the headlines, Senator Rand Paul was doing something interesting in the Senate. Teaming up with his fellow Kentucky Senator Mitch McConnell along with Oregon’s Democratic delegation, the increasingly influential senator pushed S.359, the Industrial Hemp Farming Act of 2013.

Together with its twin in the House, sponsored by Kentucky Congressman Thomas Massie, the bills seek to amend the Controlled Substances Act, which has outright prohibited the domestic raising of industrial hemp since 1970.

Hemp is marijuana, but grown for its fiber. And not potent in THC, so its recreational and medicinal value is nil. It was raised in colonial days, and by several of the Founding Fathers. I learned about it in Third Grade History. You probably did, too.

I wasn’t told that, if carefully cultivated, the same plant served other uses. There’s scant evidence that Thomas Jefferson and George Washington — two enthusiastic if not completely successful hemp growers — exhibited any interest other than curiosity and acquisitiveness in their hemp growing.

The legalization move in Congress is about, pardon the expression, high time. Hemp is a great product, and the idea that, for the convenience of suppressing its cultivation as a psychoactive substance, not only a whole species but a whole industry would be suppressed is typical federal overreach.

Why the concentrated Kentucky interest? Well, it was the Bluegrass State where hemp was historically grown after the Civil War.

The Oregon angle? You’d have to ask Senators Wyden and Merkley. But I’ve known a number of Oregonian cannabis activists who’ve talked as much about the virtues of industrial hemp as the delights of their “grass.” Perhaps the idea is blowing in Oregon winds.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets

Inventing Objections

The Times published a wispy report on how Samsung has announced not that they are about to release a “smart watch” — a watch with computer functions — but only that they are working on one. Presumably, Samsung hopes to preclude the notion that the company is simply copying Apple, which is rumored to be developing a smart watch.

One reader — call him Mr. X — claims to be “saddened” by this evidence of market rivalry. He feels it’s “sad to witness” both Samsung’s alleged copying of Apple (or of other companies already making smart watches) and Apple’s forthcoming attempt to “force” smart watches on us.

Perhaps unbeknownst to himself, X’s lament implies that the whole market process is a continuous tragedy, only occasionally interrupted when sweeping novelty comes along.

Not so.

How often is a major new product category invented, after all? Farmers sell wheat—must they offer a new strain of wheat for their efforts to be valuable? What about napkin manufacturers? Car makers? Computer makers? Should we shed tears when anybody competes with anybody else in the same decades-old or centuries-old product category?

Inventions are great. But not everything on the shelf must be a brand-new kind of product to be well made and worth getting. Incremental improvements matter too. If companies took X’s complaint seriously, their ability to provide goods and services would be thwarted.

What we want from the “competition” is usually not “the new” but the slightly better, or the substantially less expensive.

Capitalism owes its essence to copycats as well as innovators.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets too much government

A Coffin for Special-Interest Regulation

This is a story about monks and coffins, not vampires and coffins. But, since it takes place in Louisiana, you might be thinking “vampires.” And not just because Interview With a Vampire, Fevre Dream, Dracula 2000 and True Blood have all focused on the Pelican State as a hotbed of undead activity.

You see, it also deals with government. And — of course! — a particular kind of bloodsucking.

The brothers of Saint Joseph Abbey, a Benedictine monastery in Covington, Louisiana, began to make hand-make caskets in 2007. The enterprise was designed as a fund-raising effort to help cover educational and health-care expenses. But the state’s Board of Embalmers and Funeral Directors swooped in and shut down the operation before one wooden “final resting place” had been sold.

And so the monks sued, arguing that the restriction was arbitrary and “served no legitimate public purpose and existed only to funnel money to the funeral-director cartel.”

Exactly. That’s how these sort of things work. The government allows special interests to regulate markets, and suck as much wealth up as possible. It’s the most common form of vampirism today.

Yesterday, the Fifth U.S. Circuit Court of Appeals found in favor of the monks, ruling unanimously. This is historic. And inspiring.

And, yes, it’s the result of good work done by the Institute for Justice, a free-market legal outfit that represented the monks.

Still, I wonder: Do we owe this eminently just ruling at least in part to the easy-to-empathize-with plaintiffs? Would the ruling have been so favorable had the suit been initiated by ordinary Joes? Or an irascible old vampire hunter? (I say this knowing that the folks at IJ are polite, professional, and, uh, youthful, if not eternally so.)

This is Common Sense. I’m Paul Jacob.

Clipart from Clipartheaven.com

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free trade & free markets national politics & policies

Twinkies in Zombieland?

Hostess is dead. The bakery company stopped production in November, and has been trying to sell off its divisions since. Lucky for folks like Twinkie-obsessed Tallahassee, played by Woody Harrelson in Zombieland (2009), the much-beloved synthetic pastries may again appear in stores this summer.

And not as a zombie product, but as the real, edible confection we’ve known all our lives.

How? Not through any demented reanimation or infection process. This has nothing to do with zombies.

Instead, it has everything to do with the normal workings of capitalism:

In a joint bid, Metropoulos & Co and Apollo Global Management are paying $410m (£275m) for the bankrupt company.

The offer had originally been planned to set the floor for an auction, which Hostess boss Greg Rayburn had predicted would be “wild and woolly.”

In fact, a court filing showed that no other offers were submitted.

In America, today, it’s still possible for bankrupt companies to sell off their productive capacity — including names, recipes, logos and the like — to meet the debts prioritized by the courts.

The latter is entirely natural, not Zombieland-horrific.

Much of the hysteria over “too big to fail” comes from misunderstanding the nature of the deaths of once-successful businesses. Laid-off workers can and do find new work as more efficient companies step in, and the capital goods of a bankrupt company can still have value, and can be bought and re-employed more efficiently in other companies.

Indeed, keeping inefficient firms going by subsidy and special favor puts them into a zombielike existence — not the Zombieland re-animated dead kind, but pre-Romero, old-fashioned voodoo zombies. These sluggards serve slowly and creepily.

Better acclimate ourselves to capitalism’s “circle of life” than the horrorshow that is “too big to fail” in the United States of Zombiel… Bailouts.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets tax policy

Impossible, They Say

Modern economics takes a long, circuitous route to the old wisdom of classical political economy: Laissez faire is best.

This ideal of free markets was pretty clearly established by Adam Smith, J.B. Say, David Ricardo, and others long ago. Frédéric Bastiat explained it best in layman’s terms.

But modern economic theory, with lots of math I don’t pretend to follow, often backs it up, too. Sure, sure: Much of modern theory sort of assumes unlimited government as the alternative to “market failure.” But the more you look (and look critically) at that theory — and increasing numbers of economists are doing just that — the more the case for government involvement falls flat.

This struck me as I was reading economist Garett Jones:

There’s an old story about a mathematician asking Paul Samuelson for one idea in economics that was simultaneously true and not obvious. Samuelson’s answer [was the Law of Comparative Advantage].  Today, I’ve got another: The Chamley-Judd Redistribution Impossibility Theorem.

Chamley and Judd separately came to the same discovery: In the long run, capital taxes are far more distorting tha[n] most economists had thought, so distorting that the optimal tax rate on capital is zero.  If you’ve got a fixed tax bill it’s better to have the workers pay it.

Jones goes on:

Under standard, pretty flexible assumptions, it’s impossible to tax capitalists, give the money to workers, and raise the total long-run income of workers.

Not, hard, not inefficient, not socially wasteful, not immoral: Impossible. 

Hard as policy wonks and their patrons, the politicians, may try, any redistribution from the owners of capital to workers will make workers worse off.

Jones discusses some of the niceties of the theory.

But I confess: to me it’s all déjà vu. Or, to conjure up another French term, laissez faire all over again.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets general freedom

Backwoods Growers Still Outlawed?

One way marijuana legalization was pushed, politically, in Colorado and Washington, was with the “let’s tax this weed!” agenda. Indeed, the “tax and regulate” approach proved a convenient way for marijuana users to get non-marijuana users “on board” the legalization bandwagon, basically buying off those who were most sympathetic to the prohibitionist status quo.

And it’s the dominant way of thinking, today.

This frustrates many who wanted to return marijuana growth, distribution and usage to its pre-1937 legality, for they saw the prohibitionist program as inherently illiberal, nasty, inhumane. To these legalizers, “taxing and regulating” appears as just a ramped-down version of today’s policy.

Think Genghis Khan, who wanted to kill all Manchurians and turn northern China into a vast grazing land for horses. He was convinced not to do so for reasons of the “Laffer Curve”: he’d get more revenue by taxing Manchurians than killing them.

While taxing and regulating Manchurians was certainly better than genocide, it was still a tyrant’s prerogative.

Apply the same logic to cannabis.

Marijuana has been grown and used for eons. Trying to control or eradicate it as a noxious weed rather than tolerate it as a plant with many uses, seems unjust, not merely inadvisable. The whole “tax and regulate” notion rubs up against the home growing of the plant. Marijuana is easy to grow, but many folks want to prohibit people from growing it out-of-doors — the better to keep it out of the hands of thieving youngsters.

Call me old-fashioned, but it seems to me that thieving youngsters should be nabbed and dealt with in Andy Griffith-style justice.

But then, I missed the marijuana episode of the Andy Griffith Show.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

Video: Subsidies, USA

Politicians love to throw money around, especially to appreciative donors; and many, many businesses love favored treatment, and know how to show their appreciation.

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free trade & free markets video

Video: How Minimum Wage Laws Cause Unemployment

Thanks to the president, it’s the meme of the moment. Take it up a notch. With an understanding of the economics involved.

Categories
free trade & free markets national politics & policies too much government

A Teachable Wage

The U.S. President wants to up the national minimum wage to $9 per hour.

Republicans tend to lose at such policy debates, sometimes by daring to tell the truth: That minimum wage laws tend to raise unemployment. But that doesn’t impress politicians, who can’t be bothered to look beyond the surface of such issues.

They present the minimum wage hike as a guarantee that higher wages get paid all around, that wages only go up, rather than what actually happens: some wages go up to meet the law, and others evaporate, as people are let go, jobs downsized, and new jobs go uncreated.

So why would congressional Republicans use the same old rhetoric to balk at the president’s plan?

Sometimes irony works. Republicans should take all the Democrats’ premises — we want higher wages, more wealth, etc., etc. — and up the ante:

“Yes, raising wages would be great! But why are you all such tightwads? Raise the minimum to $49 an hour! Or make the lowest rate comparable with congressional pay: $85 per hour!”

Then compromise and say they will only vote for the raise if the rate hike is a serious amount, not the president’s paltry $1.75 increase.

At that point, a more honest conversation will start up.

For the ugly truth is that the harmful effects of the current and rather low minimum wage laws rest mainly on folks who aren’t very likely to vote, or to notice why it is they are unemployed. But raise the rate to $49 per hour, or even $19, and the scam becomes obvious to all but the most dense.

Even Democrats would insist on a lower rate.

And then Republicans should demand that Democrats explain why. And reveal the perverse logic behind minimum wages for all to see.

This is Common Sense. I’m Paul Jacob.