Warhol on American Equality

What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca-Cola, and you know that the President drinks Coke, Liz Taylor drinks Coke, and just think, you can drink Coke, too. A Coke is a Coke and no amount of money can get you a better Coke than the one the bum on the corner is drinking. All the Cokes are the same and all the Cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.

— Andy Warhol, The Philosophy of Andy Warhol (1975)

(Thanks to Thom for pointing me down the road to this quote.)

 

Markets in Everything – 4×4 Bypass

Over at Mark Perry’s excellent Carpe Diem blog, Mark has an ongoing series about “markets in everything.”  As soon as I saw this, I thought of his series.

As you can see from this photo, Hurricane Sandy took out a section of Hwy 12 on North Carolina’s Outer Banks.

There is a bypass across the sand, but it requires a 4×4 vehicle. When we drove through today, there was a thriving trade of locals with 4x4s and trailers ferrying two wheel drive vehicles (sometimes with an entire family still inside) across the half-mile or so of sand. A waitress at a local restaurant told us that the going rate was a surprisingly reasonable $25.

There were orderly queues of cars waiting on the side of the road to be loaded, and the only government presence I could see was an NC DOT pickup truck who was keeping an eye on the condition of the sand road.

Edit:  I sent these pictures to Mark, and Carpe Diem is carrying the story.

 

Plough the Deep, and reap the Harvest of every Country in the World.

As often as I consider these things, I am ready to say with my self, that God has bestowed his Blessings upon Men that have neither hearts nor skill to use them.  For, why are we surrounded with the Sea?  Surely that our Wants at home might be supply’d by our Navigation into other Countries, the least and easiest Labour.  By this we taste the Spices of Arabia, yet never feel the scorching Sun which brings them forth; we shine in Silks which our Hands have never wrought; we drink of Vinyards which we never planted; the Treasures of those Mines are ours, in which we have never digg’d; we only plough the Deep, and reap the Harvest of every Country in the World.

— Henry Martyn, Considerations on the East-India Trade, p. 37 (1701).

An inspired treatise on free trade 75 years before Adam Smith.  It also brought to mind one of my favorite songs.

For if you can give her one gold piece,
Then I can give her three.
For I am bold John Barbour,
And I plough the raging sea.

— John Barbour by Great Big Sea.

(HT EconTalk)

 

Megan McArdle on Income Disparity

Scientists now think that King Tut may have died of Malaria.  As the fellow who sent me the link dryly noted, King Tut did not have good comprehensive health insurance.

All kidding aside, this is a good excuse to meditate on just how rich we are.  King Tut was probably the wealthiest man in the world during his time.  He died of something that wouldn’t kill the most abjectly immiserated welfare mother in the United States today, because of a combination of public health efforts, and cheap antimalarial drugs.

You always need to factor in things like this when you talk about changes in living standards over time.  All the positive changes in society mean that the absolute difference between the income of Bill Gates and the man who valets his car is larger than it has ever been in history.  But the actual difference in comfort between the two of them is probably much smaller than the difference between JP Morgan and his stableboy.  And both Gates and the valet are almost immeasurably better off than their predecessors.

I noted earlier that free trade and technology disparately benefit the poor.

 

Forget the Mob, Farmers are the real racket.

I think I have a basic understanding of public choice theory, and how special interests can use political power to extort money from the rest of us.  However, I cannot understand the tremendous political power of the agricultural lobby, especially the corn growers.  Only 2-3% of the American workforce is directly employed in agriculture, and I’m sure the corn growers are only a fraction of that small percentage.  And yet, the industry continues to receive massive subsidies in the face of opposition by groups as diverse as the Alliance of Automobile Manufacturers, the Motorcycle Industry Council and the Outdoor Power Equipment Institute, the American Lung Association, the Union of Concerned Scientists, the Natural Resources Defense Council, and the Sierra Club.

Everyone Hates Ethanol, The Wall Street Journal Opinion Journal (Mar. 16, 2009).

Americans are unlikely to use enough gas next year to absorb the 13 billion gallons of ethanol that Congress mandated, because current regulations limit the ethanol content in each gallon of gas at 10%. The industry is asking that this cap be lifted to 15% or even 20%. That way, more ethanol can be mixed with less gas, and producers won’t end up with a glut that the government does not require anyone to buy.

The ethanol boosters aren’t troubled that only a fraction of the 240 million cars and trucks on the road today can run with ethanol blends higher than 10%. It can damage engines and corrode automotive pipes, as well as impair some safety features, especially in older vehicles. It can also overwhelm pollution control systems like catalytic converters. The malfunctions multiply in other products that use gas, such as boats, snowmobiles, lawnmowers, chainsaws, etc.

That possible policy train wreck is uniting almost every other Washington lobby — and talk about strange bedfellows. The Alliance of Automobile Manufacturers, the Motorcycle Industry Council and the Outdoor Power Equipment Institute, among others, are opposed, since raising the blend limit will ruin their products. The left-leaning American Lung Association and the Union of Concerned Scientists are opposed too, since it will increase auto emissions. The Natural Resources Defense Council and the Sierra Club agree, on top of growing scientific evidence that corn ethanol provides little or no net reduction in CO2 over the gasoline it displaces.

(HT Carpe Diem)

 

Bollywood meets the military-industrial complex.

Adapting one’s product and advertising to the local culture is a key strategies for entering new global markets.

The Israeli arms firm Rafael takes the show to Bollywood with this marketing video shown at Aero India 2009 held recently in Bangalore.

Attractive women and flower festooned Spike-ER anti-tank missiles, an effective combination, I’d say.

 

Everything’s Amazing, Nobody’s Happy

Brilliant stuff from Louis CK.  (Click through and watch it.  It’s worth 5 minutes of your time.)

 

At least you earn more than a cow . . .

Primary farm producers in the world’s developed countries receive about $280 billion a year in government support. In the European Union, farmers receive a third of their income from government subsidies. Beef and veal producers get more than 70% of their income from subsidies.

A typical cow in the European Union receives a government subsidy of $2.20 a day. The cow earns more than 1.2 billion of the world’s poorest people.

Mark Vaile, Australian trade minister in 2005

(HT Carpe Diem)

 

What Adam Smith really said.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

— Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (Book I, Ch. 10, ¶ 82)

This Adam Smith quote is often used to emphasize the evil and collusive nature of “big business.”  Unfortunately, like so often happens in these instances, everyone forgets the rest of the quote.

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

Smith wasn’t advocating for anti-trust legislation; he thought such laws were unenforceable and inconsistent with liberty and justice.  Rather, Smith cautioned against government mandated collusion.

Coyote Blog illustrate how we have quite ignored Smith’s admonition.

I can add a million examples.  Hair braiders are stepped on by the government in collusion with licensed beauticians.  Taxi companies get the government to quash low-cost or innovative shuttle transportation.  Discount casket companies are banned by government in collusion with undertakers.  Take dentistry.  Why do I need to go to an expensive dentist when 99% of my dental needs could be served by a hygienist alone?  Because the government colludes with dentists to make it so.  And don’t even get me started on medicine.  My guess is a huge percentage of the conditions people come into emergency rooms with are treatable by someone without a 4 year medical degree and 6 years of internship.  Does one really need a full medical education to stitch up a kids cut knee?  Well, yes, you do today, because doctors collude with the government to make it so.  Why can’t people specialize, with less than 10 years of education, on just, say, setting bones and closing cuts?  Why can’t someone specialize in simple wills or divorces without a full law degree?

As Adam Smith clearly saw, the real danger is not collusion between business men and business men, but collusion between business men and government.  Government is so much more dangerous because it is always done “for our own good.”

Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies, The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.

–C.S. Lewis

 

The trade deficit, currency manipulation and the motivation of foreign politicians.

Professor Don Boudreaux of George Mason University has an excellent post about exchange rates and politics over at Cafe Hayek.  He makes an eloquent argument about the implausibilities and inefficiencies of currency manipulation that I couldn’t improve upon.

However, I am reminded of the discussions I had with my International Law professor.  He was convinced that China is actively and successfully strengthening the Yuan against the dollar by buying U.S. bonds and that the resulting trade deficit is disastrous for the U.S.  After he raised the issue for the forty-third time, I pointed out that if the Chinese government was in fact propping-up the Yuan, the end result would be a transfer of wealth from poor Chinese to wealthy Americans.  And why, I asked, would Americans think this was a bad thing?  His response was essentially, “Well the Chinese aren’t stupid, are they?”

Unfortunately, I didn’t have a witty response to complete this anecdote, but I have given some thought to the issue.  I think the correct response may well be, “No, Chinese politicians are not stupid, but they are beholden to special interests just like American politicians.”

It is striking to me that we ascribe such a superior level of knowledge, wisdom and focus to foreign leaders.  The near hero worship of Soviet leaders during the Cold War by some, especially among the academy, is one example.  Then, during the ’70s and ’80s others imagined a concerted effort by the Japanese to conquer America economically.  People never saw individual Japanese companies competently competing in a global market place.  Rather, we were afraid of “the Japanese” invasion.

We see U.S. politicians enacting measures that benefit politically connected minorities at the expense of the majority of Americans, but we don’t assume a visionary effort to dominate the world sugar market.  Why then do we assume that Chinese politicians are so much more strategic?  Every government must appease a certain constituency in order to stay in power, even nondemocratic governments.  If we assume that the Chinese are successfully manipulating the currency market, isn’t it more logical to assume that the goal is to appease a powerful domestic manufacturing lobby?  The alternative is to assume that China plans to dominate the West by giving away its wealth.

Note:  Brad Delong sees the deficit as the result of U.S. exports of international liquidity and wealth preservation services, and Tyler Cowen notes that revaluation of the Yuan would likely have negligible effect.