As explained by historian Stephen Davies, after defeating James II in 1690, protestants subjected Irish Catholics to harsh restrictions on land ownership and leasing. Most of Ireland’s people were thus forced to farm plots of land that were inefficiently small and on which they had no incentives to make long-term improvements. As a consequence, Irish agricultural productivity stagnated, and, in turn, the high-yield, highly nutritious, and labor-intensive potato became the dominant crop. In combination with interventions that obstructed Catholics from engaging in modern commercial activities – interventions that kept large numbers of Irish practicing subsistence agriculture well into the 19th century – this over-dependence on the potato spelled doom when in 1845 that crop became infected with the fungus Phytophthora infestans.
To make matters worse, Britain’s high-tariff “corn laws” discouraged the importation of grains that would have lessened the starvation. Indeed, one of Britain’s most famous moves toward laissez faire – the 1846 repeal of the corn laws – was partly a response to the famine in Ireland.
Had laissez faire in fact reigned in Ireland in the mid-19th century, the potato famine almost certainly would never had happened.
Posts tagged ‘Cafe Hayek’
As a reminder, I do not moderate comments. This means that the comments section is entirely an open forum and its contents do not necessarily reflect my opinion on anything. Just because I leave a comment up does not mean I accept it in any way, since, just to repeat myself, I don't moderate comments.
Cafe Hayek has a nice post that reflects feelings on the subject I mostly agree with,
American Postal Workers Union president William Burrus complains that "It is deeply troubling that Journal editors advocate ending the Postal Service's exclusive right to sort and deliver mail. The Postal Service must remain a public service if we are to honor our nation's commitment to serve every American community "“ large or small, rich or poor, urban or rural "“ at affordable, uniform rates"
My family has a ranch that is absolutely in the middle of nowhere in Wyoming - it is 30 minutes by dirt road from a town of 2,000. The USPS delivers mail to a box 3 miles away from the ranch, and does it 3 days a week. The USPS will not deliver overnight mail. UPS delivers 6 days a week right to our door, including overnight mail.
The word "uniform" is the key -- what the USPS government protected monopoly buys us is a massive cross-subsidy, where city dwellers subsidize rural communities, Alaska, and Hawaii. Further, because the USPS knows that these subsidized routes are cost black holes, they tend to cut back on service to try to save money. The result is that no one is served well, as is often the case when a large cross-subsidy exists -- cities pay more for their mail, and everyone gets worse service.
Imagine we had entirely private health insurance market "“ no Medicare or Medicaid. If I live to be sixty-five, I will probably have a personal and/or family history that indicates a strong probability of developing an expensive chronic condition. I would wager that is true of almost all sixty-five year olds.
So here is my question: which insurer in their right mind would take on my risk?
I suspect none. Once philanthropy and savings were exhausted, I would surely risk a painful life and preventable death.
Do I want this? Does anyone? Isn't "socialized" medicine for older people an unpleasant moral necessity for our wealthy society? Please note I am deeply suspicious of most arguments cast in moral terms in discussions of politics and economics. I ask these questions guardedly.
I answer in the comments:
Imagine we had entirely private life insurance market "“ no government options at all. If I live to be sixty-five, I will probably have a pretty high probability of dieing in the next 15 years or so. I would wager that is true of almost all sixty-five year olds.
So why would anyone insure me?
Because the life insurance market has developed a very reasonable solution to this -- you negotiate a term life rate for X number of years. Your rate might be Y a year for 10 years, or 1.5Y a year for 20 years, or 2Y a year for 30 years. The longer the rate guarantee, the higher the rate. You are explicitly paying higher rates than you might have in younger, less risky years to make sure you get a coverage guarantee at an affordable rate in later, risky years.
Of course, if you play the grasshopper and never buy insurance until you are 65, your price is going to be awful. But I don't think it is a reasonable role for government to do all kinds of individual-liberty-defying and costly things just because you did not take responsibility for your old age earlier in life. However, saying that, I of course know that this is EXACTLY what the government does with Social Security.
I have a high deductible individual insurance plan from Assurant who specializes in insuring individuals, and they have been evolving to a pricing model sort of similar to the term life model I listed above, though they are not quite there yet.
To the folks that say this is no solace for folks already 65, that is an implementation transition issue, not an argument against the market's ability to deal with this. Certainly a lot of folks have paid Medicare taxes for years and are counting on it. Some kind of phase out, possibly where the government redirects Medicare funds to make up the difference in policy prices for having not started locking in earlier, is possible. But the question was not an implementation question - it was a question of whether the market inherently fails for 65-year olds, and I think the answer is that it does not. We have a perfectly serviceable analog in life insurance to prove it
I call this the "failure of imagination" argument against free markets. Some sector of the economy (such as education) has been dominated by government for so long that folks can't imagine a private model. For example, when I argue for private grade school education, I can't tell you how often people say "private schools are all really expensive, no one could afford them." Private schools are expensive because in the current government model, the only market niche for private schools is for families that can afford to pay the government for education they don't use and then pay a second time for a private school.
President Obama's modest proposal to slice $17 billion from 121 government programs quickly ran into a buzz saw of opposition on Capitol Hill yesterday, as an array of Democratic lawmakers vowed to fight White House efforts to deprive their favorite initiatives of federal funds.
Sen. Dianne Feinstein (D-Calif.) said she is "committed" to keeping a $400 million program that reimburses states for jailing illegal immigrants, a task she called "a total federal responsibility."
Rep. Mike Ross (D-Ark.) said he would oppose "any cuts" in agriculture subsidies because "farmers and farm families depend on this federal assistance."
And Rep. Maurice D. Hinchey (D-N.Y.) vowed to force the White House to accept delivery of a new presidential helicopter Obama says he doesn't need and doesn't want. The helicopter program, which cost $835 million this year, supports 800 jobs in Hinchey's district. "I do think there's a good chance we can save it," he said.
The news releases began flying as Obama unveiled the long-awaited details of his $3.4 trillion spending plan, including a list of programs he wants to trim or eliminate. Though the proposed reductions represent just one-half of 1 percent of next year's budget, the swift protest was a precursor of the battle Obama will face within his own party to control spending and rein in a budget deficit projected to exceed $1.2 trillion next year.
I missed this two-year-old post from Don Boudreax at Cafe Hayek, but it is an excellent two part look at the 1975 Sears catalog aimed at answering the question, "Are we wealthier today?" Part 1 just browses the catalog; part 2 is really interesting in that he compares the hours of work required today vs. 1975. One interesting conclusion is that the comparison can be difficult because even some of the best items in 1975 are not as good as the economy models today. And he does not mention things like reliability. How often did the TV repair guy come to your house in the early 70's, with his big box of tubes. My Sony in my bedroom has been operating flawlessly since 1995. For example:
Sears lowest-priced garage-door opener: 20.1 hours of work required in
1975 (to buy a ¼-horsepower opener); 8.57 hours of work required in
2006 (to buy a ½-horsepower opener; Sears no longer sells garage-door
openers with less than ½-horsepower.)
Or not. Via Cafe Hayek and the WSJ, the median new home is 40% bigger than just a generation ago.
After more than a decade, the US may finally allow Mexican truckers on US highways, something we actually agreed to in NAFTA:
The 9th Circuit Court of Appeals inlate on
Friday denied an emergency petition sought by the Teamsters
union, the Sierra Club and consumer group Public Citizen to
halt the start of a that was approved by
Congress after years of legal and political wrangling.
I guess I can understand the Teamsters attempt to have the government shield them from competition -- that has practically become a national sport. And I presume that the Sierra Club has some environmental concerns with Mexican trucks, though that seems flimsy given trucks must meet US environmental requirements and my guess is that Mexican trucks are at least as fuel efficient as US trucks. But how can a nominal consumer group possibly justify this action? Blocking competition in any part of the economy can only increase prices and reduce choices for consumers, particularly in an area like trucking that has almost no impact on the safety of the products actually being shipped. I wish I could say this was some strange exception, but consumer groups have for years backed protectionist efforts that do nothing but hurt consumers.
I am always sort of amazed when blogsphere debates erupt around issues of fact. Specifically, people have been debating whether real income is increasing for the average person. This seems a bizarre debate - lets just look at the table and see. However, real vs. nominal numbers, cherry-picking end points, and the like, allow folks to come up with opposite conclusions.
Russell Roberts at Cafe Hayek points to another reason we can debate: Much of the real income growth over the last five years has been from non-cash benefits, like medical and pension contributions.
This is pretty good, and not just because it is drawn by my Princeton '84 classmate Henry Payne. HT: Cafe Hayek. Update: Apparently, these cartoon links are not permanent, and new cartoons replace the link, making it meaningless, so I have deleted it.
I have tried a bit of everything to grow my blog: participating in carnivals, signing up for contests, spamming Glenn Reynolds for attention (sorry Glenn). Here is the lesson I have learned: You have just got to write a lot. Other bloggers will notice you and start linking back to you when you write about them. Walter Olson at Overlawyered has had me guest blog a couple of times, and I don't think I ever emailed him once. I linked to a lot of his posts, adding my commentary, and he eventually noticed. Ditto some of the folks at Cafe Hayek, at Reason, and at the Knowledge Problem. In turn, I have discovered great blogs like Maggies Farm and Catallarchy from my traffic logs. Write a lot on your blog, and comment on other people's blogs, if you really have energy to burn, and the traffic will show up. Search engine traffic alone will bring new readers, and the more you post, the more different searches will find you (though some are a bit bizarre).
As a sort of reverse proof of this, here is my traffic profile for the last year. Nothing spectacular, I am just a small blog, but you can see what happened to traffic when my posting went way down over the summer. I have in turn been burning up the keyboard in September, and I hit a new traffic high.
Update: Trackbacks used to be a great way to tell folks that you were commenting on a particular post. Unfortunately, spam has pretty much killed them at most sites, including this one.
There is nothing bloggers enjoy more than ranking themselves. Brian Gongol issues the latest rankings, this time of Business and Economics blogs. Coyote Blog actually makes the rankings, with between 8-9% of the traffic of the leader Marginal Revolution (which is a great site). Gongol uses a newspaper analog to say that if Marginal Revolution is USA Today, I am the Rochester Democrat and Chronicle. Uh, OK.
Maybe someone can set up trade futures on business blog rankings. If that were to happen, you know what Marginal Revolution would title the post....
I have tried many times to combat the absurdity of zero-sum economic thinking. Unfortunately, Democrats seem to be testing income-inequality messages as their lead horse to ride in the upcoming elections, so we are going to hear a lot more of it. It bothers me even more when smart liberals like Kevin Drum buy into the zero sum thinking. To his credit, he doesn't totally buy into this mess from Paul Krugman:
The concern [is] that, through mechanisms we're not entirely sure of, the very richest are siphoning off the economic growth before it flows through the middle and lower classes. The worry is about the distribution of growth, but the suspicion is that the distribution is being warped by the sheer level of inequality.
But then he goes onto say nearly the same thing:
I'm not sure this gets the mechanism quite right, though. There are two basic ways that unequal growth can happen:
The rich suck up vast amounts of income growth, and this leaves very little money for the middle class. Thus, wages for the middle class are stagnant or, at best, rising slowly.
Middle class wages are kept stagnant, and this frees up vast amounts of money from economic growth. The money has to go somewhere, and it goes to the rich.
Now, obviously, it doesn't have to be one or the other. It could be both. But I suspect there's a lot more analytic power in #2 than in #1.
And finally, this stupendously ridiculous statement:
After all, the income from economic growth has to go somewhere, and if it's not going to the middle class it's going to end up going to the rich. Where else can it go?
What's bizarre about all of these statements is it treats wealth, and in this case specifically income growth, like a phenomena that is independent of individuals and their actions. They treat income growth like it is a natural spring bubbling up from the ground, and a few piggy people have staked out places by the well and take all the water before the rest of us can get any.
Wealth and income growth comes from individual action. Most rich people are getting more rich because they are intelligently investing and taking risks with their capital, applying the output of their mind to create new wealth. There is no (none, zero, 0) economic correlation that says that if the rich get really rich, then there is less left over for the poor.
Here is his solution:
Now, there's certainly no reason to reduce marginal tax rates on the hyper rich in an effort to make inequality even worse than it otherwise would be. But as unjustified as this is, tax cuts aren't the main issue. Median wages are. Focus government policy like a laser on improving the wages of the middle class, and reductions in income inequality will follow.
And how the hell does he suggest the government do that? Seriously. Can anyone tell me one single thing the government can do to improve middle class wages that does not involve tax policy? Well, we can back into his solution from this paragraph where he lists things the government can do that are bad for the middle class:
Appoint members to the Federal Reserve who are obsessed with inflation and act to cool down the economy at the least sign that average hourly wages are rising. Make it harder to form unions in new industries, thus reducing the bargaining power of the working class. Support free trade agreements that put downward wage pressure on low-income workers. Support tax and deregulation policies that make middle class jobs less secure.
So presumably, his solution to increasing middle class wages is: 1) allow inflation to run at a higher rate 2) encourage unionization 3) adopt protectionist measures for uncompetitive industries and stifle free trade 4) increase regulation on businesses and reverse deregulation in industries (presumably like airlines and telecoms).
I'm no Julian Simon, but if we could structure a bet as to whether these policies would help real middle class wages, I would sure take the opposite side from Mr. Drum.
Here is my theory for what is going on, if you even accept that middle class income stagnation is real and not a symptom of our difficulty measuring the benefit of improving products and technologies. I think much like technological advances from time to time in the past have caused restructurings in the labor market for blue collar workers, we are going through the same thing, really for the first time, with white collar middle class workers. Technology and globalization offer all sorts of opportunities for companies, and the result is a real restructuring of how many types of white collar workers are used. Until this restructuring is complete, wages may stagnate, since any wage pressure will just lead to companies implementing changes from their backlog of streamlining opportunities.
At some point we will work through this, and wages will rise again. If anything, I think the government does damage by slowing this process down. Note that nearly every one of Drum's suggestions would slow or stop this restructuring. This is one of the ironies of progressives -- despite their name, what they don't like about capitalism is the change. They want safety and predictability from the inherently unpredictable. So protectionism slows global outsourcing, and also reduces the pressure for cost improvement. Regulation tends to lock in current practices and make changes harder. Ditto strong unions.
One of the reasons I like some of what Bill Clinton did was that in the early 90's, he faced tremendous pressure to take many of these same steps, trying to halt the economic restructuring that was occurring due to competition from Asia. He didn't have the government step in, though, and he supported free trade, and the country thrived. His fellow Democrats (including his wife) should learn from that.
update: A real economist (unlike me and probably Paul Krugman) discusses inequality and unionization
update #2: More real economists, this time the awsome guys at Cafe Hayek, pile on.
I have been a Tiger-lover for years, going back even before my days at Princeton. Over the years, I have given to various tiger defense funds, generally with a feeling of hopelessness. The total dollars someone can gain from stripping a tiger of all of its lucrative parts is almost drug-money high, due to the popularity of tiger bits in various Asian "medicines."
This proposal from Barun Mitra, as quoted by Cafe Hayek, is the first one I have seen that might have a chance. He proposes to allow ownership and commercial farming of tigers, to give incentives to breed and preserve the species. This is a classic tragedy of the commons problem, where current lack of clear ownership of the valuable assets (here, tigers) lead to harvesting without heed to the long-term value of the asset.
At present there is no incentive for forest dwellers to protect tigers, and
so poachers, traffickers and unscrupulous traders prevail. The temptation of
high profits, in turn, attracts organized crime; this is what happens when
government regulations subvert the law of supply and demand.
But tiger-breeding facilities will ensure a supply of wildlife at an
affordable price, and so eliminate the incentive for poachers and, consequently,
the danger for those tigers left in the wild. With selective breeding and the
development of reintroduction techniques, it might be possible to return the
tiger to some of its remaining natural habitats. And by recognizing the rights
of the local villagers to earn legitimate revenue from wildlife sources, the
tiger could stage a comeback.
I've met a lot of World Wildlife Federation folks in my life, and can say that few of them trust capitalism and many hate it. My gut feel is that these guys would rather see Tigers die off than end up as commercial herd-beasts, so I am pretty sure this proposal will never, unfortunately, get adopted.
In yesterday's Wall Street Journal, Lawrence Lindsey wrote
about the Chinese government's policy of not allowing the value of the
yuan to rise against that of the dollar:
America, however, benefits from this arrangement. The Chinese clearly
undervalue their exchange rate. This means American consumers are able
to buy goods at an artificially low price, making them winners. In
order to maintain this arrangement, the People's Bank of China must buy
excess dollars, and has accumulated nearly $1 trillion of reserves.
Since it has no domestic use for them, it turns around and lends them
back to America in our Treasury, corporate and housing loan markets.
This means that both Treasury borrowing costs and mortgage interest
rates are lower than they otherwise would be. American homeowners and
taxpayers are winners as a result.
The Chinese are holding on to a Trillion dollars in US currency, with the main effect of subsidizing lower prices and interest rates for US consumers. What a deal! (I took a more tongue-in-cheek approach to the same issue here) I know most commentators instead want to focus on the threat of China suddenly dumping those dollars, disrupting US markets. People need to understand that the cost of doing the latter is enormous for China, not only in lost value of their dollar-denominated assets but in lost exports as the value of the Yuan would spike. To test the hypothesis of holding dollars as a strategic weapon, would you feel more secure in the US if the government held a trillion dollars of yuan? Why? I would in fact feel more vulnerable to China, dependent on the health of their economy. I personally am a big believer that Chinese investments in the US are great, and will act as a stabilizing influence in the future.
By the way, while the above refers the Chinese government holdings of US financial assets, Cafe Hayek also points to an article by John Makin of the AEI who observes that the trade deficit is a misnomer, as the US is providing services that are not counted, specifically wealth-protection services:
In summary, Makin argues that one of the reasons foreigners sell so
many goods and services to Americans and then consistently refrain from
buying an equivalent amount (in value terms) of goods and services from
Americans is that foreigners have a high demand for "wealth-storage"
services supplied by dollar-denominated assets.
The fact that global savers accommodate U.S.
consumers by keeping U.S. interest rates lower than they otherwise
would be and the dollar stronger than it otherwise would be is simply a
manifestation of America's comparative advantage at supplying wealth
other words, there's no real imbalance. If the services supplied by
"wealth-storage facilities" were counted in international commercial
accounts as "services," then the U.S. current-account would not be in
Chicago has become the latest city to try to impose special wage requirements solely on one sector of one industry, ie on big-box retailers like Wal-mart. One wonders how anyone can bend the notion of "equal protection" to support this kind of hash, but rather than again refuting this silliness for about the 89th time on this blog, I will leave it to Cafe Hayek and Russel Roberts. I particularly liked the way he rewrote the story for the Chicago papers:
Imagine a different world. A world where the City Council was blamed for the
failure of Wal-Mart and Target to pay a decent wage. Here's how the story might
After years of disastrous decisions in running the public
schools, it has become clear that Chicago's City Council has failed the children
of the Chicago area. After attending these mediocre schools, many children of
the city have inadequate skills to be successful in the labor
"Something must be done," declared Ald. Johnson. "If we had
decent schools, we wouldn't have this problem and people could live on the money
Johnson has proposed a bill that would require all Chicago
City Council members and teachers and administrators in the Chicago school
system to pay a special tax. The proceeds of the tax would help provide workers
in the member's district with a living wage.
A few days ago, I posted that people seem to make strange tradeoffs between the cost of gasoline and the value of their personal time. Don Boudreaux at Cafe Hayek makes a similar observation about recent calls to reinstate the 55 MPH speed limit, pointing out that slower speed limits may save gas but they cost people time, and time is one resource that is truly finite:
In short, for every 75-miles covered on a highway, reducing the speed limit from
75 MPH to 55 MPH will save a driver $2.58 in fuel cost -- and this assuming that
the increase in fuel efficiency of the average car caused by the lower speed
limit is a whopping 10 mpg. But the resulting greater time on the road will
cost a driver earning the average non-supervisory wage $5.82 worth of his or her
time per 75-miles driven.
By the way, it is no surprise that this always seems to be proposed by Easterners who have no conception of the travel distances out west.
As a follow-up to this post, I wanted to take on the argument that people use against the US's health care system, arguing that it must be worse than other countries socialized approach because it costs so much more. Well, I am the first to agree that reduced regulation and a better matching of who is paying the cash to who is receiving the services would result in huge cost savings. However, it may also be true that you get what you pay for, as discussed in Cafe Hayek. The key chart is shown below:
One thing I forgot to mention in the previous post was a bit of background of exactly why we have a model where health care is payed for by the employer. This structure of company-paid health care was not a natural market evolution, but was in fact a direct result of several very distorting government regulations.
Company funded health care plans began in the 1930's and 1940's as a way for companies to try to get around government controls and freezes on wage rates, first instituted with the NRA and later during WWII. In particular, during the incredibly tight domestic labor markets in WWII, employers struggled with government-mandated wage controls, and used the promise of employer-paid health care as a way to provide higher effective compensation to attract employees, since these non-cash benefits were not counted in the wage freeze calculation. After the war, the government locked in this practice when the IRS and Congress agreed that company-paid health care was not taxable as regular income, meaning that such health plans were given a strong tax-preference over cash wages.
Finally, if you are not familiar with the appalling experiment in fascism that was the NRA, I wrote about it here.
Some days, I just don't have the energy to issue yet another rebuttal of serial economic ignorance. But the folks at Cafe Hayek never seem to get tired. You can find thoughtful rebuttals to accusations that Oil prices are too high, Wal-Mart prices are too low, and the minimum wage needs to be raised.
Cafe Hayek has a fabulous fisking of Missouri governor Matt Blunt's letter to the editor explaining why his call for price controls on gasoline is consistent with his free market principals. Its all good, I can't pick out any one quote. Read it all.
But wait! This just in! Maybe our governor IS this dumb.
Our great benevolent leader, Janet Napolitano, has stated in press conference
the she is going to investigate these fuel prices of ours. Mostly she was
ruffling her feathers right after Hurricane Katrina shutdown a good 30% of the
domestic supply source. So of course prices increased slightly to account for
the lack of supply. This trend that followed exactly what even very simple
supply and demand theory would predict was not enough to convince miss Gov. J.No
not to call for yet another investigation. No way! She was not going to be
swayed by facts, reality or "assurances from the oil industry" that these were
fair market prices. Nope. An investigation was needed.
A little over a year ago, a pipeline broke and the only source of gasoline into Phoenix was stopped. Due to EPA regulations, Phoenix requires a special gas blend made in only one refinery coming to us through one pipeline, so it is not surprising that if that source is interrupted, gas might be short here for a while and prices might spike up. Which they did. Governor Napolitano at that time blamed the whole situation on the oil industry and called for investigations. Tellingly, she took only three policy actions:
- Temporarily waived regulations for a special blend of gas in Phoenix
- Temporarily waived regulations on truckers that were preventing them from filling in for the broken pipeline
- Considered circumventing regulations that were preventing a local refinery to serve the Phoenix market from being built.
So the rhetoric at the time was "its all the oil companies faults" but the solution was "repeal government regulations". Hmmmmm. By the way, the Commons Blog created a nice chart showing how those filthy rich oil companies are making, uh, ahem, lower profits than average for US industry (click to enlarge). I wish they were more profitable- we would probably have a lot more oil.
Cafe Hayek points out that Rep. Earl Blumenauer wants to make sure that New Orleans is rebuilt with a strong urban planning vision. Since Mr. Blumenauer represents Portland, Oregon, the city beloved of planners that has been planned into having some of the highest priced housing and worst traffic of any city of its size in America, I presume he wants something similar for New Orleans (Portland was also the city that thought it had solved global warming).
Here is my urban plan for New Orleans: Every person who owns property can build whatever the hell they want on it. If other people want something else built on that property, and value this outcome enough, they can buy the property from its owner. This novel concept is called "private property rights" and falls under the broader category of what are called "constitutionally protected individual rights" or even more broadly, "freedom". It is a concept that used to be taken for granted in this country and but now is seldom even taught in schools.
For the property owned by the government, well, they are going to build whatever dumbshit thing they want to on it anyway, so I'll just root for their choice to be fairly inexpensive. We here in Phoenix built a half-billion dollar stadium for the for-god-sakes Arizona Cardinals that is used for its core purpose 3 hours a day for 8 days a year. It couldn't be worse, could it?
The shade from the Wal-Mart Neighborhood Market sign is minimal around noon;
still, six picketers squeeze their thermoses and Dasani bottles onto the dirt
below, trying to keep their water cool. They're walking five-hour shifts on this
corner at Stephanie Street and American Pacific Drive in Henderson"”anti-Wal-Mart
signs propped lazily on their shoulders, deep suntans on their faces and
arms"”with two 15-minute breaks to run across the street and use the washroom at
a gas station....
They're not union members; they're temp workers employed through Allied
Forces/Labor Express by the union"”United Food and Commercial Workers (UFCW).
They're making $6 an hour, with no benefits; it's 104 F, and they're protesting
the working conditions inside the new Wal-Mart grocery store.
"It don't make no sense, does it?" says James Greer, the line foreman and the
only one who pulls down $8 an hour, as he ambles down the sidewalk, picket sign
on shoulder, sweaty hat over sweaty gray hair, spitting sunflower seeds. "We're
sacrificing for the people who work in there, and they don't even know it."
The union accuses Wal-Mart of dragging down wages and working conditions for
other grocery-store workers across the nation. "Whether you work or shop at
Wal-Mart, the giant retailer's employment practices affect your wages. Wal-Mart
leads the race to the bottom in wages and health-care," says the UFCW's website.
"As the largest corporation in the world, Wal-Mart has a responsibility to the
people who built it. Wal-Mart jobs offer low pay, inadequate and unaffordable
healthcare, and off the clock work."
But standing with a union-supplied sign on his shoulder that reads, Don't
Shop WalMart: Below Area Standards, picketer and former Wal-Mart employee Sal
Rivera says about the notorious working conditions of his former big-box
employer: "I can't complain. It wasn't bad. They started paying me at $6.75, and
after three months I was already getting $7, then I got Employee of the Month,
and by the time I left (in less than one year), I was making $8.63 an hour."
Rivera worked in maintenance and quit four years ago for personal reasons, he
says. He would consider reapplying.
This was funny, from labor boss John Sweeney (via Cafe Hayek):
Let's require big, profitable companies such as Wal-Mart to provide health care
to their employees instead of passing the cost along to everybody else, and
let's begin to develop a national health care plan that provides affordable
coverage to all Americans.
This is really, really funny. Notice that in the first half of the sentence, he decries passing health care costs "along to everybody else" and then in the second half advocates a national health insurance plan that would pass individual health care costs onto... everybody else. Also note that since Wal-mart, despite Mr. Sweeney's description as being big and profitable, has one of the lowest profit margins in the Fortune 100, it would likely have to raise prices in order to... pass these costs along to everybody else.
What Mr. Sweeney is actually frustrated about is that there are a large number of individuals in the labor force that he does not make decisions for and who do not in turn contribute to his personal power.
Cafe Hayek has more.
I have little patience for the campaign against American companies, particularly apparel companies, for operating "sweatshops" in other countries. A bunch of American middle class protesters who have generally never been to the country involved complain that wages paid are too low. Why too low? Well, the only basis I can determine is that they are declare too low because the protesters involved would never take that $12 a day job themself. Of course, the protesters have never wallowed in miserable poverty trying to live on $2 a day. As I wrote before:
Progressives do not like American factories appearing in third world
countries, paying locals wages progressives feel are too low, and
disrupting agrarian economies with which progressives were more
comfortable. But these changes are all the sum of actions by
individuals, so it is illustrative to think about what is going on in
these countries at the individual level.
One morning, a rice farmer in southeast Asia might faces a choice.
He can continue a life of brutal, back-breaking labor from dawn to dusk
for what is essentially subsistence earnings. He can continue to see a
large number of his children die young from malnutrition and disease.
He can continue a lifestyle so static, so devoid of opportunity for
advancement, that it is nearly identical to the life led by his
ancestors in the same spot a thousand years ago.
Or, he can go to the local Nike factory, work long hours (but
certainly no longer than he worked in the field) for low pay (but
certainly more than he was making subsistence farming) and take a shot
at changing his life. And you know what, many men (and women) in his
position choose the Nike factory. And progressives hate this. They
distrust this choice. They distrust the change. And, at its heart,
that is what globalization is all about - a deep seated conservatism
that distrusts the decision-making of individuals and fears change,
change that ironically might finally pull people out of untold
generations of utter poverty.
We examined the apparel industry in 10 Asian and Latin American countries
often accused of having sweatshops and then we looked at 43 specific accusations
of unfair wages in 11 countries in the same regions. Our findings may seem
surprising. Not only were sweatshops superior to the dire alternatives
economists usually mentioned [such as working on subsistence farms], but they
often provided a better-than-average standard of living for their workers.
The apparel industry, which is often accused of unsafe working conditions and
poor wages, actually pays its foreign workers well enough for them to rise above
the poverty in their countries. While more than half of the population in most
of the countries we studied lived on less than $2 per day, in 90 percent of the
countries, working a 10-hour day in the apparel industry would lift a worker
above - often far above - that standard. For example, in Honduras, the site of
the infamous Kathy Lee Gifford sweatshop scandal, the average apparel worker
earns $13.10 per day, yet 44 percent of the country's population lives on less
than $2 per day.
Cafe Hayek concludes:
Powell's and Skarbek's lesson is straightforward and important. But it's a
lesson too often ignored by "activists" who would rather pose and prance as
moral crusaders than analyze situations in ways that might actually help people.
The lesson is summarized by what I call "The Economist's Question: "As
compared to what?"
In and of itself, situation A is neither good nor bad; it is good or bad only
in comparison with it's real alternatives. This lesson is a hard one, perhaps
-- it's certainly an unromantic one -- but it's indispensable for sound
A while back, I made a plea to the left to "come to the dark side" and consider school choice. In this post, I didn't argue about quality or efficiency improvements, but about diversity:
At the end of the day, one-size-fits-all public schools are never
going to be able to satisfy everyone on this type thing, as it is
impossible to educate kids in a values-neutral way. Statist parents
object to too much positive material on the founding fathers and the
Constitution. Secular parents object to mentions of God and
overly-positive descriptions of religion in history. Religious parents
object to secularized science and sex education. Free market parents
object to enforced environmental activism and statist economics. Some
parents want no grades and an emphasis on feeling good and self-esteem,
while others want tough grading and tough feedback when kids aren't
learning what they are supposed to.
I have always thought that these "softer" issues, rather than just
test scores and class sizes, were the real "killer-app" that might one
day drive acceptance of school choice in this country. Certainly
increases in home-schooling rates have been driven as much by these
softer values-related issues (mainly to date from the Right) than by
just the three R's.
So here is my invitation to the Left: come over to the dark side.
Reconsider your historic opposition to school choice. I'm not talking
about rolling back government spending or government commitment to
funding education for all. I am talking about allowing parents to use
that money that government spends on their behalf at the school of
their choice. Parents want their kids to learn creationism - fine,
they can find a school for that. Parents want a strict, secular focus
on basic skills - fine, another school for that. Parents want their
kids to spend time learning the three R's while also learning to love
nature and protect the environment - fine, do it...
Today, Jeff Jacoby, via Cafe Hayek, is making much the same argument:
From issues of sexuality and religion to the broad themes of US history and
politics, public opinion is fractured. Secular parents square off against
believers, supporters of homosexual marriage against traditionalists, those
stressing ''safe sex" against those who emphasize abstinence. Each wants its
views reflected in the classroom. No longer is there a common understanding of
the mission of public education. To the extent that one camp's vision prevails,
parents in the opposing camp are embittered. And there is no prospect that this
will change -- not as long as the government remains in charge of educating
Imagine how diverse and lively American education would be if it were
liberated from government control. There would be schools of every description
-- just as there are restaurants, websites, and clothing styles of every
description. Parents who wanted their children to be taught Darwinian evolution
unsullied by leaps of faith about an Intelligent Designer would be able to
choose schools in which religious notions would play no role. Those who wanted
their children to see God's hand in the miraculous tapestry of life all around
them would send them to schools in which faith played a prominent role.
Sounds good? Well, unfortunately, as Cafe Hayek points out, Stacy Schiff in the NY Times recently went off on an anti-choice screed. Not just anti-school-choice, but anti-all-choice, and readers were writing in in droves to agree! Jeez, do people really want less choice? And just because you are too lazy to handle responsible decision-making, do you really want to limit my choice as well? And by the way, who is going to be the official cull-er of choice, and what guarantees do you have that those officials will make the same decisions as you in culling choice? Virginia Postrel has more thoughts on choice.
The bottom line of choice is that many of those in power do not trust you to make your own choices. I wrote on distrust of individual decision-making here. In my article on school choice, I ended with this caution:
Of course, there is one caveat that trips up both the Left and the
Right: To accept school choice, you have to be willing to accept that
some parents will choose to educate their kids in a way you do not
agree with, with science you do not necessarily accept, and with values
that you do not hold. If your response is, fine, as long as my kids
can get the kind of education I want them to, then consider school
choice. However, if your response is that this is not just about your
kids, this is about other people choosing to teach their
kids in ways you don't agree with, then you are in truth seeking a
collectivist (or fascist I guess, depending on your side of the aisle)
indoctrination system. Often I find that phrases like "shared public
school experience" in the choice debate really are code words for
retaining such indoctrination.
Update: I feel compelled to include this quote from Radley Balko:
Critics of capitalism once predicted that free markets would wreak mass
starvation, depletion of resources, pollution, and death.
They're now reduced to bitching about too many flavors of mustard.
We've won the debate.