Posts tagged ‘Mises Institute’

The Disincentive to Work

One of the successes of US law vs. European is that we have generally maintained the inventive to work -- in other words, we have been able to relieve economic hardship while still making unemployment uncomfortable enough to provide incentives to find work.

Based on this Mises Institute post, this may no longer be true.  If a family is comfortable with $45,000 a year, or doesn't think it has the prospect of earning more than that, there appears to be little incentive to work.

Figure2

Figure1

See the original post for explanation of the methodology and the exact programs driving these lines.

Economic Resources for Free

Meet the New Boss

I am reading a fabulous book called "The Rise and Fall of Society" by Frank Chodorov.  It was apparently first published in 1959 and has been republished recently by the Mises Institute.  Here is an early bit I particularly liked:

One indication of how far the integration [between state and society] has gone is the disappearance of any discussion of the State qua State -- a discussion that engaged the best minds of the eighteenth and nineteenth centuries.  The inadequacies of a particular regime, or its personnel, are under constant attack, but there is no faultfinding with the institution itself.  The State is all right, by common agreement, and it would work perfectly well if the "right" people were at its helm.

His next line is clearly aimed at his conservative contemporaries

It does not occur to most critics of the New Deal that all its deficiencies are inherent in any State, under anybody's guidance, or that when the political establishment garners enough power a demagogue will sprout.

I offered up similar observations here, though aimed at the left, who at the time were the minority opposition party:

I am reminded of all this because the technocrats that built our
regulatory state are starting to see the danger of what they created.
A public school system was great as long as it was teaching the right
things and its indoctrinational excesses were in a leftish direction.
Now, however, we can see the panic.  The left is freaked that some red
state school districts may start teaching creationism or intelligent
design.  And you can hear the lament - how did we let Bush and these
conservative idiots take control of the beautiful machine we built?  My
answer is that you shouldn't have built the machine in the first place
- it always falls into the wrong hands.  Maybe its time for me to again invite the left to reconsider school choice.

Today, via Instapundit, comes this story about the GAO audit of the decision by the FDA to not allow the plan B morning after pill to be sold over the counter.
And, knock me over with a feather, it appears that the decision was
political, based on a conservative administration's opposition to
abortion.  And again the technocrats on the left are freaked.  Well,
what did you expect?  You applauded the Clinton FDA's politically
motivated ban on breast implants as a sop to NOW and the trial
lawyers.  In
establishing the FDA, it was you on the left that established the
principal, contradictory to the left's own stand on abortion, that the
government does indeed trump the individual on decision making for
their own body
  (other thoughts here).
Again we hear the lament that the game was great until these
conservative yahoos took over.  No, it wasn't.  It was unjust to scheme
to control other people's lives, and just plain stupid to expect that
the machinery of control you created would never fall into your
political enemy's hands.

Free Market Does Not Mean Pro-Business

I hate the term "pro-business."  In my mind, it helps to define what is wrong with the political choices we are presented with in this country.  All of us in civics class were taught the statist "heads I win, tails you lose" political spectrum from left to right.  On this spectrum, everyone is in favor of government intervention and the sacrifice of one group of people to another.  The only thing that varies across the scale is who is the beneficiary of the plunder and the targeted areas of intervention.  For years, most of the politicians who have called themselves "pro-business" were not free market capitalists -- they spent much of their time in office sending their businessman-buddies slices of pork, zoning variations, special permission to trash other people's property (e.g. via pollution) etc.

Beyond the fact that we small government libertarians and anarcho-capitalists are given no spot on the civics class political spectrum, I have always been frustrated at being lumped together with "pro-business" politicians, and have been asked to defend (which I won't and can't) various subsidies and corporate welfare.  An example of my attacks on this type of corporate welfare crap are here and here.

So, without further comment, I present this great except from an article by Gary North of the Mises Institute:

The idea that businessmen are strong defenders of the free
enterprise system is one which is believed only by those who have never
studied the history of private enterprise in the Western, industrial
nations. What businessmen are paid to worry about is profit. The
problem for the survival of a market economy arises when the voters
permit or encourage the expansion of government power to such an extent
that private businesses can gain short-term profits through the
intervention into the competitive market by state officials. Offer the
typical businessman the opportunity to escape the constant pressures of
market competition, and few of them are able to withstand the
temptation. In fact, they are rewarded for taking the step of calling
in the civil government.

The government's officials approve, but more to the point, from the
point of view of the businessman's understanding of his role,
shareholders and new investors also approve, since the favored
enterprise is initially blessed with increased earnings per share. The
business leader has his decision confirmed by the crucial standards of
reference in the market, namely, rising profits and rising share prices
on the stock market. No one pays the entrepreneur to be ideologically
pure. Almost everyone pays him to turn a profit.

This being the case, those within the government possess an
extremely potent device for expanding political power. By a
comprehensive program of direct political intervention into the market,
government officials can steadily reduce the opposition of businessmen
to the transformation of the market into a bureaucratic, regulated, and
even centrally-directed organization. Bureaucracy replaces
entrepreneurship as the principal form of economic planning.
Bureaucrats can use the time-honored pair of motivational approaches:
the carrot and the stick. The carrot is by far the most effective
device when dealing with profit-seeking businessmen.

Those individual enterprises that are expected to benefit from some
new government program have every short-run financial incentive to
promote the intervention, while those whose interests are likely to be
affected adversely "” rival firms, foreign enterprises, and especially
consumers "” find it expensive to organize their opposition, since the
adverse effects are either not recognized as stemming from the
particular government program, or else the potential opponents are
scattered over too wide an area to be organized inexpensively. The
efforts of the potential short-run beneficiaries are concentrated and
immediately profitable; the efforts of the potential losers are
dispersed and usually ineffective.

More on Wal-mart and the Minimum Wage

Last week, I posted on why Wal-Mart may be calling for higher minimum wages, and hypothesized that it may be because it won't hurt them (since they already pay well higher than the minimum) and may hurt competitors.  Llewellyn Rockwell of the Mises Institute, one of the few people in America with three sets of double-L's in his name, expands on this hypothesis:

The current minimum is $5.15. According to studies, Wal-Mart pays between
$8.23 and $9.68 as its national average. That means that the minimum wage could
be raised 50% and still not impose higher costs on the company....

So who would it affect if not Wal-Mart? All of its main competitors. And the
truth is that there are millions of businesses that compete with it every day.
Many local stores have attempted to copy Wal-Mart's price-competitive model, but
face lower costs and can actually thrive....

Even similar stores such as K-Mart can pay lower wages, and that can make the
margin of difference. K-Mart pays over a much wider range, as low as $6.75 an
hour. A major competitor is mainstream grocery stores, where workers do indeed
start at minimum wage. Target too pays starting employees less than Wal-Mart, if
the Target Union can be
believed.

Now, if Wal-Mart can successfully lobby the government to abolish lower-wage
firms, it has taken a huge step toward running out its competition. The effect
of requiring other firms to pay wages just as high as theirs is the same as if
the company lobbied to force other companies to purchase only in high
quantities, to open large stores only, or to stay open 24 hours. By making
others do what Wal-Mart does, the company manages to put the squeeze on anyone
who would dare vie for its customer base.

Now here is the great irony. The left has long been in a total frenzy about
how Wal-Mart saunters into small towns and outcompetes long-established local
retailers. Wal-Mart's opponents have whipped themselves into a frenzy about the
company's success, claiming that it always comes at a huge social cost.

Now, most of this rhetoric is overblown and ignorant. Wal-Mart would not have
made any profits or grown as it has without having convinced the consuming
public to purchase from the store. Consumers could put the company out of
business tomorrow, just by failing to show up to buy.

The left's claims of unfair practices would be valid if Wal-Mart did indeed
work to impose legal disabilities on its competitors "” in effect making it
illegal to outcompete the company. And yet that is precisely what raising the
minimum wage would do: impose a legal disability on those companies engaged in
lower-wage competition with Wal-Mart. So the economically ignorant left
advocates raising the minimum wage.

On Google and Losing My Blog Focus

In the beginning,  I tried to write a blog about my day to day experiences as a small business person.  That lasted about a day, mainly because I have the attention span of a 7-year-old boy mainlining Hershey Bars.  I still blog a lot about running a small business, but I also comment on political trends, mainly from a libertarian point of view, and anything else that happens to strike my fancy that day.

However, with Google out there, I have lost even more focus and control of my blog's positioning.  A lot of my traffic is Google hits, and it turns out there are two particular searches that drive a non-trivial portion of my traffic.  That means for many readers, my blog is defined by these two topics:

  • Pocket Doors
  • Spanking

Yes, call me the Pocket Door and Spanking Blog now.  LOL.  Anyway, if only to reinforce my strong Google rankings on these meaningful topics, here is how I became the Pocket Door and Spanking Blog:

Pocket Doors and My Manhood  (December, 2005)

Our bathroom has a pocket door to save space - that's one of those doors that slide on a hidden rail in and out of the wall.
From time to time, usually because my kids go slamming into it, the
door comes off its rails and gets jammed, which is a problem as it can
bottleneck some very critical facilities.

The first time this happened, I tried to get it back on its track,
but I just could not.  The track is up in the wall and it is almost
impossible due to the lack of clearance to do anything with it.  I
checked in the Yellow Pages and saw there was actually a company that
specialized in pocket door repairs, so I called them out.  Well, Joe
(or whoever) shows up with his little tool kit, looks at the door for a
second, grabbed it in a certain way, and then gave it a quick jerk -
kabam - and it was back in its tracks.  It took him like 5 seconds. 

Well, there I stood, completely unmanned, right in front of my
laughing wife and family, by Joe the visible butt-crack guy.  Bummer.

Since that time, I have had the door come untracked two or three
times.  Thinking to save me further embarrassment, my wife tends to ask
any passing stranger to come in and fix it.  I can sit there for hours
fighting the thing, and then my wife brings in the guy painting the
house - kabam - fixed.  Next time she brought in the 60+ year old sales
guy who happened to be there - kabam - fixed.  I swear, if Paris Hilton
was dropping by for a visit she could probably fix that damn door.  It
is humiliating.

Well, this time I would not allow my wife get someone else to fix
it.  Every night, for about 10 minutes, I would take my innings with
the door, struggling to do what everyone else seemed to have learned at
birth.  I actually suggested to my wife that we should call out a
contractor and tear the thing out and install a real door.  She
suggested instead that she could have our 13-year-old baby sitter come
in from the other room to fix it.  Finally, tonight, when I was about
to give up, I tried holding it in a slightly different way and - Kabam
- fixed.  God I feel great.  My manhood is restored and I am at the top
of the world.

Spanking Employees  (November, 2005)

Well, just when you think you have seen every way to screw up in a small business, there comes this story.

The owner of a shaved ice business was arrested after two employees claimed he spanked them for making mistakes at work.

And more...

One
of the women told police that on her first day at the Tasty Flavors Sno
Biz, Levengood made her sign a statement that said: "I give Gene
permission to bust my behind any way he sees fit."

Hat tip to Jim Rome, as I first heard this on his radio show, and to the Mises Institute,
of all places, where I found the link.  This story has been out and
about for a while, but I wanted to give it a few days to make sure it
was not a hoax.

To make this more bizarre, I did a Google search to see if
anyone had called this out as a hoax, and found that there have been
many similar stories in other places, including here and here.

Sigh.  Oh well, I guess a weird identity is better than no identity at all.

Benefits of Private Schools

Mises Institute presents a study whose results are fairly unsurprising for any who is not a socialist or member of a teachers union.  The study

showed that private schools are more efficient -their students perform better at lower costs- than public schools and moreover that the presence of private schools in one locality improves the efficiency of government schools too, presumably because of the pressure from competition.

The only real surprise was the study's source:  the department of education in Socialist Sweden.  As you can imagine, the powers that be were not amused by the results:

The teacher's union became enraged at the results as was prime minister Persson and education minister Ibrahim Baylan .

The end result, though, was ENTIRELY predictable.  Did anyone in power change behavior or their opinion?  Nope, they just hid the report and moved on:

After [education minister] Baylan publicly blasted the report (needless to say without using any real factual arguments) the Agency for Education officially disavowed it and simply withdrew it from their web site and stopped giving out the printed version of it.

Poverty and Natural Disasters

I have written in the last week here and here about how it is poverty, not global warming or any other tired explanation, that has the most to do with high death tolls from natural disasters. 

The Mises Institute makes the case in more depth.  Excerpt:

The correlation between poverty and destruction resulting from natural disaster seems to hold up not only with a cross-section of nations, but also over time. As nations become wealthier, their losses of human life from natural calamities tend to fall. Countries that experience economic growth are putting themselves in a better position to reduce the number of deaths that result from natural cataclysms, and the clearest way to produce that economic growth is to allow people to interact in the marketplace without government intrusion.

New Age Ayn Rand

Check out this flash animation that seems kind of strange and new-agy at first, but actually is a pretty good, simple definition of libertarian philosophy.  Definitely worth checking out.  Hat tip to the Mises Institute.

Spanking Employees

Well, just when you think you have seen every way to screw up in a small business, there comes this story.

The owner of a shaved ice business was arrested after two employees claimed he spanked them for making mistakes at work.

And more...

One of the women told police that on her first day at the Tasty Flavors Sno Biz, Levengood made her sign a statement that said: "I give Gene permission to bust my behind any way he sees fit."

Hat tip to Jim Rome, as I first heard this on his radio show, and to the Mises Institute, of all places, where I found the link.  This story has been out and about for a while, but I wanted to give it a few days to make sure it was not a hoax.

To make this more bizarre, I did a Google search to see if anyone had called this out as a hoax, and found that there have been many similar stories in other places, including here and here.