Wednesday, October 26, 2011

LQ&C 10/26/11

- Wendy Alexander ran a private school that eventually went bankrupt and closed 4 weeks into the current school year. Given her proclivity for running an educational establishment that is fiscally irresponsible and delivers poor results, she has decided to take her act to the professionals:
This time, Wendy Alexander wants to use $1.6 million a year in taxpayer money to operate a public charter school called the Academy for Accelerated Learning, serving students in kindergarten through fifth grade.
- EconLog's David Henderson asks why illegal drug suppliers are always called "cartels":
But are they? The defining characteristics of cartels are that they get together to fix the price and agree to limit production. Do these firms do that? I know that the government limits production by going after producers. But do the firms do it?
- A piece from last month by Gary Becker compares market and government failures, and points out that in cases of actual market failure, government can often make the situation worse. While I don't agree with some of Becker's conclusions, I did love his rebuttal to the liberal talking point that without government, ignorant consumers would make the wrong choices:
However, before advocating various forms of government protection of consumers, we should recognize that voters are far more ignorant of political candidates then consumers are of what they buy. The reason is that consumers directly suffer if they make bad choices out of ignorance, while individual voters have negligible influence over political outcomes. Hence voters have little incentive to be informed about different candidates and their positions, and the consequences of the mistakes they make are largely borne by others.
I brought up a similar point in a recent facebook debate with a friend, writing:
We're left with a tradeoff - freedom, with the legitimate chance that people will make poor decisions (and learn from them), or society ran by a cabal of our betters, picked by the very imperfect subjects they wish to rescue, vested with the confidence that they magically know the optimal trade-offs and decisions for millions of strangers, all with scant historical evidence that such demigods have ever existed.
- Warren Meyer appeared on Fox and Friends to explain the folly of our government subsidizing an expensive luxury car (the Fisker Karma) that gets the equivalent of 19 mpg.

- Cafe Hayek featured a letter to the editor from Steve Horwitz regarding the actions of private actors amidst government intervention, featuring one of the most effective metaphors in economics I've ever seen:
If all the traffic lights in Watertown were stuck on green, we’d hardly blame the drivers for the ensuing accidents. When government distorts the signals and incentives facing producers and consumers, the blame for the resulting disaster should fall on government not the private sector. The crisis and recession are what happens when you put “people before profits.”

Wednesday, October 19, 2011

9 Questions for Occupy Wall Street

1. Do you value equality over utility? If system A resulted in a higher standard of living for all, but more inequality, and system B resulted in lower living standards for all, but less inequality, which would you prefer?

2. Would you rather be a member of the top 1% in 1890 or part of the lower 50% today? Hint: only one group has penicillin, automobiles, cell phones, chemotherapy, internet, refrigeration, indoor electricity and central heating and air conditioning.

3. Statistically, there has to be somebody in the top 1%. Do you concede the possibility that these individuals change over time? Thinking more about this concept, consider that only seniors get diplomas. But does this mean they're taking anything away from freshmen, sophomores or juniors?

4. Is it greed to want more wealth through voluntary, capitalistic transactions? Is it greed to want to take money from others to pay for loans you agreed to pay back?

5. Do you believe that wealth is a fixed sum, where the only consideration is how to divvy it up, or do you think it is actively created? If the former, how do you explain the explosion of living standards (greater per capita wealth) over the last 200 years even with a greatly increased population? If the latter, what type of system do you think incentivizes people to create more wealth?

6. Do you value security over freedom? Does your answer regarding economics apply equally to national security and civil liberties or free speech? If not, why?

7. You describe yourselves as “the 99%.” Do you think that the argument of “there are more of us than there are of you” is a just and effective way to run a country? Is there anything that government may absolutely not do, even if supported by the majority?

8. If a large bulldozer were driving through your neighborhood destroying houses, would rather spend your energy trying to change who was driving the bulldozer or getting rid of it? Likewise, if the big corporations run the government, do you expect increasing government power to increase or decrease the influence of these corporations? What do you expect would be the result of campaign finance reform designed by bought-and-paid-for politicians?

9. In a capitalist society, what is to stop willing citizens from forming a commune where all possessions are shared? In a socialist society, what is to stop willing citizens from forming a capitalist, property-rights based enclave? Hint: guns.

Sunday, October 9, 2011

Truthers at 'Occupy Tampa'

Who says the 'Occupy Wall Street' crowd doesn't have a serious agenda?

This photo is from the Occupy Tampa Facebook profile:

Because 9/11 and the recession were Bush's fault 'n stuff. Man.


Update: A better-quality photo:

Plus this one, which has nothing to do with Truthers, but the shirt is priceless:

Tuesday, October 4, 2011

Shifting Debit Card Costs

In light of Bank of America's recent announcement that they will be charging a $5 monthly fee for debit cards, the St. Pete Times published an incoherent rant that tried to link the unpopular program on another - TARP:

With financially stretched consumers already getting their pockets picked at every turn, from airline travel fees to cable television bills, Bank of America's decision to impose a $5 monthly debit card fee is a cynical slap in the face to the public whose tax-funded $45 billion in TARP funds helped bail out the nation's biggest bank from the consequences of its own incompetence. The new fees by B of A and its competitors hit the poor and middle class disproportionately hard, and Congress should look for ways to provide more relief for consumers.
In response, I wrote the following letter to the editor, published today:

Your editorial criticizing Bank of America's new debit card fees was off base in linking them to the Troubled Asset Relief Program.

TARP had nothing to do with these new fees; they were spawned by another ill-conceived government initiative, the Dodd-Frank financial reform bill.

Allowing customers the use of debit cards creates costs on issuing banks, and previously the banks imposed these costs on merchants. So, the most powerful and politically connected corporations in this sector lobbied the government to make someone else pay their bills. Kind of like TARP, actually.

The result was Dodd-Frank, which capped how much banks could charge merchants for debit card transactions. To make up for the shortfall, banks now have to find other sources of revenue to fund debit card transactions.

The fees did not spring up out of nowhere — they represent costs that existed all along, but now shifted to individuals because of an unjustified government intervention. To suggest more congressional "relief" is unfortunate and illogical.

I previously wrote about debit card fees here.