free trade & free markets

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This Ain’t Laissez-Faire

Thursday, October 23rd, 2014

Things are what they are, not their opposite. Can we accept that as a starting point?

Not if we’re scoring ideological points regardless of the cost to clarity.

Newsweek calls drug-war violence in Long Island “a harrowing example of free-market, laissez-faire capitalism.” To this, Cato Institute’s David Boaz objects that “the competition between the local Crips and Bloods [is described] in terms not usually seen in articles about, say, Apple and Microsoft or Ford and Toyota.”

Under a truly free market, the rights of buyers and sellers to peaceably trade are legally protected from theft and violence, and their contracts defended from fraud. Black markets, on the other hand, are made up of illegal exchanges, actively prohibited trade.

Sure, black-market trade has something in common with legal trade. As with legal exchanges, persons willingly participate in black-market trades and expect to benefit.

But economic activity that can easily get you jailed is fundamentally different in just this respect from that conducted in a relatively laissez-faire context.

The difference has consequences.

You can’t go to court if you have a grievance with a black-market trading partner or competitor. And persons less scrupulous, more violent, more criminal than the norm tend to be disproportionately represented among sellers of illegal goods that have especially big markups precisely because they’re illegal.

So Boaz is right.

The legal capitalism at K-Mart, J. C. Penny, or a post-Prohibition-Era liquor store isn’t fertile ground for the gang warfare invited by the War on Drugs. We can’t tell the difference, though, if we ignore the difference.

This is Common Sense. I’m Paul Jacob.

The Dark Guardian of Opacity

Monday, October 6th, 2014

Sen. Harry Reid has his reasons that reason does not know.

Well, Nick Gillespie of ReasonTV (and .com) doesn’t know them. But he has his suspicions.

While the House has passed the Federal Reserve Financial Transparency Act, aiming to audit the Fed, Senate Majority Leader Reid balks at bringing the proposal up to a vote in Congress’s upper chamber. (Gillespie says it won’t happen, not while Reid has his say.)

In the House, both parties supported the audit — a majority of Democrats, and all Republicans save one lone holdout giving a Nay vote. But Reid, whose commitment to corporatism and opacity is well known, presumably fears the upwelling of good old republican values in the Old Man’s Club that is the U.S. Senate — Reid’s romper room for so many decades.

Egads, he must be thinking, even Senators Elizabeth Warren and Rand Paul agree on the need for some sunlight into the dark corridors of America’s bank cartel.

And they don’t agree about much of anything!

Gillespie spells out the whys of transparency. He also explains the basic context: “The central bank is explicitly tasked with the fundamentally incompatible duties of conducting stable monetary policy, promoting full employment, acting as a lender of last resort, and regulating the banks it works with. Good luck with all that.”

Who needs luck when you have power? Some do benefit from the current Old Boys’ system. They’re just not the general citizenry. Or republican governance.

A free society would have a very different banking and monetary system. Adding transparency might begin the process toward such a system.

Next step? Boot Harry Reid out of his cushy position of power.

This is Common Sense. I’m Paul Jacob.

Giddy, Nope

Thursday, September 25th, 2014

The National Labor Relations Board has ordered CNN to rehire 100 workers and pay off 200 others.

NLRB rebukes CNN for “failure to bargain” with a union. The dispute apparently involves no breach of contract with employees — only a breach with a union’s demand that CNN deal with it.

Blogger Daily Pundit is giddy: “I can’t imagine a happier outcome than seeing CNN, the hack propaganda mouthpiece for the ‘respectable’ American left, being forced into bankruptcy” by a “rogue bureaucracy.”

But wait. Would the tyrannical destruction of CNN be — ideological schadenfreude aside — a happy outcome?

No.

However poetic the justice, or injustice, being inflicted on its owners and officers, their right to make economic decisions — the right to control our own lives and property — does not hinge on the content of their notions. The only way we can all have rights, share the same standing  in the world, is to ground our rights in our shared humanity … and not anything more specific, narrow, or particular. Only those who forcibly violate the rights of others properly forfeit some of the protections to which peaceful persons are normally entitled.

Even if Pundit’s point is only to relish CNN’s comeuppance, not to root for governmental harassment of lefty prattlers, it’s misguided. Each new assault on our freedom — to hire, to fire, to speak, to write — serves as precedent for comparable and worse assaults. If we hope to defend our own freedom, we should defend that of all peaceful individuals. And prefer that they be left alone.

We must defend even those with some pretty noxious ideas.

This is Common Sense. I’m Paul Jacob.

The Uber Rebellion

Tuesday, September 9th, 2014

Customers in Germany and elsewhere have flouted irrational attacks on the popular ride-sharing service Uber.

As I have explained before, Uber’s software lets passengers and drivers connect in a way that bypasses regularly regulated taxicabs. Cabbies don’t necessarily oppose the innovation. Many see Uber’s app as a nifty way to get customers. And, of course, many riders see it as a nifty way to get rides.

But taxi dispatchers? Well, that’s another story.

At least it is in Germany, where an organization for dispatchers called Taxi Deutschland has kvetched that the San Francisco company lacks the Necessary Permits to do electronic dispatching in Deutschland. Thanks to TD’s loud complaints, a German court issued a temporary injunction against Uber, prohibiting it from conjoining ride-seekers and ride-givers in happy synchrony.

Uber decided to keep operating in the country anyway, despite the threat of huge fines.

They’ve gotten lots of moral support. In response to the injunction, customers quietly but firmly told regulators “Laissez nous faire!” — a.k.a. “You’re not the boss of me!” — by doubling, tripling and even quintupling demand for Uber’s app. Matthew Feeney of Cato Institute points to jumps in signups in the days following the court’s order: in Frankfurt a 228 percent jump, Munich 329 percent, Hamburg 590 percent.

Last July, in the U.K., Brits surged their signups eight times over after protests against the company.

Keep up the good work, rebels.

This is Common Sense. I’m Paul Jacob.

Buy Whoppers to Oppose Whoppers

Tuesday, September 2nd, 2014

U.S. Senator Sherrod Brown has proposed a boycott of Burger King. Try Wendy’s or White Castle instead, he urges.

Why? Are the Burger King burgers moldy now?

No, they’re still delectable. In fact, I’m stepping up my patronage of Burger King thanks to Brown’s attack. All who seek to productively improve their lives should follow suit.

For that’s the actual crime here. Honest self-improvement. Contrary to Brown, though, it deserves no chastisement.

Burger King has been caught pursuing an opportunity to improve its offerings and bottom line. It is buying Tim Hortons, a Canadian coffee-and-donut chain. It will also be moving its headquarters to Canada.

Why?

Because our federal government taxes corporate earnings more heavily than many other countries do, the Burger King move north means a smaller tax bite. More money for the shareholders.

And, thus, less money for Uncle Sam.

Fine with me. I don’t begrudge an honestly earned dollar. And our government’s wastrel ways  won’t be cured by ever-higher taxes on us. But if politicians fear the exodus of U.S. firms for tax reasons, why not eliminate that motive by reducing corporate taxes?

Brown gestures in the direction of lower taxes but also demands a “global minimum tax rate” to thwart absconders. Nah. Chuck the stick. Just use the carrot. Slash what U.S.-based firms must pay and American firms will stay.

Slash them enough and maybe successful foreign firms will move HQs here, too.

Entice the economic titans who benefit us so much; don’t chase them away. Instead of badgering with boycotts, inspire with freedom.

This is Common Sense. I’m Paul Jacob.

Unsustainable Pseudo-thinking

Tuesday, August 26th, 2014

One of the fashionable thought-killing words offered by the cliché-recycling movement is “sustainable.”

In the common tongue, as spoken by many, many environmentalists, this term implies that we will run out of all our stuff pretty soon unless everybody on the planet (except maybe Al Gore) is put on a strict low-consumption regimen.

The environmental movement has adopted the color “green,” but “drab-gray” is what comes to mind when I’m told that we must treat economic goods as existing in a fixed quantity, only to be skimpily apportioned (by regulators), never massively expanded (by profit-seeking producers, as they’ve done whenever free to do so).

In fact, as economist and Cafe Hayek blogger Don Boudreaux argues in his article “Unsustainable Platitudes,” market actors tend to swiftly counteract shortages that occur in a market context. When supply of a good slumps for whatever reasons, prices for it rise. Rising prices yield predictable effects. That is, they

  • nudge customers to economize; and
  • entice profit-seeking producers and vendors to create more of the good, or
  • provide good-enough (or better) substitutes for it,
  • or both.

This is Economics 101, teachable in one lesson.

The Wall Street Journal saw fit to quote Boudreaux, provoking the ire of enviro-cliché aficionado Joshua Holman. He contacted Boudreaux to accuse him of “[emitting] word pollution . . . to block the work of the many activists struggling to save our planet from overuse, exploitation and destruction.” In reply, Boudreaux suggests that reality “cannot be grasped, and it certainly cannot be improved, with slogans.”

Slogans do have their place. They’re just not a sustainable substitute for reasoning.

This is Common Sense. I’m Paul Jacob.

Help Airbnb Win in San Fran

Monday, August 4th, 2014

Whenever companies invent radical new ways of making life easier, there’s a good chance someone will kvetch about how hazardous the new way is and/or how rudely inconvenient for those wedded to old ways.

That’s true when it comes to smartphone apps that helps users buy rides outside the usual regulated-taxi context (as I’ve discussed here and here). It’s also true in the case of Airbnb, whose app connects renters and home owners.

Airbnb and other companies are fighting to reform San Francisco’s restrictive housing laws, which have helped inflict one of the most hellish housing markets in the country. The Fair to Share San Francisco website says that the town’s housing laws are “outdated” — which understates the case, since the strictures weren’t valid to begin with. Regulators prohibit San Francisco residents from subletting their residences for fewer than thirty days.

This makes things tough for an app designed to broker short-term rentals.

Airbnb has also been hassled in New York State, where it has been forced to turn over some data about its users to the attorney general as prelude to turning over even more data about users the AG decides may be breaking the law.

It is indeed unfair to outlaw you from peacefully using your own property as you wish. If you live in the San Francisco area, you can help change Fog City’s smoggy housing laws by signing a petition at the Fair to Share site.

Strike a blow for Common Sense. I’m Paul Jacob.

Original photo by Dave Alter, “Lombard Street San Francisco,” some rights reserved.