Tuesday, September 29, 2009

Second stupid question of the day: "How do they get away with it?""

I was catching up on news, and someone at Yahoo! Games asks how video console manufacturers and others can charge what they do. It's another stupid question. Here's my simple answer:

Because people are willing and able to accept the amount offered.

We'll take things one by one. Microsoft charges for a wireless adapter for the Xbox 360 and is "getting away with it" because...people are willing and able to pay that! Microsoft is cutting the price to $80, clearly hoping additional buyers at $80 will offset lost profits from those who'd have paid $100 (thus maximizing revenue). But at whatever price, no one is being forced to buy the wireless adapter, or an Xbox in the first place.

The wireless adapter hardly costs "$0" on the PS3 or Wii. It's part of the total package you bought. That means if you don't need it, you're still paying for it.

"Microtransactions" might seem a sneaky, even sinister way that a company will lure in buyers and increase profits by selling you extra pixels, but again, no one is being forced to buy them or even the game in the first place. It reflects the fact that a game's full price (meaning all features present) is considerably more than the basic ("retail") price you pay in a store. This guy may feel that these are "features that really should have been in the game to start with," but the end result would be a far more expensive game. Does he think programmers work for free, that the additional content is insignificantly costly to produce? "Giving" everyone the full content sounds nice, but the practical result is that the more expensive game would be bought by fewer people. Instead, everyone can buy the basic game and then purchase additional, customized content based on...his ability and willingness to pay.

Best Buy charges $130 to set up your PS3? Well, no one is being forced to pay that. Evidently some are still willing and able to pay it, otherwise Best Buy wouldn't offer the service. Perhaps they don't have a neighbor's kid, or one they can trust, and they'd rather pay $130 to a semi-professional (we're talking Best Buy, after all) to have a PS3 set up as a surprise.

Xbox Live Points: again, no one is being forced to pay, in any denomination. Is Microsoft being "sneaky" with the 0.8 conversion? No, for the simple reason that it's right there for people to see. I don't have an Xbox and never heard about it, and while it might seem silly, people don't have to agree to pay it.

"Downloadable games that cost the same as retail" and "standard retail" are pure fallacies. The games would not cost the same as retail, because if Sony were to make the same profit, the game would cost considerably more once you factor in the necessity of retailers' profits. Is Sony trying to be "greedy" and increase its profits? It's certainly trying the latter -- any company would -- but it's a misnomer to disparage it as "greed."

The game by necessity can't be traded, because it would only lead to piracy. If you don't like that, then once again, don't buy it.

Finally, if you don't like what you're offered for a used game, then don't accept it. Retail stores are in business to maximize profit, and they by definition will charge what the market will bear. First, there's no way they could survive on just a few dollars' markup per game. Second, the reason they can charge "so little" is because...people are willing to accept it.

You probably could make more selling online, but consider the time it takes to set up the sale, waiting for payment, and then having to mail it or meet the person. This is not "laziness": it's people's realization that there's a big cost to their time. So, more than a few people are willing to go to a game store, which is a ready and reliable buyer that will pay cash. This is in contrast to a pawn shop that will pay...a similarly low price. Oops, bad example for him to use.

Stupid question of the day: "Why wasn't Manila prepared?"

American news has been covering the flooding disaster in the Philippines, but Philippine TV has the images you probably haven't seen. If you thought Katrina was bad, imagine two million people now without homes. The following videos are (someone else's) captures of Philippine news. It's ok if you don't understand Tagalog. Just watch, and like the line in the original Dragnet movie, you don't need a translation to understand what people are saying.

SUVs and minivans literally floating away
Philippines flood of woes - 29 Sep 09

Time magazine has now asked, "Why wasn't Manila prepared?". It's a stupid question, and here's my simple answer.

Because the Philippines is a poor country that can't afford to spend a huge percent of its GDP on an unpredictable event that might happen only once every several decades.

This holds true whether it's government spending or private spending. For this reason, as I explained last February, metro D.C. didn't spend millions every year to maintain equipment suitable for very rare snowstorms. That's in a wealthy area, so then what can we expect from an impoverished country?

Besides, if the Philippine government had tried, it's not as if it would have prevented this disaster. The bureaucracy works this way: Congress "appropriates" money and eventually "distributes" it to local officials in the targeted barangay. But Philippine officials tend to be so corrupt that the money is rarely spent on what it's supposed to be. Instead, it's pocketed at some point in the chain, and evidence will be faked appropriately. Roads will supposedly have been paved and well-maintained for years, so the report to Congress will include lovely photos of other infrastructure -- you could call them "Potemkin roads."

So even if the Philippine government actually had spent a sizable percentage of the country's GDP, it would have made a marginal difference at best (and certainly with less efficiency than private sector spending). Such is the nature of the state.

Wednesday, September 23, 2009

In commemoration of this week's UN meetings

A few years ago, I had the pleasure of meeting John Bolton. I quipped that this is probably one of his favorite movie scenes...but he didn't remember it!

Fast-forward to 6:00 exactly, and you can watch the rest of this brilliant movie from part 1. If you've never seen it, do. If you've seen it before, it's worth watching again once in a while. I haven't seen it in years and will have to buy it this weekend.

My friend Billy Beck wrote, "It is now idle, of course, to complain about the freedom-hating monster who pitches this evil to such a constituency." Isn't it the most pathetic thing yet in American history that that sentence, taken by itself, could apply to either Obama or Qadafi?

The UN: of collectivists, by collectivists, for collectivists, and may it perish soon from the earth.

Thursday, September 17, 2009

Nassim Nicholas Taleb: not as powerful in prognosting the crisis as people think

My comments over at Three Sources about an interview with him:

All right, I finally read the interview. His powers of prediction are...overrated. He's correct about economists' and financiers' inability to predict the future, correct about debt, wrong about Iceland, incorrect about Canadian self-sufficiency, wrong about "developing a system," very wrong about the nature of human information, and utterly wrong about actively preventing "too big to fail."

"For the past decade, he's been warning that the global economy has become far more vulnerable to unpredictable events that can cause vast disruption."

That was no prediction, because such a "warning" is completely meaningless. What does it mean, exactly? He says economists as "no more reliable than astrologers," which is true, but his own "predictions" have all the precision of fortune cookies. When something happens to ripple through international financial markets, he pats himself on the back. That's a bunch of bull.

Of course the world economy, having grown so complex, is susceptible to "unforeseeable events that can cause vast disruption." Anyone can see that. But his prediction lacked any specifics

He was simply a stopped clock that was eventually right. Similarly, don't believe all this hype about Nouriel Roubini, who also didn't have these amazing powers of prognostication that the media would have you think. Mark Zandi of Moody's frequently provides soundbites, and too many in a way. He's made a career of predicting a recession every year since at least 1997, maybe before then. Of course these two would eventually be right if they keep predicting the same thing over and over.

As I said, he's correct that "Central bankers have no clue" and about economists' ability to predict the future. Anyone familiar with Hayek knows that, and why.

The Internet did not "bankrupt" Iceland, no more than it caused the tech bubble. The Internet was merely the conduit for information, not a cause. The British and Dutch governments were wondering as early as 2006 what would happen if Iceland's major banks couldn't cover British and Dutch citizens' deposits in Icelandic banks, because it was clear Iceland's equivalent of the FDIC, or the Icelander taxpayer, couldn't cover the deposits. If you want to talk about causes, William Butler and Anne Seibert released a paper in October 2008, originally done in April 2008 but kept secret, that explained Iceland's problems. They were already very well known. In short, its banking sector was simply too extended for the size of its economy, and policymakers tried to sustain the unsustainable.

He says Canada has "energy and minerals," is "not overspecialized" and "is self-sufficient." These could easily apply to the United States; why is Canada any better? Now, Canada, or any other nation, cannot be insulated from the world, nor should it want to be. Self-sufficiency is the road to ruin, as the Hawley-Smoot Tariff showed us. It's good to have a fallback position so you can have another way to trade your goods and services with others, like a trader who can switch to driving taxis, not to provide everything for yourself.

But if we get hyperinflation and Canada will be the best place to be, how much more overloaded will its socialized health care system be? As the signs say, where will Canadians go for health care if they don't want to die waiting in line?

He's wrong about "developing a system." Anyone familiar with Hayek (namely the concepts of spontaneous order and knowledge being distributed throughout society) will understand why this line of thinking is as bad as central planners' belief that they can steer an economy in the right direction. It's flatly impossible for him, or any group of people, no matter how smart, to regulate things as he dreams.

For all his well-regarded philosophy, he doesn't understand that human information, as a whole, is imperfect. That's the nature of our existence, and unavoidable. Austrian economics explains that market processes exist as the mechanism by which we eliminate errors (q.v. Hayek's "Competition as a Discovery Procedure") and approach the harmony of supply with demand. Some people will have better information, not necessarily scientific facts as Hayek explained, but knowledge of time and place. Israel Kirzner developed his concept of the entrepreneur as someone who has better information and will put it to use, expanding on Schumpeter's concept of the risk-bearer.

And how does he plan to prevent things from becoming "too big to fail"? The free market tempers the size of a firm by allowing it to fail when overextended, which then becomes a warning to others. But he's talking about an active regulation, which is done only through government -- which would rely on imperfect bureaucrats and economists whose track record is abysmal.

I'm not impressed.

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Wednesday, September 16, 2009

No sympathy for those who don't stop to think that it's not their money

Sara Gaspar said she "thought finally something wonderful had happened," but had she a lick of common sense, she would have realized that something was very, very wrong. Notre Dame University, where she formerly worked in catering, sent her a check for the mistaken amount of $29,387 and is now suing her to get the money back.

It could very well be the truth that she contacted the catering department, but why not payroll? Meanwhile, after not receiving any answers for an unspecified time and unsure either way about the size of the check, she decided to cash it anyway and spend the money. Evidently she never tried to reason with herself that Notre Dame is a business, not a charity, and definitely not in the habit of giving out thousands of dollars for no stated reason.

A prudent, reasonable person would have waited to verify that the amount was correct. Despite her attempt to turn it into a sob story, she acted recklessly and is therefore responsible for making restitution for money that was never hers. Her situation is much like the occasional family that makes the news for blowing through excess money that an ATM spits out -- "excess" meaning it exceeded what they had on deposit, which means they knew it wasn't theirs. This news story is about college students too stupid to realize that banks can track these errors and turn names over to the police.

Good luck to Sara in any future job searches. Now her name is all over search engines as someone who'll cash a paycheck for a mistaken amount, then blame the employer. Who now will want to trust her?

Update: this gives more details, and unbelievable insight into Sara's mentality. It seems it wasn't a physical check, but direct deposit. Nonetheless, Sara should have waited. Instead:
When she didn't hear back, Gaspar said she assumed the gratuity was intentional. After years of medical problems and hard times, she believed she was finally catching a break.

"I was so excited," Gaspar said. "I thought, I could pay some of these bills."

The former employee has also since contacted an attorney and says she was told that because the money was under "gratuity" and not "wages" that she was in the clear.

The enormous tip indeed went toward medical bills and a 2002 Volkswagen Jetta, Gaspar said.

It wasn't until May that university officials discovered the mistake and contacted Gaspar, according to court documents. Notre Dame is now seeking repayment of the $29,387 plus attorney fees and other court expenses.
This article also doesn't say precisely when, but it could have been as early as May 1st (exactly two weeks after her excess payday). Payroll and HR departments can work that slowly, especially when conducting an internal investigation to find out exactly what happened. So Sara decided that this was, what, manna from heaven? That Notre Dame decided to give her $29,000 (a strange amount when you think about it, why not $25K or $30K?) as an act of charity, but on a paycheck and marked as a tip?

The attorney she initially contacted either gave her bad advice or was not aware of all the facts. The nature of the payment does not matter here. If it was a customer directly giving her a large tip, then she'd be entitled to it. That was not what happened, however. This was the case of a private party mistakenly overpaying another.

Tuesday, September 15, 2009

A lazy long weekend in New York

A view of the Statue of Liberty from Battery Park.

Jones Beach. It's not Boracay, but not bad.

Monday, September 14, 2009

"I don't need to be an American living in US to come up with a relevant and well-thought opinion about their economy or politics."

I didn't say that, someone else did. At first I thought this referral was by another "Tita Cory" worshipper looking to insult me behind my back, but these chaps Genkied (who linked) and tyrone (who said what I quoted for the title) actually recognize the truth about her. I don't quite agree she was the worst, but as I've been saying, she did plenty of damage to the country in her own way.

Yes, I was young when repatriated (having been born an American citizen) to the United States. However, I don't have to justify or excuse that, or counter that "My parents lived under martial law and told me." Not having "been there" is no reason to disqualify someone from having an informed opinion on a subject. So as I said to a certain troll, it doesn't matter if she really was at the "People Power Revolution" while my family watched it on TV. History has recorded what happened, and in fact people who were not there have developed a more objective perspective: having "been there," she refuses to let go of the mythology. The irony is that, clearly outmaneuvered and outclassed, she reversed her original strategy and tried to accuse me of not being American.

The essence of her and others' argument is, "Were you there, Charlie? Well then..." And it's appropriate: it was Baron Munchausen's only excuse when being questioned on his literally unbelievable stories.

Monday, September 07, 2009

Jesus sat down with twelve new apostles...

And Jesus said unto them, "Not every one that saith unto me, Lord, Lord, shall enter into the kingdom of heaven; but he that doeth the will of my Father which is in heaven. Many will say to me in that day, Lord, Lord, have we not prophesied in thy name? and in thy name have cast out devils? and in thy name done many wonderful works? And then will I profess unto them, I never knew you: depart from me, ye that work iniquity."

Barack: Can I accuse people of racism and threaten them with damnation, for not supporting me?

Al the Not-So-Sharp: Hey, wait a minute, you're taking over my hustle!

Jesse, who beareth a strange name for his father was not Jack: Tell me about it. Remember when I cried last November, when I was officially upstaged as the Messiah?

Nancy: It's not fair you're healing only select people. It should be equally distributed, even if it means poor quality for each person after it's divided. It won't apply to us, of course.

Harry of Reid: Lord, we should remind the crowd that they should obey the Romans and pay taxes happily, for after all, it's voluntary.

Ted, brother of John and Robert: My head hurts. Can I go swimming?

Chuck, called Schmuck: This is great. Part of the job is making up any new sins we want, right?

Lindsey the False Protector: Lord, the kingdom of heaven is nice to talk about, but we should worry about the Romans making their currency artificially cheap!

Arlen: It looked like a tough fight to get into the Sanhedrin, so I switched to you guys because it's easier to get into leadership.

George the Elder: Read my lips, Lord, I shall not sin against thee.

George the Younger: Hey, those Ten Commandments are just goddamn pieces of rock!

Orrin: You got that right. I preach righteousness and lawfulness only if and when they suit me.

And Jesus wept.

(I originally started this before Kennedy died. Even so, I can't say I give a damn. Being ill or dead does not earn him a free pass.)

Sunday, September 06, 2009

Anything the government can do, the free market can do better, part III

Shucks, Mike, your kind words are much appreciated. For a couple of years I haven't blogged as often as I'd like, but I do what I can. I started reading Billy's blog after his first link to me a few years ago. He's taught me a lot, not always directly, but he got me thinking through certain assumptions I clung to, which nearly all young Americans develop in a public education. They essentially boil down to this one: "But at minimum, don't we need government for ___?" It's a problem that many "libertarians" have.

In recent comments I linked to something that I was meaning to blog about for months, but I kept forgetting. I almost never listen to Rush Limbaugh's show, but I had the day off and was driving to meet someone for lunch. He talked about this story of rebuilding Polihale State Park's access road, which was destroyed by flooding. Hawaii's state government said it would cost $4 million and require two years of construction, and there was no money for it. Locals, then, did it in eight days and at their own expense. So much for two years!

Was it all out of charity? No, as the article clearly states. Business owners got involved because repairing the road was to their benefit -- decreased visitors, or none at all, meant they weren't making money. And so what if they had that motive? It was their money. Better that they invest their own, rather than the immoral situation of everyone having to pitch in for something not everyone would equally benefit from.

It's reminiscent of when Donald Trump was so disgusted with the lack of progress in rebuilding Central Park's Wollman skating rink that he spent his own money to do it. Six years and $13 million later, the city government just couldn't get anything right. A big problem was the insistence on using freon, supposedly for energy savings, rather than the salt water systems that have worked so well for years (like at Rockefeller Center, which to my knowledge has never failed to open its rink during the winter).

Trump devoted an entire chapter of The Art of the Deal to this:
I never had a master plan. I just got fed up one day and decided to do something about it....

I knew nothing about building ice-skating rinks, but I did know something about construction. If it took me two and a half years to put up a major skyscraper, surely it was possible to build a $2 million ice-skating rink in a matter of months.
Yet no rational person should be surprised that his project succeeded so well, and the first time around. He had his money and reputation on the line. "If I failed--if I was even one day late, or one dollar over budget--my plan was to pack my bags and take the next plane to Argentina. There was no way Ed Koch or anyone else would ever let me live it down." Trump explained how he asked around to learn who was the absolute best, most trusted company in rink construction. He didn't bother with soliciting bids from contractors.

The city government, on the other hand, knew that even if voters remembered news reports, who could be blamed and ousted? The city commissioned a report that itself took 15 months to complete, and in the end no one responsible for the fiasco was ever named. Trump had already offered to take over the project, always at his own expense, with the promise that any profits would be donated to charity. What was there to lose, and who could lose?

Union workers, that's who could lose, and the city council members who received their generous campaign donations. That's no small reason why public projects are inevitably constructed so slowly and shoddily; the rest is pure incompetence. When I lived in Utah, Syncrete was an infamous example of government's desire to "experiment," since, after all, it's someone else's money being risked.
Syncrete proved to be less than the superior surface it was advertised to be, and the freeway surface began crumbling shortly after the project's completion. In the end the UDOT tore out the syncrete and admitted that the experiment had been a failure.
"Less than the superior surface it was advertised to be"? That's putting it mildly. The stuff immediately started falling apart as if it were styrofoam, for crying out loud. I was young then, but old enough to understand the TV news showing these chunks all over the road. Who knows how many windshields were cracked because some semi kicked them up like any common rock.

By contrast, as I keep mentioning, I come home to a private road so excellently constructed that it's been years -- before I moved into the neighborhood -- since its last paving. Similarly, I don't remember exactly when my neighbor across the street had his driveway repaved, maybe a couple of years ago. I came home from work one day and saw it was just finished. Compare that to the week it takes just to fill in a couple of potholes on the typical public road, or the months it's taken to redo Route 6 in Putnam County.

If you scroll near the end in these comments, I was telling our new liberal troll about the pedestrian bridge near the Metro-North train station at Chappaqua. Since it began last year, I can't help but notice how slowly it's going. Since it's a public project, there's no incentive for it to be done quickly or efficiently.

An example in my county is the Tappan Zee Bridge, the biggest joke in Westchester next to Andy Spano's "governance." The bridge opened in 1955 and, I recall, cost $500 million (approximately $4 billion in today's dollars). It's not even six decades old yet is already falling apart. Even the second London Bridge, surely built with inferior technology and materials, lasted over 130 years before it needed replacing.

Instead of repaving, raised metal plates are used for repairs, such utter crap that they don't even rise to the level of "makeshift" or "jury-rigging." I drive across the bridge once in a while, and I can assure you that 1.5 inches wreaks havoc on your car, no matter what "ramp plates" are claimed to use. The ramps up and down make the surface effectively sinusoidal. The amplitude is relatively small, certainly, but at vehicular speeds it's jarring enough that you must slow down. And that slows down the driver behind you, the one behind him, and so on.

This is a bridge where a simple repair has caused one-hour delays, stretching 13 miles back into Rockland County. The repair crews closed two of the four Westchester-bound lanes just to repair one pothole, and in the middle of the morning rush hour! Oh, and in case you don't notice it from the article, the crew didn't even fill in the pothole: they put another metal plate over it!

Update: look here to see what the plates look like, and here for a picture of them installed. You really have to drive over them to experience how terrible they are. And who is surprised that there are "cost overruns"?

This would have never happened in a free market, which is based on freedom and competition, not politics and favoritism. Someone else would have started building a competing bridge, and the better one would be getting all the business. At the very least, the bridge's owner-operator would have done such a repair only until after rush hour, or late at night, and certainly not by putting another damn metal plate over it.

In a free market, one private party contracts with another, and each side has to eat any "overruns" on his end. Thus it's to both sides' benefit that the contracts is negotiated honestly, with all expected costs and timetables taken into account.

The central planners, though, are as stupid as ever. They're looking to build a new bridge. Of course, it's easy for anyone to advocate building an entirely new one when it's not his money at stake:
Mark Kulewicz, director of traffic engineering and safety service at the Automobile Club of New York (the local affiliate of the AAA), advocated a new bridge as follows:

Instead of spending $1 billion to patch up a bridge that is already straining to handle the region's growing traffic volume, why not avoid all those years of messy construction delays and invest $4 billion in a modern structure that can serve more commuters, and in new ways?
Actually, the plan announced last September was for a $6.4 billion bridge, which tells us we should count on at least $10 billion before it's done.

Ask yourself: what could the free market do for $4 billion? What could it have done for the $286 billion highway bill, which Congressional Democrats are aiming to increase to $400 billion with its successor?

Update: here's a Times article that puts the total cost of a new bridge, plus expanded train and bus lines, at $16 billion:
Officials also looked at the possibility of rehabilitating the current bridge, which was built 52 years ago, but [State Transportation Commissioner Astrid Glynn] said that was a costly and complex project.
And $16 billion for the replacement is not costly?

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Liberals make it self-evident, that they are lying cowards

So my resident troll "DocWashboard" keeps repeating the same lies, ignoring the world around us that proves "Anything government can do, the free market can do better." Well, as a veteran of Usenet flamewars, and BBS flamewars before then, I love few things better than laying down the smack on such morons.

For the umpteenth time, I've challenged him on what he dare not include in his replies, because he knows I fisk every single word he writes. Do you see how liberals try to "reason"? I use quotation marks because you can't call it true reasoning: when confronted with facts that prove them wrong, liberals deny them and attempt to obfuscate the discussion. They have no grasp of reality and refuse to view the world outside of their warped concepts. The sad part is that this one knows it only too well. He knows he's a liar, he knows he's a hypocrite, he knows he's a coward, and he'll use all three simultaneously by making vague replies in the hope he can't be pinned on anything, although his nature is that he can't help lying about what anyone has said.

Even the arch-liberal of liberals, John Maynard Keynes, was smart enough to say, "When the facts change, I change my mind. What do you do, sir?" Clearly, my latest troll just sticks his head in the sand -- or is that up his ass? I've had to change my mind; I admit it freely. One can see that by looking at my earlier blog entries. But I'm not a hypocrite: I won't attempt to whitewash history by deleting or modifying them, instead leaving them as evidence of my evolution into a free man.

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Friday, September 04, 2009

Anything government can do, the free market can do better, part II

Over at QandO, McQ blogged about New York City forcing a tobacco shop owner to remove its $9000 coffee machine, because the shop doesn't have a food license.

Skorj left a comment, "I think it’s totally reasonable that the government can impose safety regulations, including requiring food handlers’ certs, whenever food would pass between you and a stranger – even in a soup kitchen."

No. Not even that much, as I pointed out in my reply: "Skorj, if you don’t like how someone prepares your food, then you have the freedom not to go there. However, someone else may not mind, so don’t infringe on their freedom to do business with whom they want."

Regular commenters Steverino and looker, for all their talk against big government, don't see that they still don't mind feeding the beast. Being state-worshippers, they advocate standards: government-enforced standards. As I said a few nights ago, you don't have to be Paul Krugman to worship the state. You need only believe the falsehood that we need government to accomplish certain (good) things. Their argument is that the private sector can't enforce standards, which in and of itself is true. The private sector has no power to force a business to close. Private citizens cannot legitimately make a shopkeeper cease business, or imprison and/or fine him if he does anyway.

But their fallacy is that since the private sector cannot do something, then government must. This is not true in the least. They also don't understand my point about not forcing standards on anyone. The private sector's powers are to let competition and consumer choice work unhindered so that standards can come into existence on their own. It would mostly be a matter of trust: sellers would have earned reputations, good or bad. Also, within the private sector, it's perfectly possible for a trusted entity be relied on for judging others, even though it doesn't have the force of government. McQ kindly reminded us of Underwriters Laboratories, and I pointed out McAfee's website certification.

My key rebuttals:
Most establishments are clean enough, but not because of law. It’s because our wealth, courtesy of capitalism, allows us to be clean without much cost, and it’s to a restaurant’s best interest to maintain a reputation — or at least not develop a bad one. Most everyone in New York heard about that KFC with the rat problems. The government didn’t need to shut them down, because they’d have shut down from a lack of business.


Cleanliness is a good thing. A government that tries to enforce “cleanliness” via arbitrarily standards is not a good thing. But I already knew you worship at the feet of the state. You might talk a good line on this and that, but in the end you rely on what law provides you.


It’s [government] not enforcing standards. It’s the myth that the standards can be enforced all the time. So people grow reliant, and they presume that any place they walk into will be ok. More often than not, they’ll be fine. It’s that occasional occurrence, however, that proves the state’s inability to protect us.

The problem with your reliance on government-set standards is a form of the so-called “market of lemons.” Akerlof’s basic argument applies here in the sense that government enforces — or pretends to enforce — a minimum standard of quality. You’re now expected to assume that any given food handler is clean, however, you don’t really know that. Government has said, “Any used car sold must be in certified good mechanical condition,” but buyers can no longer properly judge what’s worthwhile and what is not. They can’t tell if a seller is pulling a fast one, unless they inspect for themselves.

Look at the outbreaks the FDA failed to prevent. Do you understand now why they occurred? Because people gave trust that was not truly earned, and some died because of it. “The government wouldn’t allow this to be sold if it weren’t safe.” Instead of checking how and where a toy was made, parents bought all the toys with lead-containing paint. The plain fact is that government cannot enforce the “standards” you cling to, which creates (in food, transporation and a host of other things) a false sense of security.


In a free market, sellers of goods and services would be too scared to give anything but their best. They wouldn’t dare let anything slide. They would compete not on the basis of meeting some standard set arbitrarily by a government official, but on the basis of reputation: which one is setting the highest standard (service, trustworthiness, etc.) becomes the standard by which everyone else is measured.

My employer is one of the most respected firms in the financial industry, and we exceed every “standard” the government sets for transparency and accountability. That’s because we want to compete so effectively that we’ll be considered THE standard.

But as I said, when you have government supposedly enforcing standards, it can never do so as effectively as the free market. Government’s “standards” are set by politics and ignorance, by the bureaucrats who make arbitrary decisions and/or don’t know the industry. The “standards” are met without too much difficulty by many participants (this truism is proven by modern history), thus making “standard” a very low bar to clear. It might put enough fear into food handlers, but fear of government punishment is never as great as fear of losing your customers. If you really were in the restaurant industry, you’d know that a place needs a helluva track record to be shut down. Otherwise, well, fines may be issued but are rarely publicized more than obscurely.

The Old West is popularly imagined as a violent society, but it was actually a very polite one. If you shoed someone’s horse poorly, no one would trust you anymore unless you redeemed your name, or unless you charged so little that a customer knew he would get what he was paying for. Even then, you might get shot by someone’s friends if your customer got thrown after his horse lost a shoe. There were no “standards” enforced, so every seller of goods and services was extremely careful to do a good job.
There was a lot of dancing around the fundamental issue of freedom, which I brought us back to:
How is it YOUR right, or anyone else’s, to prevent that transaction? You’re being nothing more than a busy-body, trying to save the buyer from himself. It’s his right to be stupid: you can try to persuade him from something that harms himself and no one else, but you have no right to force him.
Looker asked, "who has the authority to tell you to cease and desist in a completely government free market." It's easy to figure that one out. My reply:
The individual has the authority, either by not returning or not going there in the first place.

As an individual, you have the power to shut down any business — to the extent of your own business with it, and that should be the extent of the “authority.” Do you see that what you and Steverino are advocating is that one person or a few individuals can act on behalf of “society,” forcing a business to shut down just because some people don’t think it’s good enough? Neither of you have yet addressed the fundamental question: by what right can you to force people to do business only by your standards and not their own? If they agree to a peaceful, private transaction that harms no one else, what is it to you?

You argue, in essence, that people might not know a place is dirty. What, though, if someone fully knows what he’s buying and wants it anyway? Whether he’s ignorant or deliberate, you can try to persuade him, but do not force him. If he refuses, then what is it to you? It’s not harming you or anyone else. Let him go his own way and don’t lose any sleep.

There are people who can’t sell particular kinds of meat, or even butcher it for their own use, because of “health codes.” Unfortunately it’s been argued on the basis of “religious freedom,” instead of on the basis of freedom, period.


Without health codes, people would scrutinize establishments more carefully. They’d rely on newspaper reviews and Zagat ratings, perhaps late night news segments about the latest dirty restaurant.

Do you see the paradox that Michael and I have been trying to tell you? When government enforces standards, it in fact does not make anyone implicitly trustworthy, but rather makes it dubious that any given entity is truthfully adhering to the standards. Government can never be effective in making sure everyone follows the rules. There are health code violators no matter what government tries, just like it can never rid the road of bad (let alone drunk) drivers.
Looker also asked, "Can we really go back, especially in the case where many people can be, for want of a better term, poisoned, to Caveat Emptor?" I replied affirmatively:
We not only can, but we must. It’s the only way for a free people to live. And it won’t be some Stone Age world; you’re just not giving capitalists enough credit. It would be an opportunity for the smart ones to bill themselves as the cleanest operations.

I’ve seen signs in Third World fast food joints touting their “Clean restrooms,” and they were. In fact, they were in better condition than most in the States. We take such things in the U.S. for granted, not because of laws, but because our greater wealth already made possible what laws later mandated.

Now, “caveat emptor” is half inaccurate because it implies that sellers may suffer no consequences. Buyers should beware, but as I’ve been pointing out, a free market has solutions for people who harm others. If you sell me a pie that you advertised as “cherry” but it contains small stones, then regardless of what “warrant of merchantibility” laws are on the books, I regard it as implicit that the pie won’t break my teeth.
I will again quote Bastiat:
Do those worshippers of government believe that free persons will cease to act? Does it follow that if we receive no energy from the law, we shall receive no energy at all? Does it follow that if the law is restricted to the function of protecting the free use of our faculties, we will be unable to use our faculties? Suppose that the law does not force us to follow certain forms of religion, or systems of association, or methods of education, or regulations of labor, or regulations of trade, or plans for charity; does it then follow that we shall eagerly plunge into atheism, hermitary, ignorance, misery, and greed? If we are free, does it follow that we shall no longer recognize the power and goodness of God? Does it follow that we shall then cease to associate with each other, to help each other, to love and succor our unfortunate brothers, to study the secrets of nature, and to strive to improve ourselves to the best of our abilities?

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Thursday, September 03, 2009

Protest a ticket, get shot in the back by the police

Yes, it really happened. A police fire chief (thanks to Charlie for spotting my miswrite) wanted to speak truth, but the powers didn't like it. He dared to complain about the latest ticket (issued in retaliation for his previous complaint), a scuffle ensued between him and the seven police, and then he got shot in the back by one of the cowardly pigs. Oh, the pig may not even be charged with anything, too, but it's just the tip of the iceberg with a corrupt local government that's squandered all its money.
It was just too much, having to return to court twice on the same day to contest yet another traffic ticket, and Fire Chief Don Payne didn't hesitate to tell the judge what he thought of the police and their speed traps.

The response from cops? They shot him. Right there in court.

Payne ended up in the hospital, but his shooting last week brought to a boil simmering tensions between residents of this tiny former cotton city and their police force. Drivers quickly learn to slow to a crawl along the gravel roads and the two-lane highway that run through Jericho, but they say sometimes that isn't enough to fend off the city ticketing machine.

"You can't even get them to answer a call because normally they're writing tickets," said Thomas Martin, chief investigator for the Crittenden County Sheriff's Department. "They're not providing a service to the citizens."

Now the police chief has disbanded his force "until things calm down," a judge has voided all outstanding police-issued citations and sheriff's deputies are asking where all the money from the tickets went. With 174 residents, the city can keep seven police officers on its rolls but missed payments on police and fire department vehicles and saw its last business close its doors a few weeks ago.

"You can't even buy a loaf of bread, but we've got seven police officers," said former resident Larry Harris, who left town because he said the police harassment became unbearable.

Sheriff's deputies patrolled Jericho until the 1990s, when the city received grant money to start its own police force, Martin said.

Police often camped out in the department's two cruisers along the highway that runs through town, waiting for drivers who failed to slow down when they reached the 45 mph zone ringing Jericho. Residents say the ticketing got out of hand.

"When I first moved out here, they wrote me a ticket for going 58 mph in my driveway," 75-year-old retiree Albert Beebe said.

The frequent ticketing apparently led to the vandalization of the cruisers, and the department took to parking the cars overnight at the sheriff's department eight miles away.

It was anger over traffic tickets that brought Payne to city hall last week, said his lawyer, Randy Fishman. After Payne failed to get a traffic ticket dismissed on Aug. 27, police gave Payne or his son another ticket that day. Payne, 39, returned to court to vent his anger to Judge Tonya Alexander, Fishman said.

It's unclear exactly what happened next, but Martin said an argument between Payne and the seven police officers who attended the hearing apparently escalated to a scuffle, ending when an officer shot Payne from behind.

Doctors in Memphis, Tenn., removed a .40-caliber bullet from Payne's hip bone, Martin said. Another officer suffered a grazing wound to his finger from the bullet.

Martin declined to name the officer who shot Payne. It's unclear if the officer has been disciplined.

Prosecutor Lindsey Fairley said Thursday that he didn't plan to file any felony charges against the officer or Payne. Fairley, reached at his home, said Payne could face a misdemeanor charge stemming from the scuffle, but that would be up to the city's judge. He said he didn't remember the name of the officer who fired the shot.

Payne remains in good condition at the Regional Medical Center at Memphis. He referred questions to his lawyer.

"I know that he was unarmed and I know he was shot," Fishman said. "None of that sounds too good for the city to me."

After the shooting, Martin said police chief Willie Frazier told the sheriff's department he was disbanding the police force "until things calm down." The sheriff's department has been patrolling the town in the meantime.

A call to a city hall number listed as Frazier's went to a fax machine. Frazier did not respond to a written request for comment sent to his office.

Alexander, the judge, has voided all the tickets written by the department both inside the city and others written outside of its jurisdiction — citations that the department apparently had no power to write. Alexander, who works as a lawyer in West Memphis, resigned as Jericho's judge in the aftermath of the shooting, Fairley said. She did not return calls for comment.

Meanwhile, sheriff's deputies want to know where the money from the traffic fines went. Martin said that it appeared the $150 tickets weren't enough to protect the city's finances. Sheriff's deputies once had to repossess one of the town's police cruisers for failure to pay on a lease, and the state Forestry Commission recently repossessed one of the city's fire trucks because of nonpayment.

City hall has been shuttered since the shooting, and any records of how the money was spent are apparently locked inside. No one answered when a reporter knocked on the door on Tuesday.

Mayor Helen Adams declined to speak about the shooting when approached outside her home, saying she had just returned from a doctor's appointment and couldn't talk.

"We'll get with you after all this comes through," Adams said Tuesday before shutting the door.

A white Ford Crown Victoria sat in her driveway with "public property" license plates. A sales brochure advertising police equipment sat in the back seat of the car.

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