Bootleggers and Baptists

I became familiar with the economics phrase "bootleggers and baptists" this month. It comes from the days of the Prohibition, obviously, but can refer to any issue where a government mandate will have those who would profit from it, either materially or morally, on the same side. For instance: during the Prohibition, the bootleggers backed the anti-alcohol policies because it kept other alcohol venders out of competition. The Baptists (and others) backed prohibitionist policies because it was a moral issue to them. So in this basic example you have two groups who might never have anything to do with each other both advocating for prohibition but for completely different purposes.

Here in VA, all vehicles are required to have a vehicle inspection which is good for one year. I have yet to have mine, however I have heard from others that often you will be required to have a certain part fixed if the inspector so mandates. This is a bootlegger/baptist situation in that some morally principled legislator said at one time I am sure that in the name of safety and the children, the state should inspect all cars on the road. The mechanics fully agreed because they had the power of the state on their side mandating people to get their cars fixed.

One other example: tariffs on imports. The baptist side says we must protect American industry and the American worker. Think of the children. While the domestic companies (bootlegger side) fully agree because the high tariffs will keep otherwise viable competition out of the market.

It seems that any legislator proposing these sorts of idealistically motivated laws/protections/whatever would be doubly lobbied. The baptists and the bootleggers will beat a path to their door. No wonder we have increasing regulations.

Government Spending 101

Check out this very useful site at Mercatus.org for some basic information on government finance (which sounds super exciting, right?). No but seriously, who doesn't want to know this stuff these days? The articles are brief and easy to understand. I found it very enlightening.

Also, in listening to some Michael Medved yesterday, during his interview with Arthur Brooks, Brooks stated that most government growth has occurred at the state level. When the federal problems are foremost in the news, one forgets about the fact that our states are mostly suffering the same issues. Our governments are hurtling toward fiscal failure. We cannot have our cake (vast social programs, primarily) and eat it too (not pay for it).

Space Is THE Physical Reality Check

For You Higher Ed People Out There...

This article by John Stossel caught my attention: The College Scam

Tell me your thoughts.

Below, an excerpt:

...[L]ots of people not suited for higher education get pushed into it. This doesn't do them good. They feel like failures when they don't graduate. Vedder said two out of five students entering four-year programs don't have a bachelor's degree after year six.

"Why do colleges accept (these students) in the first place?"

Because money comes with the student -- usually government-guaranteed loans.

A Few Thoughts

After hearing one Dr. Richard Williams of the Mercatus Center speak about government regulations (of which there are 165,000 pages of and growing by 80,000 pages a year), he brought up a point I have been mulling over for a bit: Regulations serve the purpose of closing the knowledge gap. For instance, you can't check up on how your food, drugs, clothing, entertainment and other consumables are prepared because you do not have the capability or time. Therefore government regulations via agencies fill that role for you. However with the advent of the internet, that knowledge gap is closing rapidly and it is now possible for you, the individual with the help of other individuals to find out information on whatever it might be you are looking to consume. I do not know whether all government regulatory agencies should be done away with, but this idea of the internet filling up the knowledge gap the agencies otherwise would need to fill, is an interesting idea. For more on regulations check out this Mercatus Center policy resource.

I am reading Atlas Shrugged right now. Last year I read The Fountainhead. Overall I like the economic philosophy of Ayn Rand, however not her general philosophy of Objectivism. I have also enjoyed the stories in the books. Reading these Rand works is essential if I am to be current within the circles I run in here in DC. A friend referenced this quote so I looked it up. It is by John Rogers (a blogger, and then made more famous by Paul Krugman): "There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs."

A 'South California'? Okay

I know hardly any details about this proposal, but it looks like an attractive idea. There are cultural differences between north and south as well as ideological ones. Making a state legislature more local for those in the south counties could improve government. At least it may provide a fresh start. It's all very, very preliminary and probably won't happen. An intriguing idea nonetheless.

Incredible

I am astounded by the assemblyman's economic delusions.

According to him, if amazon.com leaves CA, then everyone will start buying products they bought on amazon.com at the little, friendly store around the corner. He says this new tax is for the purpose of creating jobs. How does driving out a major, cost saving company equate to creating jobs? That is exactly why PEOPLE are leaving CA, not just "jobs." It's too darn expensive and this new tax thing will not stave off the exodus. It makes sense from some angle I am sure, but not a sound economic one.

Trade Offs

I read a point on the Economist's website today that reminded me how the federal minimum wage was raised to its current $7.25 in July of 2009. Probably the worst time for wages to be kept artificially high given the economic climate at the time. The higher the minimum wage becomes, the more that low skilled people will be out of work. It's an economic principle (although an unfortunate one) that those not worth being paid $7.25 will not be paid at all.

Not only does it create shortage of labor demanded, but a small proportion of our working population is currently paid at or below the minimum wage. The Bureau of Labor Statistics puts it at 3.6million people, which is 4.9% of the hourly paid workforce. Any raise in the minimum wage thus benefits a few already in the system but will most likely cast some out and definitely keep others from entering who may need it most.

In my own thinking I recognize there is a trade off between an ideal where everyone makes enough money to support their family, body and whatever other endeavors. However that level of prosperity cannot be achieved through wealth redistribution. A minimum wage of $100 an hour would seem to grant a high quality of life to all but at a cost of ruining businesses nearly completely. I assume most would agree to that point. Similarly, those who want to have the government regulate MPG in cars to an artificially high standard in order to save the atmosphere would be better off at just going for a ban of all cars because zero gas consumption is better than a little. There is trade off thinking in that as well: one can't ban cars because we need them so let's stretch their capabilities farther than the market demands.

Without a minimum wage there would still be unemployment, there would still be poor people, there would still be injustice. However I would wager there would be fewer in those categories mentioned when firms and individuals are granted more freedom to use the resources they possess in a manner best suited to their needs.

Two Great Videos

Firstly, surfing is all fun. This video shows it well.

Second, in getting across ideas of economic freedom in a quick, engaging way, this video is hard to beat.

Enjoy, ya'lls.

Ah, Google

Thanks to a presentation I heard this week I found out about this nugget in the Google Terms of Service agreement:

It's an excerpt from section 11.1

By submitting, posting or displaying the content you give Google a perpetual, irrevocable, worldwide, royalty-free, and non-exclusive license to reproduce, adapt, modify, translate, publish, publicly perform, publicly display and distribute any Content which you submit, post or display on or through, the Services.

I guess most of us don't transmit information we would need to worry about becoming public, but it's something to keep in mind. And like Facebook, it is information we willingly, freely provide to the company.