Monday, March 08, 2010

Get Rich Quick?

I've been wondering lately why it is assumed that someone who comes up with a good idea or invents the "next great thing", no matter how small, is somehow entitled to get rich from it. This theme seems to run through all the debates I've had with others about "intellectual property" (IP), even if it's not articulated as such. Pro-IP folks vehemently defend the inventor's "right" to profit from his or her idea, claiming that someone else using another person's idea to make a profit is somehow "stealing" from the original inventor.

Inventors and innovators are definitely important for human progress, as without them technology would stagnate, and we wouldn't have many of the amazing devices and technologies we have today. But does creating something new really entitle you to a profit windfall? As a capitalist pig, I certainly believe that everyone has the right to exchange goods and services with others to make a profit, but why should inventors and innovators be given special treatment?

Many Pro-IP folks would probably say that if we didn't reward inventors handsomely we'd never have any new inventions, but I think that's hogwash. If nothing else, it ignores the fact that good ideas and useful inventions generate lots of profits for lots of people over long periods of time...not just at first or only for the inventor. Thus, it's silly to think that no one would ever invent anything if they couldn't be assured of getting rich from it within a short period of time. A good idea can make one rich without monopoly protection, maybe just not as quickly.

But I think there's something much more human that makes most people think that the market (or government or society or whatever) should make inventors rich. I'll call it the "It Could Be Me!" (ICBM, lol) principle. See, coming up with a great idea or a new useful gadget represents to most people the simplest, quickest way to "strike it rich." Potentially anyone can have a sudden flash of insight that leads to the next great thing and make a bundle...and it could be me! It's a way to make a bunch of money and live the life you've always wanted without saving and investing more of your earnings than you spend, being a real entrepreneur and starting your own business, or showing a ton of initiative and ambition and working your way up the ladder.

It's the everyman dream of success. It's hope that I could be the next one to get rich by hatching the plans for a better mousetrap. So if we got rid of patents, copyrights, and other IP monopoly protection, we would destroy the hopes of millions of people hanging onto that glimmer of hope...the hope that It Could Be Me! Who could possibly be so callous as to want to dash all those hopes and dreams?

Wednesday, February 10, 2010

The 2010 Census

I recently received an email (from my mom) warning me about possible scams associated with the upcoming 2010 federal census. Apparently there is a chance that some people will attempt to pose as census workers and try to get financial information from you so they can steal your identity. Maybe so, but that's not the reason for this post.

What stood out to me in the warning email was the following, seemingly innocent statement:
...more than 140,000 U.S. Census workers will count every person in the United States and will gather information about every person living at each address including name, age, gender, race, and other relevant data. (Emphasis added)

What do they mean by "relevant data", and why is any of the information mentioned at all relevant to the federal government?

According to the U.S. Constitution (remember that?), the census is only used to determine the number of representatives in the House for each state, as per the 14th amendment. Once upon a time it was used to determine taxes paid by each state, but that was superseded by the 16th amendment, which arrogated to Congress the power to levy income taxes with no regard to population whatsoever. The census is supposed to be a survey of the geographical dispersion of residents within the United States...that's all.

So why would it be at all necessary for the federal government to know the age, gender, race, or even the first name of every person living in your house? Is there going to be a new law mandating representation based on the relative ethnic composition of each state? Will there have to be so many black, hispanic, or Asian representatives based on the census? Are we going to ensure there is appropriate age and gender representation, ensuring that Generation X is as well-represented as the Baby Boomers, or that there is a geographically proportionate number of female and male representatives? How about names? Do we need an apportionment of representatives based on the first letter of each first name? Will I be represented by the Letter R in my district? Obviously this is all patently ludicrous (though I wouldn't be shocked if some form of race- or gender-related representative apportionment legislation made it onto the House floor), so why do they care?

I have to confess a tinge of paranoia when it comes to government gathering information on its subjects (as if you couldn't tell). I can't help but wonder what they're going to do with that information, particularly since it has nothing at all to do with apportionment of representatives. All they need for that is a simple headcount. I imagine most people probably think it's no big deal. After all, they're just statistics. But statistics in the hands of government can be a powerful weapon against freedom, and therein lies my concern. How many more entitlement programs will we see based on the census results? How much more redistribution of wealth will ensue? How many excuses will be found within those statistics for future expansions of government power over our lives?

Thinking back about the original email warning me about impostors fishing for information about me, I'm dismayed that most people are more concerned about the possibility that their fellow man may attempt to do them harm than they are about the activities of their government. It speaks volumes about the attitude of most people toward government...trusting their government over their fellow man. As I've said before, I'm a lot less worried about what free people might do than what an overbearing government is almost certain to do. In either case, regardless of who comes to my door claiming to be a census worker, the only answer they'll get from me is, "2."

Friday, January 02, 2009

Is the Value of Everything Measurable?

A common complaint about Wal-Mart, Best Buy, Home Depot, and other "big box" retailers is that they drive smaller retailers out of business. When this happens, it is opined, something "intangible" or of immeasurable value is lost. Among the things lost may be involvement by the business in the community, personalized, polite, or friendly service, and the sense of satisfaction that comes from supporting a small business. While it's true that small businesses often provide intangible benefits such as these, many would argue that since their value can't be measured in terms of dollars they are typically under-valued by most consumers and are therefore unable to stand against the onslaught of low prices from big box retailers. Interestingly enough, the value of such intangibles can be measured in dollars, although perhaps not directly.

Economically speaking, the value of any item or service can only be measured subjectively, in terms of what an individual is willing to give up in order to attain the item or service. For instance, if a buyer is willing to give a seller $15 for a particular item, this shows that the buyer values the item more than whatever else he could have bought for $15. Thinking in terms of money, therefore, provides a convenient way of measuring subjective value, but it's not always obvious. Consumers may be willing to give up other things that they don't immediately associate with money in order to attain some item or some intangible "good" such as personalized customer service. They may, for instance, be willing to drive further, accept a more limited selection, or have to arrange their schedule to visit a store during business hours. All of these things represent a cost, and no matter how you slice it they always impact our ability to exchange productivity (earnings, i.e. money) for goods and services.

So what bearing does this have on the overwhelming success of big box retailers and the demise of mom-and-pop boutiques? Well, it simply means that in many cases the majority of consumers place less value on such intangibles as customer service or a sense of community than they do on the other things they could buy with the money they saved by going to a big box retailer. Smaller stores that are unable to compete with the larger retailers on prices will often find themselves out of business. This will undoubtedly mean short-term hardship for those business owners and their families, and it may mean the loss of shopping options for those consumers who place more value on intangibles.

There is no more "democratic" system than the free market. Consumers vote with their dollars every moment of every day, rather than just once every few years. And unlike political elections, the businesses elected by consumers that fail to meet the electorate's demands will be thrown out of office in short order as consumers withhold their votes/dollars. Any attempt to "level the playing field" in favor of small businesses flies in the face of majority rule and simply substitutes the preferences of a relative few for those of the vast majority.

But also unlike a political election, those of us who wish to vote for small businesses by exchanging a little more of our productivity for things the majority under-values are free to do so. We need not be relegated to big box retail stores if we don't want to be. So long as the market remains free, those options will remain available to us.

Thursday, January 01, 2009

What Can a Tampon Teach us About Markets?

I was watching television with some friends recently, and during a commercial for some new model of panty liner a friend asked if anyone else was "disturbed by the amount of research being put into creating new feminine hygiene products. After all, how many different types of tampons and panty liners does the world really need?"

Like most things other people say, it got me thinking. Why IS there so much research going into feminine hygiene products, or indeed any other personal care product? Walk down the personal care aisle of any grocery store, and you'll see an amazing variety of products in every category. Whether it's toothbrushes, hair gel, antiperspirant, shampoo, facial cleanser, or hand lotion, consumers have a plethora of choices.

I think the primary reason for this vast array of variety is regulation, or rather, the lack thereof. These industries are incredibly vibrant because they're largely unregulated. Unlike heavily regulated industries there are very few barriers to entry for a small company that wants to make toothbrushes, toothpaste, or mouthwash. Putting a new brand of hair gel or conditioner on the shelf doesn't require expending resources meeting cumbersome safety rules. The products are safe because consumers wouldn't buy them if they weren't. There's incredible variety because it's simpler for smaller companies to compete. The playing field is level because no one company is hampered any more or less than another by the heavy hand of government. Greater competition means more innovation and research as companies search for ways to stay ahead of their competitors. This is why there are so many different brands and styles of panty liners on grocery store shelves.

Of course, this condition is not at all unique to personal care products. In any un- (or at least less-) regulated industry there will always be more research, greater innovation, higher quality, and lower prices. Witness the computer hardware industry, for instance, or the television industry. These are almost entirely unregulated, and so they are incredibly vibrant. Computer hardware gets faster, better, and cheaper every day, and televisions get larger, cheaper, and have better picture quality all the time. There is no reason the same would not be true of any industry that currently suffers from government oversight. Whether it's health care, education, banking, or otherwise, freeing resources for innovation by reducing government regulation will always result in better, safer, less expensive products and services.

Thursday, October 09, 2008

We're all Marxists now!

The fifth plank of the Communist Manifesto reads:

Centralization of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.

For those of you unfamiliar with the Manifesto, it outlines a plan to overthrow the Bourgeois and bring about the full "blessings" of Communism. The 10 planks are the conditions that must exist before a transition to Communism is possible. So far, we've already met planks 2 (A heavy progressive or graduated income tax) and 10 (Free education for all children in public schools), and were brought closer to 4 (Confiscation of the property of all emigrants and rebels) with the passage of The Patriot Act and various other abominations under the Bush administration. The impending purchase of ownership stakes by the Treasury Department in private U.S. banks gets us closer to plank number 5.
WASHINGTON - The Bush administration is considering taking ownership stakes in certain U.S. banks as an option for dealing with a severe global credit crisis.

An administration official, who spoke on condition of anonymity because no decision has been made, said the $700 billion rescue package passed by Congress last week allows the Treasury Department to inject fresh capital into financial institutions and get ownership shares in return.

Wednesday, October 08, 2008

Democracy is a Big Fat Failure

I'm one of those people who gives his Congresscritters hell about everything. I email them and call their offices anytime a piece of crap legislation comes down the pipe, and I often get their canned responses telling me they're going to do this or that, regardless of what I say. The recent bailout bill was no exception. I emailed both Senators and my Congressman about that steaming pile of destructive garbage several times, and I called their offices and had protracted discussions with their lackeys about it. Without exception, each of them told me that public opposition had been overwhelming, quoting numbers of calls and emails received in ratios anywhere from 25:1 to 300:1 against the bailout. I was encouraged that the public had finally mobilized and made clear its wishes to our representatives in Congress, and I thought that such indisputable public outcry might mean the bailout bill would meet an appropriate end as bedding in some kid's hamster cage. Unfortunately, my optimism was unfounded, and Congress took us further down the road to economic ruin by passing the $700 billion bailout. What a great day for democracy, huh?

I now know, beyond any doubt, that representative democracy is a complete and total sham. In one stroke, Congress has shown complete and utter contempt for those they are elected to serve. By voting against the wishes of the public they have illustrated that they don't give a damn what we think, and that they believe we're all far too stupid to know what's good for us. It's not that I had any great faith in democracy to begin with, but this just puts the final nail in the coffin.

So what happened? Put simply, members of Congress do not have your interests at heart when they go to vote on a piece of legislation. There are a few exceptions, but by and large they are all working to further their own agendas and pet projects. In some cases, their intentions are good, but because government really has no way of knowing whether or not it's doing the right thing (because it neither profits nor suffers loss as a result of its actions), the policies undertaken are nearly always disastrous.

Really, it's not even a problem with the people in government. On the one hand, they're just people like you and smarter than us, no less fallible, no more immune to the trappings of vice and greed...yet they are somehow expected to be immune to normal human failings simply because they've been elected. Even the most noble-minded individuals, once elected to seats of power, are soon swallowed up by the machinery of bureaucracy...the plethora of perverse incentives, the focus on procedure over outcomes, the complete lack of meaningful feedback, the near total insulation from the possibility of being replaced during the next election. Then of course there are the malevolent, power-hungry, career politicians, who will do or say anything to get elected, then focus completely on their own enrichment at the expense of taxpayers. Either way, we (the public) lose.

It can be no other way. These flaws are built into the machinery of government, and as romantic an idea of a Constitution that limits the power of government may be, it is obviously powerless to constrain the desires of Leviathan. Those who seek power will use it to gain more power. Those who can get away with doing whatever they damn well please despite the wishes of those who elected them will do so without fear of retribution. It is a grave error to believe otherwise.

How, then, can we expect government to protect us, to work toward the betterment of society, or to make anything better? The fact is that we can't, and we shouldn't. Government can defend us no better than we can defend ourselves. Government can provide for us no better than we can provide for ourselves. Government can do nothing good for society when it institutionalizes all the worst things of that society...violence, fraud, coercion, theft, you name it. Government is the manifestation of all these things, and as if that weren't enough, it wields the power of force to bend us all to its will.

I'm done. I refuse to participate any longer. I won't get out of bed any earlier on November 4th than on any other day. I will still grudgingly pay my taxes simply because my refusal to do so would impose costs on others who don't share my views. This great democratic experiment has been a colossal failure, and I only hope that someday others wake up to this reality and decide not to participate anymore as well.

Tuesday, September 02, 2008

Couldn't Have Said It Better Myself

A recent book review on sparked a debate on the legitimacy of the State. Various posters commented on everything from the establishment of government to the workability of anarchy. One post in particular stood out so much that I felt it bore repeating.
"According to the Declaration of Independence, if the government is not serving your best interests, you are entitled to overthrow it. Given the costs of overthrowing any government, it is apparent why most people prefer paying their taxes and taking their chances with the depredations and destructions heaped on them.

Nevertheless, history is also replete with cases where governments were violently overthrown and the rulers liquidated when oppression became so severe that opposing became more palatable to remaining in subjugation. I have confidence that America will suffer the same fate since we see the sign posts on the same road that all nations have traveled.

Empires rise and fall, but human nature never changes. Every generation starts fresh and repeats the same mistakes because people cannot believe that they are like their ancestors. And so all the world cycles through the phases of civilization and destruction. Alas, we are caught in the decline."
This reminds me to keep a few things in perspective: First is that there will always be those who seek power. Likewise, there will always be those who believe that someone must be in charge of everything. And finally, that ideas change the world.

I don't know if it will happen in my lifetime, but eventually the masses will tire of the incremental destruction of liberty, the constant theft of our earnings, and the endless lip service paid by politicians to the principles Americans once embraced, and they will take action to end it. Until then, I will remain a champion of freedom within my own sphere of influence, and I will take heart in knowing that one day the cycle will start again. Perhaps next time they'll get it right.