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.

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.

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.

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 me...no 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.

Couldn't Have Said It Better Myself

A recent book review on Mises.org 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.

Non-Coercive Environmentalism

Now, this is the way it should be...partnerships between businesses and environmental groups, instead of heavy-handed, destructive government edicts.

Think of what a "market" is comprised...individuals and businesses exchanging value for value. Each player participates in the exchange because they both believe they will be better off for it. This is exactly the same principle that is at work here. Businesses exchange what environmentalists value for what businesses value. In the end, both are better off than they were before. Environmental groups make progress toward their goals, while businesses receive the "green" seal of approval and improve their reputation with consumers. It's win-win...value is created for both parties.

On the other hand, government edicts destroy value by forcing businesses to exchange something of more value to the business, for something of lower value. Businesses expend resources reducing pollution, with nothing to show for it. As if that weren't enough, the cost of enforcing the edicts takes money from the hands of consumers that could be put toward more environment-friendly products. It's a lose-lose. As in nearly every other case, government inaction has been a good thing. It has allowed the market to respond by creating value, which is what markets are good at.

The holdouts who claim that environmental groups are "compromising too much" will forever be unable to come to grips with this reality. Markets are all about compromise. Any time you spend money on something you compromise whatever else may have been bought with those funds. By giving up one thing, you have gained something of greater value. The Sierra Club may not have gotten its hearts' desire of a complete ban on pollution of any kind, but rather than spending resources lobbying for this or that legislation, perhaps fruitlessly, they have actually accomplished something through compromise. Let's hope they keep it up.

Isn't MORE Recycling the Whole Point?

Yes, ladies and gentlemen, it's a crime to recycle in some major U.S. cities. Or it soon will be. With the market prices for recycled goods actually reaching a level that makes recycling profitable, bands of entrepreneurs have rushed onto the scene to make a buck by "stealing" recyclable materials from trash cans. A few major cities are cracking down on these trash thieves, in a bid to ensure that recycling remains a government monopoly.

"California lawmakers are also considering legislation that would make large-scale, anonymous recycling more difficult by forcing scrap and paper recyclers to require picture identification for anyone bringing in more than $50 worth of cans, bottles or newspapers and to pay such individuals with checks rather than cash."

So, let me get this straight...state and city governments supposedly want people to recycle, right? Most people believe that recycling is a good thing, which is not untrue. The problem with recycling to date has been that it wasn't profitable, so the only way it could be sustained was if it was subsidized by taxes. Now, suddenly it's profitable to recycle, so more people are doing it. You would think this is a good thing, right?

Well, the government obviously doesn't think so, and neither do their monopoly contract holders. Why not? You might think that a waste collection company could care less, and may even be thrilled that private individuals are doing a portion of their work for them. After all, refuse theft means less they have to pick up and less they have to dump into a landfill. It would save space, time, and money. So why would they condemn the practice and lobby for laws prohibiting it? Because it threatens their monopoly on recycling...plain and simple. If private recycling becomes a profitable enterprise, the subsidized government bureaucracy loses its raison d'etre, since its only reason to exist is to provide a service that supposedly couldn't or wouldn't be provided by a free market.

Now, I certainly am not one to advocate theft, and you could make the argument that refuse left by the curb to be picked up by a collection company belongs to either the producer (the resident disposing of the refuse) or the company. And, of course, stealing newspapers out of the rack in order to recycle them would rightly be considered theft...except that we're talking about "free" newspapers.

"The free weekly The East Bay Express, which covers Oakland, Berkeley and other Bay Area cities, hired an ex-police detective to stake out thieves and began retrofitting curbside newspaper racks to make them theft-resistant because thousands of fresh copies go missing some weeks.

"We don't want to be spending all our energy printing papers that people take directly to the recyclers," said Hal Brody, the paper's president.

Mike Costello, vice president of circulation at the free San Francisco daily, The Examiner, has taken to doing stakeouts of his own." (emphasis added)

These newspapers are probably free because they're paid for by advertisers, so the argument could definitely be made that the recyclers are stealing from the advertisers themselves. However, the fact that they're being stolen specifically for recycling would seem to indicate that they're more valuable as recycled material than as actual newspapers, which should probably inspire the advertisers to rethink that particular marketing choice.

But why should a homeowner care who takes possession of his or her trash once they place it next to the curb for pick-up?

"Every Wednesday night, Bruce Johnson dutifully puts his garbage and recycling on the curb for pickup, and every week he fumes as small trucks idle in front of his home and strangers dig through his bins stealing trash they aim to turn into treasure."

In most cases, residents don't pay for their trash pick-up directly. Rather, it's paid for via taxes or homeowners' dues. The same is often true of recycling (although in some rural areas homeowners must actually pay to have recyclables picked up separately). One would think that if someone was willing to pick up a portion of a homeowners' garbage for free it would spur competition among waste collection companies for contracts. This is, of course, precisely what the government monopolists don't want.

So here we are, at a point where one can actually turn an honest profit while "saving the planet", but rather than embracing the benefits that this newfound profitably would bring in a free market, bureaucracy is fighting it tooth and nail, as it threatens its very existence. Surely we all see the irony herein. Government wants you to recycle, but only so long as you use government to do it. All else is verboten. Honestly, were I a homeowner who witnessed my garbage being ransacked for recyclables I would probably feel more inclined to sort the recyclable items into a separate container to speed up the process of undermining the government monopoly on recycling, thereby doing my part to save the planet by encouraging the free recycling market to flourish.