More on Sweatshops

I received some feedback on an earlier post...the one about sweatshops, suggesting that I find a case study to investigate. So I started Googling, searching the Web for some Western "exploiter" to defend. In the midst of my research I happened upon this piece from AWorldConnected.org.

So I read it, and felt at once inspired, and deflated.

This is the kind of material I want to learn to write. This article's treatment of its topic was excellent, IMHO. Please read it when you have a few minutes. It's worth it.

Patriot Act Extension Defeated in the Senate!

In a close (52-47) vote, the Senate today rejected the extension of several major provisions of the Patriot Act. These provisions are set to expire on December 31st.

While this doesn't make the Patriot Act go away completely, it's definitely a step in the right direction. There are still a lot of loopholes to close, and hopefully the momentum will carry through to the sunset of this travesty.

Here's the full story.

Incidentally, John Sununu is quoting Ben Franklin here:

"Those that would give up essential liberties in pursuit in a little temporary
security deserve neither liberty nor security," said Sen. John Sununu, R-N.H.

Another great quote:

"I don't want to hear again from the attorney general or anyone on this floor
that this government has shown it can be trusted to use the power we give it
with restraint and care," said Feingold, the only senator to vote against the
Patriot Act in 2001.

And finally, from the warmongers:

If the Patriot Act provisions expire, Republicans say they will place the blame
on Democrats in next year's midterm elections. "In the war on terror, we cannot
afford to be without these vital tools for a single moment," White House press
secretary Scott McClellan said. "The time for Democrats to stop standing in the
way has come."

Housing prices influenced by zoning regulation?

Movning this discussion to the 'blog, from email...

Interesting article about how rising home costs in the area are due more to
zoning restrictions than market forces.

http://www.washtimes.com/business/20051212-121002-6605r.htm

I don't know if it will show up for everyone, but it cracked me up that
on the same page as an article pointing out the ill effects of gov't
regulation there's an advertisement for StandUpForSteel.com...an
organization that favors government intervention.

Response from Steve:

The problem is that the zoning restrictions aren't anything new. They surely are
a big reason why home prices trend upward and almost never downward (supply
cannot rise fast enough or simply enough to keep pace with demand), but it
doesn't explain why demand has risen so much, so fast. If I had to give an
answer to that, I'd suggest it has something to do with how increases in the
money supply come into circulation through the banking system, and make for
easier and cheaper credit markets.

My response to Steve's response:

> ...it has something to do with how increases in the money supply come into
circulation through the banking system, and make for easier and cheaper credit
markets.

There was a nod given (however slight) to cheaper credit
markets, although it clearly doesn't address the issue
head-on.

"What many economists have been proclaiming as a "bubble"
in Washington and other high-cost areas can be mostly explained by the
restrictions on development, combined with a rush to homeownership by renters
taking advantage of low interest rates, [Mark Vitner, senior economist at
Wachovia Securities] said." (emphasis added)

In this light the term
"housing bubble" is almost a misnomer. If anything, there is a "credit
bubble" that affects not only housing, but also automobile sales, credit card
debt, basically anything that relies on cheap credit. At least with a house one
has some form of equity so long as the loan is of the conventional
variety. Those who have bought their homes using "alternative" (i.e.
adustable rate and interest-only) mortgages, relying on the assumption that they
will be able to offset the outstanding loan balance by selling within a few
years at a profit, are the ones who will suffer as housing prices start to level
off.

Were interest rates set by the market, rather than by a
misquided central planning authority, they would naturally rise to balance
supply with demand. Home prices would be much more consistent, more
accurately reflecting the costs of development and the desirability of
individual locations. Furthermore, the lack of a federal guarantee of repayment
on bad debt would cause lenders to be much more selective of prospective
borrowers, thereby placing more of the responsibility of ownership on the
borrower than on taxpayers.

Continued from here in the Comments section...

The Morality of Profit by Exploitation of Circumstance

We hear every day of American corporations setting up factories in foreign countries, cashing in on the cheap labor available in the poorer parts of the world. It is said that these companies are exploiting the people hired by these "sweatshops"...That the companies profit at the expense of these workers, who have no other opportunities, and are therefore "forced" to work in factories where conditions are poor by American standards.

To those who cry out that this is wrong or immoral, I ask this question: Is it immoral to offer someone a better opportunity than what they already have available?

Interestingly enough, I have asked this question of a few people, and I'm usually told that the comparative level of opportunity offered is irrelevant when workplace conditions are poor. I must admit that this logic escapes me.

If I offer someone a job, as an alternative to starvation, prostitution, or outright theft, and they choose to accept it voluntarily, haven't I just made that person's life better? How is it moral to say that I shouldn't offer the opportunity unless it conforms to some arbitrary standard? Shouldn't it be up to the individual to decide by his or her own standards?

Better Alternatives

If I set up a factory in Bangladesh to make t-shirts, I have to attract labor. In order to do so, I have to offer a better comparative opportunity for potential workers. This means I will have to pay more or provide better benefits than other businesses in the region. In many cases, it may simply be enough to offer the job at any amount of pay...if the alternative is no job at all. Even if the work is dangerous or the conditions hazardous, the individuals who accept the jobs are making a choice between alternatives. If they choose to work in my factory, it is simply because I offer the better alternative.

I've often heard the argument that the workers in this situation "have no choice", and so it's wrong for me to take advantage of that. The truth is that they do have a choice. It may not be a good choice, but it's a choice nonetheless. If the choice is between having a job and starving to death, how am I in the wrong by offering them the opportunity to not starve to death?

What if the machinery in my factory is cheap, defective, or poorly maintained, and therefore dangerous? What if someone loses a hand, or worse? Regardless of whether or not I'm held accountable by law for the injury or death of a worker, there will still be consequences. Some workers may decide that the risk of working in my factory is not worth the pay and quit. The ones that remain may demand more pay. Productivity may suffer because the workers are more cautious around the machines and work more slowly in the name of safety. Word of my dangerous factory will undoubtedly spread, discouraging applicants and reducing the available labor pool. In any case, the costs of the worker's injury or death will almost certainly exceed whatever I may have saved by purchasing shoddy machinery. Most likely, I'll have to invest in newer, safer machinery. Even if I don't do so, however, I may still attract workers who feel that my factory offers a better alternative. An individual could certainly decide that the potential of losing a hand is better than certain starvation, and they should be allowed to make that choice.

Wouldn't Regulations Help?

American companies choose to set up factories in foreign countries for various reasons, but the main reason is to reduce production costs by making use of inexpensive labor. Many who feel that the laborers are being exploited call for government regulation of overseas expansion, primarily with regard to workplace conditions and wages. They want to elevate the conditions of foreign labor employed by American companies to an "American" standard. The problem with doing this is that it increases the cost of foreign labor to the point that it nullifies the incentive to use it in the first place, thus denying foreign laborers the opportunities they so desperately need.

After all, we Americans were only able to advance ourselves to our current standard by taking risks. Consider the puritan settlers who first colonized the New World. Most of them were farmers and tradesmen, many of them poorly educated. Additionally, sea travel in 1620 was horribly treacherous. They took a grave risk setting sail for an unknown land, but the choice represented an opportunity to better their situations. Should they have been allowed to go? Shouldn't some human rights activist group, concerned for the separatists' well-being, stepped up and petitioned King James to prohibit the voyage of the Mayflower because they believed the risk to be too great? Was it immoral to allow them to choose to take such a risk?

In my view, what is immoral is to impose one's own standards upon another, rather than allowing the other to make his own choice. Freedom means being allowed to choose one's own destiny, even if the path is hazardous or the choices dangerous.

The Debate over Corporate "Social Responsibility"

Read Rethinking the Social Responsibility of Business, from Reason Magazine. It's only a few pages long, and it's well worth it. Then, read my comments about it.

My comments:

First of all, I very much enjoyed this piece, and I hope the debate continues.

Second, I have a great deal of respect for all three of these gentlemen. I know that I have benefitted, at one time or another, from each of their contributions to the Market and our society.

Regarding the debate itself, it strengthens Adam Smith's point regarding the benefits to society realized by those enterprising individuals, working in their own self-interest. Realize, of course, that "self-interest" does not merely mean "profit". In fact, John Mackey states a number of times that the (self-imposed) responsibility of Whole Foods is to "...provide value for all [its] stakeholders." I think this is a key point that is implied, but not fully explored in the debate.

"Value" is highly subjective. What is of some measure of value to one person may be of greater or lesser value to another. There is no objective measure of value where individuals are involved. It is the freedom to determine what is of value to each of us that I believe is at the core of Capitalism, and the attempt to arbitrarily determine value that is its undoing.

Entrepeneurs are free to organize their businesses according to what they determine is of value to them. To some, this will mean maximizing profit. To others it will mean engaging in corporate philanthropy. The same holds true for all stakeholders within the business, regardless of their role in the organization. Stockholders will judge the worthiness of their investment based on their own subjective standards. Again, some may be concerned only with maximizing their returns, while others wish to support organizations that embrace a similar set of principles to their own. Should a business fail to meet this set of standards, the stock will be sold, or changes will be mandated by shareholder referendum. By the same token, employees and customers will make their own determinations of value and choose their involvement with the business accordingly.

What it is important to realize, is that no matter what a business sets as its goals it is still subject to the laws of the market. Its survival will still be determined by consumer preference. Its prices will still be influenced by the laws of supply and demand. Whether profits are a means to a socially beneficial end or vice versa is in my view irrelevant.

Wal-Mart vs. Bureaucracy

In this editorial, Sheldon Richman, of the Foundation for Economic Education, points out that bureaucracy (government) is unable to successfully provide services that can (and should) be provided by the free market simply because it is devoid of the natural feedback that the market provides...that of profit-and-loss.

In addition to this lack of performance accountability, there are other factors regarding the nature of bureaucracy that contribute to its failure. The one that strikes me as the most baffling is this:

Bureaucracy rewards failure.

Hurricane Katrina, and the resulting disaster provide an excellent example of this phenomenon. Among the various things government failed to do either in preparation for, or in response to Katrina, the most obvious was the failure to maintain the levees protecting New Orleans from flooding. The levees have been in disrepair for years, and the Army Corps of Engineers diverted tons of money from levee maintenance to other projects.

Still, the result of this failure will undoubtedly be to throw more money at the body responsible for it. Those who failed to protect New Orleans from flooding will see a salary increase next year. The power and influence of the agency that failed will grow. Taxpayers will have more of their earnings garnished to fund a continuing debacle. And this is true of any government activity.

Failed government projects do not get cancelled. They don't go away with budget cuts. They get bigger. They get fatter. Their very failure is their success. There is not a single government program that is working to make itself obsolete. The perverse incentives created by this mechanism should be obvious.

But what if government hadn't been put in charge of protecting New Orleans from flooding in the first place? What if government was powerless to protect anyone or any place from flooding? Would the need for flood protection simply vanish? No...not at all. Where, then, would flood protection come from? Quite simply, it would come from those who have a vested interest in protecting their property from flooding.

In New Orleans there are a great number of businesses, homeowners, and industries that would obviously benefit from flood protection. Oil companies, for instance, have a vested interest in protecting refineries located near seaports from being destroyed. Business owners working together to prevent loss have a much greater incentive for ensuring that efficient, effective protections were erected and consistently maintained. Government has no such incentive.

A Word in Defense of "Illegal" Immigration

A few days ago, I was once again involved in a conversation in which I was the guy with the unpopular opinion. Go figure, right?

Someone made a comment about illegal immigrant workers, specifically those who migrate to Maryland during crab season to pick the meat from crabs for packaging, and how they bring their culture with them, and what a travesty this is. Many around the group agreed, and the commentor went on to say that in the areas where the migrant crab-pickers live, one can find more and more Mexican foods, imports, etc., and that they oughta damn-well learn English if they're gonna come here, earn their money, then head back to Mexico to live like kings.

My response to this (in my own inimitable fashion) was, "But I don't wanna pick crabs."

Simple, yes, but enough to light the bonfire of indignation. I was then told that they shouldn't be allowed to come over here, "getting all the benefits we get", if they're not even willing to learn English.

Again I stoked the flames by asking, "What are they getting that they aren't earning?"

I never got a clear answer to that question, but it did prompt a good deal of flapping and flailing. Then from the other end of the table came the statement, "It's fine if they want to do that, but they could certainly do it legally!"

I have to admit I was stunned. "Dumbfounded" might be a better word, actually. My face must have looked like a constipated Carol Channing, cuz at that point everyone got up from the table.

So why is everyone so bent about illegal immigrants? Why do we need to close our borders to people who are really only interested in making a living? Hell, Americans could learn a lot from the average Mexican work ethic. Maybe that's what pisses Americans off...they make us look like a bunch of lazy hypocrites. My money's on that one.

And what difference does it make whether they do it legally or illegally? "Legal" just means they've jumped through a bunch of hoops, dreamt up by some bureaucrat just to make it more difficult for immigrants to come earn a decent living. Sure, it means they then have to pay taxes, but it means a lot more cost to taxpayers and consumers, as well.

Putting aside the question of whether or not ANY of us should be paying taxes in the first place, I contend that it's actually better for us if illegal immigrants remain illegal.

"Blasphemy," you say! Well, here's why...

First, illegal immigrants are less of a drain on the "system" than taxpaying Americans. They're ineligible for public services (welfare, unemployment, etc.) because they're not citizens, so they're not using services they're not paying for. There are far more individuals living on someone else's dime amongst our own citizenry than amongst illegal immigrants.

Second, they're cheaper to employ because they're illegal. Employers aren't required to provide health insurance, pay payroll taxes, or make social security payments for illegal workers. They're also not bound by minimum wage laws. Granted, they're flying under the radar, but so what? This all results in lower prices for American consumers.

Third, much of the money they earn is spent here in the U.S. As noted above, the immigrants' presence creates a market for goods that otherwise wouldn't exist, benefitting businesses in areas where immigrants work. It works out all around.

If all illegal immigrants suddenly became "legal", the increased costs to taxpayers would indeed be noticeable. Suddenly they would be subject to all the same destructive rules that apply to the rest of us. If you really think about it, the protests start to sound like jealous whining, because in a way they're more free than the rest of us.

Why is anyone surprised?

This piece, in the Washington Post, reports on misspending of funds by the Army Corps of Engineers on non-flood-related projects in Louisiana. It's one of thousands of similar pieces that decry the failure of the federal government to do whatever in the wake of or in preparation for an event such as hurricane Katrina.

Yet nearly every single piece that I've read, rather than suggesting that we stop putting the federal government in charge of saving us from the disaster of the day, all call for MORE government involvement, greater funding, or more oversight by some lot of boobs from amongst the lot of boobs that boobed it all up in the first place!

I don't get it! Why is it that when the fed fails at something the automatic response is to give them more stuff to screw up? Or to give so-and-so more money to continue screwing it up in more expensive ways? Haven't we figured out yet that trusting the federal government to accomplish anything is like using a billy club for brain surgery? Make the club bigger or plate it with gold, and you'll still only succeed in making guacamole of the patient.

In our daily lives, when an attempt to solve a problem fails, we typically try something new. Yet when government fails, the response is to do more of the same thing. It defies logic. Which is probably why it continues to be so popular.

Are we all entitled to a boat?

A recent op-ed piece by Eugene Robinson, of The Washington Post, entitled No Longer Invisible, contains this excerpt in response to the Katrina disaster:

No one can claim that the post-Reagan orthodoxy of low taxes and
small government, which does wonders for the extremely rich, also inevitably
does wonders for the extremely poor.

What was that about a rising tide lifting all boats? What if you don't have aboat?

I have two issues with this. The first is that the "...orthodoxy of low taxes and small government" is a figment of the imagination. The GOP talks a good game when it comes to reducing taxes and the size of government, but somehow government seems to get larger and larger and spend more and more money every year. The federal government is not "small" by any stretch of the imagination. There is nary an aspect of our daily lives in which government doesn't have its grubby fingers.

The second is the implicit message that government should supply boats for those who don't have them. It shouldn't. Individuals should be left alone to make their own "boats". Certainly there are those who are incapable of doing so or who have fallen on hard times, in which case reaching out to another individual or private charity is perfectly acceptable. The more we rely on government, however, the more powerless we become to help ourselves.

Donations for victims of Katrina

Guys,

I received this email today from a company whose software I've used in the past. They're a small company that creates web editing software. It arrived just as I was trying to figure out to which charity I wanted to donate to help the victims of hurricane Katrina. This is a difficult decision to make because it's hard to know for sure exactly how your money is being used when you donate to a charity. Some honestly put the funds toward legitimate uses to help others, and some do not. It's often hard to tell which is which.

At least with this approach, you can know that you're sending items that can really only be used for one purpose. It's not likely that a group would solicit donations of razors and toothpaste in order to fill their own medicine cabinets...especially at a time like this. I also support this effort because I can be reasonably certain that this is not a charity that receives public funds, putting it exactly where it belongs...in the realm of people helping people.

I plan to pack a big box full of stuff to send to these folks, and I hope that you'll consider doing the same. You may not choose to send your donation to CoffeeCup, but if you do donate, I urge you to do some research and find a charity that will put your donation to the use for which you intend it.

Here's the email I received:

Hello,
As many of you know CoffeeCup Software is a socially active company. In the past our users have raised over 1 million dollars for September 11th efforts and over $50,000 dollars for vistims of the Asian Tsunami.

Hurricane Katrina has given us a different challenge. We have accessed the situation and have found a way we can all help. Since CoffeeCup Software is located in Corpus Christi, Texas (a couple of hours south of Houston), we are calling upon anyone who receives this e-mail to send 'Goods' to our office. This will directly help the thousands upon thousands of American refugees that will be entering Houston, Beaumont, and througout Texas within the next days and weeks.

Our office will collect what you send and will drive these items by cargo truck to the refugees where they are located. Over 25,000 people will arrive at the Houston Astrodome tonight and we expect many waves of refugees over the next month. We will collect items for the next 60 days and will make trips once a week or more as needed.

Currently many Charitable organizations are overwhelmed and we want to make sure the Families and Children will be given what they really need without wait. Send as much as you wish, we have plenty of storage.

Some items we believe they need are:

Diapers, Baby Wipes, Infant Care Items
Personal Care Items (soap, razors, shaving cream, toothpaste, hygeine items) Clothing (socks, underwear, shirts, shoes, pants, shirts) Long Distance Calling Cards, Batteries, FM Radios, Walkie-Talkies Toys (coloring books, crayons, puzzles, any activity toy) and more....

Our
Address is:

CoffeeCup Software
c/o Hurricane Aid
226 South Tancahua
Street
Corpus Christi, Texas 78401

You can also order things online at places like Amazon.com, WalMart.com, Target.com, and others and have them sent directly to our offices as well.

Please do not send food, water, or money. This will be handled by Organized Charities. Send what you would personally want if you were placed in a very uncomfortbale position for a very
long time with little or no money (use your best judgement). We will be documenting our efforts by Web Cam and Pictures and these will be posted on our Website soon.

If you would like to Donate money you can do that
here:
http://www.houstonredcross.org/ or http://national.unitedway.org/
"We make a
living by what we get, we make a life by what we give."
- Sir Winston
Churchill

Thank you so very much again,
Nick Longo
CEO
CoffeeCup Software, Inc.
-------------
www.coffeecup.com

High gas prices a boon to consumers!

Yeah, we all bitch about the price of gas these days, but this article, written by Jay Hancock, of The Baltimore Sun, illustrates some of the positive effects of high oil prices. The examples cited show that progress in the petroleum industry, spurred by the promise of high returns from $60/barrel oil, will lead to lower oil and gas prices in the future, along with reduced oil consumption and an increase in alternative fuel use.

Adam Smith might have his hand on the gas pump

Jay Hancock

August 21, 2005
BLOODY SHAME about those high oil and gas prices.

They're causing billions of dollars to be invested in petroleum production, which will increase supply. They're discouraging unnecessary driving, encouraging use of public transit and fuel-efficient cars and cueing industry to cut fuel costs, which will decrease demand.

And they're triggering billions more to be invested in new technologies such as solar power and hybrid engines, which will offer alternatives.

I hate to say it, but if this keeps up we might avoid a 1970s-style energy crisis, with its shortages, gas lines, severe recession and petroleum prices a third higher than they are now, adjusted for inflation. We might even set the stage for a new era of low oil prices, like we had in the 1980s and 1990s, or at least new stability.

Can't Congress do something about $2.60-a-gallon gas?

Check out the damage caused by exorbitant oil prices, as reported by news outlets across the globe.

In Libya, which has some of the biggest untapped crude reserves in the world, lifted sanctions and the prospect of getting $60 or more for a barrel is helping induce Chevron, Marathon and numerous others to open millions of acres for drilling.

Exploration is also creating jobs and expanding supply in Russia, Angola, China, Algeria, Britain, India, Canada, Azerbaijan, Nigeria, Poland, Malaysia, New Zealand and Trinidad and Tobago, reports Oil & Gas Investor.

The profit signal sent by $60 oil is so strong that last month the number of exploratory rigs around the world hit its highest level since 1986, says Baker Hughes, the petro services company.

Where are the energy czars and price controls to stop all this when you need them?

Capital projects are booming in the equipment and "downstream" sectors, too. Companies in South Korea, China, Singapore and the United States are addressing a drilling-rig shortage by building new hardware.

Chevron is expanding its Pascagoula, Miss., refinery by a fourth. Kinder Morgan and Sempra want to spend $3 billion on a pipeline bringing natural gas from the Rockies to the Midwest and East. Texas-based Valero and ConocoPhillips are spending billions to improve their ability to process sour crude, which is cheaper than sweet and will help bring down prices.

Thai Oil is spending $1 billion on new output capacity. Brazil just announced plans to increase processing capacity by 20 percent. China and India have doubled refining capacity in recent years.

In short, high prices have spurred the global petroleum industry to make up for decades of miserable investment and operating with rickety equipment. We're finally investing in the future and ensuring our ability to produce energy for our children.

Darn it. I hate it when that happens.

As rising oil prices make alternatives look attractive, we're also getting the strongest incentives in two decades to reduce our petro addiction and take the next step.

Public transit use seems to be rising. Ridership on the MARC commuter rail system is up 13 percent since 2003 despite ridiculous breakdowns and delays, The Sun reported last week. Public transit ridership also seems to be up mildly in places from Washington to St. Louis to Los Angeles, according to various newspaper reports.

Sales are soaring for "hybrid" vehicles that run on gas and electricity. Toyota doubled production of its Prius hybrid this year. Ford has a hybrid SUV. GM has a hybrid truck and says it could produce a fuel-cell car that runs on hydrogen by 2020.

Florida-based FPL Group is building up to 750 megawatts' worth of wind-powered electricity generation this year - nearly half the capacity of Constellation Energy's Calvert Cliffs nuclear facility. Frederick-based BP Solar, a division of BP PLC, is expanding again after downsizing in 2003, the Frederick News-Post reported a few months ago.

Weirder and wilder stuff is on the way. Venture capitalists, the people who brought you Silicon Valley and the computer revolution, have gotten interested in energy. One of the partners at Baltimore's New Enterprise Associates is a Nobel Prize winner searching the globe for alternative-energy investments.

Gee, that doesn't sound so bad, actually. Maybe higher prices are part of an invisible hand creating economic order, as described by Adam Smith. Maybe $60 oil is beaming signals across the economy that will boost supply, cut demand and eventually lower prices, as described by Friedrich Hayek. Maybe we didn't need the energy bill Congress just passed.

Maybe, in a free market, the solution to $60 oil is - $60 oil.

Pretty easy to see that imposing price caps, subsidizing oil refining, imposing higher pump taxes, and various other government hammers typically used to keep prices down will undermine all of these efforts.

Public Education...More of the same

In a recent op-ed piece for the New York Times, editor Bob Herbert bemoans the state of public education in America. Rather than suggesting that we try something different, however, Bob suggests that we throw more money into and draft stricter standards for this failed endeavor.

This is simply naive. Public education sucks. It has always sucked. It always will suck. Specifying higher standards and recruiting better teachers does nothing to address the inherent flaws in the system. They're band-aids at best, counterproductive at worst.

I present to you these questions for research and/or reflection:

1. On what premise is the assumption based that everyone is entitled to a free education, and does that premise fit within a framework of personal liberty and individual responsibility?

2. Is it possible for government-controlled education to be anything but a tool for the indoctrination of "good citizens", subservient to the will of the State, taught to revere those in power? If so, how?

3. What would be the effect of the abolition of publicly funded education and a return to private education? Assuming, of course, that taxes used to fund public schools would remain in taxpayer pockets, rather than being redirected to other dubious endeavors.

Michelin - Class Act, or PR Hounds?

You guys all remember the debacle with the US Grand Prix, right? Well, Michelin is giving a full refund to everyone who bought a reserved seat ticket.

I think it's a pretty cool thing to do.

Others may think it's just a PR stunt or that Michelin should refund ticket prices because the mess was their fault.

I say, what difference does it make?

What do you think?

"Victory" for migrant farm workers?

A friend and I recently had a discussion about a boycott of Taco Bell restaurants that was staged by several workers' rights groups in protest of the plight of migrant farm workers...specifically, farm workers who pick tomatoes for a number of growers in southern Florida. The boycott was over the wages the workers were paid and the conditions under which they worked. The workers' rights groups believed that refusing to patronize Taco Bell would force the company to pay higher wages and improve the conditions of "virtual slavery" on the farms.

This article from the NPR website, reports that the boycott has done just that. An agreement has been reached with Yum Brands, Inc. (Taco Bell's parent company) that stipulates higher wages and better working conditions for migrant workers. Many who read the article will indeed consider it a great victory for the workers, but how many will consider the effects beyond the immediate and obvious? Is this agreement an all-around good thing? I, for one don't believe so...simply because the money to pay the higher wages has to come from somewhere.

Under the agreement, Taco Bell can buy tomatoes "only from growers who pay farm workers almost double the current going wages...without raising prices at its restaurants." This presents a number of problems to Yum Brands, Inc.

First, paying more for tomatoes without raising prices at the restaurants means less profit. The typical response to this is probably something along the lines of, "So what? They could stand to make less profit. They make enough already!" In fact, the article sites an increase in profits at Taco Bell restaurants, apparently in an effort to enforce this line of thought. The problem is that less profit means lower stock prices, which means less money invested in the company, which puts us right back where we started. The "extra profit" has just been eaten up by reduced investment. Still, there are several other ways the higher tomato prices could be compensated for.

Maybe they could just put fewer tomatoes on the food, thereby reducing the amount of tomatoes needed and bringing the overall costs back to where they were previously. It might work, but there is yet another unseen effect to this plan as well. Fewer tomatoes needed means fewer tomatoes purchased from the very growers who are overpaying their workers. As a result, the grower must lay off workers or cut benefits to maintain a profit margin.

Perhaps some of the "corporate fat cats" that run the company could just take a pay cut. But why should they? They're being paid what the company has agreed to pay them in return for their services. Furthermore, their salaries are determined largely by market forces and the success of the company (as reflected by profit/loss, and therefore stock prices), much as the workers' wages were.

Another option would be for Yum Brands to increase prices at other restaurants it owns in order to make up the difference for Taco Bell's overpriced tomatoes. In this case, consumers bear the cost of the workers' increased wages. Unless, of course, consumers decide to eat elsewhere as a result of the higher prices...putting us back at square one.

Labor, like any resource used in any industry, is part of the cost of production. It is subject to the laws of supply and demand just like any material good or consumer product. Forcing an employer to pay more for labor than the market will bear invariably increases costs for everyone, often costing jobs as well.

As for the abuse of workers the article speaks of, there is a question that needs to be answered...Did the workers agree voluntarily to work under those conditions? Since the word "migrant" is used instead of "immigrant", one must assume that the workers are illegals, and so there is probably no binding employment contract between the workers and the growers. In my own opinion, there should be no such thing as "illegal aliens". Our borders should be open to anyone who seeks gainful employment and a better way of life. I therefore feel that there should always been a written employment contract executed by both parties, thus removing any ambiguity about the nature of employment or any claims made by either party. The growers are able to get away without it because the workers are not American citizens.

I also don't believe that any company should be required to provide worker's compensation in the event of an on-the-job injury, unless it is a term of the employment contract between employer and employee. Risk should be assumed voluntarily, along with the responsibility for the consequences of such risk.

In What is Seen, and What is Not Seen Frederic Bastiat writes of the consequences of failing to look beyond the immediate visible effects of any action and examine the unseen damage that action may cause. This agreement may bring about slightly better conditions for the workers in the short run, but others within the organization, consumers, and quite probably the workers themselves will bear the cost.

Self-Defense is a Basic Right

This article, from The Cape Times, in South Africa, describes a device that can be worn by women as a deterrent to rape. The device is inserted into the vagina and attaches to the assailant's penis with microscopic hooks. It can then only be removed with medical assistance. This may help identify rapists so they can be prosecuted (unless, of course, the attacker is willing to emasculate himself in order to avoid prosecution). It also contains any ejaculate, thereby protecting the victim from pregnancy or sexually transmitted diseases that may result from rape. Seems like a perfectly reasonable, effective method to help reduce one of the most heinous, intrusive acts that can be committed by a human being upon another.

Still, there are those who may condemn its use, as evidenced by this passage:

Lisa Vetten, of the Centre for the Study of Violence and Reconciliation (CSVR)
says: "It is like we are going back to the days where women were forced to wear
chastity belts. It is a terrifying thought that women are being made to adapt to
rape by wearing these devices. We should rather focus our energy on changing
men's mindsets and behaviour towards women."

I agree...It is terrifying that women must go to such measures to protect themselves from rape. The fact remains, however, that merely focusing energy on "changing men's mindsets...towards women" is a losing proposition. Yes, progress can be made toward changing attitudes about gender, race, religion, whatever, but human nature is in many ways unchangeable. There will always be a violent element in any society, and relying on a change of attitude to quell the violent side of human nature is naive.

Changing behavior, on the other hand, is much more straightforward. Without doubt, the most effective deterrent to any undesirable act has and will always be to increase the negative consequences of such an act. The risk of having one's penis bitten of by an anti-rape device would probably be high on any rapist's list of reasons to NOT indulge his vice. Especially since it would be impossible to tell if the potential victim is wearing the thing.

By way of example, in October, 1966, Orlando police began a program to train women in the use of firearms. As a result, the number of rapes dropped from 34 incidents per 100,000 inhabitants in 1966, to 4 incidents per 100,000 inhabitants in 1967, with no drop in rape incidents at all in surrounding areas[1]. Clearly, allowing individuals to defend themselves makes would-be assailants think twice before attacking an individual who may be packing a gun...or in this case, a potentially emasculating penis-biter. Should it matter that the rapist's reasons for not committing rape were purely born out of self-preservation? In my opinion, it definitely does not matter.

Oh, and Lisa Vetten is either an idiot or is grossly misinformed. Chastity belts were primarily used by husbands to prevent their wives from cheating on them while they were away on some crusade. They were extremely uncomfortable, and would probably never be worn voluntarily by any woman...unless she was into that sort of thing.

1. Healing Our World, by Dr. Mary Ruwart. Ch. 16. Text can be found here.

Shocker! U.S. Auto Makers in Trouble!!!

Hiroshi Okuda, chairman of Toyota Corp. is considering hiking prices on vehicles sold in the U.S. in an effort to help out Ford and GM.

Here's the article from MSNBC.com.

My favorite quote: "General Motors Corp. and Ford Motor Co. are symbols of U.S. industry, and if they were to crumble it could fan nationalistic sentiment."

"Symbols of U.S. industry" indeed. I'm ashamed that our symbols of industry are incompetent, inefficient behemoths that couldn't build an efficient, reliable, affordable vehicle if their lives depended on it, have been propped up time and again by taxpayers because they're incapable of forming an efficient business model, and use the power of government intervention in the market to maintain their incumbency. They all should have gone down in flames years ago, and we should all be driving Tuckers and Hondas. Yet another perfect example of how consumers, taxpayers, and laborers take it up the 'chute as a result of government involvement in the economy.

Labor unions create their own issues by using government to force businesses to pay higher wages or provide more benefits than what the market would otherwise bear. This drives up production costs, thereby driving up prices and causing a decrease in overall sales. The cycle ends with plants closing and the very laborers who fought for higher wages in the first place out on the streets.

Artificially low interest rates and the profligate availability of credit have helped create a market for overpriced, extra large, gas-guzzling SUVs. That market is slowing down as gas prices and interest rates rise, and GM and Ford will be hard pressed to recover the billions they've invested in it.

Their failure (or in this case, the lack thereof) now stands to increase prices for vehicles from foreign manufacturers, leaving consumers with a choice between cheap, unreliable domestic cars and expensive, reliable foreign cars. Interesting how it's come full circle.

Honk if you hate stupid people...

Ran across this nicely written article on MensNewsDaily.com.

Socialism...The Price of Idiot Proofing America

Never visited the site before, but this article (and the ad on the left, featuring some very nice cleavage) have piqued my interest...so to speak.

The Golden Days of VOIP

I suppose it was only a matter of time before legislators turned their attention to yet another achievement of unfettered ingenuity...VOIP communications. Without the watchful oversight of technologically challenged busybodies, VOIP may just turn into a highly profitable, efficient, customer-pleasing free-for-all...and we just can't have that.

http://www.iht.com/articles/2005/05/25/business/netphone.php

We'll see how long it takes them to start turning the screws here in the US. While it lasts, though, it's still fun to tell the phone companies to take a flying leap.

New Addition to the Family

This afternoon, I'll be picking up a shiny new Yamaha FJR1300. It's been over 6 months since I gave my deposit for this motorcycle to the dealership, and now that the day has actually arrived the anticipation is killin' me!

Needless to say, I'm getting nothing done at work.

Socialized Health Care

Yeah, I know it's been a long time. I've been a busy guy.

Some interesting reading about nationalized (socialized) health care...

From the Foundation for Economic Education:
http://www.fee.org/vnews.php?nid=5730

From Physicians for a National Health Program (PNHP):
http://www.pnhp.org/facts/key_features_of_singlepayer.php

From the Pacific Research Institute:
http://www.pacificresearch.org/press/clip/2005/clip-03-20-05.html


I have to say that I absolutely disagree with everything on the PNHP page. The FEE article does a pretty good job of giving a point-by-point rebuttal, so I won't go on a rant at this moment. ;-)

What kills me about this is that socialized health care has never succeeded in providing timely, effective treatment to all patients. Since this is what it's apparently supposed to provide, it amazes me that people still think it's the right answer even though it's been proven ineffective (and often detrimental to overall health) time and time again.

Spring Equinox

Just want to wish a Blessed Ostara to all my pagan friends!

I stayed up late last night to try and balance an egg on end, but it wasn't cooperating so I scrambled it. Next year maybe it won't be so friggin' contrary! :)

Immigration and Xenophobia

In an article on the Foundation for Economic Education website, Thomas Lehman presents arguments in favor of open immigration. I don't have a whole lot to add to the article, but I thought the rest of you may find it interesting.

There are a few things about the article that I really like. First is the way he poses the question of immigration to a society whose very foundation is one of open immigration and wonders why we're so closed to it now. The article was written in 1995, so the terrorism concern wasn't nearly what it is now; however, I don't believe the tone of the article would change much even if it were one of the issues considered...which leads me to the second thing I really like about the article.

He points out that the domestic element is of greater concern than the foreign element in terms of loss of our freedom and economic superiority, which is true for so many of the problems we face today. After years of creating terrorists abroad, the state has turned its focus inward to protect us from those terrorists. We find our borders more closed today than ever, and anyone who goes in or out is automatically presumed a terrorist until proven otherwise. The fact that our foreign policy has created this threat in the first place is completely and utterly lost on those in positions of power. Thus grows the power of the state, reaching into every aspect of our lives more every day.

Likewise, the fact that so many are up in arms about the migration of IT jobs to foreign consulting firms is testament to how unwilling we are to understand our own role in creating an environment where such cost-cutting measures are necessary. I had to laugh when Kerry promised to "close the tax loophole" that businesses supposedly exploit in order to reduce costs.

In so many ways, we've been digging ourselves into a hole for 200 years...one from which escape seems difficult, if not impossible. I'm always amazed how the answer to this is typically to keep digging, hoping we'll find the way out further down. Sometimes we dig sideways for a while, but anytime the going gets tough in that direction we turn our efforts once again downward. The solutions to these issues are simple in concept, but difficult and often painful in implementation. Will we ever be willing to endure the hardships that may come with undoing all the damage we've done to ourselves?

Crying in my beer

Got a bit of rotten news on Saturday. Turns out that the shiny new motorcycle I ordered from Yamaha won't be coming in until May. Originally, they were supposed to start delivering them this month, but since I ordered a model with ABS, it's gonna take a couple more months.

Boo Hoo...

On the bright side...it gives me more time to get my garage ready for the new arrival. Who's up for descending on my garage with saws, hammers, drills, and other implements of destruction to get the thing cleaned out, insulated, and drywalled...followed by consumption of much beer and barbeque?

Just when I was getting warmed up...

So now, blogs are under attack by the FEC. A recent posting on the Free Market News Network website outlines action being taken by the Federal Elections Commission to regulate and censor internet activity.

Voice your opinion by visiting DownSizeDC.org, and sending a letter to your representatives.

New links on the Wombat blog...

Hey, Wombat fans...

I've added some new links to my blog, beneath my profile on the left side.

Particularly of note is the link to the Baghdad Burning blog. If you really want to get an idea of how Iraqis feel about Americans stomping around in their country, you MUST check out this blog. It's written by an Iraqi girl living in Baghdad, and it's an eye opener. Also, check out some of the blog links on her page...they're just as enlightening.

Now if you'll excuse me I must get back to looking for a DBA job in New Zealand...

The whole patent thing...

In a recent post on the Ludwig von Mises Institute website, Stephan Kinsella analyzes the US patent system and whether its supposed benefits outweigh its costs. Patent advocates have long held that the patent system encourages innovation by restricting the reuse of ideas, thereby forcing inventors an entrepeneurs to innovate.

I have a few questions about this...

1. Does innovation really need to be encouraged by artificial means? If there were no restrictions on using someone else's ideas to make a buck would we be stuck in the dark ages because no one ever invented anything new?

2. Is it valid for a company or individual to file suit against someone else on the basis of the possible but unquantifiable loss of potential sales that may occur due to patent infringement? Does that mean that outselling a competitor in a given market merely by providing a superior product is somehow unfair?

3. Would Microsoft Windows be more stable and secure if other companies could create a similar product without fear of litigation?

The topic of intellectual property in particular is hotly debated these days, and I'm interested in hearing what others have to say about it.

Insurance...and the ten-minute victory

I have this friend. We'll call him Mike...cuz his name happens to be Mike. Most of you know Mike...but for those that don't, Mike is an interesting character. His life experience has rendered him just a little bit cynical, so that invariably determines his position in our debates. He's one of the friends I was talking about in my first post, so you'll hear a lot about Mike. Maybe he won't like me callin' him out like that, but so what...it's my blog.

Anyway...Mike made a comment the other day that the whole "threat of lawsuit" thing sometimes works out in our (the consumer's) favor. He went on to relate how his son was recently in a car accident (he's okay...no serious injuries), and his insurance company called a few days ago, offering him money. They told Mike they were sending him a certain amount to cover his son's medical bills, and an additional sum of equal amount to cover "hardship and suffering"...or something like that.

Now...being the evil Capitalist that I am, I didn't see how this worked out in anyone's favor. Even Mike acknowledged that the extra money was merely a buy-off to help prevent the possibility of litigation effort to procure further payment for "hardship and suffering", which could potentially amount to a much higher sum. I pointed out that this sort of activity was just another line item that would push insurance rates even higher.

Mike's answer was that his rates were going to go up anyway, so why shouldn't he get some of his money back? After all, it was his money in the first place. He considered it a victory...albeit a small one.

Here's where I made my mistake in the debate. I asked Mike why his rates were going to go up. This had the effect of sparking Mike's usual response about business in general, which punches my Free Market button every time. His answer was, "...because they're greedy f***ers." (my own censoring added for the benefit those who may not appreciate our urban vernacular)

Now...I don't deny that many of the people who run insurance companies (or any other company, for that matter) are greedy f***ers. I'm sure it's true of many of them. The point that I (and I'm sure many other laissez-faire types) have been trying to make about this is that it wouldn't matter if every single last business owner in the world was a greedy f***er...The fact remains that a free market doesn't reward purely greedy behavior.

The factors that go into setting a price for a particular service or product are many and varied, but one thing is consistent...it's never arbitrary or based solely on greed. An insurance company won't simply raise prices "because they can". To do so would risk pricing above what consumers are willing to pay, thereby driving customers to do business with its competitors. (At this point, Mike would probably invoke the danger of the ominous specter of collusion, but that's another post)

I'm intrigued by the overall attitude of the general public that business owners are greedy, heartless, and conniving. I've realized that it's basically an emotional outburst, and that this is what makes it so difficult to undo. The question is, who is to blame for this unreasonable position? Have we (consumers) done this to ourselves because we're unwilling to take responsibility for the decisions we make about the products we buy or services we pay for? Is it government's fault for demonizing some business owners in order to protect others? Is it the fault of business itself for being opportunistic and selling people whatever they'll buy?

Comments, please...

A little bit about me and my intentions...

For the past year or so, I've been doing a lot more thinking than I did before. I used to be the type who was proud of not giving a shit about anything that went on outside my little sphere of existence. I saw my ambivalence as an asset...something that allowed me to float through life with nary a care or concern. Some of that attitude took a shot in the arm when I got married and realized that I was committing to being cognizant of the needs of another person, but my political, economic, and social views remained enshrined in blissful ignorance. That all changed over the summer of 2004...when I did the first bit of serious reading I've done in a very long time. I devoted several months to reading Ayn Rand's seminal work, Atlas Shrugged.

Yeah, yeah...I hear a lot of you out there groaning. You're thinking I've become one of them. I've gone over to the dark side of Capitalist exploitation of the down-trodden masses. Whatever your view of Ayn Rand or her philosophy happens to be, there is one thing that I learned from this book that I believe every person should know and understand...and that is that in order to live any kind of life at all we all have to think for ourselves. The only real choice you have in anything is the choice of whether to think or not think, and all too often we choose not to think but to react emotionally and irrationally. Thus began the formation of what some of my friends are calling "The New Ron"...and not always in a complimentary fashion. I've also realized that I'm a Libertarian at heart.

My best friend, Steve, has been of a Libertarian mindset for almost as long as I've known him, though I wasn't fully aware of what that meant until fairly recently. We'd had discussions about society, economics, and politics over the years, but through it all he remained carefully non-evangelistic because he finds those type of people annoying. So now I'm annoying. I bug the hell outta my friends constantly about all things political and economic. That's what's so great about having friends, though...they keep talking to you even after you've gotten on their last nerve.

I'm not sure any of them know how valuable they are to my learning process, though. The discussions we have force me to think...and I'm grateful for that. Interesting thing, eh?...how before I didn't want to think and now I look forward to every opportunity to do so. I also have to thank my wife, Alli, for putting up with the new me and being willing to discuss these things as well. Without her support, there really wouldn't be any point in this anyway.

Which brings me to the purpose of this blog. This is primarily an outlet for the unfinished discussions I have with my friends. I'm not very skilled at debate, so it's often difficult for me to get my point across effectively in the heat of discussion. Later, it's much easier to reflect on the conversation and figure out how I could have made my point. It also gives me time to consider the alternative viewpoint presented by the person with whom I had the discussion and determine whether or not I agree and why.

The problem is that by the time I figure all this out it's too late. The conversation is over, and I'm usually lying awake in bed or something. I don't want to call up my friends to rekindle a discussion in the middle of the night or while I'm sitting on the toilet. Better to post it here and let them read it if they wish. This way I get to say what I wish I had said before, and everyone is happy.

So here it is...The Wombat's View on Economics (and random other things). Enjoy, and please post comments whenever you can.

Thanks!
~Ron