Category Archives: Economy

Crunchy Cons And Other Cud Chewers

Capitalism, Democrats, Economy, English, Free Markets, Government, Neoconservatism, Political Economy, Private Property

Jeff Tucker of the Mises Institute provides a powerful and pertinent review of Crunchy Cons, by Rob Dreher, a book I’m as likely to read as I am to see Al Gore’s Global Gibberish. Jeff writes:

“What’s really strange about this book is that it … is mostly a guide to how above-it-all the author and his family are, how they got to be so fabulous, and how they and their friends are to be congratulated and admired for having escaped the trappings of the materialism of our age. No Wonder Bread and Cheez Whiz circuses for them! They live a fully ‘sacramental’ life, from their choice of crusty multigrains to their love of fancy French cheeses.”

“It never occurs to the author that his crunchy way of living is a consumable good—nay, a luxury good—made possible by the enormous prosperity that permit [sic] intellectuals like him to purport to live a high-minded and old-fashioned lifestyle without the problems that once came with pre-capitalist living….”

And:

“The author doesn’t speak of demographics at all: the population of England soared from 8.5 million in 1770 to 16 million by 1831. This is the result of a vast increase in living standards. The result of the Industrial Revolution was not “a loss of the human in everyday life” but exactly the opposite: the vast increase in the number of humans who could participate in everyday life.”

“The world today has 6.5 billion people, and many of them are growing richer all the time thanks to the advance of capitalism. How does Dreher propose to feed and clothe and care for all these people? If they were all required to live a ‘crunchy con’ lifestyle they would die, first by the thousands, then by the millions, then by the billions. The world today absolutely requires a vast productive machinery called the market. I’m sorry that he doesn’t like it but this is reality. To be truly pro-life means to embrace free markets.”

Let us not forget “the evil of large retail shops driving smaller ones out of business.” Crunchy creeps are not original in this particular fixation. In a book review of Naomi Klein’s “deeply silly” No Logo for the Financial Post, I wrote that “in her discrete demarcation between big and small, local and transnational business, Ms. Klein ignores the fact that consumer patronage grows a small business into a large one. To her, consumers are dim. They buy products they neither need nor want, and even when their purchases are unsatisfactory, they keep at it. If they are so incompetent, why allow them to vote?”

Joining Klein and her crunchy-conservative cohort is another cud chewer: Charles Fishman, author of The Wal-Mart Effect. His think-piece was reviewed in The American Conservative by Marian Kester Coombs (the magazine has a preference for the double-barreled pretension). Now, even if a reviewer thinks a book is Bible from Sinai (not a metaphor TAC would tolerate, mind you), he ought to use some critical faculties to examine its flaws. That’s presuming such faculties exit.

Coombs is also a crappy writer: Wal-Mart, we are informed, is a “close-mouthed entity”; or “Wal-Mart knows the price of everything and the value of nothing.” I suspect both are mixed metaphors, and that Oscar Wilde is writhing in his grave.

She does nothing to articulate the mysterious mechanism that explains how exactly Wal-Mart impoverishes. By offering “the lowest possible prices all the time, not just during sales”? What exactly is the economic process that accounts for Wal-Mart’s ability to “expel jobs and technology from our own country”? Competition? Offering a product people choose to buy?

“Protecting the home market,” which is what this woman advocates, is to the detriment of consumers. It forces them to subsidize less efficient local industries, making them the poorer for it. To keep inefficient industries in the lap of luxury, hundreds of others are doomed to shrink or go under.

Our reviewer also froths at the mouth over “the teenage girl in Bangladesh … forced to sew pocket flaps onto 120 pairs of pants per hour for 13 cents per hour.” Look lady, Wal-Mart is either offering higher, the same, or lower wages than the wages workers were earning before its arrival in Bangladesh. The company would find it hard to attract workers if it was paying less, or the same as other companies. Ergo, Wal-Mart is a benefactor that pays the kind of wage unavailable prior to its arrival. More material, if the entrepreneur were forced to pay Third-World workers in excess of their productivity, he would eventually have to disinvest. What will the Bangladeshi teenage girl do when that happens?

Killing Commerce

Canada, Economy, Law

I import my beans freshly roasted from the fabulous JJ Bean Coffee in Vancouver, Canada. The place is charming and quaint—it sports a vintage 4-barrel Jabez Burns sample roaster. Back in the day, I used to love sipping a cup of the house blend and munching banana bread as I waited for my beans to be packaged.

The other day I was informed by JJ Bean’s insurance agent that the company’s goods will no longer be available in the US:

Legal liability laws in the US and Canada differ markedly with respect to consumer products. American product liability laws include ‘Strict Liability’ and this difference makes it prohibitively expensive for JJ Bean to continue with its US sales.
In Canada when a business sells a product, and that product causes harm to the consumer, the consumer must prove that the product caused the harm. In the US the onus of proof shifts onto the business owner, who must prove that he did not negligently cause the harm, something that is generally much more difficult to prove.
Accordingly, commercial legal liability insurance premiums in the US are much higher than in Canada, and if a Canadian business sells products into the US they are subject to these higher rates.

Because JJ Bean is a small franchise, it doesn’t generate enough business to support the steep overhead.

It is clear that Canadian law is far more compatible with the free market. American law is illiberal; it gums up trade, infantilizes Americans, and is tantamount to open season on business. What makes it particularly egregious is that, in the event that some malcontent initiates criminal proceedings against the company, the law leans toward a presumption of guilt, not innocence. Innocent until proven guilty; no crime without intent—now aren’t those supposed to be some of the foundations of the American judicial and constitution tradition?

Bush’s Energy and Eco-Idiocy

Bush, Economy, Energy

Debates about energy on Fox News, the Republican Party’s megaphone, reflect just how far Bush and his supporters have strayed from a priori economic truths, in adopting the Democratic agenda.

The two ubiquitous interlocutors typically invited to “debate” energy—one a Democrat; the other a Republican—have no real disagreement about policy or the facts undergirding it. Their only quarrel concerns the degree to which Bush is carrying out the Democrats’ plank; Democrat pinkos say not fast enough; Republican pinkos give him full marks.

Democrats don’t even have to argue their case for the repugnant Marxist theory of environmentalism; Bush has accepted and acted on it–its fallacies inform his policies. As I’ve written:

“The theory used to be that capitalism was going to cause the impoverishment of the worker. The exact opposite transpired. Greater economic freedom, especially in developed nations, has enabled those who, in previous centuries would have lived short, nasty and brutish lives, to afford the accoutrements of modernity. The theory now is that the capitalist has taken a slight detour—the worker’s demise will indeed follow as soon as the capitalist is through despoiling the environment.”

Republicans have been converted: they are now “watermelons”—green on the outside, red on the inside.

Duly, they ignore that supply and demand determine the price of gas—and that, other than taking care in future not to reduce supply by pulverizing a country that was once a major oil producer—supply has to be increased to reduce prices.

Furthermore, the price system is the best way to conserve. Americans are already adjusting consumption because of prices. Dare to meddle with these, as Bill O’Reilly advocates, and shortages or surpluses will follow in short succession. If you cap prices (or profits, as Comrade Bill advocates), people will conserve less because prices will have been artificially lowered, and suppliers will have no incentive to drill for crude and bring it to market. If the eco-idiots don’t want lines at the pump the likes Iraqis are now enduring, let the price system work to conserve—and to secure supply.

Any impending scarcity is the responsibility of the powerful environmental lobby’s opposition to oil exploration—and the governments that have heeded it. This lobby has seen to it that a domestic moratorium and thousands of regulations and restrictions have been foisted over the years on industry in a bungling attempt at conservation. The prices at the pump are their handiwork. Absent legislative barriers to exploration, courtesy of ignorant environmentalists, high prices would, ordinarily, signal to oil companies that there are profits to be made, and that they should intensify drilling, refining, etc. In short, get more product to market.

As to the “commie cars” Bush is pushing, much to the delight of Democrats: Don’t expect Bush (who recently spoke of reducing “greenhouse admissions“), the Fox fillies, affiliated fops, or any other ignoramus on the networks, to tell you what they apparently don’t understand—also the only thing you need to know about electric, hydrogen, and hybrid gas-and-electric vehicles—these are only as good as the original source of energy that powers them.

Take the Hydrogen vehicle: energy is released when water (H2O) is separated into Hydrogen and Oxygen. Notwithstanding that this process is not economically viable, and thus far more wasteful than oil extraction, to bring about this reaction, coal, natural gas, nuclear power, or a hydroelectric dam are required first. Dah!

America’s “People’s Car”—engineered due to the same central planning that brought into being the lowly Russian Lada (it was decreed by USSR’s Ministries Council)—is only as clean as “the original source of energy that generated the vim that powers it.”

Further reading: “Commie Cars”, “Mutant Marxists in the ‘Heart of Darkness'”

Updated: America: Follow The Chinese & Save!

America, China, Economy

What a disgrace. For the past few days I’ve heard assorted American economists and commentators—socialists all—complain bitterly about the Chinese saver. Yes, the Chinese may have a democracy deficit, as American politicians never cease to remind them, but they don’t believe in debt, personal or national, as do wastrel Americans and their political overlords.

This is one reason why the Chinese economy is exploding: savings, capital accumulation, and investment are the very lifeblood of a healthy economy. Solvency and fiscal prudence are virtuous qualities, and, in the long run, lucrative.

The Chinese save up to 40 percent of their Gross Domestic Product. In fact, they behave exactly like individuals in a truly free-market would behave; they save like there is no tomorrow. Or, more appropriately, like there is no welfare state, which, indeed, the Chinese don’t have. Or if they do have social programs, these don’t meet American standards of socialism.

Or so our leading lights have been claiming throughout the week of President Hu Jintao’s visit: The reason the Chinese save so energetically is because they don’t have an adequate welfare system, the pointy-heads have puled.

Yes, this is the message from the land of rugged individualism: develop more government programs. Of course, these do no good, other than for the bureaucrats that administer them. They are, moreover, based on immoral distribution. Yet this is what we wish on China.

I guess it’s a case of “leveling the playing field”—another expression that is often lobbed at the Chinese. Translated, it means wanting to see one’s rival sapped of his vitality too.

That the Chinese plan their lives as though there were no government hand-outs to rely on has incenses American economists and commentators (at least the ones I’ve had the misfortune to hear this week). They want Bully Bush to put pressure on Hu Jintao to set up some programs for his people, and, by so doing, make them more like us: inclined to spend, because of the knowledge that Uncle Hu will pick up the tab (like Uncle Sam does so magnificently. Think Katrina).

As Henry Hazlitt reminded us in Economics in One Lesson, and as the Austrian, and classical economists before them, taught: “The rational saver, in making provision for his future, was not hurting, but helping, the whole community.” Money isn’t stored under the proverbial mattress, it is invested either directly (by buying securities) or indirectly (via the bank, which lends deposits out), thus creating steady, sustainable growth.

However, even if all Chinese were sitting on their money—a ludicrous proposition—isn’t it theirs to hoard? What about the individual’s right to keep what belongs to him without being punished by central planners and social engineers? Anyone who openly advocates such tweaking has a cheek waving his “Land of the Free” credentials in the faces of foreigners.

Since they must fend for themselves, absent government largess, the Chinese are probably the best barometers as to the true state of our intricately linked global economy. Do as they do!