Category Archives: Economics

No Free Marketeer

That’s what John McCain is. One of the reasons it’s hard to get enthused about him. I suspect that Palin might be a little better.

[Update a while later]

Both presidential candidates are completely economically incoherent.

No surprise, since they’re both economic ignorami. Though in Obama’s case it’s worse, because he thinks that he understands economics, and much of what he knows for damned sure is wrong.

Where Is The Pencil Czar?

George Will has more on economic ignorance:

The indignant student, who had first gone to Home Depot for a flashlight, says it “didn’t try to rip us off.” It was, however, out of flashlights. Ruth suggests that the reason Big Box had flashlights was that its prices were high. If prices were left at regular levels, the people who would have got the flashlights would have been those who got to the store first. With the higher prices, “someone who had candles at home decided to do without the flashlight and left it there for you on the shelf.” Neither Home Depot nor the student who was angry at Big Box had benefited from Home Depot’s price restraint.

Capitalism, Ruth reminds him, is a profit and loss system.Corfam–Du Pont’s fake leather that made awful shoes in the 1960s–and the Edsel quickly vanished. But, Ruth notes, “the post office and ethanol subsidies and agricultural price supports and mediocre public schools live forever.” They are insulated from market forces; they are created, in defiance of those forces, by government, which can disregard prices, which means disregarding the rational allocation of resources. To disrupt markets is to tamper with the unseen source of the harmony that is all around us.

The spontaneous emergence of social cooperation–the emergence of a system vastly more complex, responsive and efficient than any government could organize–is not universally acknowledged or appreciated. It discomforts a certain political sensibility, the one that exaggerates the importance of government and the competence of the political class.

Yes, an exaggeration that is reinforced by the propaganda inculcated into people by government schools.

Economic Ignorami

George Bush’s announcement this morning that the administration was concerned about “gouging” reminded me of why I wish that we’d had better options in the last two elections (and still do). I expect that kind of nonsense from Democrats, but you’d think that someone who was supposedly a businessman would know better. Or perhaps he does, and is just pandering. I’m not sure which is worse.

Every time we have a natural disaster like this, this idiotic topic comes up, and we once again have to explain Econ 101 to the products of our public school system, probably in futility. This time, it’s Rich Hailey’s turn.

Here’s what I wrote about it a three years ago, in the wake of Katrina.

[Update late morning]

Jeez, I thought that David Asman was smarter than that. Now he’s telling Fox viewers to take pictures of stations with high gas prices so that they can be reported to authorities. It’s hard for me to believe that Neal Cavuto would do that.

[Another update a minute or so later]

You know, I think that this is an explanation for socialism and collectivism’s continuing grip on the public mind, despite its long history of unending failure. There’s just something in human psychology to which it naturally appeals, and rationality just can’t break through. It just “feels” unfair for prices to go up in an emergency, regardless of the demonstrably bad consequences of attempting to legislate them.

[Late afternoon update]

Shannon Love explains how the gas station business works:

I’ll say it one more time for those who can’t be bothered to actually ask someone who owns a gas station. Gas stations set prices for the gas they sell today based on the wholesale price of the gas they will have to buy to replace it. Get it? The price you pay for a gallon today is the cost of the gallon the station will have buy to replace the one you just bought.

Gas stations sell gas at or near cost, so if they did not use replacement pricing any sudden spike in gas prices would shut them down and you couldn’t get any gas. I simply do not know why our public and private talking heads cannot understand and communicate this simple fact.

Because either they don’t know it, or they think that people don’t want to hear it. They operate on razor-thin margins, and can’t afford to hand out subsidized gas as charity, even if that wouldn’t screw up the market. And note, for those who say it’s “big oil” that is “maximizing profits” in the face of a national emergency, even if that were true (it’s not) “big oil” isn’t threatened with jail for “gouging.” It’s the gas station owner, who has no control over his wholesale gas costs. So people who demand that we crack down on gougers are essentially demanding that the station operators either operate at a loss, or pay fines, or go to jail. I don’t know why anyone would want to be in that business in the face of so much public ignorance about it.

Who Would Have Imagined?

Just a month ago, many Republicans were resigned to hoping at best for the possibility of John McCain eking out a win against Obama, and not losing too much ground on the Hill. Now it looks like regaining Congress is within the realm of possibility:

The issues raised by today’s low approval ratings of Congress are reinforced by recent Gallup Poll findings that relatively few voters generally believe “most members” of Congress deserve re-election. That figure was only 36% in July, much lower than the 51% or better reading found in recent election years when the party of the sitting majority in Congress maintained power.

When the generic preference is only 3% among registered voters (not likely voters), the Donkeys are in big trouble, because registered voters almost always overstate actual support for Democrats at the polls.

McCain needs to start running hard against Pelosi and Reid. With all the nasty things that Reid has been saying about him lately, he shouldn’t have to work hard to motivate himself to do so.

It would help, of course, if Boehner and McConnell could make some noises to demonstrate that they learned their lesson from two years ago, and that they’re no longer going to be the party of pork and privilege. It’s a real shame that it looks like Stephens is going to win his primary in Alaska.

Of Course It Does

Restricting the top speed on automobiles “seems reasonably sensible” to Matthew Yglesias:

…of course the reason you’re not allowed to go super-fast is that it isn’t safe. A large proportion of car accidents are related to people driving too quickly. Thus, via Ezra Klein comes Kent Sepkowitz’s suggestion that we design cars so as to make it impossible for them to drive over, say, 75 miles per hour.

Clearly spoken as someone woefully ignorant of the cause of accidents, and who probably doesn’t drive much, at least outside a city, or in the west, or in mountains, or on curvy roads where rapid passing is occasionally necessary. Or someone to whom time (at least other peoples’ time) has no value. I suspect that he agrees with Al Gore that cars are intrinsically evil, and wishes that everyone would ride a train, like those enlightened Europeans. It’s similar to the idiocy (and yes, there’s no other word for it) of a double nickel speed limit (something to which even Charles Krauthammer, who doesn’t drive at all) has fallen prey.

Fortunately, most of his commenters take him to school.

Who Is Overpaid?

Not engineers.

Engineer’s salaries, taking into consideration education and responsibilities, the stress of accelerated delivery schedules and their direct impact on corporate profits and overall success of the company, seem absolutely inadequate.

Well, I’ve known a few who were. But no, not in general.

In many of these overpaid professions, there’s some kind of government-induced market failure going on (e.g., longshoremen), but in a lot of cases, it’s just the occasional irrationality of the market place.