Category: Economics

Something Not About The Election

FCC Commissioner Michael Copps believes we’re not doing enough to ensure that all Americans have access to broadband access to The Internets. Consider:

America’s record in expanding broadband communication is so poor that it should be viewed as an outrage by every consumer and businessperson in the country. Too few of us have broadband connections, and those who do pay too much for service that is too slow. It’s hurting our economy, and things are only going to get worse if we don’t do something about it.

I’m fired up to Do Something&#153. So what’s Commissioner Copps’ solution? Take a guess:

The FCC needs to start working to lower prices and introduce competition. We must start meeting our legislative mandate to get advanced telecommunications out to all Americans at reasonable prices; make new licensed and unlicensed spectrum available; authorize “smart radios” that use spectrum more efficiently; and do a better job of encouraging “third pipe” technologies such as wireless and broadband over power lines. And we should recommend steps to Congress to ensure the FCC’s ability to implement long-term solutions.

We need a broadband strategy for America. Other industrialized countries have developed national broadband strategies. In the United States we have a campaign promise of universal broadband access by 2007, but no strategy for getting there. With less than two months to go, we aren’t even within shouting distance.

Government is the answer, apparently. To be fair, Commissioner Copps later suggests that universal broadband access will require a public-private partnership. Perhaps, but he offers no clear situation in which private comes into play, other than taking dictation from the FCC. We already have that, and we’re going to miss our goal. What am I missing?

Maybe the government just needs to get out of the way and let the market develop itself. If Americans don’t have access to broadband, it’s certainly possible that they don’t care to have access. Considering they can get satellite DSL anywhere, I’m hard-pressed to find a lack of access warranting massive intervention.

An argument against satellite is that it’s too expensive. But who decides what price is the reasonable limit that government should push? Because we want that price does not mean that we can sweep aside the cost of infrastructure to build that access. Price is a function of that cost. If customers want the service at the price necessary to make universal access possible, they’ll pay it. If not, they won’t pay it. Why should everyone else be forced to subsidize another’s decision to live in a sparsely-populated location where universal access isn’t economically feasible?

There are costs associated with the rush to get universal access. If it costs us $600 billion to achieve the $500 billion economic boost Commissioner Copps mentions elsewhere in his editorial, we will have fallen behind to avoid falling behind. With deference to Commissioner Copps, we already have a broadband strategy for America. It’s called Capitalism. It works. Maybe a little slower than the snap-of-a-finger speed desired, but better slow-and-correct than fast-and-wrong.

I lost my job today

Not really, but if I had, I wouldn’t want these people looking out for me:

At Wal-Mart these days, snowy weather is no longer an excuse for lateness. It had better be a natural disaster like a hurricane or blizzard. And being 10 minutes or more tardy for work three times will earn you a demerit. Too many of those could get you fired.
…

“After a year of adopting antifamily policy after antifamily policy, Wal-Mart adds further insult to injury by adopting a new restrictive attendance policy that treats hard-working associates like children while penalizing them if, God forbid, they face a child or friend with a medical emergency,” said Chris Kofinis, a spokesman at WakeUpWalmart.com.

The group is set to hold its first-ever national conference call with Wal-Mart employees and civil rights leaders Thursday to discuss the latest move as well as other recent labor changes.

Civil rights leaders? What am I missing? But is Wal-Mart treating employees like children any more than labor unions treat employees like children? Under labor union thinking, employees are not capable of negotiating their own wages. Employees are not capable of resisting so-called oppressive rules. Employees are not capable of providing for their own healthcare needs. Employees are not capable of providing for their own retirement. Just like government, labor unions are no more interested in the rights (used loosely here) of workers than the lack of care they allege Wal-Mart fosters. This is little more than a ploy to be the employment central planner they believe Wal-Mart is.

But is Wal-Mart in complete control?

Mike Turner, who resigned three weeks ago as assistant manager of a Wal-Mart store in Crosby, Tex., said he was briefed about the changes by his bosses earlier this fall. He said that under the old policy, managers would approve excuses on a case-by-case basis, but the 800 number eliminates such “human interaction.”

“I believe in being fair,” he said, noting he personally approved plenty of situations that made a worker late like flooding or a car breaking down. “What can you tell a good associate that you are going to discipline because of a system that goes against human interaction?” he asked.

It’s easy enough to focus on “a system that goes against human interaction.” Instead, focus on “resigned three weeks ago.” That’s the true right of the worker. If something is unfair – whether wages, benefits, or leave policy – employment is not slavery. But it is up to the employee to demand and earn what she wants as it is for the employer to provide what’s fair demanded by the market. It only takes one party to institute a bad policy, but it takes two to perpetuate it.

Why not give them the company?

More signs of dinosaurs protecting their territory using the power of government.

A music industry group is asking XM Satellite Holdings Inc. and Sirius Satellite Radio Inc. to pay at least 10 percent of their revenues for the right to play songs over their networks.

Unlike land-based radio stations, which pay royalties only to songwriters and music publishers, federal law requires satellite radio, digital cable and Internet companies that broadcast music to pay the artists and record companies.

The two subscription satellite radio companies have been paying about 6.5 to 7 percent, analysts estimate, although the figures are not publicly disclosed. That agreement expires at the end of this year, and the Copyright Royalty Board, an arm of the Library of Congress, will determine the rates the companies pay for the next six years.

Why is there a federal law for satellite radio, digital cable, and Internet companies? Maybe there’s a valid reason for such a difference, but I can’t think of one that appeals to common sense. And why are rates decided by the government, rather than negotiated in the marketplace? It would make more sense to find the true market value of those rights than to have the government decide what they should be. Letting the market decide would allow companies to create new distribution and pricing models that might prove more beneficial to the music industry.

Besides could the market work faster than this?

The Copyright Royalty Board will hold hearings before it decides on new rates, a process that many say could take 18 months. Until then, XM and Sirius will continue to pay the current rates. If an increase is approved, they will be required to pay the difference retroactively.

Without regulation forcing capitalism out of the equation, no such structure would survive the pressures of competition.

Some things are worth paying for

I rarely post items Instapundit-style, with a link and a Heh. Such aggregation of links can be useful, but my interest drifts quickly because the information is out there for me to find almost as quickly. Instead, I want insight or commentary. I like for people to offer me a perspective to ponder, which is another reason I like reading things I disagree with. But this post at Cato @ Liberty is worth mentioning, even though I can only add my own Read the whole thing.

The Fraser Institute of Vancouver, B.C., has released its 16th annual “Waiting Your Turn” report on waiting times for health care in Canada’s state-run Medicare system. The average wait for surgical and therapeutic services increased slightly over the 2005 average to less than one day shy of their all-time high of 17.9 weeks in 2004. Throwing more money at the system doesn’t seem to make a difference; the Frazer Institute has documented that waiting times often increase with increased spending on Canada’s Medicare program.

National healthcare or insurance is not the answer, no matter how many pleas we hear about the expense of our system or how many people don’t have adequate health insurance. The Cato post doesn’t offer a solution, but it demonstrates why our problem is a better problem than countries now dealing with the drawbacks of socialized medicine.

I like alien radio. Here’s why.

Witness the actions of a dinosaur:

The radio wars are escalating. In a one-two punch aimed at enlisting regulators to their cause, the National Association of Broadcasters (NAB) and National Public Radio want the Federal Communications Commission to investigate alleged misdeeds by satellite radio companies XM (XMSR) and Sirius (SIRI).
…

In its second claim, the NAB contends that XM and Sirius shouldn’t be allowed to give away their products for free to new car buyers or online. Last week, Sirius streamed Howard Stern’s program for free on its Web site.

The NAB argues that such freebies ought to subject satellite radio to the same FCC regulations as those governing terrestrial radio. That likely would trigger restrictions, for example, on language and other racy content.

If you can’t beat them, force them to join you? I don’t recall learning that maxim in business school. Yet, that’s exactly the perversity unleashed by regulation. The NAB’s members roll over and play dead every time the FCC yells Bang!, so it expects satellite broadcasters to do the same. They’re imbeciles. People don’t have to consume satellite radio, even when it’s free. They don’t have to consume terrestrial radio, either, which is what the NAB seems to miss in bowing before legislators instead of customers.

I won’t be surprised if the FCC takes action, though XM and Sirius will clearly fight back if it does since they’re businesses are on the line. But the NAB’s complaint leads to an obvious, and chilling, conclusion. If we’re going to take its claim as valid, that would open every podcaster to FCC regulation if he allows his customers to download his podcast for free. I’ll take my liberty in maximum strength tablets, not children’s chewables. Liberty for all, including customers.

Any color you want, as long as we like it

Our government certainly creates issues with the way it inserts itself into commerce, but the European Commission’s involvement with Microsoft puts our central planners to shame:

The European Commission has said it will “closely monitor” the impact of Microsoft’s soon-to-be-launched Vista operating system on the market.
…

But in a statement the EC said that while it has been “informed” of Microsoft’s plans it has not given a “green light” to Vista’s delivery because “Microsoft must shoulder its own responsibilities to ensure that Vista is fully compliant with EC Treaty competition rules and in particular with the principles laid down in the March 2004 Commission antitrust decision concerning Microsoft”.

I’m sure Microsoft will be presumed innocent of any anti-socialist behavior until the EC proves that Microsoft is breaking the rules. I’m not serious about that belief because the phrase I highlighted says everything. (The rest is instructive, as well.) In a free market, which Europe clearly isn’t, customers get to decide if they like a company’s product. Instead, the EC stands in the way telling Europeans whether or not they’re allowed to like it. The European Commission is stupid.

Consumers make different, rational choices

Thanks for studying the obvious:

One of the lures of the outer suburbs is more house — maybe even one with a big yard — for less money. But a new study shows that the savings are illusory: The costs of longer commutes are so high that they can outweigh the cheaper mortgage payments.

When Danielle and I bought our house last summer, we specifically considered the impact of living in an outer suburb because we’re intelligent. First, the difference in price was significantly more than the $40,000 to $50,000 listed in the article. Second, the economic impact does not have to include getting in my automobile. Public transportation is still an option for me, and I considered in our decision. Of course, I could also change jobs to live closer to home if they commute becomes burdensome. That’s three factors. How many more could I name if I tried?

The Washington Post story includes this:

Moving closer to their jobs is out, Hannah said, because “there is no way we could move into an equivalent three-bedroom house for the same amount,” she said. “We don’t want to downsize and give up a yard, for instance.”

That suggests a willingness to pay the associated cost of having a large house and yard on a specific budget, namely, higher commuting costs (economic and lifestyle). Bottom line: Buyers aren’t stupid. Don’t bombard us with studies implying that we might be.

Who knew that leveraging personal assets can be bad?

From Robert Samuelson’s column in today’s Washington Post:

We are at the endgame for housing. Until recently our national motto has been “In real estate we trust.” Just last week the Census Bureau reported that median home prices after inflation rose 32 percent from 2000 to 2005. In some places, the gains were huge: 127 percent in San Diego, 110 percent in Los Angeles and 79 percent in New York. But real estate — which has acted as a national piggy bank, with homeowners borrowing and spending against rising house prices — no longer looks so trustworthy. On this, more than on falling oil prices or a record Dow, hangs the economy’s immediate fate.

Americans used real estate as a national credit card, not a national piggy bank. I don’t like it because it hurts the value of my home through the cumulative effect, but anyone stupid enough to borrow and spend against rising house prices will see no sympathy from me now that the market is finished with this boom. Some expenditures are necessary and probably unforeseen, but many are not. Until sold, though, no home provides any guaranteed value. Homeowners have one house, not $500,000.

As an example, I want an Xbox 360. Standing in my way, my current employment contract expires at the end of the year. I fully expect to have a new contract in place in time to avoid a revenue disruption, but until then, I’ll settle for a frustrating case of adolescent pining. Even when Call of Duty 3 arrives in stores next month, I’ll have to settle for standard definition instead of high definition. That’s if I purchase the game before securing a new contract.

The rest of Mr. Samuelson’s column is reasonable.

Today is showing a clear theme

I’m fascinated by Liberty Dollars. From today’s Washington Post:

Liberty Dollars were coined by von NotHaus and an Evansville, Ind.-based group called Norfed, which stands for (sort of) the National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code. In the late 1990s, the group began hawking its money as a hedge against inflation, and as a way to compete with the Fed. Von NotHaus makes the pitch online, using a raft of statistics and graphs that he says show the greenback is well nigh worthless.

I’ve read about them before, and understand the basic idea that the greenback is worthless. It’s a crock for reasons beyond what I’m interested in talking about here, so I’m content to accept that those who use Liberty Dollars are kooky. If merchants want to accept them as payment, that’s between the merchant and the customer. If a merchant refuses to accept them, that’s also between the merchant and the customer. Either way, the basis of commerce is something of value for something of value. Trade is good, and I’m not judge of what someone else considers good.

Our government’s position is that Liberty Dollars are Bad&#153. I think it’s over-reacting, considering no legitimate crime has been committed. I’m just surprised that the U.S. Mint didn’t invoke the children who might try to buy bubble gum with Liberty Dollars:

The U.S. Mint acted after federal prosecutors around the country began forwarding inquiries about the coins. “We don’t take these consumer alerts lightly,” said spokeswoman Becky Bailey. “Merchants and banks are confronted by confused customers demanding they accept Liberty Dollars. These are not legal coin.”

As I said, merchants and banks are free and capable to say no when confronted with Liberty Dollars. If they, or individuals, choose to accept them, that says more about our need for economics education than any indication of criminal activity. Prosecuting those who create and/or use Liberty Dollars is nothing more than a meddlesome trade restraint.

Post Script: Government shouldn’t provide that education, since education isn’t a legitimate function. But since it is our education provider, couldn’t we make a case that government is responsible for this? It won’t teach economics to everyone it educates, but it expects everyone to behave correctly. That’s a system with failure as the logical outcome.

More thoughts at defcon:blog

If you can’t decipher a calendar, please don’t vote.

The opening to a story about declining gas prices seems reasonable enough:

Pump prices — now at a national average of $2.28 a gallon for regular unleaded — already have fallen because of a slowdown in U.S. demand, a buildup in crude oil and gasoline inventories, the end of the summer driving season, a collapse in profit margins at oil refineries and a $17-a-barrel drop in crude oil prices since August.

Forget the journalist’s rambling list of causes, since the first two, decreased demand and increased supply, are sufficient. The remaining reasons mostly flow from the basic supply and demand argument. That’s not stunning, of course, as economic laws cannot be defeated by wishful thinking, often demonstrated as political grandstanding. That’s what makes this so frustrating:

Three out of 10 Americans think the recent fall in gasoline prices is a result of domestic political factors, including White House and Republican Party efforts to influence the November elections. That’s nearly as many as the 35 percent who attribute the recent price decline to market forces or supply and demand, according to the poll of 1,204 adults conducted from Thursday to Sunday.

The survey also showed that suspicions about the steep drop in gasoline prices over the past two months aren’t limited to the nation’s liberal strongholds. Sixteen percent of people who identified themselves as conservative Republicans, 26 percent of white evangelical Protestants and 29 percent of Southern residents think the plunge in prices is linked to the coming election or other political reasons.

That’s predictable. I was always inclined to agree with arguments for universal economics education as a graduation requirement, but really, the need for that is nowhere more obvious than in the incessant debate on gas prices. This ignorance gets perpetuated in the nonsense our elected leaders spew. The only control the government has in the market is the ability to cause harm or discontinue causing harm. People who wish to deny this are free to do so.

For a moment let’s pretend that the government has this power. If it did, it would work both ways. The government could decrease prices at will to influence elections. It could increase prices to benefit big donors. It could undertake all the nefarious actions people suspect. If it possessed such nonexistent powers, haven’t politicians shown a sufficient lack of scruples that we’d like them to get out of the game altogether? Would it be any surprise that they’re rigging it against us? Of course not.

Back in the real world, though, please remember that government has no such powers, so stop asking. It only drives the rest of us crazy.