no third solution

Blogging about liberty, anarchy, economics and politics

Category Archives: Michigan

What Would Coase Do?

August 16th, 2007

A U.S. District Judge upheld as constitutional a Michigan law requiring oceangoing vessels to sanitize their ballast tanks in order to prevent the spread of certain “invasive species, including round gobies and zebra mussels.”

I won’t pretend to know anything about maritime affairs, the logistics of sanitizing a million gallons of ballast, or commercial law especially with regards to open waterways, etc. I’m also not a specialist in ConLaw, either. But based on my limited understanding of the document and its application, it doesn’t seem like this is an undue restriction of interstate commerce. Although perhaps it is: consider a similar scenario where the State of California outlawed late-model, out-of-state vehicles (which do not meet its emissions standards) from entering the People’s Republic? But I digress.

This headline caught my eye today because, on its face, the case is nearly identical, qualitatively, to Coase’s examination (pp 13) of the farmer and the train, which passes his property on a nearby track, occasionally dropping burning embers which could potentially destroy his crop. (Incidentally, it’s also an examination of Pigou taxes.) Should the railway pay to install preventative measures on the trains? Or is this the farmer’s responsibility? Should the State pay to sanitize these tanks? Or is this the shipping companies’ responsibility?

We learn from Coase is that these problems are far more likely where property rights are poorly defined, and there are perhaps few better examples than the vast, inland seas which comprise the largely “public” waterways of the Great Lakes. Do I think there’s probably a better way to solve these problems than the adversarial manner of escalating court cases and duelling lawyers? Almost certainly. Do I want to propose the solution? Not really. I just think it’s interesting when I come across a real-life example like this.

“About What We Expected…”

August 15th, 2007

Michigan’s version of “No Child Left Behind,” according to early results from the State’s department of education, has left approximately half of the children behind:

“Just half of Michigan juniors passed the state’s new high school exam in English while fewer than half passed the math section, according to lackluster results released today by the Michigan Department of Education.”

Which is, according to the article, “about what we expected.” Because, you know, we can’t build a program from the bottom-up, instead we have to do this half-assed trial-and-error routine where we expect failure, and go from there. Brilliant.

Also in its inception is the new Michigan Promise Scholarship, which gives students money for merely demonstrating an adequate comprehension of reading, math, and science, as administered by the MME exam. Disregarding some not-so-trivial details (such as: where is this money coming from? the State has an $800B deficit!), nearly every student will “qualify” for this subsidy – either by passing the exam, or by successfully completing two years of post-secondary education. Of course, this subsidy will simply be absorbed by the State Universities – there is absolutely no reason to presume it will have any beneficial effect on the price of higher education in the State of Michigan.

No, just like the federally subsidized education that everyone receives now, it will simply push the prices higher – and even further out of reach for the unfortunate few who don’t have access to the government’s checkbook.

Buy American?

July 31st, 2007

Always ignored in protectionist arguments is the question of how a company like Toyota, that nobody had ever heard of, run by yellow men with slanty eyes who were our mortal enemies 20 years prior – how this sort of David could’ve slain the mighty Goliath of American manufacturing. It is, in a word, inconceivable. If any market wasn’t “fair,” whatever that means, it was the market for automobiles in the U.S. in the 1960s and 1970s. Nevertheless, frequently, you’ll hear the protectionist cries against foreign companies like Toyota or Honda, who broke into a market dominated by textbook oligopoly thirty or forty years ago :

“We need to keep profits in America – these companies send their profits back to Japan!” And all sorts of other economic gobbledygook.  These allegations are, for starters, demonstrably untrue – anyone who wants a slice of the pie need only call their broker and buy shares of their publicly traded stocks. Furthermore, the proposition is rooted in the worst sort of nationalistic mercantilism, which despite two hundred years of intellectual and economic progress, refuses to die. These points are well worth making. But not today. Today, I have a question for anyone who makes or supports those protectionist war cries:

Would you ask that General Motors, the largest U.S. auto maker – and I believe, still the largest auto maker in the world – for example, limit their operations to America?

How can any of the start-ups in the “emerging global markets,” where General Motors earned the lion’s share of its $891 million 2Q2007 profits, compete with the General’s superior wage structure? Their supply chain? Economies of scale? Is it not true that General Motors is in fact stealing profits that otherwise rightly belong to foreigners, in foreign lands?

Anyone who repudiates the profits Toyota earns in the United States must similarly decry those profits earned by General Motors in China, by Coca-Cola in France, and so on. If this sort of special pleading strikes you as inconsistent, you’re not alone. If this makes the protectionist uneasy, perhaps he should reverse his position.

no third solution

Blogging about liberty, anarchy, economics and politics