no third solution

Blogging about liberty, anarchy, economics and politics

What About Off-shoring?

November 17th, 2010

So just a few days after I said “don’t expect regular updates any time soon,” I hammer out a handful of posts… Well, the smart money still says I’m not likely to continue at this pace, so enjoy it while it lasts.

Off-shoring is not a black and white issue.

It’s neither categorically wrong, nor categorically acceptable. In its purest form, off-shoring is simply the international division of labor, and although I prefer to think of things not in terms of nations and borders, the concept of divided labor really is morally neutral: no better or worse than the division of labor between you and your barber, or your butcher, or your ISP or the guy who changes your oil. Smith noted that you could open a vinyard in Scotland, but the grapes would be awful and the wine terrible unless you spent an enormous sum on greenhouses. But why do that when you can grow perfectly good grapes in California, the Loire Valley in France, Traverse City MI, etc.

What about profits going overseas and vice-versa?

On both sides of the aisle people complain about “profits going overseas”.  For instance, they don’t want you to buy Toyota cars because the “profits go to Japan”.  Hypocritically, many people (let’s call them Republicans) also consider “free markets” the environment in which American giants of industry can continually exploit cheap labor in developing economies while slashing labor in the US. You can’t have your cake, and eat it, too.

There’s nothing necessarily bad about someone (foreign or otherwise) who’s willing to sink millions/billions in to capital investments, creating jobs, infrastructure, and productive capacity. So even if you buy in to the argument that the “profits are going overseas”, the infrastructure, the knowledge base, and the employment is happening here and you need to reckon that. Besides, they created the jobs and opportunities, and so they are entitled to profit (there are serious objections to why we depend upon the grace of a privileged few when it seems we ought be able to provide for our own well-being; these are presently outside of scope). That’s how it works.

But the last I checked, Toyota was publicly traded. If you want a slice of Toyota pie, just call your broker and place an order.

But that’s not how off-shoring really works. Is it?

So far we’ve been talking about off-shoring in its purest form. Actually existing offshoring is quite often another story altogether and this is where we need to start examining those objections to which I alluded, above.  A critical examination would fill many volumes.

The reader’s digest version is: transnational companies are able to offshore mostly because of US imperialism and the remnant of European colonialism which basically pillaged the resource-rich countries now known as “the third world”.

When you start peeling back the layers of this rotten onion, what you’ll see (if you can fight back the tears) is a system in which you and I are expendable.  On the backs of our labor, Uncle Sam bails out the banks that caused so much havoc.  We pay for their mistakes, but don’t profit from their success, instead we chase higher and higher prices caused by inflation.  It is a system in which you & I pay taxes to fund a military force which keeps the volatile “third world” safe — safe for the very same profiteering corporations (which our taxes also subsidize) who continue to off-shore the jobs that used to be ours.

We’re paying for (and many of us don’t even know it) an empire which is jeopardizing our well-being, our livelihoods, and our security.

In a Free Market, Who Will Build the Parking Lots?

October 12th, 2010

Yesterday evening I caught a random comment from local news anchor Stephen Clark, lamenting (perhaps?) a proposal to increase parking meter fees in Royal Oak, Michigan.

A dollar an hour to park in royal oak..I bet businesses love that…not! (via Twitter)

If I had my druthers, the city would stop collecting property taxes and say to all the people and businesses: “You figure it out. The roads, the parking lots, the meters, they’re all yours now. Do with them (or not) as you wish.” So, this is not a defense per se of the proposed increase.

royal oak parking meter in front of Ed Retardy boutique

With that qualifier out of the way, I responded with a little Econ 101 knowledge: especially on a Thursday-Friday-Saturday evening, they could easily charge $3-4 per hour that much and there would be no shortage of people willing to pay. This is fundamental economics: when the price of a good or service is set lower than the market will bear, there will be a shortage of that good or service vis à vis the number of people who want to consume that good or service.

If parking were nominally “free”, it would be even more difficult to find a parking spot. Right now, parking is inexpensive, at fifty cents per hour during normal business hours and it’s still very difficult to find a parking spot. This is the number 2 reason why I don’t visit Royal Oak.

The number 1 reason is a preponderance of douchebags. I think the douchebags are attracted by low parking fees.

Stephen responded that, “As a rule, merchants resist parking price increases… they have a tendency to drive away business, but your point is well-taken.”

The notion that these customers (the same people who gladly pay $6 for a pint of beer and $190 for a pair of jeans) are going to be off-put by a 25-cent per hour increase in the meter fees is as retarded as a football bat, by the way.

Let me rephrase that: The business interests downtown oppose any change to this fee structure which would result in them bearing a greater amount (i.e., their fair share) of the burden for maintaining public parking lots in the city. The taxpayers in the City of Royal Oak are providing corporate welfare to the businesses in Royal Oak, predominately in the city’s downtown district. It is a direct transfer of wealth from the people who live and pay taxes in Royal Oak, to the people who only visit Royal Oak.

In a free market, there would be no taxpayer subsidized parking lots just like there would be no taxpayer subsidized bank bailouts, because there would be no taxpayers in the first place! How the parking situation might resolve itself, if I had my druthers (see above) is anyone’s guess. Here are a few options:

  • Parking lots could be strictly private: belonging to a person or group of people who may (or may not) choose to explicitly charge for their use.
  • An independent parking lot would probably charge daily or hourly fees to maintain the parking lot.
  • A restaurant might charge a daily or hourly fee for entry, and validate the charge (or a portion thereof) for any restaurant patrons, or a restaurant might keep the lot for patrons only, building the cost of maintenance/upkeep in to their menu prices, just like they do with the amortization costs of the establishment proper.
  • Or parking lots could be communally owned and operated — perhaps by a group of neighbors/citizens, but more likely by a group of commercial establishments with less absolute need for parking lots may pool resources together and establish shared lots, perhaps managed by the group or by a third party.

But instead, we have this pseudo-marketplace where the state or city zoning board sets (more-or-less arbitrarily) a uniform price for all places & times. The fact of the matter is that, although business interests may unanimously oppose fee increases, raising the parking fee is not necessarily “bad for business” or “bad for downtown Royal Oak”. The effects either way are probably de minimis, but I would argue that at least on principle of basic economic theory, subsidizing parking lots is a harmful distortion to market prices.

The results: parking is a clusterfuck during weekends and high-traffic events, and there are too many idiots wearing Ed Retardy jeans and fist-pumping all night long in sunglasses after dark.

All Costs are Opportunity Costs

August 16th, 2010

You don’t pay someone for the job they did; you aren’t paying someone because they did something toilsome. Rather you pay for the job you don’t have to do.

The former justifies all manner of economically backwards, window-breaking make-work schemes; the latter represents the exchange of value for value, of productivity for productivity.

What you are willing to pay is determined your disutility of labor.

A cost is what you give up in order to obtain something else.

A price is the cost of something that you didn’t produce.

All costs are opportunity costs.

That is all.

no third solution

Blogging about liberty, anarchy, economics and politics