David and Goliath

Hi.  I’m David, and I run an on-line fruit business.  I’ve been in business for nearly 25 years, carrying on the business from my father and his father.  And pleasing our customers has allowed us to stay in business all these years. 

 

One reason, I believe, that I’ve been able to stay in business is the fact that I can sell any number of combinations of fruit depending on the particular taste of my customers.  For example, I have some customers who love my kiwi, and that’s all they order.  I have other customers who love my kiwi and mangos, and they load up on both.  Still there are others that order nearly every line of fruit we offer.  That gets fairly pricey, but they keep returning, so we must be doing something right.  We’ve always believed that satisfying the needs and wants of customers comes first.

However, things are changing.

The government called the other day and said I had to change the way I sell my fruit.  They explained that I could no longer customize my fruit orders for my customers.  The government said I had to make all fruit orders the same.  The penalty for not complying would be fines, seizure of my business, and even jail.  Full compliance was non-negotiable. 

All fruit orders, according to new government regulations, must contain 13 specific types of fruit.  The government also said this was subject to change, and for me to be on the lookout for new fruit basket rules.  This will not please my customers who just want kiwi or kiwis and mangos.  In fact, this won’t please most of my customers.  All this will do is increase prices and waste fruit.  

This may be my last year of selling fruit.  I don’t particularly care for the government telling me how to run my business.  I’ve heard of other industries being taken over like mine was, and the outcome wasn’t good.  You see, the government wrongly believes it knows the exact needs and wants of all my customers, but this is false.  Over time, some of my customers’ tastes change.  Some who only wanted oranges now want just papayas.  The government isn’t privy to the taste preferences of all my customers.  Since they don’t know – can’t know!, they simply impose their own tastes on everyone.  Like it or not, all fruit orders will contain the government-mandated fruit.

Those arrogant bastards.  They’ve reduced all 300 million of us into one single, plain vanilla, garden variety nitwit and forced upon us one standard – their standard.  If we don’t like it – too bad.  You’re no longer an individual, but a collective member of society assumed to possess no preferences of your own, lest you be chided for selfishness.  Conform or be jailed.

I hear government wants to try this experiment with other industries as well.  Things aren't looking up. 

Here Ye, O Workers!

My work has me visiting the Department of Labor website lately.  To get there, I normally just type the URL in the address bar.  Today I was feeling lazy, so I typed in “DOL” into Google.  I was shocked at what came up.  See below:

Whatever the mission of DOL, it most assuredly isn’t to prepare the American workforce for new and better jobs.  The American workforce isn’t some malleable glob of analogous workers sitting idly by eagerly awaiting orders from the government. This assertion is laughable, but further evidence of an overbearing government.

The DOL no more prepares the workforce for new and better jobs, whatever those may be, than does the Securities and Exchange Commission ensures Americans only buy stocks that go up in value.  Nonsense.

(un)Free Enterprise

Today, I had the distinct pleasure of teaching my daughter about business.  Amanda, who usually teaches our two girls, asked if I would teach this particular segment.  For some odd reason, she thinks I’m passionate about free enterprise, liberty and capitalism.  Not sure where she got that crazy notion.  So, today our lesson was about free enterprise. 

 

Her textbook, which I like for the most part, went on to explain that in America the government doesn’t tell businesses what they must make and sell; rather, business owners make those decisions.  I thought about the magnitude of this statement and the profound implications it has for our lives.  And then I thought about how some are trying to change this, and perhaps, have changed this already.  The culprit: Obamacare.

Obamacare mandates that every single American buy health insurance or pay a fine.  That particular provision begins next year, by the way.  So, in effect, the State has mandated that some businesses sell medical services.  If the State forces me to buy a product, it follows that a business must offer that product for sale, no?  Therefore, the State has a de facto mandate that some segment of the economy be in the healthcare industry.  If you disagree, I would then ask that if no such business existed to offer the mandatory product, could the government still mandate the purchase of a non-existent product?  (Actually, they could. Read here.)

So, Obamacare has ushered in an era of UnFree Enterprise, where the State begins to decide what some sell and what everyone must buy.  And who knows where we’ll go from here.  After all, if the State can mandate the purchase of insurance, what can’t they do?

Demand-Supply Theory Tossed on its Head

Prof J – you were wrong! 

 

At least that’s what Rep. Kuchinich and several other economic professors idiots in Congress obviously think.  Mr. Kuchinich, fitfully worried about high gas prices, proposes to tax the windfall profits of oil companies.  Now, I was taught, by none other than Prof J, that the response to higher prices could be addressed through increased supply.  As the price of any given product rises, suppliers are incented to bring even more product to market.  If the supplier is making economic profits, the chances that others will want in on the action dramatically increases.  As more suppliers bring even more product to market, prices usually retreat.  This can be seen in today’s natural gas market.

   

However, Rep. Kuchinich proposes a new economic model to solve these pesky micro economic problems.  His solution – the Reasonable Profit Board.  Think I’m joking?  HR 3784, which was introduced this week and proudly named – The Gas Spike Act of 2012, would create this new federal Board.

This new Reasonable Profits Board (I just love how that name rolls off the lips!) would be empowered to monitor the profits of oil companies and tax their excess profits, defined as profits between 100 and 102 percent of a reasonable profit.  Confusingly, Rep. Kuchinich chose not to define reasonable in the bill.

So, according to Rep. Kuchinich, the best way to lower gas prices is to increase taxes on the very suppliers that bring gas to market.  His theory suggests that taxing the profits (or reducing the price suppliers receive for their products) will magically reduce gas prices?! I would argue, and I hope most folks would agree with me, that this would incent companies to bring less product to market, not more, resulting in even higher prices.  

So, maybe Prof J was right all along.

A Sobering Self Realization

America is home of the brave....land of the free....right?  Not so much.

Here's an article by the Washington Post about how America's liberty light is dimming, darkened by the vastly growing police and security state.

Heritage just published its annual freedom index.  America has to rank high on that list, right?  No.  We're not even in the top ten anymore.  What the hell is going on?

We are losing our freedoms and no one even notices or seems to care.  Each year like clockwork Congress enacts more laws and statutes, all aimed at protecting us, but at what cost?  Every aspect of our life is now under the watchful eye of big brother.  It's no wonder that 25% of the world's prisoners remain incarcerated in American prisons.

A letter to Consumer Reports

Here's a letter to Consumer Reports Magazine:

I’ve long been a fan of your magazine, enjoying the unbiased advice you give on thousands of products each year.  However, I’ve come to loathe your increasing affinity of government regulation over consumer products.  While it may be true that a small number of consumers are harmed by less-than-honest companies, consumers also suffer harm when government intervenes in the market place.  And while you vigorously invite more regulation, you fail to report on the harm that that same regulation inflicts on consumers in the form of higher prices and less choice. 

Consumers should be free to express their preference in the market place by entering into mutually beneficial exchange with others.  Only consumers, who have intimate knowledge of their needs and wants, should determine if a product or service survives, not unelected government bureaucrats.  While some regulation is necessary to ensure a level playing field, your magazine advocates too loudly for big government.  What’s needed is less regulation and more information.

In a perfect world, government would not prevent producers from bringing their products and services to market, nor would it prevent consumers from purchasing those same products and services.  In this perfect world, consumers would become savvy buyers and organizations like yours would provide a vital service supplying the market with much needed information.  Today’s technology makes it relatively easy to quickly and efficiently acquire information regarding a products pros and cons.   In this perfect world, consumers would benefit hugely from the overwhelming variety of products and services, and producers would be kept in check not only through information provided by your organization, but also by the market discipline - make a bad product, and face bankruptcy.

Government regulation exacts a hefty toll on consumers and the overall economy, and quite often fails to accomplish its “good” intentions.  And while I don’t expect you to begin embracing free market principles, you could at least inform consumers of the oft unintended consequences of government regulation.

Sincerely,

Brad D.

FAA Rules Against Passengers

The FAA announced new rules today further limiting the hours pilots can work.  The FAA's move will cost airlines, and ultimately consumers, millions, and reduce choice, especially in small to medium sized airport.  However, contrary to the FAA's intentions, this move will do little to prevent fatigued pilots from flying.

The one thing the FAA cannot do is mandate rest for pilots.  Sure, they can force pilots out of the cockpit, but it cannot force them into naps or sleep, which is what's required to prevent fatigue.  Pilots, like nearly everyone else, can do whatever they please during their off hours.  Until the FAA passes new rules mandating bedtimes for pilots, the new rules will have little to no effect on pilot fatigue.  However, you can be sure that you'll pay more for that next flight.

The most ridiculous thing you'll ever read

“To recap: Congress subsidized a product that didn't exist, mandated its purchase though it still didn't exist, is punishing oil companies for not buying the product that doesn't exist, and is now doubling down on the subsidies in the hope that someday it might exist.”

You couldn’t make this stuff up.  Read about it here.

I’m without words.  I can only shake my head in utter disbelief at this article.  It’s like….I don’t even know.  I have nothing to compare this to.   Could our government be more stupid?