Free Markets – Page 10 – artdiamondblog.com

“America Represents Wilderness and Freedom, and Also a Big House”

(p. A1) JACKSON HOLE, China — Yearning to breathe untainted air, the band of harried urbanites flocked to this parched, wild land, bringing along their dreams of a free and uncomplicated life.
But unlike the bedraggled pioneers who settled the American West, the first inhabitants of Jackson Hole, a resort community on the outskirts of the Chinese capital, arrived by Audi and Land Rover, their trunks filled with French wine and their bank accounts flush with cash.
Over the past decade, more than a thousand families have settled into timber-frame houses with generous backyards, on streets with names like Aspen, Moose and Route 66. On Sundays, some worship at a clapboard church that anchors the genteel town square, outfitted with bronze cowboys and a giant Victrola that sprays water.
“America represents wilderness and freedom, and also a big house,” said Qin You, 42, who works in private equity and owns a six-bedroom home that features a koi pond, a year-round (p. A8) Christmas tree and what he proudly described as “American-style” electric baseboard heating. His parents live in the house and he goes there on weekends. “The United States is cool,” he says.
. . .
. . . , Communist Party edicts and conservative commentators have sought to demonize so-called Western values like human rights and democracy as existential threats. Even if the menace is seldom identified by name, the purveyor of such threats is widely understood to be the United States.
. . .
Gao Zi, 60, a retired military employee who organizes an oil painting club for Jackson Hole residents, said that “we accepted the propaganda” back in the 1950s, when China was a closed society. “But now people have the opportunity to travel abroad and see the truth for ourselves.”
Like Ms. Gao, Mr. Qin, the investment executive, has never been to the United States but he has long admired American ideals like personal liberty and blind justice. Five years ago, after his wife gave birth to their second child, Mr. Qin says the government fined him nearly $30,000 for violating the country’s population-control policies. “This is not freedom,” he said, before continuing a tour of his expansive back patio.

For the full story, see:
ANDREW JACOBS. “JACKSON HOLE JOURNAL; Living a Frontier Dream on Beijing’s Outskirts.” The New York Times (Fri., DEC. 11, 2015): A1 & A8.
(Note: the online version of the story has the date DEC. 8, 2015, and has the title “JACKSON HOLE JOURNAL; Living a Frontier Dream on the Outskirts of China’s Capital.”)

Behavioral Economists Ignore Biases and Irrationalities of Governments

(p. A4) . . . it is quite a leap between acknowledging markets sometimes fail and arguing they are inherently flawed. Policy makers who work from the second assumption risk overreaching, by seeing market failure where there is none and ignoring their own behavioral biases, in either case leaving people worse off, not better. Public trust in free markets hasn’t wavered notably in the U.S. or Britain from precrisis levels and even in the pope’s native Argentina, attitudes aren’t much more negative than in 2009.
. . .
. . . , consumers don’t seem irrational when they evaluate fuel economy; one study found changes in gasoline prices are closely reflected in the relative prices of less fuel-efficient used cars.
Besides, as Mr. Viscusi and Mr. Gayer note, the government has behavioral biases of its own. Courts and regulators assign more value to the potential harm of a new drug than its potential benefits. Politicians take actions out of proportion to the risks, for example by closing schools during the Ebola scare or imposing onerous airline-security checks to prevent terrorist hijackings.

For the full commentary, see:
GREG IP. “Market Critics Shouldn’t Overreach.” The Wall Street Journal (Thurs., Sept. 24, 2015): A2.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Sept. 23, 2015, and has the title “Critics of Free Market Shouldn’t Overreach.” Where there are minor differences between the print and online versions of the article, the sentences quoted above follow the online version.)

The Vicusi and Gayer paper mentioned above, is:
Viscusi, W. Kip, and Ted Gayer. “Behavioral Public Choice: The Behavioral Paradox of Government Policy.” Harvard Journal of Law & Public Policy 38, no. 3 (Summer 2015): 973-1007.

Consumers Vote “No” on Costly Organic Smoothies “Made of Swiss Chard, Cashew Milk and Himalayan Salt”

(p. D1) As recently as last month, one could hardly throw a lentil in New York City without hitting an Organic Avenue storefront, with its orange banner, stick-figure logo and promise of better living through $9 cayenne-infused lemonade.
Kat Schamens, a yoga teacher and fitness-apparel designer, liked it that way. “I would always think, ‘I can’t wait to go in and get my chickpea soup,’ ” she said.
In mid-October, Ms. Schamens learned that Organic Avenue’s 10 stores had been shuttered and that the company had filed for bankruptcy. “I kind of freaked out,” she said. “I was distraught. I lost my yoga for a minute.”
. . .
(p. D7) The loyalty of devotees like Ms. Schamens and Ms. Kerin notwithstanding, there is an admitted emperor’s new clothes quality to paying $25 for a lunch of vegetable shavings and a smoothie made of Swiss chard, cashew milk and Himalayan salt.
“You can’t get people to crave this food,” the former investor said. “You can’t build a long-term business off what Gwyneth Paltrow likes.”
Some researchers began to publish studies questioning the necessity and safety of juice cleanses. And the fashion world started to feel pushback from nutritionists and eating-disorder activists against its support of juicing in early 2013, after the Council of Fashion Designers of America announced a 50 percent discount for models on Organic Avenue juices during New York Fashion Week.

For the full story, see:
KATHERINE ROSMAN. “How Organic Avenue Lost All Its Juice.” The New York Times (Sun., NOV. 5, 2015): D1 & D7.
(Note: ellipsis added.)
(Note: the online version of the story has the date NOV. 4, 2015.)

Smugglers Respond to Putin’s Ban on Cheese

(p. A4) When the Russian government banned dairy products from a host of nations, including the United States and members of the European Union, last year in response to Western economic sanctions imposed over Russia’s military meddling in Ukraine, President Vladimir V. Putin said the restrictions would create a profitable opportunity for domestic industries.
Instead they appear to have created an opening for forgers and smugglers. The “cheese ring” was busted with an estimated $30 million worth of the stuff, nearly 500 tons, according to the Interior Ministry police.

For the full story, see:
NEIL MacFARQUHAR. “A Crackdown in Russia on a Creamy Contraband.” The New York Times (Weds., AUG. 19, 2015): A4.
(Note: the online version of the story has the date AUG. 18, 2015, and has the title “Russian Police Get Tough on Illicit Cheese.”)

Venezeuelan Socialists Seize Warehouses of Cerveceria Polar Beer

“Polar workers protested the government’s decision to expropriate warehouse land in Caracas on Thursday [July 30, 2015].” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. A7) CARACAS, Venezuela–The government ordered major food companies, including units of PepsiCo and Nestlé Inc., to evacuate warehouses in an area where the state plans to expropriate land to build low-cost housing.
. . .
Manuel Larrazábal, a director at Polar, said he hoped the government would reconsider the measure. “We don’t doubt that they need to construct housing, which is so important, but we ask why it has to affect active industrial facilities.”
. . .
Some workers painted messages including “No to expropriation” and “Let us work” onto the walls of the industrial park and on dozens of trucks that lined the streets outside, which were blocked by police and National Guard. Polar said the move would affect some 600 workers, as well as 1,400 employees who transport their goods around Caracas and two neighboring states.
. . .
Polar suspended operations at its facility after getting the order Wednesday night. The expropriation order extends a history of shaky relations between it and the government, which began under the late leader Hugo Chávez and continues under his protégé, Mr. Maduro.
In recent months, the company, which is the largest beer maker in Venezuela, said it had to halt work at several plants and breweries due to labor strife. It has also struggled with difficulties in acquiring raw materials and U.S. dollars to pay overseas suppliers, a process controlled by the government due to complicated currency regulations.

For the full story, see:
KEJAL VYAS . “Venezuela Takeover Order Riles Companies; Maduro’s government wants industrial zone to build housing for poor.” The Wall Street Journal (Fri., July 31, 2015): A7.
(Note: ellipses added.)
(Note: the online version of the story has the date July 30, 2015.)

Communist Party Destroying Dissenting Civic Groups in China

“Yang Zili of the Transition Institute of Social and Economic Research went into hiding.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A4) BEIJING — First, the police took away the think tank’s former graphic designer, then the young man who organized seminars, and eventually its founder. Another employee fled China’s capital, fearing he would be forced to testify against his colleagues in rigged trials.

“The anxiety is overwhelming, not knowing if they are coming for you,” said the employee, Yang Zili, a researcher at the Transition Institute of Social and Economic Research in Beijing, who has been in hiding since November. “It’s frightening because as they disappear, one friend after another, the police are not following any law. They just do as they please.”
These are perilous days for independent civic groups in China, especially those that take on politically contentious causes like workers’ rights, legal advocacy and discrimination against people with AIDS. Such groups have long struggled to survive inside China’s ill-defined, shifting margins of official tolerance, but they have served as havens for socially committed citizens.
Under President Xi Jinping, however, the Communist Party has forcefully narrowed the bounds of accepted activity, setting off fears that these pockets of greater openness in China’s generally restrictive political landscape may soon disappear.
. . .
The campaign has focused on groups deemed sanctuaries for dissent. From its cramped offices in the university district of northwest Beijing, the Transition Institute championed a mix of free market economics and support for the downtrodden, conducting research on the exploitation of taxi drivers, school policies that shortchange rural children and the environmental costs of the massive Three Gorges Dam on the Yangtze River. But the institute also attracted advocates of democratic reform, some of whom had prior run-ins with the authorities.
“We always hoped to eke out survival in tough circumstances,” said Mr. Yang, 43, the researcher now in hiding, who spent eight years in prison for holding informal discussions with a group of friends about multiparty elections and a free press. “But the more independent NGOs,” he added, referring to nongovernmental organizations, “especially the ones that criticize government policies or don’t help the government’s image, have encountered a policy of containment, even destruction.”
. . .
(p. A6) With his colleagues disappearing one by one, Mr. Yang decided to go underground. He was in the institute office one morning in late November when a police officer called and told him to go to a station for questioning. Instead, Mr. Yang left an Internet message for his wife, shut off his cellphone, and slipped away, taking only the clothes on his back. “It was a spur-of-the-moment decision,” he said in an interview.
Meeting with a reporter at a location several hours’ drive from Beijing, he said he missed his wife and 4-year-old son, and visibly nervous, he talked about his fear of being returned to prison.
Mr. Yang said he would turn himself in should a warrant be issued for his arrest, but he was not interested in cooperating with what he described as an extralegal persecution of his colleagues.
“I still don’t understand what we did wrong,” he said. “We were just trying to help improve China.”

For the full story, see:
ANDREW JACOBS and CHRIS BUCKLEY. “In China, Civic Groups’ Freedom, and Followers, Are Vanishing.” The New York Times (Fri., FEB. 27, 2015): A4 & A6.
(Note: ellipses added.)
(Note: the online version of the story has the date FEB. 26, 2015.)

Starting in Late Middle Ages the State Tried “to Control, Delineate, and Restrict Human Thought and Action”

(p. C6) . . . transregional organizations like Viking armies or the Hanseatic League mattered more than kings and courts. It was a world, as Mr. Pye says, in which “you went where you were known, where you could do the things you wanted to do, and where someone would protect you from being jailed, hanged, or broken on the wheel for doing them.”
. . .
This is a world in which money rules, but money is increasingly an abstraction, based on insider information, on speculation (the Bourse or stock market itself is a regional invention) and on the ability to apply mathematics: What was bought or sold was increasingly the relationships between prices in different locations rather than the goods themselves.
What happened to bring this powerful, creative pattern to a close? The author credits first the reaction to the Black Death of the mid-14th century, when fear of contamination (perhaps similar to our modern fear of terrorism) justified laws that limited travel and kept people in their place. Religious and sectarian strife further limited the free flow of ideas and people, forcing people to choose one identity to the exclusion of others or else to attempt to disappear into the underground of clandestine and subversive activities. And behind both of these was the rise of the state, a modern invention that attempted to control, delineate, and restrict human thought and action.

For the full review, see:
PATRICK J. GEARY. “Lighting Up the Dark Ages.” The Wall Street Journal (Sat., May 30, 2015): C6.
(Note: ellipses added.)
(Note: the online version of the review has the date May 29, 2015.)

The book under review, is:
Pye, Michael. The Edge of the World: A Cultural History of the North Sea and the Transformation of Europe. New York: Pegasus Books LLC, 2014.

Annual Benefits of NAFTA: Canada $50 Billion, United States $127 Billion, Mexico $170 Billion

(p. 249) Gary Clyde Hufbauer, Cathleen Cimino, and Tyler Moran evaluate “NAFTA at 20: Misleading Charges and Positive Achievements.” . . . “Ample econometric evidence documents the substantial payoff from expanded two-way trade in goods and services. Through multiple channels, benefits flow both from larger exports and larger imports. . . . The (p. 250) channels include more efficient use of resources through the workings of comparative advantage, higher average productivity of surviving firms through ‘sifting and sorting,’ and greater variety of industrial inputs and household goods. . . . As a rough rule of thumb, for advanced nations, like Canada and the United States, an agreement that promotes an additional $1 billion of two-way trade increases GDP by $200 million. For an emerging country, like Mexico, the payoff ratio is higher: An additional $1 billion of two-way trade probably increases GDP by $500 million. Based on these rules of thumb, the United States is $127 billion richer each year thanks to ‘extra’ trade growth, Canada is $50 billion richer, and Mexico is $170 billion richer. For the United States, with a population of 320 million, the pure economic payoff is almost $400 per person.” Peterson Institute for International Economics, May 2014, Number PB14-13. http://www.piie.com/publications/pb/pb14-13.pdf.

Source:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 28, no. 3 (Summer 2014): 249-56.
(Note: first ellipsis added; other ellipses in original.)

“What Valuable Company Is Nobody Building?”

(p. A15) Peter Thiel is larger than life even for a Silicon Valley billionaire. He co-founded PayPal, was the first investor in Facebook , and funded LinkedIn, Spotify, SpaceX and Airbnb. Now he has written a much-needed explanation of the information economy, masquerading as a breezy how-to book for entrepreneurs. “Zero to One: Notes on Startups, or How to Build the Future” is based on lectures Mr. Thiel gave at Stanford.
He hopes more entrepreneurs will focus on big ideas for health, energy and transportation; his venture firm’s tag line is “They promised us flying cars and all we got was 140 characters,” a reference to Twitter. His explanation of innovation is also a primer on how free markets work. He encourages entrepreneurs to ask: “What valuable company is nobody building?”

For the full commentary, see:
L. GORDON CROVITZ. “INFORMATION AGE; Three Cheers for ‘Creative Monopolies’.” The Wall Street Journal (Mon., Oct. 13, 2014): A15.
(Note: the online version of the commentary has the date Oct. 12, 2014.)

The book praised in the passage quoted above is:
Thiel, Peter, and Blake Masters. Zero to One: Notes on Startups, or How to Build the Future. New York: Crown Business, 2014.

Lippmann Attacked FDR’s Socialist National Industrial Recovery Act

(p. A13) . . . Duke economic historian Craufurd D. Goodwin employs the writings of the once-famous newspaper columnist Walter Lippmann to describe the fervid U.S. debates that began with the 1929 stock-market crash.
. . .
Lippmann established his intellectual credentials in the 1920s, writing several well-received books. They included “Public Opinion,” which excoriated the press for sloppy coverage of government policies and actions. The book is often seen as a call for top-down rule by experts, but Mr. Goodwin argues that Lippmann had something else in mind–that he was eager for expert opinion and “reasoned study” to be widely disseminated so that self-government would be more fully informed and the citizenry less easily manipulated.
. . .
At first, Lippmann embraced the Keynesian argument that government could ameliorate downswings in business cycles through deficit spending, but he later had second thoughts about economic engineering and became more attuned to the free-market ideas of Friedrich Hayek, whom he knew and consulted. . . . Lippmann attacked as ill-conceived the most ambitious New Deal brainstorm, the 1933 National Industrial Recovery Act, which attempted to organize all business and industry into cartels to boost prices.

For the full review, see:
GEORGE MELLOAN. “BOOKSHELF; The Umpire of American Public Debate; Certain that a return of investment confidence would restore prosperity, Lippmann criticized those that blamed Wall Street for the malaise.” The Wall Street Journal (Tues., Oct. 14, 2014): A13.
(Note: ellipses added.)
(Note: the online version of the review has the date Oct. 13, 2014, and has the title “BOOKSHELF; Walter Lippmann: Umpire of American Public Debate; Certain that a return of investment confidence would restore prosperity, Lippmann criticized those that blamed Wall Street for the malaise.”)

The book under review, is:
Goodwin, Craufurd D. Walter Lippmann: Public Economist. Cambridge, MA: Harvard University Press, 2014.

Socialist Price Setting Causes Shortages of Corn Flour, Car Batteries and Toilet Paper

(p. B1) Venezuela’s prices on everything from butter to flat-screen TVs are set without warning by the government, which also caps corporate profits at 30%. Any profits evaporate quickly, however, because inflation is almost double that.
And expanded price controls imposed by Venezuelan President Nicolas Maduro, who succeeded late leftist firebrand Hugo Chávez in April 2013, have exacerbated shortages of basic items such as corn flour, car batteries and toilet paper, triggering violent street protests since early February.

For the full story, see:
MAXWELL MURPHY and KEJAL VYAS. “CFO JOURNAL; Currency Chaos in Venezuela Portends Write-Downs.” The Wall Street Journal (Tues., May 27, 2014): B1 & B6.
(Note: the online version of the story has the date May 26, 2014.)