Free Markets – Page 12 – artdiamondblog.com

‘Buy Local’ Implies ‘Sell Local’

In the spirit of the great Bastiat:

(p. 1117) Buy local (BL) campaigns are gaining ground in many towns, cities, counties, and states throughout the United States. These commendable efforts are based on intuitive principles that: local production reduces energy usage and therefore mitigates against climate change; the rapid approach of peak oil will lead to potentially disastrous dislocations that will erode society’s ability to provide adequate food supplies and medical care; and face-to-face economic relationships between producer and consumer, such as in a farmers’ market setting, provide a superior form of economic organization relative to the impersonal nature of our current industrial modes of production.

It is in this spirit that we, the members of Sustainability in Transportation, Utilities, Production, the Environment, and Development (STUPED), urge our local governments to take the next logical step: requirements for selling local.
. . .
This is also clearly a fairer way to approach the problem of non-local production. There exists the temptation for a given locality to urge its community members to BL, but to also simultaneously promote selling to other localities in the name of “increased local employment.” Of course, this kind of thinking totally ignores the fact that by selling goods to another region, those of us in a local production area cause harm to workers in that distant region who, as a result of our incursion into their local economies, reduce that distant region’s abilities to provide for itself.
Given the foregoing, it is evident that selllocal requirements are virtually required for the sustainability of our local economies. Buy Local publicity campaigns may make us feel better, but a well-enforced set of sell-local regulations eliminates the thorniest problem of a free-market approach–the tendency of consumers to buy whatever they darn well please. STUPED urges our local governments to adopt such a set of regulations.

Source:
Thompson, Philip, and Hart Hodges. “Sell Local! The Next Logical Step.” Economic Inquiry 49, no. 4 (October 2011): 1117-17.
(Note: italics in original; ellipsis added.)

Why Health Care Costs So Much in McAllen

(p. 235) Atul Gawande lays out “The Cost Conundrum: What a Texas town can teach us about health care.” “It is spring in McAllen, Texas. The morning sun is warm. The streets are lined with palm trees and pickup trucks. McAllen is in Hidalgo County, which has the lowest household income in the country, but it’s a border town, and a thriving foreign-trade zone has kept the unemployment rate below ten per cent. McAllen calls itself the Square Dance Capital of the World. ‘Lonesome Dove’ was set around here. McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami–which has much higher labor and living costs–spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.”

Gawande as quoted in:
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 24, no. 2 (Fall 2009): 231-38.

The full Gawande article can be viewed online at:
Gawande, Atul. “Annals of Medicine; the Cost Conundrum; What a Texas Town Can Teach Us About Health Care.” The New Yorker 85, no. 16 (June 2009): 36-44.

A later Gawande article, that asks why the health care system cannot be run as well as The Cheesecake Factory, can be viewed online at the link below. (Spoiler alert: I haven’t read this article yet, but I’m guessing it has something to do with the feedback and incentives provided by the free market.)
Gawande, Atul. “Annals of Health Care; Big Med; Restaurant Chains Have Managed to Combine Quality Control, Cost Control, and Innovation. Can Health Care?” The New Yorker 88, no. 24 (August 2012): 52-63.

When Trade Is a Matter of Life and Death (and the Progress of Knowledge)

Source of book image: http://www.mikedash.com/assets/images/Batavia-l.jpg

(p. 236) In Mike Dash’s book, Batavia’s Graveyard, the mutineers on the ship Batavia get stranded on a parched sand bar with the liquor and foodstuffs, but no fresh water. A few hundred watery yards away are the remnants of the loyal crew, stuck on another islet without liquor or provisions, but with plentiful fresh water. Trade proves impossible. The analog of this breakdown is the current relationship between history and the social sciences.

Source:
Clark, Gregory. “The Ends of Life: Roads to Fulfillment in Early Modern England.” Journal of Economic History 71, no. 1 (March 2011): 236-37.
(Note: italics in original.)

Dash’s book that Clark mentions:
Dash, Mike. Batavia’s Graveyard: The True Story of the Mad Heretic Who Led History’s Bloodiest Mutiny. New York: Crown, 2002.

Renaissance Florence: “A Really Vibrant, Flexible, and Free-Market City”

Source of book image: http://covers.booktopia.com.au/big/9781421400594/the-economy-of-renaissance-florence.jpg

(p. 176) Chapters 4 and 5 deal with manufacturing, by far the main source of employment in the city. The Florentine textile industry had developed thanks to the Arno River, which provided water and power, and had become a market leader in Europe for high-quality products. Production was based, as everywhere in Europe, on a putting-out system–but strictly confined to the city. The author describes the organization and its changes over time, stressing, as for international banking, the flexibility of firms and their high turnover. Workers were organized in guilds, but the author stresses their nature as political associations rather than their economic role. Florentine guilds did not restrict the access to profession nor stifle innovation. Chapter 6 describes the banks catering for urban market–including local branches of international banks as well as smaller local firms, plus pawnbrokers, both Catholic and Jews. Local banks appeared thoroughly modern in their business and the resort to banking services was quite widespread. Artisans and workers were routinely paid with checks and had bank accounts. And the whole system worked well with almost no state intervention, at least until the late sixteenth century.
. . .
. . . , the author argues that Florentine society was very upwardly mobile, at least for the standard of the time and that the distribution of wealth by household according to the 1427 Catasto was fairly equal (although inequality increased in the next century).
(p. 177) As a whole, at the end of the book one has the impression of a really vibrant, flexible, and free-market city. The standard of living was undoubtedly high and not only for the wealthy, as witnessed by the art treasures of the city, but also for the working class. Literacy and numeracy was very common, and the majority of children attended a primary school.

For the full review, see:
Federico, Giovanni. “Review of: The Economy of Renaissance Florence.” Journal of Economic Literature 48, no. 1 (2010): 175-77.

Book under review:
Goldthwaite, Richard A. The Economy of Renaissance Florence. Baltimore, MD: The Johns Hopkins University Press, 2009.

“Let the Consumers Decide When and Where They Want to Eat”

“Rachel Billow is the co-founder of La Cocinita, a food truck in New Orleans that serves Latin American cuisine. She says the city’s requirement that mobile food vendors change locations after 45 minutes in one spot isn’t feasible. “It takes about a half-hour to set up,” she says.” Source of caption and photo: online version of the WSJ article quoted and cited below.

(p. B8) A street fight is brewing between gourmet food-truck vendors and restaurants–not over the grub, but how it’s sold.

Under pressure to protect bricks-and-mortar restaurants from increased competition, several big cities are starting to apply the brakes on a rising tide of food-truck vendors with fully loaded kitchens.
Boston, Chicago, St. Louis and Seattle are among the cities enacting laws that restrict where food trucks can serve customers in proximity to their rivals and for how long. Some food-truck operators argue that they shouldn’t be punished for offering an innovative service, especially since many cities already allow restaurants to open up alongside one another.
“The rules are unfair,” says Amy Le, owner of Duck N Roll, a food truck in Chicago serving Asian-style cuisine that includes short ribs and mango lychee.
Three weeks after she launched the business last fall, she received a ticket from local law enforcement for doing business about 150 feet from a wine bar–50 feet within the city’s limit for how close food trucks can park outside of retail food establishments.
Ms. Le says she later had to spend nearly a full day in court to find out what the violation would cost her–about $300–and that she lost an estimated $600 to $700 in sales as a result.
“The 200-foot buffer prohibits me from competing,” says Ms. Le, 32 years old, who also opposes a new rule requiring food trucks to install global-positioning devices so the city can track their whereabouts. “It is a free market. Let the consumers decide when and where they want to eat.”
. . .
Gourmet food-truck operators say another problem is that in many cities they are still relegated to antiquated rules intended for ice-cream, hot-dog and other traditional mobile vendors with smaller and less complex menus.
New Orleans, for example, requires mobile food vendors to change locations after 45 minutes in one spot, among other restrictions.
“It’s not a feasible amount of time for this business model,” says 31-year-old Rachel Billow, who last year co-founded La Cocinita, a food truck that serves Latin American cuisine such as plantains and arepas. “It takes about a half-hour to set up.”
Ms. Billow says she and her business partner, Venezuelan chef Benoit Angulo, started La Cocinita after several years of working in the restaurant industry. They invested $50,000 in start-up costs, an amount that included $12,000 in modifications to their vehicle to satisfy the city’s fire code, she adds.

For the full story, see:
SARAH E. NEEDLEMAN. “Street Fight: Food Trucks vs. Restaurants; Some Big Cities Jump Into the Fray, Enacting Parking Restrictions to Cope With Rising Tide of Gourmet Vendors.” The Wall Street Journal (Thurs., August 9, 2012): B8.
(Note: ellipsis added.)

“Amy Le, owner of Duck N Roll, an Asian-style food truck in Chicago, says last fall she received a fine for doing business about 150 feet from a wine bar–50 feet within the city’s limit for how close food trucks can park outside of retail food establishments.” Source of caption and photo: online version of the WSJ article quoted and cited above.

People “Enmeshed in Modern Commerce” Are More Generous

(p. C4) A few years ago, Joe Henrich of the University of British Columbia and his colleagues did a series of experiments in small-scale societies in the Amazon, New Guinea and Africa. They asked people to play the “ultimatum game,” in which a player must decide how much of a windfall he needs to share with another player to prevent the other player from exercising his right to veto the whole deal. The more the small-scale society is enmeshed in modern commerce, the more generous the offers people make. This may shock those who believe in Rousseau’s idea of the “noble savage,” but not those who believe in the virtues of what Montesquieu called “sweet commerce.”
. . .
. . . , though human beings do kind things unrewarded for their neighbors, for reward they also do kind things for strangers: They hand more cash to merchants than they do to beggars.

For the full commentary, see:
MATT RIDLEY. “MIND & MATTER; Which Makes Us Nicer, Team Spirit or Trade?” The Wall Street Journal (Sat., August 27, 2011): C4.
(Note: ellipses added.)

Page 76 of the Henrich et al article has the key result that Ridley summarizes:
Henrich, Joseph, Robert Boyd, Samuel Bowles, Colin F. Camerer, Ernst Fehr, Herbert Gintis, and Richard McElreath. “In Search of Homo Economicus: Behavioral Experiments in 15 Small-Scale Societies.” American Economic Review 91, no. 2 (May 2001): 73-78.

Middle Class “Doesn’t Want to Fight Wars. It Has Other Things to Do.”

“A booth for Motherson International, an Indian company that produces clothes and costume jewelry, at the Indian trade show in Lahore, Pakistan, in February.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) LAHORE, Pakistan — On the day the Indian trade delegation came across the border, Pakistan was having another political crisis. The prime minister was embroiled in a showdown with the country’s Supreme Court. Early elections were rumored. And Islamists had just staged a rally in Karachi to protest “foreign intervention” on Pakistani soil.

Not, perhaps, the perfect moment to hammer out closer trade ties.
Yet Rajiv Kumar, a leader of the Indian delegation, was pleased. It was mid-February, and his business group was staging the first Indian trade show ever held in Pakistan. Tens of thousands of visitors would attend during three days. And Indian and Pakistani business leaders, as well as both countries’ commerce ministers, swapped cards, sipped tea and feasted at lavish banquets.
“Look at this!” Mr. Kumar exclaimed as his car rolled up to the convention center here in Lahore, where crowds were thronging for the trade show. “My God! Quite good, I’d say.”
. . .
(p. 12) Ashok Malik, a journalist who was one of the writers of an academic analysis of India’s private sector diplomacy, said the influence of Indian business is evident beyond the changed relationship with the United States.
. . .
Mr. Malik noted that the rise of India’s middle class, as well as the growing domestic influence of the private sector, has created a quiet constituency for easing hostilities with Pakistan. “The growth phenomenon has made the Indian middle class less tolerant of adventurism, lawlessness and war,” he said. “It is still worried about terrorism. But it doesn’t want to fight wars. It has other things to do.”

For the full story, see:
JIM YARDLEY. “INDIA’S WAY; Propelling a Nation Onto the World Stage; Industry Opens Doors to India’s Neighbors and Rivals, Including Pakistan.” The New York Times, First Section (Sun., April 1, 2012): 6 & 12.
(Note: ellipses added.)
(Note: the online version of the story is dated March 31, 2012 and has the title “INDIA’S WAY; Industry in India Helps Open a Door to the World.”)

“India held its first trade show in Pakistan in Lahore.” Source of caption and photo: online version of the NYT article quoted and cited above.

Libertarian Law Professor Defends Free Choice in Health Care

“Randy E. Barnett has argued against the health care law.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) WASHINGTON — When Congress passed legislation requiring nearly all Americans to obtain health insurance, Randy E. Barnett, a passionate libertarian who teaches law at Georgetown, argued that the bill was unconstitutional.
. . .
. . . over the past two years, through his prolific writings, speaking engagements and television appearances, Professor Barnett has helped drive the question of the health care law’s constitutionality from the fringes of academia into the mainstream of American legal debate and right onto the agenda of the United States Supreme Court.
. . .
. . . the challenge championed by Professor Barnett: that Congress’s power to set rules for commerce does not extend to regulating “inactivity,” like choosing not to be insured.
. . .
(p. A14) He is a fierce advocate of economic freedom who is accustomed to being a legal underdog. In 2004, in his first (and, he says, probably his last) appearance before the Supreme Court, he argued that Congress could not criminalize the production of home-grown marijuana for personal medical use. There again, critics said he would lose 8 to 1. He did lose, but took satisfaction in the actual vote, 6 to 3.
. . .
Professor Barnett’s work on the health care law fits into a much broader intellectual project, his defense of economic freedom. He has long argued that the Supreme Court went too far in upholding New Deal economic laws — a position that concerns his liberal critics.
Even a close friend and fellow Georgetown law professor, Lawrence B. Solum, says that Professor Barnett is aware of the “big divide between his views and the views of lots of other people,” and that his political philosophy is “much more radical” than his legal argument in the health care case. Professor Barnett, for his part, insists that if the health law is struck down, it will not “threaten the foundation of the New Deal.” But, he allowed, it would be “a huge symbolic victory for limited government.”

For the full story, see:
SHERYL GAY STOLBERG and CHARLIE SAVAGE. “Libertarian’s Pet Cause Reaches Supreme Court.” The New York Times (Tues., March 27, 2012): A1 & A14.
(Note: ellipses added.)
(Note: the online version of the story is dated March 26, 2012 and has the title “Vindication for Challenger of Health Care Law.”)

Freedom Grew from the Greek Agora

Source of book image: http://images.borders.com.au/images/bau/97801997/9780199747405/0/0/plain/a-culture-of-freedom-ancient-greece-and-the-origins-of-europe.jpg

(p. C9) A city’s central space reveals much about the society that built it. In the middle of the typical Greek city-state, or polis, stood neither a palace nor a temple–the dominant centering structures of Asian and Egyptian cities–but an open public square, an agora, useful for gatherings and the conduct of business. When Cyrus the Great, founder of the Achaemenid Persian Empire, first encountered Greeks on his western boundaries, he sneered at the race of shopkeepers who hung about the agora cheating one another all day. Yet that same race would later defeat his descendants, Darius and Xerxes, in two of the most consequential battles the Western world has seen, at Marathon in 490 B.C. and at Salamis 10 years later.
. . .
Mr. Meier’s approach runs counter to a tendency in recent classical scholarship to trace Greek ideas to non-Greek sources or to seek common ground on which East and West once met. The polis itself has been claimed in the past few decades as a Near Eastern, or Phoenician, invention; Carthage too, it seems, had an agora at its hub. But Mr. Meier takes pains to dismiss this claim. Relying on expertise amassed in his long academic career, he reasserts the uniqueness of Greek political evolution, the mysterious and somewhat miraculous process that culminates, at the end of this account, in the emergence of Athenian democracy.
. . .
After surveying the crucial reforms of the Athenian leader Cleisthenes, the foundation stones of the world’s first democratic constitution, Mr. Meier asks: “Was it just a matter of time before the Attic citizenry was reorganized–so that Cleisthenes did something that would have happened sooner or later anyway? Or were Cleisthenes’ achievements beyond the scope of men less able and daring?”

For the full review, see:
JAMES ROMM. “The Greeks’ Daring Experiment.” The Wall Street Journal (Sat., FEBRUARY 11, 2012): C9.
(Note: ellipses added.)

The book under review is:
Meier, Christian. A Culture of Freedom: Ancient Greece and the Origins of Europe. Oxford, UK: Oxford University Press, 2011.

Economic Freedom and Growth Depend on Protecting the Right to Rise

(p. A19) Congressman Paul Ryan recently coined a smart phrase to describe the core concept of economic freedom: “The right to rise.”
Think about it. We talk about the right to free speech, the right to bear arms, the right to assembly. The right to rise doesn’t seem like something we should have to protect.
But we do. We have to make it easier for people to do the things that allow them to rise. We have to let them compete. We need to let people fight for business. We need to let people take risks. We need to let people fail. We need to let people suffer the consequences of bad decisions. And we need to let people enjoy the fruits of good decisions, even good luck.
That is what economic freedom looks like. Freedom to succeed as well as to fail, freedom to do something or nothing. . . .
. . .
But when it comes to economic freedom, we are less forgiving of the cycles of growth and loss, of trial and error, and of failure and success that are part of the realities of the marketplace and life itself.
. . .
. . . , we must choose between the straight line promised by the statists and the jagged line of economic freedom. The straight line of gradual and controlled growth is what the statists promise but can never deliver. The jagged line offers no guarantees but has a powerful record of delivering the most prosperity and the most opportunity to the most people. We cannot possibly know in advance what freedom promises for 312 million individuals. But unless we are willing to explore the jagged line of freedom, we will be stuck with the straight line. And the straight line, it turns out, is a flat line.

For the full commentary, see:
JEB BUSH. “OPINION; Capitalism and the Right to Rise; In freedom lies the risk of failure. But in statism lies the certainty of stagnation.” The Wall Street Journal (Mon., December 19, 2011): A19.
(Note: ellipses added.)

Paleolithic Homo Sapiens Engaged in Long Distance Trade

(p. 71) At Mezherich, in what is now Ukraine, 18,000 years ago, jewellery made of shells from the Black Sea and amber from the Baltic implied trade over hundreds of miles.
This is in striking contrast to the Neanderthals, whose stone tools were virtually always made from raw material available within an hour’s walk of where the tool was used.

Source:
Ridley, Matt. The Rational Optimist: How Prosperity Evolves. New York: Harper, 2010.