Category: Free Markets

“Authentic” Rees-Mogg Appeals to Texans Deep in the Heart of England

(p. A10) Among the most unlikely developments of this political season in Britain has been that Mr. Rees-Mogg — whose conservative views include a hard line on departure from the European Union and on abortion and gay marriage — is being talked up as a possible Conservative Party leader.
This unfurled in phases all summer. Youth activists coined the term “Moggmentum,” touting him as the only Tory, as Conservatives are also known, with the charisma to match the Labour leader, Jeremy Corbyn. A 24-year-old man from South Yorkshire had the phrase tattooed on his chest, sending the newspapers into transports of delight. Memes followed. There were online quizzes (“Name Your Child the Jacob Rees-Mogg Way”) and T-shirts (“This fellow is a Rees-Moggian teen”). Someone recorded electronic dance tracks called Moggwave.
. . .
An interview on a morning TV show highlighting Mr. Rees-Mogg’s position on abortion — he opposes it even in the case of rape or incest — was expected to put an end to the chatter. But it appeared, for many, to have the opposite effect.
Voters understood that his positions were to the right of his party, but they had found a quality in him that mattered more than positions. He was, they said, “authentic.”
A decade ago, many Conservative Party leaders wanted nothing to do with Mr. Rees-Mogg. He first attracted national attention in the late 1990s, when he ran unsuccessfully for a seat in a working-class Labour stronghold in Scotland and went out to shake voters’ hands in the company of his nanny. (It was reported that they had campaigned in a Bentley, but he later denied this charge; it was a Mercedes.)
. . .
In Parliament, Mr. Rees-Mogg fell to the far right of the Tory spectrum, opposing climate change legislation and increased spending on welfare benefits and supporting tax breaks for bankers and corporations. In an interview, he said the Tory party must win a “battle of ideas” between the forces of the free market and socialism, and that its message to voters, especially young ones, had been too timorous.
“I think that conservative principles have a broad appeal and you should state them boldly, and the point of a Conservative election is to do conservative things, not to do Labour things but slightly less damaging,” he said. Voters today, he said, were drawn to politicians with more pointed views, both on the left and right, “because the centrist approach didn’t succeed.”
. . .
Radstock was a mining town until the last pits closed down, in the 1970s. Among those waiting to see him was Scott Williams, a knife-maker with brawny forearms and the accent of a Hollywood pirate. Mr. Williams said he had always considered himself staunchly Labour, but was increasingly concerned about attacks on his personal liberties. He had fiercely supported Brexit.
“I belong in Texas,” he said. “That’s the type of person I am. I don’t fit in in England.”
Mr. Williams said he had paid little attention to Mr. Rees-Mogg’s voting record on taxes or welfare — “I don’t really keep count on politics” — but had been drawn to him in recent months, and was impressed when he stood by his hard-line view on abortion.
“Something I do like about Jacob, he’s a straight talker,” he said. “He is who he is. He may be blue blood, but at least you get a straight answer.”

For the full story, see:
ELLEN BARRY. “The Saturday Profile; Latest Populist Craze in Britain: An Unabashed Elitist.” The New York Times (Sat., SEPT. 30, 2017): A10.
(Note: ellipses added.)
(Note: the online version of the story has the date SEPT. 29, 2017, and has the title “The Saturday Profile; The Latest Populist Craze in Britain: An Unabashed Elitist.”)


Connecticut Upholds Car Dealerships’ “Lucrative Stranglehold” on New Car Market

(p. A23) Connecticut and Tesla should be a perfect fit. But lawmakers failed to act on a bill in this year’s regular legislative session (for the third straight year) that would have legalized direct sales by Tesla, whose business model is rooted in selling directly to consumers.
The culprit? Heavy lobbying by the state’s car dealerships.
Thanks to Connecticut’s decades-old franchise laws, new cars can be sold only through licensed franchises independent of carmakers. Even though only about 5,500 zero-emission cars have sold in Connecticut since 2011, Tesla’s effort to cut out the middlemen would undermine the lucrative stranglehold that car dealerships have on the new car market.
. . .
. . . , the National Automobile Dealers Association claimed franchise laws “keep prices competitive and low.” However, a 2009 paper by an economist at the Justice Department’s Antitrust Division instead concluded that “car customers would benefit from elimination of state bans on auto manufacturers’ making direct sales to consumers.” The paper pointed to a study by a Goldman Sachs analyst in 2000 that found that direct manufacturer sales could lower costs by 8.6 percent, with most of the savings resulting from more efficient matching between consumer demand and supply, and a subsequent reduction in inventory.
No wonder the Federal Trade Commission has criticized franchise laws as a “special protection” for these dealers — “a protection that is likely harming both competition and consumers.”

For the full commentary, see:
NICK SIBILLA. “‘Connecticut Should Be Tesla Turf.” The New York Times (Fri., JULY 7, 2017): A23.
(Note: ellipses added.)
(Note: the online version of the commentary has the title “Connecticut Should Be Tesla Country.”)

The Department of Justice research paper, mentioned above, is:

Bodisch, Gerald R. “Economic Effects of State Bans on Direct Manufacturer Sales to Car Buyers.” U.S. Department of Justice, Economic Analysis Group, Competition Advocacy Paper # EAG 09-1 CA. May 2009.

Price Gouging Rewards Conservation and Increases Supply

(p. B1) On its face, the very idea of price gouging, especially during a natural disaster, feels outrageous. Indeed, 34 states have anti-gouging laws meant to protect consumers.
However, in a small slice of the world of economists and businesses, there is a fascinating debate about the topic — with many arguing that price gouging is actually a good thing.
. .
(p. B6) “Price caps discourage extraordinary supply efforts that would help bring goods in high demand into the affected area,” Michael Giberson, an instructor with the Center for Energy Commerce in the Rawls College of Business at Texas Tech University, wrote in an opinion piece from several years ago that was widely circulated around parts of Wall Street this weekend. Meanwhile, he suggested, “You discourage conservation of needed goods at exactly the time they are in high demand.”
He added, “In a classic case of unintended consequences, the law harms the very people whom lawmakers intend to help.”
Consider this scenario, as described by Matt Zwolinski, the director of the Center for Ethics, Economics, and Public Policy at the University of San Diego: If a hotel that normally charges $50 per room were allowed to double the price to $100 a night during an emergency, “a family that might have chosen to rent separate rooms for parents and children at $50 per night will be more likely to rent only one room at the higher price, and a family whose home was damaged but in livable condition might choose to tough it out if the cost of a hotel room is $100 rather than $50.”
The result, he contended in a paper titled “The Ethics of Price Gouging,” is that allowing higher prices “increases the available supply — as a result of consumers’ economizing behavior, more hotel rooms are available to individuals and families who need them most.”

For the full commentary, see:
Sorkin, Andrew Ross. “DEALBOOK; Price Gouging Can Aid Victims? Why Some Economists Say Yes.” The New York Times (Tues., Sept. 12, 2017): B1 & B6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Sept. 11, 2017, and has the title “Hurricane Price Gouging Is Despicable, Right? Not to Some Economists.”)

The article by Zwolinski, mentioned above, is:
Zwolinski, Matt. “The Ethics of Price Gouging.” Business Ethics Quarterly 18, no. 3 (July 2008): 347-78.

“I Believe in Free Markets and Open Skies”

(p. B1) DELHI — When the fast-growing Malaysian carrier AirAsia wanted to expand, India looked like the ideal frontier.
. . .
Then, AirAsia discovered the difficulties of doing business in India.
While it benefited from a recent loosening of restrictions on foreign investment in airlines, AirAsia India has contended with a web of red tape and regulations for new entrants that have added significant cost and complexity to its operations.
. . .
(p. B7) . . . Mr. Chandilya acknowledges that he misjudged India’s regulatory environment, which is uniquely stringent for airlines.
Taxes on aviation turbines are higher than almost anywhere else in the world. Every airline, even those with just a few planes, is also required to fly regularly to remote regions, where flights often run half full. And new entrants like AirAsia India are prohibited from flying lucrative international routes until they are five years old and have at least 20 aircraft, the so-called 5/20 rule.
“I believe in free markets and open skies, but if you look at the policies we have in place, I don’t think we have that at all,” Mr. Chandilya said.
. . .
Each Indian state controls its own taxes on aviation turbine fuel, and in many places it is kept as high as 30 percent. More than half of AirAsia India’s operating costs are fuel-related.
High taxes also extend to maintenance and Indian airlines often choose to take their aircraft to nearby countries for that work. AirAsia India plans to send its planes to Malaysia or Singapore for servicing once they’ve been operational for two years.
“I talk to ministers and policy makers about how they can help the industry and promote growth, but it is very difficult to get them to understand that reducing these taxes will probably boost their states’ economies,” Mr. Chandilya said.

For the full story, see:
MAX BEARAK. “India’s Restricted Airspace.” The New York Times (Tues., JUNE 23, 2015): B1 & B7.
(Note: eilipses added.)
(Note: the online version of the story has the date JUNE 22, 2015, and has the title “AirAsia Faces Red Tape and Tough Competition in India.”)

Fanjul Sugar Family Donated to Inauguration and Now Seeks Sugar Price Protection

(p. B1) MEXICO CITY — The sugar barons of Florida, Alfonso and José Fanjul, have been equal-opportunity political donors for decades, showering largess on the campaigns of Democrats and Republicans alike to ensure that lawmakers will protect the American sugar industry.
When Donald J. Trump was preparing to take office as president, the Fanjul brothers wrote another check. Among the contributors to Mr. Trump’s inaugural festivities in January was Florida Crystals, a Fanjul-owned company that contributed half a million dollars.
The brothers most likely had more on their mind than a sumptuous ball. Led by the Fanjuls, large American sugar producers and refiners were eager for the new administration to tackle some business left unfinished by the Obama administration: an agreement to control imports of Mexican sugar.

For the full story, see:
ELISABETH MALKIN. “Sugar Talks May Hint at Trump’s Approach to U.S.-Mexico Trade.” The New York Times (Mon., June 5, 2017): B1-B2.
(Note: the online version of the story has the date June 4, 2017, and has the title “Sugar Talks May Hint at Trump Approach to U.S.-Mexico Trade.”)

Ukrainian Deal with E.U. Annoyed Russia and BLOCKED Ukrainian Egg Sales to Europe

(p. B1) SADKI-STROYEVKA, Ukraine — A cold wind whips through the streets. Vehicles that enter must drive through a foot-deep, moatlike bath of disinfectant, lest their tires track in disease. Computers raise and lower the levels of light to match circadian rhythms.
The scene is one of emptiness. One in four buildings is deserted. Fewer delivery trucks arrive than in years past.
As in much of Ukraine, hard times have befallen the Slovyany farm and its million or so inhabitants — all of them chickens.
“We could be a player, and not a small one,” said a forlorn Oleg Bakhmatyuk, the owner of Avangard, Ukraine’s biggest egg producer. “We could be a major supplier.”
The plight of his company, and the broader agricultural sector, has come to encapsulate a wider disenchantment in Ukraine with a trade agreement signed two years ago with the European Union. The deal, which went into force in January, included protections for farmers in the European bloc, and, as a result, one of Ukraine’s most successful industries has been effectively shut out of the new opportunities.
. . .
(p. B5) The deal itself was not particularly favorable to the agriculture sector, but there were other consequences as well. When the agreement was signed in March 2014, it almost immediately triggered conflict with Russia, Ukraine’s powerful neighbor. Moscow annexed Crimea, and Russian-backed separatists took control of parts of eastern Ukraine.
Avangard lost seven farms and 7.5 million chickens. It now keeps just 10.7 million hens, barely a third of its prewar capacity.
In effect, the deal provided a double blow to the agriculture sector: It went far enough to enrage Russia, but stopped short of immediately opening a lucrative new market.

For the full story, see:
ANDREW E. KRAMER. “Stunted Growth; Ukrainian Farmers, Poised to Broaden Their Markets, Stumble Under an E.U. Deal.” The New York Times (Sat., DEC. 24, 2016): B1 & B5.
(Note: ellipsis added.)
(Note: the online version of the story has the date DEC. 23, 2016, and has the title “Ukrainian Farmers, Poised for Growth, Stumble After E.U. Deal.”)

One Way to Defend Free Trade (in Honor of Reagan’s Birthday)

(p. A9) Baldrige also knew how to use humor to deflate tense moments, as when the U.S. toy balloon industry petitioned for protection against cheap Mexican imports. Baldrige was opposed, but after debate the entire cabinet favored sanctions. Sensing this was not where the president wanted to go, Baldrige pulled from his pocket a dozen toy balloons and tossed them on the cabinet table. As the room filled with laughter, he said, “This is what we are talking about.” Reagan denied the sanctions.

For the full review, see:
CLARK S. JUDGE. “BOOKSHELF; The Cowboy At Commerce; During tense talks over steel imports, Baldrige insisted the tired Europeans work through lunch. He’d hidden snacks for his team nearby.” The Wall Street Journal (Tues., Jan. 5, 2016): A9.
(Note: the online version of the review has the date Jan. 4, 2016, and has the title “BOOKSHELF; The Cowboy At Commerce; During tense talks over steel imports, Baldrige insisted the tired Europeans work through lunch. He’d hidden snacks for his team nearby.”)

The book under review, is:
Black, Chris, and B. Jay Cooper. Mac Baldrige: The Cowboy in Ronald Reagan’s Cabinet. Lanham, MD: Lyons Press, 2015.

Dignity and Equality Before the Law Unleashes Creativity in the Poor

(p. A23) We can improve the conditions of the working class. Raising low productivity by enabling human creativity is what has mainly worked. By contrast, taking from the rich and giving to the poor helps only a little — and anyway expropriation is a one-time trick.
. . .
Look at the astonishing improvements in China since 1978 and in India since 1991. Between them, the countries are home to about four out of every 10 humans. Even in the United States, real wages have continued to grow — if slowly — in recent decades, contrary to what you might have heard. Donald Boudreaux, an economist at George Mason University, and others who have looked beyond the superficial have shown that real wages are continuing to rise, thanks largely to major improvements in the quality of goods and services, and to nonwage benefits. Real purchasing power is double what it was in the fondly remembered 1950s — when many American children went to bed hungry.
What, then, caused this Great Enrichment?
Not exploitation of the poor, not investment, not existing institutions, but a mere idea, which the philosopher and economist Adam Smith called “the liberal plan of equality, liberty and justice.” In a word, it was liberalism, in the free-market European sense. Give masses of ordinary people equality before the law and equality of social dignity, and leave them alone, and it turns out that they become extraordinarily creative and energetic.

For the full commentary, see:
DEIRDRE N. McCLOSKEY. “Economic View; Equality, Liberty, Justice and Wealth.” The New York Times, SundayBusiness Section (Sun., SEPT. 4, 2016): 6.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date SEPT. 2, 2016, and has the title “Economic View; The Formula for a Richer World? Equality, Liberty, Justice.”)

McCloskey’s commentary, quoted above, is related to her book:
McCloskey, Deirdre N. Bourgeois Equality: How Ideas, Not Capital, Transformed the World. Chicago: University of Chicago Press, 2016.

EU Regulations Frustrate Innovation

(p. A13) The EU is a supranational government run in a fundamentally undemocratic, indeed antidemocratic, way. It has four presidents, none of them elected. Power to initiate legislation rests entirely with an unelected commission. Its court can overrule our Parliament.
. . .
. . . today, Britain–the most outward-facing of the major European economies–will thrive if it leaves. . . .
This is because the EU’s obsession with harmonization (of currency and rules) frustrates innovation. Using as an excuse the precautionary principle or the need to get 28 countries to agree, the EU gets in the way of the new. “Technological progress is often hindered or almost impossible in Europe,” says Markus Beyrer, director general of BusinessEurope, a confederation of industry groups. Consequently, we’ve been left behind in digital technology: There are no digital giants in Europe to rival Amazon, Google, Apple and Facebook.
The EU is also against free trade. It says it isn’t, but its actions speak louder. The EU has an external tariff that deters African farmers from exporting their produce to us, helping to perpetuate poverty there, while raising prices in Europe. The EU confiscated Britain’s right to sign trade agreements–though we were the nation that pioneered the idea of unilateral free trade in the 1840s. All the trade agreements that the EU has signed are smaller, as measured by the trading partners’ GDP, than the agreements made by Chile, Singapore or Switzerland. Those the EU has signed usually exclude services, Britain’s strongest sector, and are more about regulations to suit big companies than the dismantling of barriers.
Even worse than in Westminster or Washington, the corridors of Brussels are crawling with lobbyists for big companies, big banks and big environmental pressure groups seeking rules that work as barriers to entry for smaller firms and newer ideas. The Volkswagen emissions scandal came from a big company bullying the EU into rules that suited it and poisoned us. The anti-vaping rules in the latest Tobacco Products Directive, which will slow the decline of smoking, came from lobbying by big pharmaceutical companies trying to defend the market share of their nicotine patches and gums. The de facto ban on genetically modified organisms is at the behest of big green groups, many of which receive huge grants from Brussels.

For the full commentary, see:
MATT RIDLEY. “The Business Case for Brexit; Britain will thrive outside the EU, free from Brussels’ regulation and empowered to cut its own trade deals.” The Wall Street Journal (Weds., JUNE 22, 2016): A13.
(Note: ellipses added.)
(Note: the online version of the commentary has the date JUNE 21, 2016.)

“Liberated People Are Ingenious”

(p. C1) Nothing like the Great Enrichment of the past two centuries had ever happened before. Doublings of income–mere 100% betterments in the human condition–had happened often, during the glory of Greece and the grandeur of Rome, in Song China and Mughal India. But people soon fell back to the miserable routine of Afghanistan’s income nowadays, $3 or worse. A revolutionary betterment of 10,000%, taking into account everything from canned goods to antidepressants, was out of the question. Until it happened.
. . .
(p. C2) Why did it all start at first in Holland about 1600 and then England about 1700 and then the North American colonies and England’s impoverished neighbor, Scotland, and then Belgium and northern France and the Rhineland?
The answer, in a word, is “liberty.” Liberated people, it turns out, are ingenious. Slaves, serfs, subordinated women, people frozen in a hierarchy of lords or bureaucrats are not. By certain accidents of European politics, having nothing to do with deep European virtue, more and more Europeans were liberated. From Luther’s reformation through the Dutch revolt against Spain after 1568 and England’s turmoil in the Civil War of the 1640s, down to the American and French revolutions, Europeans came to believe that common people should be liberated to have a go. You might call it: life, liberty and the pursuit of happiness.
To use another big concept, what came–slowly, imperfectly–was equality. It was not an equality of outcome, which might be labeled “French” in honor of Jean-Jacques Rousseau and Thomas Piketty. It was, so to speak, “Scottish,” in honor of David Hume and Adam Smith: equality before the law and equality of social dignity. It made people bold to pursue betterments on their own account. It was, as Smith put it, “allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty and justice.”

For the full commentary, see:

DEIRDRE N. MCCLOSKEY. “How the West (and the Rest) Got Rich; The Great Enrichment of the past two centuries has one primary source: the liberation of ordinary people to pursue their dreams of economic betterment.” The Wall Street Journal (Sat., May 21, 2016): C1-C2.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date May 20, 2016.)

McCloskey’s commentary is based on her “bourgeois” trilogy, the final volume of which is:
McCloskey, Deirdre N. Bourgeois Equality: How Ideas, Not Capital, Transformed the World. Chicago: University of Chicago Press, 2016.

Mast Brothers Started Their Chocolate Business in Their Apartment

The Masts provide another example showing the possibility of entry into the candy business. The issue is relevant to the claim of those who support sugar quotas, that a decline in sugar prices would not be passed on to consumers in the form of lower candy prices. If there is easy entry into the candy business, then the business is traditionally competitive, and lower costs of production will be passed on to consumers.

(p. A20) In an interview on Sunday [Dec. 20, 2015], Rick Mast, who with his brother began making chocolate in a Brooklyn apartment in 2006, said the allegations were untrue — for the most part. But on the claim that the Masts were “remelters” at the start, Mr. Mast confirmed the brothers did use industrial chocolate, what is known as couverture, in some of their early creations, before settling on the bean-to-bar process for which they are now known.

“It was such a fun experimental year,” Mr. Mast said, adding that the brothers were transparent “to anyone that asked.”

For the full story, see:
SARAH MASLIN NIR. “Unwrapping a Chocolatier’s Mythos.” The New York Times (Mon., DEC. 21, 2015): A20 & A22.
(Note: bracketed date added.)
(Note: the online version of the story has the date DEC. 20, 2015, and has the title “Unwrapping the Mythos of Mast Brothers Chocolate in Brooklyn.”)