Economics – Page 2 – Shall Not Be Questioned

A Little Economic Liberty in Louisiana

IJ put out a release on their case representing monks who make caskets to support their monastery that has been targeted by funeral directors who are irritated by the competition.

The monks of Saint Joseph Abbey declared victory once again after the 5th U.S. Circuit Court of Appeals issued a blistering opinion stating that the five-year campaign of the Louisiana State Board of Embalmers and Funeral Directors to prevent the monks from selling their handmade caskets was either unconstitutional or totally unauthorized by Louisiana law. The federal appellate court took the unusual step of asking the Louisiana Supreme Court to weigh in on whether Louisianaâ€™s funeral law actually grants the state board the power to stop casket retailing. If the answer is yes, then the law is unconstitutional. If the answer is no, then the state board has been acting lawlessly against the monks and other entrepreneurs for years.

According to the release, the state Supreme Court has to get back to them by January 22, so this should move reasonably quickly. But, as I was reading this release to Sebastian today, this is where the shocking quotes come in:

The 5th Circuit left no doubt about the invalidity of the state boardâ€™s primary constitutional argument that industry insiders and government may team up to pass laws that suppress competition and clobber consumers: â€œneither precedent nor broader principles suggest that mere economic protection of a pet industry is a legitimate governmental purpose.â€ The Court was equally harsh in rejecting the state boardâ€™s argument that judges in economic liberty cases are supposed to rubber stamp whatever the government does: â€œThe great deference due state economic regulation does not demand judicial blindness to the history of a challenged rule or the context of its adoption nor does it require courts to accept nonsensical explanations for naked transfers of wealth.â€ (emphasis added)

As Sebastian said, it’s almost like the court is doing its job. I’ve posted a video that’s really just background in the case below.

Happy Birthday “Uncle Milty”

Milton Freedman would, one of the greatest economists of all time, would be 100 today if he had made it. He almost did.

Unexpected Economic Indicators

I love the Wall Street Journal and the fact that they can make almost any economic story interesting. For example, the leading gong salesman in the U.S. Yes, gongs.

When the economy was going gangbusters, salesmen were piling into gongs. Sales people seem to like making customers bang gongs to ease the pain of buying something they might not be able to afford.

“But as soon as the recession hit, bam! It stopped,” says Mr. Borakove. Gong sales shifted over to the meditation market. “Because when people go broke,” he says, “they get spiritual.”

Turns out there are a few folks in the gong business, and they aren’t joking about the spiritual aspect of gongs. Their top buyers now are yoga instructors and people who are buying “planet gongs,” probably related to the end of the world predictions.

The gong dealer says that Countrywide was a buyer during the subprime crazy selling days. This should be a warning sign. Any business that thought it was a good idea to buy a giant gong probably deserves to go out of business with a few exceptions.

Another random fact I find amusing is that the tv show “Scrubs” can singlehandedly boost gong sales.

That reminded Mr. Borakove of the “Scrubs” episode where J.D. says to Julie, “Um, now it’s time to ring the sex gong.” Whenever that line airs, no matter where in the world, gong orders pour into Gongs Unlimited.

Trading in Precious Metals

Clayton Cramer has an amusing tale about “of two Americans being shut up in a room together, and emerging twenty-four hours after, each with a large fortune made by swapping jack-knives.” Apparently bowie knives were often used by Americans as a stand in for currency, to which Sir Lyon comments “it must be admitted, that it lends American trade a certain kind of respectability, by giving it some sort of metallic basis to rest upon.”

I’m hoping this means Clayton is researching the background of the bowie knife, and how it came to be associated with the criminal element. Some of the earliest moves by the pant wetters in America came about over the bowie knife, and then again many years later when the hysteria of the day were switchblades.

The H1B: Our Modern World’s Indentured Servitude

I’ve always thought, when it comes to the highly skilled, our immigration laws poorly serve the country. If someone has in demand skills, we should be doling green cards out to them like candy. Instead, what we have is a modern day equivalent of the indentured servant, known as the H1B Visa program.

For those of you not in the tech industry, H1B is basically where a company sponsors an immigrant to be in the country for a specific job. If that person loses that job, they are out of the country, essentially. They have to find another company willing to “sponsor” them if they want to stay, and within a fairly short amount of time, or face deportation.

This is essentially a license for the sponsoring company to mistreat employees, knowing the only other place they can turn is other companies willing to sponsor an H1B. It is a modern day indentured servitude, and we should be appalled as a country our immigration laws are allowing this. If someone has skills that could contribute to the economy, they should be a given a green card and thrown into the labor pool to compete along with the rest of us. If they choose to go back to their own country because they can’t cut it, that’s their business. But if they can succeed in America, we should welcome and embrace that.

So why does the H1B program persist? Because a lot of large corporations like crony capitalism. They like being able to bring skilled labor in from other countries, mistreat them, pay them poorly, and know they don’t have too may other options. Personally, I’d rather compete against these folks on a level playing ground. There are many brilliant H1B workers who deserve to find a permanent place in this country, and we’re doing them a horrible disservice by continuing this program.

Confusopoly

It’s a common theme on Scott Adams blog, the notion that many companies, in order to avoid competing on price, creating buying structures that are impossible to understand, thus hiding true cost.

I think what’s surprising to me is that I’ve only ever heard the term from Scott Adams, but anyone who buys things, particularly corporate purchasing, knows this is common, so why don’t you hear mainstream economists speaking of confusopolies?

Megan McArdle on the Greek Referendum

Megan McArdle had an amusing observation about the Greek Government putting their bailout deal to the people:

If EU economic policy were a soap opera–and apparently, it is–Greece would be the sultry, irresponsible beauty in a tumultuous love-hate relationship with rigid, authoritarian Germany. Â Obviously after years of tumultuous breakups and teary reunions, this is the season finale where he finally beats the hell out of her during a screaming fight over thier impending bankruptcy, and in despair, she drives both of them, and his prize Volkswagen, off a cliff.

She doesn’t see how this will end well. I don’t either. I never quite understood why the Germans would want to be in a monetary union with basket cases like Spain, Greece and Italy to begin with.

Gun Shops in Big Boxes

Most of the time when one thinks of a gun shop, they imagine a fairly small and cramped space. At least, that’s been my experience with a majority of shops I’ve visited. Even the larger spaces I’ve seen (outside of the big box retailers themselves) aren’t actually terribly big. So, it’s rather amusing to read about a guy who wanted to open a gun range and gun shop who found an empty big box store to buy.

Perhaps the most unusual use of a former big-box store is William James’s Arms Room gun shop and shooting range, which opened last year in a former Circuit City store south of Houston. Mr. James spent nearly $5 million to buy the 20,000-square-foot space and convert it into a shooting range, a price he considered a bargain compared with building from scratch. The Arms Room offers handgun training courses in addition to traditional shooting practice, all in a popular shopping center anchored by Target Corp. and Home Depot Inc. stores.

“It was sort of providential,” Mr. James said in his Arms Room office, surrounded by antique swords and modern firearms. “I never dreamed of a place like this.”

The local PetSmart & Mattress Giant have both recognized the gun range for bringing in new customers. The Home Depot was willing to go on record before he opened that they had no problem with a gun range in the shopping center.

The only Pennsylvania example cited for a non-traditional use of retail space was a community theater in Harrisburg mall. It’s too bad. There’s an empty anchor store at one of our local malls that could use a gun range. :)

Mystery of the Missing Garlic

Two stores we’ve been to lately have been mysteriously out of garlic. When it was Giant, I just wrote it off as typically crappy service that they wouldn’t have any out on the shelves or even in the back in inventory. But Wegmans was out, too. That’s just not cool when they are out of something we use so often.

I came home to the wonders of Google to find out if there was some kind of garlic shortage. Considering that it auto-filled “garlic shortage 2011,” I didn’t expect to find news about moderating prices and rebounding production. So what gives? If garlic production is actually going up, and prices are going down, why are the stores out of garlic?

Beware of Greeks Bearing Debt

Looks like another financial crisis has been averted for now, but I share SayUncle’s puzzlement about how Greeks Grok economic principles. Spend more money than you take in, eventually you run out of other people’s money. It’s still hard for me to understand why the European Project is worth British and German bankers having to continuously bail out the fiscal basket cases of Europe. At least the British were smart enough to stay out of the monetary union, but it’s hard to imagine the Germans are going to keep agreeing to bail out other members of the Eurozone.