Why is Human Composting Illegal in the First Place?

Human Composting

The State of Washington is poised to make Human Composting legal. Human Composting is a method of disposing of a corpse by simply covering it with compostable materials where it is broken down over the course of a month or two. The process is currently illegal in most states and this Libertarian asks the obvious question, why?

I’m of the opinion that the ban on any procedure other than burial or cremation speaks to the heart of the idea of limited government and reasonable regulation. I think it’s perfectly rational to have restrictions on how to properly dispose of a human corpse. Dumping a body along a main thoroughfare is clearly something against the general interests of the people. Government officials have a responsibility to carry out the will of the people and while someone might find it convenient to throw grandma’s body onto the highway, most of us will be severely inconvenienced by such an action.

The problem is the regulation that prevents any other method except those approved by the state. Instead the limitations should be much vaguer and allow people the freedom to dispose of their loved ones in a variety of ways. The regulation could simply read that corpses should be disposed of in designated regions in a manner that doesn’t inconvenience others. That way people would be free to conduct the process as they saw fit with the minor limitations as stated. Judges could make common sense rulings in regards to those who failed to obey the law.

A regulation so worded would allow Human Composting without any sort of government intervention. We wouldn’t need someone to sponsor a bill, to lobby politicians, or to fight against the existing purveyors of cremation and burial who have a vested interest in preventing the legalization of Human Composting as an economic threat.

This is what Libertarians mean when we speak of limited government. We don’t advocate anarchy and the dumping of human corpses wherever might be convenient. The problem is that regulations are so specific they make doing business impossible unless you bribe politicians into passing rules that benefit your company. This is Crony Capitalism and it is rampant in our nation from Federal to State to Local government.

Ask yourself, why is Human Composting illegal? It’s a perfectly reasonable method of disposing of a corpse and, frankly, the choice I think many people would make if given the option. I know I do.

Tom Liberman

EB-5 Program and Buying United States Citizenship

EB-5 Hudson Yards

Until I read a fascinating story, I had not heard of something called the EB-5 Visa Program for foreign investors. The idea is simple enough. If a foreign investor pumps $500,000 to a $1,000,000 into a project targeting a rural or poor urban area, their children are given legal rights to live in the United States. What could go wrong? Exactly what you would expect.

Basically, the meaning of jobs being created and poor regions as defined by the EB-5 was stretched so that most of the money went to fund luxury projects in wealthy cities. Districts were drawn to include poor regions but the vast majority of the construction took place in wealthy areas. That along with the fact that some of the developers simply absconded with large sums of money.

Most of the investors appear to come from China and individuals of enormous wealth found a way to invest their money not only with a financial return but also a pathway to United States citizenship for their children.

Personally, I’m not convinced the EB-5 program was created with the best of intentions at all. The politicians back in 1990, when it was implemented, most likely well-understand where the money would go and created a system by which it could flow to wealthy regions while following the loose guidelines of the program.

I’m not even upset the money went to fund luxury projects like Hudson Yards. I’m also not opposed to foreign nationals purchasing U.S. citizenship, which is exactly what is going on despite any arguments to the contrary. What makes me angry is pretending to be doing a good and wonderful thing by helping out the poor in rural regions and urban cities when there was never any such intention.

Some of the money did, in fact, go to projects of the nature for which they were intended but I strongly suspect that would have been the case even if the base purpose of the program was to simply attract foreign investments. When money comes into the United States for various projects it is a good thing. It would be nice if more money was spent to help poor rural areas and poverty ridden urban regions but reality is a tough mistress.

People largely don’t want luxury apartments in rural regions or the poor areas of the inner city. However, when a region undergoes development the area around it often improves as well. This reality is the best we can hope to accomplish.

Creating a program like EB-5 with unrealistic expectations of development in rural and poor regions is an exercise in deceit. I’m here to help, said the politician while stuffing their stomach at the trough. My Libertarian sensibilities say, go ahead and stuff your face, but be honest about it.

If the EB-5 program was created honestly, I’m certain organizations like Asian Americans for Equality would have found a way to use that money to help the poor in both rural and urban regions. I’m sure many investors believed they were doing a good thing because the project was under the mantle of the EB-5.

Tell investors the truth. This project is in a wealthy region and this other one is in a disadvantaged region. You decide which one in which to invest. I’d guess you’d have had more money going to the sorts of projects the entire program was designed to fund in the first place.

Tom Liberman

Philadelphia Bans Cashless Stores and Why It is Silly

Cashless Stores

The idea of Cashless stores has been around for a while now but with Amazon set to open a series of Amazon Go outlets around the country it’s getting more news. The city of Philadelphia has now passed a law making in mandatory for most retail stores to accept cash. Cashless stores are also banned in the state of Massachusetts with similar bans being considered in New York and New Jersey. Why is all this happening and will the legislative efforts solve the issues or make them worse?

The reason retail outlets want to go cashless is because they can streamline their operations. They don’t need cashiers to make change, count cash, or risk being robbed while delivering bags of money to the bank. A quick swipe and you’re out of the store.

The reason politicians want to ban it is because such cashless stores inordinately affect the poor. People from lower income classes don’t always have credit cards or debit cards or smart phones. This means that if every grocery store in a particular region had become a cashless store, those people would not be able to purchase groceries.

It’s important to understand that both of these arguments are absolutely true. If retail outlets streamline their processes that translates to savings for consumers. If poor people are unable to purchase basic necessities that means suffering for them. We like lower prices but we don’t like suffering. The deciding factor then becomes if the proposed legislation is going to alleviate the problem it purports to solve.

Retail outlets want your money. They want rich people’s money and they want poor people’s money. There are a good number of poor people in this country and if grocery outlets shut them out then the company itself will certainly suffer. This is something the business fully understands, better than any politician I’d guess. They know the numbers. Because of this knowledge, retailers like Amazon now offer lower cost membership to low-income families enabling them to make purchase. I’d guess any grocery store in a low-income area would immediately make provisions to the do the same, they don’t want to lose out on all that business.

If a business is able to offer lower prices through modern business models, and we need look no further than Amazon and Walmart to see this, then people save money, everyone who purchases anything saves money. This includes poor people who will, if they want to purchase something at a cashless store, have to pay some amount for a debit card or a membership.

It’s my opinion in the end the poor person is going to save money by entering into the new business model, but I don’t see it as worse than a break-even proposition. That being the case, the legislation is putting an undue burden on the business, it is politicians sticking their noses in and creating laws that don’t help anyone.

The point of a law is help enforce a just system. When it the law does not do so, it shouldn’t be there at all.

Tom Liberman

Local Grocers Helping People and Wilbur Ross

Wilbur Ross

Commerce Secretary Wilbur Ross recently said something I think illustrates one of the biggest problems in implementing good economic policy. In addressing the need for federal workers to make it through the shutdown, he said, “Local people know who they are, when they go for groceries and everything else.” I see this sort of thinking from many people in the business community and it demonstrates an old military adage that tells us we are always fighting the last war.

I cannot tell you how many times I’ve heard politicians and local leaders talk about how important small business is to the economy of the United States, how it is the backbone of our nation. This was true for a long period of time after the Industrial Revolution but today our economy is largely driven by what is called Enterprise Businesses or Multinationals. The majority of business receipts are controlled by such companies despite their entire number being a small percentage of all businesses in the nation.

Secretary Ross and President Trump are under the impression that we all reside in a small-town America that no longer exists. Most people do their shopping at Wholefoods, at Walmart, at Home Depot, or online, even those who live in rural regions. While the clerks at such companies might well know you by name, they don’t function the same way mom and pop grocery stores did even just thirty years ago. Their accounts are done electronically and they can’t just give people another month or two to make payments. To do so requires getting into the computer code at corporate headquarters. It’s just not feasible and the fact that men like Secretary Ross and President Trump, supposedly powerful business leaders, don’t seem to understand such a simple reality is discouraging.

This way of doing business saves we consumers a huge percentage of our paychecks and allows us to have many nice things. The global economy and the Enterprise Companies that arose with it deliver goods to our doors at shockingly low prices. Our choices are all but limitless and this is a product of capitalism. It is a good thing. But it also means Wholefoods can’t just give Tom a break on my purchase of potatoes because they know I’m good for it.

This is the nature of our economic world. This is reality. Perhaps you harken back to a simpler time when we had to spend a far greater percentage of our paycheck on food, shelter, and clothing. I don’t. Capitalism and globalization have brought us so many wonderful things including the incredibly cheap computer, tablet, or phone on which you are reading this blog.

Until our leaders recognize this modern world, they will not be able to fix its remaining economic issues. Things are not perfect, that is certain, and I do not say they are so. What I am saying is that if you are the Secretary of Commerce, if you are the President of the United States, maybe you should stop living in a delusional version of a world that no longer exists. You might make better decisions for us all.

Tom Liberman

Why Does the Federal Reserve Raise Interest Rates?

Federal Reserve

The Federal Reserve and the President of the United States seem to be at odds over the idea of raising interest rates. I’m of the opinion that most people, including many of my fellow Libertarians, don’t really understand the base purpose of the Federal Reserve and the point of increasing interest rates. I’m not an economist by trade but the issue is relatively straight-forward and I thought I’d take a few moments to go over it.

As I said, it’s relatively simple. Pretty much since the beginning of human history there has been something called the business cycle, or in common parlance, the boom-bust cycle. Basically, when times are good and people have plenty of money, they tend to spend it on speculative interests in the hope of gaining much more money. In contrast, when times are not good and money is in short supply, people have a tendency to hoard what they have. These two things exacerbate the business cycle.

Essentially, because people are spending more money on potentially enriching schemes during boom times the bubble goes to extremely high levels before it bursts and creates devastating economic destruction. Once the bust takes hold it is difficult to stop the downward spiral because people are reluctant to borrow money.

The solution created by Alexander Hamilton and the founders was the First Bank of the United States. Its primary idea was to raise interest rates during boom times thus curtailing people’s willingness to borrow money and fuel the boom and to lower interest rates during times of bust to encourage people to take out loans and pull the economy from its collapse.

It did not stop the business cycle altogether and thus its opponents, who felt there was artificial manipulation of the economy at the expense of growth abolished it. The booms and bust then grew much worse and so the Second Bank of the United States was formed with essentially the same goals as the first. Once again, the business cycle continued although with tempered effects because of the policies of the bank. As can be expected, people grew unhappy with the bank because they felt it was impacting the booming economy negatively and so it was abolished.

Immediately thereafter there again began a more virulent series of business cycles until Congress established the Federal Reserve which still exists to this day. As expected, the business cycles continue to be a problem as we have seen recently. One of the things that has happened since President Reagan is that the Federal Reserve has acted more to promote economic growth but not to slow it. This means, naturally that the boom cycle is not properly tempered.

That is the point of the Federal Reserve in their recent raising of interest rates. They desire to slow economic growth to temper the boom section of the business cycle. These actions anger the President of the United States in the midst of that cycle. Politicians desire to brag about the good they have done and lay blame for the bad, but the business cycle is beyond their control. The Federal Reserve cannot stop the cycle, the people who make policy can only hope to temper the catastrophic effects of the inevitable bust.

That is why it is generally considered a bad idea for politicians to dictate policy to the Federal Reserve. Their actions are often, and for good reason, opposite of those wished by the politicians.

Tom Liberman

Does Ticketmaster Mind Scalpers Breaking Rules?

TicketmasterThere’s a fascinating story in the news involving Ticketmaster being complicit in scalpers reselling tickets. The idea is simple enough, Ticketmaster has a service called TradeDesk in which people who have tickets sell them to willing buyers. The problem is TradeDesk is largely a way for scalpers who purchase tickets on Ticketmaster to resell them at higher prices.

Why is this problem? At first glance it doesn’t seem as if Ticketmaster is doing anything wrong. They sell the tickets to whoever is first to purchase them and then are involved in the resale at a higher, or lower, price. This is obviously lucrative for Ticketmaster as they get a percentage of all sales; essentially, they are profiting twice off the same product. However, thanks to some undercover work from the Canadian Broadcasting Corporation, it seems Ticketmaster is making it very easy for scalpers to purchase large numbers of tickets to events before the public has a chance to do the same. Ticketmaster has a rule in which no one is allowed to buy more than a small block of tickets but they essentially ignore it when scalpers bypass it.

Thus, people who want to purchase tickets to an event never really have much of a chance and are forced, if they still want to attend, to buy the higher priced tickets at TradeDesk. Sales representatives for Ticketmaster told undercover investigators they pretty much were facilitating such transactions. The company is denying the allegation and said they are looking into the practice. They claim they attempt to stop such large purchases to the best of their abilities.

This entire thing intrigues me from a Libertarian perspective. Let’s imagine Ticketmaster doesn’t have the rule about blocks of tickets. Then what we are seeing is capitalism in action. The event promoters generally set the ticket prices and if resellers are able to get a higher price, it’s likely the promoters set the original price too low. That’s their bad. The scalpers are merely capitalizing on a mistake. The risk is all with the reseller. If they misjudge and have to resell the tickets at a lower price, because there is little interest for instance, they lose money.

I totally agree Ticketmaster is not being transparent if they are, indeed, allowing scalpers to purchase large blocks of tickets with the intent of reselling in violation of Ticketmaster rules. The reality of the supposed crime is more complex. Even if Ticketmaster cracks down on large blocks of tickets being sold to a single user, I’m fairly certain the scalpers will refine the technology they use to call and order and still scarf up the majority of the tickets.

Is it fair to the average user who just wants to go to the concert or see the game at the price of the original ticket? No. That’s clear. Then again, such a viewer can simply choose not to spend the extra money for the resold ticket.

What do you think?

Tom Liberman

Rich Give Almost Fifteen Billion in Charity Despite Crony Capitalism

Charity GivingThe nation’s top fifty donors scraped up $14.7 billion to give to a charity this past year. What sort of things are the rich trying to do with their money? How can we encourage them to give more?

The Bill and Melinda Gates Foundation alone donated $4.8 billion to charity organizations with a large hunk of it going to education. Educational organizations dominated the donations this year. The reason largely given is that it’s vital to have an educated workforce in the coming generations. Menial jobs are going away and highly skilled positions are going unfilled.

It won’t surprise you to learn that the biggest donors these days represent Technology Industries. They have supplanted finance donors in recent years and they, more than anyone, know their source of income is being generated by skilled workers. Without such workers, their income evaporates. It is in their interest to have educated workers but it is also in the interest of the people getting an education. A symbiotic relationship that highlights the ideas of Enlightened Self-Interest and Rational Egoism. In other words, charity isn’t just helping someone else.

At its heart is the idea: What is good for me is generally good for those around me. Anyone who runs a business isn’t going to do well without good employees and customers with ready cash. At least it used to be that way. We’ve perverted things in the United States with Crony Capitalism.

Business leaders today also spend a great deal of their money attempting to bribe, that is to say finance, politicians in their campaigns in order to influence policy. The reason business leaders do this is that political leaders determine the success and failure of business through legislation. Politicians hold the reins and with the stroke of a pen can promote one business and destroy a competitor. This forces businesses to spend money buying influence instead of running their company.

The cause and effect relationship here is infinitely interesting to me. The ostensible reason politicians were given this ability to regulate business is the impression that corporate leaders are going about their jobs in a manner detrimental to the consumer. Politicians must save us from such evil! This, in turn, led to businesses becoming overly involved in politics. It was a matter of survival.

Despite having to give enormous sums of money to politicians, these fifty people still managed to donate nearly fifteen billion to charity. I wonder how high that number might be if they didn’t have to worry about bribing, I mean donating, to politicians. If politicians can’t decide the fate of a business, then business leaders don’t care who is elected. They can go about improving their company. This means giving customers what they want and training better employees.

What started with good intentions, regulating egregious and criminal business practices, has become egregious and criminal of itself. If my competitor gives more money, that business will win through the efforts of legislators who don’t care about good products or educated workers. They create winners and losers with regulations.

We didn’t solve the problem, we made it far worse and have taken away who knows how much money from charity in the meantime.

If the solution is making the problem worse, it’s not a solution at all. Something to think about.

Tom Liberman

A Study of Tariffs and Laws and the Tomato

tomatoWith all the talk of tariffs in the news these days, I’ve been doing a bit of research and came across an interesting Supreme Court case related to the Tariff of 1883 and the humble tomato. Our friend the tomato is almost universally referenced as a vegetable in common parlance, this despite the fact that it is undeniably a fruit in botanical definition. This became an issue when the two food categories were treated differently in said tariff legislation.

If you were a seller of produce back in 1883 and sold tomatoes the tariff became an enormous issue. You see, fruits were exempted from tariffs while vegetables were not. The government, being the government, decided to include as many things in its revenue scheme as possible and that included tomatoes.

A fellow named John Nix founded a company called John Nix & Co. which became the largest sellers of produce in New York. They shipped produce from Virginia, Florida, and Bermuda to the city. Naturally, Nix didn’t want to pay extra tariffs on tomatoes. This is one of the problems with such tariffs. They raise revenue, certainly, but that revenue is taken indirectly from tax payers. While Nix’s company certainly has to pay the tariff directly to the government, they recoup this loss by raising the price on their produce. Thus, any tariff is really just an indirect tax. That is beside the point.

The point here is that the case went all the way to the Supreme Court in Nix v. Hedden, Edward L. Hedden being the Collector of the Port of New York. Hedden collected that money and Nix wanted it back. From a botanical perspective, the tomato is undeniably a fruit and therefore clearly exempt from the vegetable tariff.

The Supreme Court decided, unanimously and against nature, the tomato is not a fruit, it is a vegetable. The argument being that it is commonly thought of as thus. It is eaten as dinner rather than dessert. Therefore, Nix had to pay the tariff.

Is there a moral anywhere to be found in all of this? I’m not sure. The government instituted a tariff that was vague in reference using simply the words fruits and vegetables in non-taxonomic terms. The Supreme Court decide what Congress was really trying to do was put a tariff on tomatoes even they are clearly fruit and thus changed the legal definition in regards to tariffs, although they had not the power to change the scientifically determined definition, for which we can all be thankful.

It does give us some insight into who is the one paying for these tariffs and why manufacturers and wholesalers tend to fight them to the bitter end.

And, of course, my summation. Even if the Supreme Court made Nix pay the tariff because the tomato is commonly thought of as a fruit, this does not change the nature of the tomato. It clearly fits the established definition of a fruit, like it or not. Me, I’ll go with science over government.

Tom Liberman

United Airlines and Would You Trade a Quarterly Bonus for a Chance at a Big Prize?

United AirlinesUnited Airlines recently announced they were doing away with a quarterly bonus of $300 to all eligible employees and instituting a lottery wherein those same employees have a chance to win $100,000 and other prizes. What I’d like to ask is if you would want such a plan at your place of work?

Let’s look at the metrics. United Airlines employees almost 90,000 people although we have no way of knowing how many of those get the incentive bonus of $300. It is based on things like attendance so it doesn’t sound particularly difficult to achieve. I’m going to say that about a quarter of the employees get the bonus. That’s 22,000 bonuses of $300 awarded each quarter for a total of $6.6 million in payouts.

We have to do a bit more guesswork on the value of the remaining prizes United Airlines is giving out but let’s say the total package is worth $2 million. That’s a saving of $4.6 million dollars for the company. Pretty nifty. It might be more, it might be less, but I think it’s fair to say the new policy is designed to save the company money. United Airlines executives claim it will generate employee excitement but I think it’s reasonable to infer this line is somewhat disingenuous.

Under the old plan an employee who met the standards receives $300 each quarter. That’s not a life-changing sum by any imagination. A bonus of $100,000 and trips are, obviously, of significantly greater value to an individual employee. The employee who wins the bigger prize is quite happy while all the employees who gave up the $300 for nothing are not as thrilled. From a metric point of view that’s about 21,900+ employees who are angry and 100, depending on how many prizes are offered, who are happy, each quarter.

Will this mean more employees seek the bonus? Fewer? These are interesting questions to me. They speak to psychological motivations. Would you do more for the chance at a greater prize or do less because your chance of getting something is greatly diminished? Would it not change your work behavior at all?

What do you think?

Would you be for or against a plan like United Airlines?

View Results

Loading ... Loading ...

Tom Liberman

Is a Diamond a Diamond?

diamondCompanies have been able to manufacture diamonds through industrial processes since the 1950s but with advances in technology it is now possible to create a diamond that is equivalent to those found in nature in all respects except, perhaps, resale price. These grown diamonds are significantly cheaper than their naturally occurring counterparts and their share of the market is increasing, much to the chagrin of those companies who sell found diamonds.

I think it’s an interesting study in human behavior because found diamonds and their grown competition are essentially identical from a practical respect. Yet, I imagine most people are so enamored with the illusion of a real diamond they would, if they had the financial wherewithal, generally purchase the more expensive version.

Let me be honest, I find the entire diamond industry to be largely artificial. Diamonds are not particularly rare but for a long time the companies that mine them kept enormous numbers in warehouses to create scarcity. In addition, those same companies launched successful advertising campaigns which promoted the idea of their value. I have no problem with either of these tactics, no one is forcing anyone to purchase an overly expensive rock. I just don’t plan on shelling out a bunch of money for a diamond.

That being said, I’m in the minority as far as this goes. Diamonds are considered an almost necessary declaration of love between a couple. The giving of diamonds from one person to another is considered of great importance in matters of romance. This is why people pay large sums for relatively common sized stones.

It’s also no surprise established diamond companies would like to convince people the grown stones are not equivalent to those found. Those companies producing the grown diamonds are quite interested in overcoming this perception. This is business and all quite normal.

I don’t have any great insight into this issue. I don’t really know if grown diamonds will eventually completely usurp their found counterparts or if the industry will continue to distinguish one as better than the other. Possibly diamonds will simply lose most of their value as people don’t find them useful in matters of the heart anymore. I don’t know, I just find the entire situation interesting from both a marketing standpoint and that of human psychology.

For those of my readers who actually have something more than an emotionless, pea-sized, black, barely beating heart; if you had enough money would you purchase the more expensive found diamond over the grown diamond despite their being molecularly the same?

Would you pay more for a "found" diamond?

View Results

Loading ... Loading ...

Tom Liberman

Lady Friendly Doritos and why a Gender Trend is not Sexism

DoritosPepsiCo CEO Indra Nooyi recently gave an interview in which she noted market research indicated men and women generally have different habits when eating Doritos, a snack made by the company. She said the company planned to release products that catered toward the eating habits of women. Social Justice Warriors Triggered!

How dare a company market a product designed specifically for men or for women besides, say, tampons and jockstraps. What unbridled sexism to suggest research indicates women generally don’t like to lick their fingers of the Dorito residue or pour the crumbly remnants of the bag directly into their mouth.

The problem is groups of people do perform tasks differently, eat particular foods, and otherwise differ from one another for a variety of reasons including gender. If PepsiCo has done market research indicating certain Dorito eating trends in women then promoting a product to that gender’s preferences makes sense. What it doesn’t mean is all women eat Doritos in a particular way. That’s the gist of all the tumult. An angry female says: I’m a woman and I do like to lick my fingers of the Dorito residue. I’m a woman and I enjoy pouring the crumbs from the bag into my mouth.

No one at PepsiCo is telling you how to eat your Doritos. They are simply creating and marketing a product toward particular trends their research indicates. They discovered a certain percentage of women don’t eat Doritos because their fingers get sticky and they don’t like leaving the crumbs behind but are unwilling to pour them directly into their mouths. I’m sure there are plenty of women who do these things just as I’m sure there are plenty of men who don’t like sticky fingers and crumbs.

Let’s imagine the research indicated 70% of women don’t like to eat Doritos in the way described. With there being about 300 million people in the United States and approximately 150 million of them being women that suggests 45 million women out there do not meet the trend. That’s a lot of ladies. It also means about 105 million of them behave as the marketing indicates. Now, I’m making up the 70% figure but let’s work with that for the sake of argument.

What PepsiCo has found is their product is unappealing to 105 million women because of the sticky residue and crumbly product. They want to target that large group of people, who happen to be mostly women. Is that wrong? Is that sexism? Is that terrible and awful? I say absolutely not. I say it’s finding a market and making a product that appeals to it. That’s smart business, not sexism.

No one is saying all women eat Doritos in a particular way or that all women are dainty and all men are rough. It is impossible to deny there are differences in women and men. Savvy companies use those tendencies to market their product to specific segments of society. Does anyone deny certain television shows and movies appeal more toward women than men and vice versa? Does this mean all women love Chick Flicks and hate Action Movies? Does it mean men don’t like Chick Flicks? No. I think Steel Magnolias is a great movie but I love The Right Stuff and Fight Club as well. It’s a tendency, not a sexist agenda.

Men and women are unalike in some respects and their respective preferences in eating Doritos might just be one of those differences. That’s a fact whether you like it or not.

Tom Liberman

How Regulations Destroy Small and Medium Businesses

regulationsPeople generally assume regulations are a burden on all businesses in general but the reality is that large and enterprise companies are far less affected because of their greater resources. Thus, small and medium sized businesses are the only ones hurt. As if the small competitor didn’t have enough trouble already. It’s my opinion a great number of regulations are working exactly as planned, to benefit political allies.

You have to remember who pays the bills. Enterprise businesses bribe, I mean to say contribute, to politicians on a much larger scale than is possible for smaller businesses. When new regulations come down the pipeline they force all companies to perform a great deal of documentation to prove they are doing things correctly. Bigger companies can handle these costs much more readily and thus small producers are forced to sell their business. It’s an accelerating trend that has created carnage in the once influential small business world. I won’t get too deeply into statistics but since the 1980s small businesses have contributed less and less to the total economy of the United States.

An article I recently read about the 5,000 plus regulations that apply to apple farmers is case in point. There are regulations on scanning the entire orchard for mouse dropping before the start of the work day. Shoe to ladder to hand. While the Trump administration has reduced some regulations, they’ve also vastly increased regulations in regards to foreign workers so help does not appear to be on the horizon.

The reality of regulations is they drive out small players and aid enterprise business. Even if you support many of the regulations it is impossible to deny the evidence of their affect.

Another quite interesting factor in all of this is the standards applied by wholesalers often outstrip those applied by the government. If you want to have Whole Foods sell your produce, they require a lot of assurances about quality and safety. This means a double burden in which not only must government regulations be followed and thoroughly documented, but a second set of rules must be adhered to in order to make it to market. This, again, is to the advantage of larger operations.

I question the necessity of many government regulations at all. Let’s take the mouse droppings rule as an example. It’s certainly possible mouse droppings might make their way from the ground to a ladder to the hand of a worker and hence to an apple. The regulation requires workers walk the entire orchard each day before harvest looking for mouse droppings. This is obviously unreasonable, even for large operations. This regulation is doing nothing to prevent mouse droppings from migrating to your apple simply because it is an impossible rule to follow.

I’m not entirely against various regulations, I think there needs to be far fewer of them and they need be better written. The bottom line in the case of apples is to ensure those going to market aren’t going to make people sick. The simplest way to do this is test a random apple or two from various batches for salmonella or whatever else might cause disease. I admit this is not a perfect solution as the stray disease-causing apple will slip through the net, but that is no different than with current regulations. Citizens of the United States are sickened by food on a fairly regular basis.

Nor am I arguing against the executives of enterprise business, they have every right to conduct their companies as they choose. The problem is the majority of regulations, well-intentioned or not, basically work against smaller operations.
We want a business to succeed because they do something well, not because they are aided by the government against competition. Fewer, smarter, and better regulations is a winning recipe for the smart business owner and the consumer.

Tom Liberman

Walmart Shoplifting Deterrence is Extortion when the State is not doing it

WalmartRecently Walmart decided to suspend a shoplifting deterrent program run by companies called Corrective Education Co. and Turning Point Justice after a number of complaints about the practice. In this program people who are caught shoplifting must pay around $450 to attend classes and avoid being turned over to the police.

What is all the commotion about? The basic idea is that Walmart experiences a fairly large number of shoplifting attempts over the course of a year. Executives decided to hire private companies that provide a day of counseling to offenders instead of relying on local police departments who generally make arrests and mete out fines. They only implement the policy where local law enforcement agencies agree to do so. The result has been a decrease in shoplifting and a corresponding savings in time and effort for local police forces who estimate that investigating such minor thefts costs about $2,000 per report. In addition, the person so accused doesn’t get a criminal record or have to deal with court costs which generally add up to far more than the fee being charged for the seminars. Seems like a win-win-win, right? Nope.

A number of people have complained and state authorities are upset as well, they call the practice extortion. If you are caught committing a crime you must pay a fee or risk imprisonment. When private companies like Walmart engage in such activity it is called extortion. When the state does the same thing, we call it business as usual. Basically, every time you commit a misdemeanor, and petty shoplifting generally falls into this category, the state asks you to pay a fine or go to jail for a period of time. Somehow this is perfectly reasonable but privately offering largely the same options along with practical help to avoid having to shoplift in the future is a crime. Makes you think, at least I hope it does.

Another consideration for municipalities is while law enforcement agents clearly save time not having to deal with minor shoplifting complaints, the local government has to pay their salary either way. If the officers are engaged in duties that don’t involve collecting fines from residents, that is a loss of revenue. It should go without saying that such officers should be spending most of their time investigating serious crimes rather than imposing fines on citizens for minor transgressions. That’s not the reality in which we live. From local to state to federal levels of government, a great deal of money comes from such fines. It has largely become the main revenue stream for many municipalities so it’s not surprising they might be alarmed by such activity.

I admit there are likely to be abuses in such a system run by a private company such as Walmart but I don’t think the abuses will amount to anything more than those already occurring in the state sponsored version of the same thing.

This is a perfect example of where private solutions are better than government. This answer offers the business a documented reduction in shoplifting, gives law enforcement officers greater time to spend on other endeavors, and largely helps the shoplifter because they avoid much more severe penalties.

Shouldn’t we be doing more of this sort of thing, not less?

Tom Liberman

Cryptocurrency Mania Strikes the Tea Business

cryptocurrencyInvesting in particular ways during a financial bubble, in this case Cryptocurrency, is a good way to lose a lot of money but it also gives us amazing insight into the nature of greed. If we analyze and understand human nature during these events there is money to be made. Today let’s talk about Long Island Iced Tea Corp.

That company specializes in selling non-alcoholic beverages. What, you might ask, does this have to do with cryptocurrency? Good question. The answer is nothing. Nevertheless, the officers of the company decided to change the name to Long Blockchain and claim to be refocusing on businesses using something called blockchain. This technology is an integral part of cryptocurrency. We need not understand the particulars.

Immediately upon rebranding the company stock soared to unseen heights. What this means is people saw the name change and, in the mania surrounding cryptocurrency, immediately purchased shares. Now, the money people use to buy the stock has to come from someplace. Perhaps their saving account or their child’s education fund. The assumption of the purchaser is that, like other cryptocurrency companies, the value will rise dramatically. They hope the stock price will continue to rise and they will eventually sell their shares for an enormous profit.

There is some reality to these desires. Those who buy low and sell high stand to make a lot of money. The danger is you don’t know exactly what is low or what will be high. It’s entirely possible Long Blockchain has already reached its peak price, that anyone purchasing now will lose a lot of money. This does not dissuade the speculative investor. It is something that can be taken advantage of by a wise investor.

When perception is not aligned with reality mistakes will be made. This is clearly what is happening with cryptocurrency speculation and Long Blockchain. The company is a tea company. They have an infrastructure designed to manufacture and distribute tea. They are not well-positioned to function in competition with existing blockchain companies.

Now, I will get to the point of all this. In the same way Long Blockchain knows little or nothing about blockchain technology, the average investor, you, knows little or nothing about the nuances of the market. You see something interesting and make a purchase. In the same way Long Blockchain is most likely doomed to failure, so is the average investor. The women and men who know something about investing, who can properly take into account perception and reality; are brokers. They can help you invest your money wisely. They can take advantage of misperception without so easily falling prey to it.

The lure of easy money is almost always false and the people most vulnerable are those who have the smallest disposable income. In essence, the Middle Class. The poor cannot invest at all and the wealthy have financial advisors.

You say to yourself it’s just a bit of money and there is the chance to get rich. The same applies to purchasing lottery tickets. It’s your money, do with it as you will. I’d advise you to get sound financial advice and avoid get rich quick purchases like Long Blockchain. If not, well, my financial team is happy to take your money and I’m thrilled to pay them for doing so.

Tom Liberman

Sandwich Dispute Illustrates the Demise of Capitalism

sandwich-capitalismThe demise of capitalism in the United States is amply illustrated by a lawsuit that took place back in 2006 in the state of Massachusetts between Panera Bread Company and Qdoba Mexican Grill. I came across this horrific little story while perusing Wikipedia’s Sandwich entry. The sandwich, you might ask? A lawsuit? Sadly, yes.

There was a time in the United States when business owners and operators devised methods of defeating their competition by providing a better product, a lower price, more amenable service, or any number of other methods. While for many companies those days still exist, more and more we are descending ever further to a point where success is decided largely by government intervention.

The Panera in question was, perhaps still is, located in the White City Shopping Center in Shrewsbury, MA. The company agreed to move into the center as long as it was written in their contract that no other “sandwich” shop would be allowed to rent space there. The fact someone actually attempted wording like this in a contract is by itself alone enough to raise the ire of this Libertarian. Competition is the backbone of capitalism. Without competition the consumer is the ultimate loser. The fact that contracts like this are legal is another huge problem from my perspective. It encourages companies to rely on government backed capitalism, or Crony Capitalism.

More and more businesses must rely on government for survival. It is not enough the government spends enormous amounts of taxpayer dollars simply to support whichever business pours the most money into election campaigns, the government is the ultimate arbiter of legal disputes. The law and its equitable enforcement is a vital component of healthy capitalism and the law has gone wrong.

The very existence of non-compete clauses like the one Panera tried to enforce are an affront to the tenants of capitalism and, by extension, to our nation. If industries can legislate their rivals out of business as the primary way to achieve profitability, the consumers lose. While I’m not suggesting capitalism is dead, I do think it is beginning to fail. When competition dies it means the end of enterprise in the United States. Businesses in other countries will overtake industry here. They will win customers through true capitalistic ingenuity. I think this phenomenon is already manifestly occurring across the globe as other nations are filing larger number of patents and surpassing the United States as an innovative leader.

Our government’s solution to the issue seems to be larger involvement in business processes. There is a strong sentiment in our leaders to impose tariffs and restrictions on the companies competing with businesses in the nation and this America First policy seems to have found strong support among a populace that apparently fails to understand what is in their best interest. So be it. We live in a nation where we vote for our leaders and if the people believe in this sort of intervention, we deserve what we get.

The proper solution is the opposite of this approach. Government should lessen their presence in enterprise. Many people consider this a reduction of regulations. The sad part is the majority of regulations are designed to give one company or industry an advantage over a competitor rather than protect the consumer. I support most deregulation for this reason. That being said, the main problem is government contracts and legislation decide which company makes a profit and which go out of business. This outcome should instead be related to the purchasing habits of consumers.

Only when companies survive by providing better products, cheaper products, and better service will they be able to compete globally.

A business that relies on government to save them from rivals is eventually doomed, either to foreign takeover or violent revolution. The government of the United States is culpable in all of this, and by extension the voters, and it should end. Voters have this power although they seem disinclined to use it.

Tom Liberman

Net Neutrality and all the Hype

Net NeutralityThere is a lot of news about Net Neutrality these days and the people who are proponents are incredibly passionate while those who are against are quite determined. The current administration and the Federal Communication Commission seem bent on eliminating Net Neutrality and tout all the benefits of doing so. Those who oppose fill my Social Media with diatribes and examples about how the internet will be destroyed. Frankly, it’s a lot of hype on both sides.

I’m not going to make this a long dissertation on exactly what Net Neutrality is and is not. Instead I’d like to focus on the idea it just won’t make that much of a difference either way. In doing so I understand I’m going to make enemies on both sides of this passionate debate, so be it.

There is a single factor causing the majority of the problems we have with our internet providers, the lack of competition. This dates back to the monopolies granted to cable providers. Basically, territories of the United States were broken up and given to single companies to provide cable access. These monopolies largely continue to exist across the country.

There is a distinct lack of competition in the industry and this means consumers have few, if any choices, about whom provides them with internet access. This means the power largely resides with the companies rather than the customers. They can apply any sort of rules they want and their customers have nowhere else to go. Thus, if an internet provider decides to throttle customers or block particular content there is nowhere else for the consumer to go, they must simply accept the status-quo.

It’s extraordinarily important to note prior to 2015 Net Neutrality was merely a concept that many internet providers followed simply because it made good business sense not to anger their customers. There are some choices in the industry and providers voluntarily gave open content and access to their customers in an effort to provide good service.

There were some exceptions but when they came to light, consumer pressure generally forced the provider to change the policy, it was not government enforced Net Neutrality that did anything, at least before June 12, 2015 when the provisions were accepted by the FCC.

If we had strong competition in the field then Net Neutrality would most certainly be a negative concept. If we had many choices and a company was not providing us with a good service we would simply go elsewhere. Once you get a bad meal at a particular restaurant, do you go back? Of course not, there are far too many good choices. It is the lack of competition that makes it appear we need Net Neutrality. The problem was created by the government, mainly municipal and state, in creating monopolies in the first place. The answer isn’t to enforce Net Neutrality but to open the market to competition.

The reality is enforcing or repealing Net Neutrality in our current situation isn’t going to do any harm or any good. We didn’t have Net Neutrality prior to 2015 and things were fairly much exactly the way they are now. Removing Net Neutrality is not going to bring the benefits claimed by those who oppose the concept. Keeping it is not going to fix the current problems we all have because of the lack of competition.

The proof seems obvious to me. Prior to 2015 we did not have Net Neutrality. Can you tell the difference? I can’t.

In other words, it’s much ado about nothing.

Tom Liberman

Best Intervention for Fyre Festival of Pizza

pizza-festivalA fellow named Ishmael Osekre organized a pizza tasting festival in New York City which is being compared the failed Fyre Music festival held in the Bahamas. I’m not going to get into detail on the failings of the festival, suffice it to say serving tiny slices of cold, miserable pie to a New York pizza savvy crowd is going to be a disaster. What I’d like to discuss is the best remedy to this situation? Social Media? Government?

The first avenue is that of Libertarian dreams, Social Media. Such Gotham users are in an uproar about the event. Facebook, Twitter, and more are alive with people complaining about the scam and demanding their money back. The organizers eventually promised to create a makeup date but that is doing little to appease those wronged. As one of those aforementioned Libertarians, I’m quite pleased with this turn of events.

That being said, there are realities to embrace. Osekre might well pack bags and depart, leaving everyone out not only the money they paid but also the time they spent attending the event. In addition, such visitors might well have done something else that day of greater value. Social Media can certainly shame such a fraudster. It can spread the word so that the perpetrator will have a difficult time attempting the same in the future.

However, it is still quite possible for Osekre to change names, move to another city, and attempt the scam yet again. Each time he might steal money from those who want to attend such festivals. I think Social Media makes this far more difficult, but it is still possible. This is where government enters the picture.

Alerted to the travesty by Social Media, the Attorney General of New York is investigating and considering charges. Legal remedies are something beyond the power Social Media. If Osekre collected money but did not provide the expected service, that is a crime called breach of contract. Even if the festival was created in good faith but Osekre simply underestimated the popularity, the people who paid money were still defrauded.

My question then becomes; what is government going to do about it? The courts might well find Osekre guilty of a crime and sentence him to prison. They might order him repay the festival goers. The thought of punishing Osekre with imprisonment certainly appeals to the vengeance part of my brain. The possibility of people getting their money back is certainly a reasonable outcome. I’m not convinced people will ever get their money back. The money is probably already largely spent and there is little way to recoup the losses.

It seems to me there is room for both remedies and one creates justice where the other fails, they complement one another. We live in this brave new world in which the collective has far more power than it ever has in the past. Prior to the advent of the Internet and the rise of Social Media, scam artists like Osekre could simply travel from place to place perpetuating the same crime again and again. It was up to government to stop such fraudsters.

In the past government often failed to do so. In fact, government not infrequently became complicit with the fraudsters as long as they were cut in on a share of the profits. This sort of thing still happens on a fairly regular basis. Social Media can force government to be held accountable in a way never before seen in human history with the notable exception of violent revolution. In the same way, Social Media can hold criminals such as Osekre accountable for their crimes, or at least make it far more difficult for those like him to continue on with their nefarious schemes.

To my mind, this is a wonderful synergy. Government and the people working together to implement justice. This dual defense brings us perhaps as close as we’re ever going to get to true justice. Count me in.

Tom Liberman

Gold Trade Spike and Conspiracy Theories

goldSomething interesting happened in the gold, or bullion, market when someone traded over 18,000 lots and sent the price down by 1.6% in about a minute. This sort of volatility is unusual but had no long-lasting ramifications. When I read comments on the story I was struck by the fact almost immediately the most suggested theories were conspiracy based.

When reading about what happened, it becomes clear gold traders are completely unalarmed and know precisely the reality of the situation. Someone tried to trade 18,149 ounces of gold but accidently chose to sell the same number of lots. A trade of this nature in ounces is quite typical. Gold is currently a pretty flat commodity without much movement or trading and thus the larger trade, a lot is about equivalent to a hundred ounces, was unusual.

I find this incredibly interesting. The logical and rational explanations, well clarified in the article, fall on completely deaf ears. There are quite a few people who are invested in various financial collapse schemes. These people want your money. They want you to be convinced an imminent downfall is coming and the price of gold will spike. They want people to be scared, because frightened people are fleeced of their money all the more easily.

These sorts of doomsayers have been around for as long as we have written records. They’ve always had the same motives. I think it’s highly unlikely the people commenting on these stories are those who will reap the financial windfall cascaded on them by willing fools. The conspiracy commenters are merely unwitting agents and future victims.

There is no great financial collapse coming. Buying gold is not going to make you rich. No one is manipulating the market. The only easy way for you to make millions of dollars in the commodity market is to understand human frailty. People are easily frightened and, when so, lurch as a pack toward a single objective. I’m reminded of watching a soccer game where the competitors are all about five or six years of age. They chase the ball as a herd. If a couple of players are smarter and more skilled than the rest they can easily use this tendency to score goal after goal.

That being said, it’s your money. Do with it as you will. If you want to purchase gold, or anything else, because you believe disaster is right around the corner, far be it from me to stop you. I don’t begrudge those who understand how things work their profits. To the smart go the spoils.

Tom Liberman

What Nepali Tea Teaches Us about Government

teaLet me be clear, I enjoy a fine cup of tea. Much to my chagrin, I just learned I’ve never tasted a tea called Orthodox Tea which grown in Nepal. The reason I’ve never enjoyed this tea, the reason most tea lovers have not, is because of a repressive and totalitarian government. In addition to limiting my tea enjoyment experiences, this government kept the people of Nepal in crushing poverty.

One of the finest teas in the world is called Darjeeling and comes from India. India was a colony of tea-loving England and while I certainly don’t approve of colonization of other nations, it can’t be said everything that happened in this era was bad. One of the good things was the fostering of the tea industry in India. The English wanted their tea and they created a huge industry in India. The fact for a long while this industry largely benefited the English rather than the people of India is shameful, but eventually the Indian people gained independence and they began to enjoy the fruits of their labor.

Nepal is adjacent to India geographically and also well-suited to tea production. Way back in 1862 the Chinese supposedly gifted Nepal tea seeds and production began. Then something rather tragic happened. The government of Nepal at that time was called the Rana Dynasty. This was an autocratic and totalitarian state to the extreme. They ordered the army to confiscate the first crop of tea in 1873 and tea production in the region essentially ground to a halt.

Why? What is the point of growing tea leaves for anything other than personal use if the government is just going to come and take it away? That’s what happens when a government decides what is best rather than economic factors. If the people of Nepal had been allowed to produce tea on a large scale it would almost certainly have alleviated some of the poverty in that nation, just as it did so in neighboring India. In addition, it would have generated tax revenue far in excess of the value of the tea seized.

Eventually the Rana Dynasty fell from power in the 1950s and a new constitution was written granting people freedom. What was the first thing people started to do? Grow wonderful Orthodox Tea in a climate that is ideal for doing so. The new government pretty much immediately recognized the economic potential of tea and took over the industry. This had some benefits because it encouraged growing tea but the entity that largely profited was the government.

In 1980 Nepal exported about one-hundred and fifty tons of tea annually. Then, only fifteen or so years ago, the government decided to allow individuals and companies to profit from tea production. Nepal now exports nearly five-thousand tons of tea annually. Highly rated Orthodox tea which I had never even heard of until today. Production is rising, no surprise.

Meanwhile private organizations among tea companies have sprung up and tried to ensure producers are adhering to high standards including environmental concerns. The supposedly indispensable role of government.

This nascent tea industry is enriching the people of Nepal, and more importantly from my perspective, allowing me to enjoy a cup of tea. I have yet to sample, so I cannot give you a review. When I make my next order from Tea Gschwendner you can bet there will be at least one batch of Orthodox winging its way to my tea kettle. I can hardly wait.

Tom Liberman

When is One Third Less than One Quarter: at A&W

A&WI just read an interesting story about a chain restaurant called A&W. It’s been around since 1919 and at its peak had more locations than McDonalds. There are any number of reasons for the decline but one of the more fascinating was the introduction of the Third Pounder in competition with the Quarter Pounder. It failed.

This despite the fact various focus groups found the Third Pounder tasted better than the Quarter Pounder. Also confounding A&W was they sold the Third Pounder at a lower price than the quarter pounder. Why did it fail? A&W management had that same question and they convened more focus groups to explain it to them. “Yes”, they said. “It does taste better than the Quarter Pounder but there’s less meat.”

And thus, we discover the terrible mistake A&W made all those years ago. They priced the Third Pounder less than Quarter Pounder setting up a particular expectation. If you pay more for one product than another, there is some anticipation the more expensive product has something extra. Sometimes that extra might be higher quality, a larger portion, or perhaps better service. In this case there is little chance of better service and higher quality is not really a consideration, so people made the logical deduction. A third must be less than a quarter.

The fact this is not true is irrelevant to the point. I’ve read a number of stories about this incident and the conclusion everyone seems to arrive upon is people in the United States are not very good at math. This is a correct conclusion but it’s not the correct marketing interpretation.

To me, it’s clear the mistake A&W made was pricing the Third Pounder lower than the Quarter Pounder. If they had priced it slightly higher people would more likely have done the math correctly. Now, I could be wrong. One article I read said people made the error because in 1/4 the 4 is a bigger than the 3 in 1/3. It’s certainly possible this is true but I’m skeptical because the fraction is not in the name. It’s called the Third Pounder and its competitor is called the Quarter Pounder.

If I’m correct, this is an extremely important lesson in marketing. It’s something I consider when pricing my books. I’ve been told, by different people, that my price of $2.99 is wrong. Some say it should be $.99 while others suggest $10.99. The argument is interesting. A low price suggests low quality. I agree, that’s why I go with the $2.99 as a compromise. It could well be the wrong choice, I certainly haven’t sold many of my novels.

This story is certainly making me rethink my pricing scheme but that aside, let’s return to the idea that A&W made a marketing mistake. A simple solution to the problem would have been to raise the price on the Third Pounder and see if that alleviated the problem. We’ll never know what would have been the result of such a test.

Still, it’s an insight into human nature. We generally come to the conclusion a higher price means something better, even if it doesn’t. Many marketers take advantage of this and put high prices on lower quality products. It’s important as a consumer to take that into account. We live in an age where you can research any product you are planning to purchase extensively on the internet. Do so.

Meanwhile, there is good news. A&W is making a bit of a comeback. They’ve opened more stores this year than in many years. In addition, they’re now making root beer on site rather than going with syrup and fountains.

Anyone else have a hankering for an old-fashioned root beer float?

Tom Liberman