The Liberal Order

I practiced price gouging - so sue me!

I noticed that consumers at a local clothing store had been charging the business 1/4 of a long-sleeved dress shirt for one of their $20 bills. (Umm, that's $80 per shirt.) Then a natural disaster happened - it got really warm. (Probably global warming.) This change in the weather gave me an opportunity to price gouge the clothing store. 

You see, the unexpected hot weather caused a change in market conditions for long-sleeved dress shirts and people stopped buying them. But the store was becoming more desperate for $20 bills. This opened up an opportunity to engage in raw, greedy price gouging on my part. I told the store manager that I would sell one of my $20 bills to him for one shirt.

I heard the manager mutter under his breath something like, "I was paying just 1/4 of a shirt for a $20 last month. It's outrageous that people now want me to pay one whole shirt for a $20 bill."

I told him that he could take it or leave it and that I have a line of clothiers waiting desperately for me to sell them my twenties. It cost him a whole shirt for one $20 bill that just one month ago had cost him just 1/4 of a shirt. I was ruthless. (For Moryam, that does not mean "without Ruth.")

Did I charge the clothier an unconscionably excessive price to obtain my $20 bills? Is there a difference between me buying a shirt on sale (one side of an exchange where the seller pays more in the form of more shirts per dollar) and having to pay more for ice after a hurricane (the other side of an exchange where the buyer pays more in the form of more dollars per bag of ice)? I was really surprised to see some of the comments by noted economists regarding this issue. 

There are two reasons (other than my great reasoning above) for why price gouging laws run counter to the interests of residents where they are enacted:

1. A misallocation of resources in that people with lower valued uses for the scarce resource will obtain and use the resource rather than someone with a higher valued use. Think of me using bags of ice to keep my sodas and feet cold after a power outage at the expense of someone else who needs ice to keep their higher priced medicine cold. If the price of ice remains at $2.50, I get cold sodas. If it rises to $10, I'm drinking warm soda and the medicine stays cold.
2. The law destroys the incentive for people outside the affected area to bring in needed supplies. After Hurricane Ivy hit the Outer Banks last year, people needed ice. If it costs someone in Raleigh or Richmond $2 per bag to truck ice to the Outer Banks, they can make a greater profit by shifting sales from Raleigh or Richmond at $2.50/bag to the Outer Banks at any price above $4.50/bag. Forbid the price from increasing to more than $2.50 per bag and you'll have a shortage of ice. Allow it to rise and people will do well by doing good. They will better serve their self-interest by trucking more ice to the adversely affected areas. 

The Hilarity of the Greens

Mike Munger at KPC slams (in honorable fashion) a post by a greenie with ideas for reducing your carbon footprint. (Munger thinks the post is satire; I don't.)

This idea was more hilarious than the one Munger ridicules.

Euthanize Your Old Pet

Pets have become a common feature in most homes and are an attribute of the modern, Western lifestyle.  We all love our dogs and cats, but really, when you think about it, pets are a major producer of excess carbon.  One of the best ways to reasonably enjoy your pet and reduce your overall Carbon Footprint is to determine in advance how long your pet should live.  As a family, set a date when your pet will be euthanized.  One great way to teach children the value of pet euthanasia is to turn the occasion into a family celebration.  Let's say you've set March 10, five years from now, as your pet's euthanasia date.   For the next five years, celebrate March 10 as your pet's special day, with a family party and perhaps a visit to your pet's future burial spot.  Teach your children to think of the occasion as a birthday in reverse.  A predetermined euthanasia date will encourage your family to love and care for your furry friend while it's still young and playful.  What's more, pre-planing for pet termination not only works towards reducing your family's Carbon Footprint, but guarantees long term reduction in veterinary expenses.

What a wonderful idea. "Kids, one more month with old Sparky and then the dog gets it. Be happy!" 

Actually, we have two cats and I've contemplated this idea on a regular basis. But not for reducing my carbon footprint.

UPDATE: The fine print at the bottom of the GreenTremayne.com page notes that it is totally satirical. 

Incentives Matter

Because of asset forfeiture laws, every druggie and John should be driving pieces of junk. From this story, it seems to be the case.

Naves met that caller and another person near Bear Poplar at U.S. 801. They were waiting in a white 1994 Oldsmobile Cutlass.

The nadir of American automobile manufacturing. It hasn't gotten much better.

Potential v. A Proven Record

In one of their earliest experiments, Tormala and his colleagues ran a Facebook ad touting a real comedian, testing different versions of the ad to see whether messages emphasizing the comic’s potential would garner more interest (as measured by click rates) and liking (as measured by fan rates) than would messages emphasizing his achievements. In one version, the ad contained the tagline “Critics say he has become the next big thing,” while another version of the ad had the tagline reading, “Critics say he could become the next big thing.” In this comparison, the latter ad, which was all about potential, did more than twice as well as the former.

Story here.

Louis C.K. Attempts to Cut Out Ticket Scalpers to His Show

Comedian Louis C.K. wants to share more of the gains from trade with his fans and not middlemen, so he's trying to cut out scalpers and ticketing agents that charge outrageous fees. 

C.K. will sell tickets exclusively on his website for a flat $45 rate.

According to C.K., making shows affordable has always been a goal of his. However, like many events today, fans are faced with re-sellers inflating the ticket prices through surcharges and handling fees.

“Some ticketing services charge more than 40 percent, and ironically, the lower I’ve made my ticket prices, the more scalpers have bought them up — so the more fans have paid for a lot of my tickets,” C.K. explains in a press release.

I admire him and hope it works well, though I think he'll find it difficult, if not impossible, to police and enforce.

Come back to Raleigh, Mr. C.K. (assuming C.K. really is your last name).

Do Mac users pay more?

Pete Boettke has a contest going on where he is offering an autographed book to the person with the best explanation for why the Kindle version of his book is priced at $9.99, while the iBook version is priced at $21.99.

I responded (as did many other people) that it's price discrimination in that Mac people are willing to pay more for stuff Apple, so Apple willingly obliges their loyalty. But it seems that Mac people are willing to pay more for other things as well.

Orbitz found Mac users on average spend $20 to $30 more a night on hotels than their PC counterparts, a significant margin given the site's average nightly hotel booking is around $100, chief scientist Wai Gen Yee said. Mac users are 40% more likely to book a four- or five-star hotel than PC users, Mr. Yee said, and when Mac and PC users book the same hotel, Mac users tend to stay in more expensive rooms. 

Do I win the book, Pete?

What do MBAs maximize?

“The joy that comes with an influx of money wanes quickly as people become accustomed to how wealth shapes their daily lives. Yet respect and admiration from one’s face-to-face groups might bring sustained [Subjective Well-Being],” concludes a new Berkeley study, which finds that the respect of one’s peers is far more predictive of an MBA’s happiness after graduation than their income.

I'm not certain I buy all of it, given that wealth follows innovation, which is followed by admiration and respect in those circles. 

I also found this interesting. 

What the Berkeley study shows is that entrepreneurs who work tireless hours creating new products, or tech giants who push game-changing ideas, are sincere in their explanation that the effort isn’t about the money. But, it’s not altruism either. Rather, it’s about wanting to look at yourself in the mirror, and your friends in the eyes, and feel worthy of respect.

An Outstanding Essay On This Day In History by Brad Birzer

Nationalism in the North and defeatism in the South allowed the American people to ignore the problems of violence against the original occupants of the Americas (though many white Americans in the West aided the Indians whenever possible), while the earliest Progressives (meeting annually in Lake Mohonk in New York) saw the American Indian as laboratory test subjects for their social-engineering schemes.

From my friend Brad Birzer. It's outstanding; read the whole thing.

Is earning a college degree really worth the time and money?

It depends on your major.

"The premiums for majoring in STEM fields are huge," said Tatiana Melguizo, lead author of the study and associate professor of education at the University of Southern California. "We need to educate students that if they get a job in a STEM-related occupation, they have an even higher earning premium. Otherwise, students aren’t reaping the economic benefit of all the hard work they went through as undergrads."

Why can't teens find jobs?

I wonder if the following graph helps explain this.

For the third summer in a row, teens across the country are finding employment opportunities few and far between. While the economic downtown has limited job prospects in numerous industries, it’s been particularly hard on those with the least experience.

After falling by 20.79% from 2000 to 2007, the real federal minimum wage increased by 30.64% from 2008 to 2010. It has since declined only slightly, by 3.05% during 2011. 

Yes, certainly the economy adversely effects employment at all levels, but it has persisted for the least skilled much longer. Raise the price of something and people buy less of it.