The Liberal Order

A Must-See Video - Shark Tank Roundtable

 

Great quotes of note:

For job applicants or budding entrepreneurs looking for venture capital, Mark Cuban says it all:

If you get a good jockey you can replace the horse. But if you get a good horse and you don't have a good jockey, it doesn't matter.

Others:

Mark Cuban 

If it's a bad idea, giving [someone] the money only just delays the inevitable.

* * * 

You know the difference between when we all started our business versus now? We always get to, "How much of your own money did you put in?" "Is it your own money?" "What did you spend it on?" And it's always, lawyers, lawyers, regulation, trademarks, patents, everything but the business itself. 

* * *

That's what I want the politicans to see, that the money is going to the things that are counterproductive and that's keeping people from growing businesses and hiring people. Because if you're spending $100 an hour on a lawyer - a trademark lawyer, a patent lawyer - you know, an accountant, a tax advisor to fill out forms for you, that's time (and money) that could otherwise be spent visiting customers, visiting prospects, selling your product.

Kevin O'Leary:

Something's gone wrong the last three years in America because we vilify business. All of a sudden, people who create the only jobs that matter - the ones in the private sector - are vilified. 

They talk about the importance of creating jobs. First, there are an infinite number of jobs. As long as there are infinite wants - and there are - there are infinte ways to employ my labor services to fulfill those wants. The important thing is for me to do those things most valued and let the rest go unfilfilled.

Jobs are a byproduct of creating value and it's important to not put the cart before the horse. If creating jobs is the overriding objective you get a misallocation of resources. It's the primary problem with Keynesian economics. If "creating" jobs is what's important, let's put people to work digging holes and filling them back up. Let's get rid of machinery and force people to dig with spoons and farm with rakes. We end up poorer, not richer.

What these Sharks (and this is such a misnomer) are really implying - and it's what's really important in this discussion - is that entrepreneurs utilize and employ scarce resources to higher valued uses. Entrepreneurs take currently idle or undervalued labor and put it to work creating more value per dollar than how that labor had been employed. This is what politicans miss when they vilify entrepreneurs, especially the most successful of them.

My hats off to these guys and the great show that they put on each week. 

UPDATE: The problem with using terms like "creating jobs" as if that's the ultimate objective is that it gives politicians license and political cover to destroy wealth by taxing the most productive and successful, or borrowing recklessly, to build bridges to nowhere under the guise that they are creating jobs and that's what's important. 

Dan Quayle Was Correct - Go Figure!

It really wasn't difficult to see the flawed reasoning exhibited by Hollywood and "Murphy Brown" when it came to single parenthood. Dan Quayle was correct.

Isabel Sawhill from the Brookings Institution notes:

Twenty years later, Quayle’s words seem less controversial than prophetic. The number of single parents in America has increased dramatically: The proportion of children born outside marriage has risen from roughly 30 percent in 1992 to 41 percent in 2009. For women under age 30, more than half of babies are born out of wedlock. A lifestyle once associated with poverty has become mainstream. The only group of parents for whom marriage continues to be the norm is the college-educated.

* * * *

In later research, Ron Haskins and I learned that if individuals do just three things — finish high school, work full time and marry before they have children — their chances of being poor drop from 15 percent to 2 percent.

Unfortunately, don't expect Hollywood and those on the left who championed single women having and adopting children to issue a mea culpa and apologies to all the lives, young and older, that have been made worse off.

Speaking of Super Bowl ads . . .

. . . here is a funny remake of the old Coke commercial starring Amy Sedaris. Amy is from Raleigh and my wife and I enjoyed her talk at Quail Ridge Books last spring.

 

Reinvented to give you "everything you could possibly want."

Check out the ad below, which is to air (supposedly) during the Super Bowl. Isn't this the beauty of capitalism? Complete strangers - the investors, the managers, the contractors, the labor, and more - toil to give me "everything I could possibly want" in a car. I don't even know these people. A tear rolls down my cheek. 

Reinvented from DTan on Vimeo.

 

Russian News Anchor Flips Off Obama

Wow! Don't hold back; tell us how you really feel?

 

Here is a link to an active video.

Institutions Matter - Three Videos From The Daily Show Worth Watching

There wasn't any doubt that the Super Committee would fail at coming up with a plan to reduce the budget deficit - neither side had an incentive to do so. This is an institutional problem, not a procedural problem. If you collectivize more than 40% of U.S. GDP (federal, state and local governments) put it up for "debate" regarding who gets what, and then push payment of much of this spending onto future generations, don't be surprised when the rent-seeking class shows up to influence the size and distribution of government largesse. If you want to get rid of the ants, stop pouring sugar on the floor. 

With that said, although he doesn't quite get exactly to that point, I give Jon Stewart much credit for attempting to hold Nancy Pelosi accountable for the problem we refer to as Washington. She tries her best to pin it all on the Republicans, who do deserve much of the blame for out-of-control spending, but it's not just them. The debt and deficit is not a procedural problem, it is an systemic flaw in the system. The Democrats act the same way and the Libertarians would too should they ever, ever control Congress.

Here are three videos of an interview by Jon Stewart of Nancy Pelosi. She embodies everything that is wrong with our federal government and spending and debt.

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

 

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

 

The Daily Show with Jon Stewart
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

 

3/5ths of A Person?

Hilarious!

 

 

 

The Beautiful Consequences of Market Competition

The beauty of market comptition.

Forbes considers the Kindle Fire much ado about nothing.

Is the $99 iPad on the horizon?

Netflix Underestimates The Elasticity of Demand For It's Service

The revision reflects the negative reaction to Netflix's decision, announced in July, to separate its DVD-by-mail service from its faster-growing Internet streaming service. Before, DVD-by-mail was a $2 add-on for some streaming subscribers; now, each service now costs $8.

Some subscribers were upset by what was effectively a price hike, and a subset of them have cancelled their Netflix accounts.

In July, the company said it expected that it would end the third quarter with 22 million subscribers to the streaming service, 12 million of whom would also opt for the DVD-by-mail service. It expected back then that 3 million would opt only for the DVD service.

Now, it's expecting that just 2.2 million will opt only for DVDs, a drop of 800,000.

Netflix also anticipates a slight drop in streaming subscribers, to 21.8 million, a difference of 200,000 from the earlier estimate. It still expects 12 million of those streaming subscribers to also pay for DVD-by-mail, helping it to generate more revenue overall.

Story here.

Price Discrimination?!?

Firms price discriminate to maximize profit. If the marginal cost of providing some good or service is $25, and profit maximization requires the firm sell at, say, $75, then the firm misses profit oppotutnities to sell to customers whose value for their product is less than $75, yet more than its $25 cost. This is the reason for things like coupons, Groupon, generic goods, dented appliance and furniture sales, and outlet malls.

The products sold in regular markets and discounted markets typically are the same, with possibly some minor blemishises insignificant to the purpose and functioning of the good or service. If the marginal cost to Whirlpool of manufacturing a clothes dryer is $300 and it normally sells for $600, dent the side of it to make it unattractive for high valued users and sell it to those who value one for at least $300, but less than $600. But using cheaper parts? Well, that's no longer price discrimination. 

The original outlet and factory stores sold overstocked, discontinued items, and imperfect merchandise unfit for retail sale; that’s what made the prices so cheap. But nowadays, the majority of common outlet stores supplement their stock with merchandise created especially for outlet-store sale. These lines carry the brand name, but they’re made with lower-quality fabrics and cheaper construction techniques. The companies depend on customers’ inability to tell the difference between the quality of real designer merchandise and the lower-quality knockoffs carrying the same label. The knockoffs may be cheap, but that cheapness comes at the expense of quality.

A friend who managed a Bose plant remarked to me that that company refused to ever sell imperfect merchandise; it's brand was too important and brand loyalty was dependent on high quality. 

The practice noted above first canabalizes the brand maker's primary market. (People with loyalties to the brand and would have paid full price are attracted to the lower quality items with the mistaken notion that they're the same quality.) But more importantly, it blemishes the brand name, providing the firm short-term profit at the expense of longer term profit. This may be just a temporary tactic during a severe recession, but reputation declines, and customers may not return later on. Just ask General Motors.

I've also noticed during this recession increased use of a marketing trick whereby something is advertised for sale at a fraction of its "normal" list price. For instance, I bought a watch for $50 that was advertised as normally selling for $550. I knew the Swiss Legend watch was not worth anything more than the $50 I paid for it - it was about as high quality as a cheap Timex. But there seems to be a lot more of this type of deceptive advertising taking place over the past three years, more than I remember in the past twenty-five years.