Monthly Archives: August 2011

Cardinals 2, Brewers 1

Posted on August 31, 2011 | Comments Off on Cardinals 2, Brewers 1

A couple of errors doomed the Brewers. They’ll try again tonight. A win would set the franchise record for most wins in a month.

The magic number remains 18.

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Posted in Sports

Free Trade vs. Protectionism

Posted on August 31, 2011 | Comments Off on Free Trade vs. Protectionism

Don Boudreaux hits it out of the park in this video (click here if the embedded video doesn’t work).

He brings up an important question that free trade skeptics need to answer: if international trade barriers create wealth, why stop there? Every state should have its own trade barriers against every other state.

Heck, inter-city trade should have barriers, too. Imagine how wealthy we would be if San Diego placed tariffs on all goods from Los Angeles! Barriers to inter-household trade within the same city could have even more profound effects.

The economic logic is exactly the same in all those cases. Protectionism’s greatest failing is that it does not recognize that fact. It is astounding that many people see nothing inconsistent in favoring restrictions at one level, but not the others.

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Posted in Economics, Trade

The DOJ’s Antitrust Seers

Posted on August 31, 2011 | Comments Off on The DOJ’s Antitrust Seers

Today, the Department of Justice sued to stop the proposed AT&T-T-Mobile merger. They claim to know in advance how the merger will affect the mobile market for years to come. It’s an example of F.A. Hayek’s fatal conceit. Of course, most people haven’t read Hayek. So over in the Daily Caller, I use a better known thinker to make the same point:

The philosopher Yogi Berra once said that “It’s tough to make predictions, especially about the future.” Let’s apply his lesson to the proposed $39 billion AT&T-T-Mobile merger…

Competitors are also surprisingly confident in their ability to predict the future. A Sprint spokeswoman said that “Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision … Today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.”

This translates roughly to “We think the merger would make the market more competitive. We were scared that we’d have to work harder to innovate and cut costs to keep our customers happy. Whew.”

Most mergers fail. Nobody knows if a merged AT&T and T-Mobile would offer a better, cheaper product line. The only way to find out is trial and, often, error. The Justice Department’s astounding claim that it knows the merger’s effects in advance is either proof of its superior enlightenment, or else the height of hubris. I’m guessing the latter.

Read the whole thing here.

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Posted in Antitrust, Economics

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Regulation of the Day 196: Babysitting

Posted on August 31, 2011 | 1 comment

California legislators are set to pass a bill that would reduce the number of babysitters. Not on purpose, of course. But when you make babysitters more expensive, parents won’t hire as many of them. California Sen. Doug LaMalfa lists some of the bill’s requirements:

Under AB 889, household “employers” (aka “parents”) who hire a babysitter on a Friday night will be legally obligated to pay at least minimum wage to any sitter over the age of 18 (unless it is a family member), provide a substitute caregiver every two hours to cover rest and meal breaks, in addition to workers’ compensation coverage, overtime pay, and a meticulously calculated timecard/paycheck.

The intentions behind this bill are noble, one assumes. But when it comes to regulations, good intentions don’t matter. Results do. And it’s pretty easy to see that if it passes, this bill will result in a lot of unhappy nights at home for frustrated parents – and a lot less income for sitters who have been priced out of a job.

You can read the full text of the bill here (PDF). It would also raise unemployment for maids, nannies, and anyone else who makes a living helping others around the house.

1 Comment

Posted in Economics, Nanny State, Regulation of the Day

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Brewers 3, Cubs 2

Posted on August 29, 2011 | Comments Off on Brewers 3, Cubs 2

Busy day; couldn’t find the time for my usual morning baseball post. The Brewers won yesterday, but so did the Cardinals.

Both teams have today off, then play each other in a 3-game set at Miller Park starting tomorrow. Should be a good series. St. Louis’ playoff hopes are dwindling, but they’re a good team that always plays hard, no matter what. They are not pushovers.

Milwaukee’s magic number is 18, with 27 games to play.

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Posted in Sports

Broken Window Fallacy: Hurricane Irene Edition

Posted on August 29, 2011 | Comments Off on Broken Window Fallacy: Hurricane Irene Edition

Huricane Irene largely spared the East coast’s larger cities from the worst of its wrath. It still cut off power to about 4 million people. And it cost 25 lives. But there is a sunny side to the billions of dollars of destruction! Politico’s Josh Boak quotes the University of Maryland’s Peter Morici:

Morici said there could be some economic growth at the end of this year and the beginning of next year, because with the rebuilding, “largely what we’re going to get is a private-sector stimulus package.”

Morici fell for the broken window fallacy; if a kid (or a hurricane) breaks a window, it creates a job for the repairman. He then spends his wages on other things, and the economy gets a boost. Why not break every window in the entire country, then? Think how much wealthier everyone would be if only a hurricane would come along and level the entire nation!

Morici could well be right that Irene could cause a small GDP boost. But that doesn’t mean that America is richer for having endured a natural disaster; hurricanes are not stimulus packages. St. Lawrence University economist Steve Horwitz draws a useful dichotomy that can help us understand what’s going on here:

GDP measures a flow of activity, not a stock of wealth. Destroying things and then rebuilding them might increase economic activity in the area affected (by drawing resources from elsewhere), but leaves us with less wealth than we would have had without the disaster. That is the real meaning of the Broken Window Fallacy.

Irene destroyed billions of dollars of America’s stock of wealth. Getting back to where we were before the hurricane will probably give a boost to GDP. But we aren’t wealthier for it, even if GDP does look better. If nothing had been destroyed, all the time, energy, and materials put into playing catch-up would have been put into making something new.

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Posted in Economics, Stimulus

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AT&T-T-Mobile Merger Delayed

Posted on August 29, 2011 | Comments Off on AT&T-T-Mobile Merger Delayed

A few months ago, the FCC said it would hand down a decision on whether to allow AT&T and T-Mobile to merge within 180 days. August 26 was day 83. The FCC decided to reset the clock to zero. So now it will be as long as another 6 months before the FCC announces its verdict.

There’s a comment to made here about regulatory uncertainty. There’s another one to make about the value of the FCC keeping its word. But instead I’ll concentrate on Sen. Al Franken’s recent remarks. “I am very suspicious of consolidation of power,” he told MinnPost.com.

“Big is bad” is an old argument. Age has not given it wisdom, however. Suppose a super-size phone company like a merged AT&T-T-Mobile is so big, clunky, and inefficient that it has to charge higher prices. What a golden opportunity for smaller, leaner competitors like Verizon and Sprint to swoop in and gain market share.

Now suppose instead that the merger gives AT&T and T-Mobile better economies of scale and a faster, more reliable network. Consumers flee their previous networks to join a better, cheaper one. This is hardly consumer harm – which after all, is the usual rationale for antitrust regulations.

Nobody knows if the proposed merger will work or not. But a company’s size doesn’t have much to do with whether a merger should be allowed. If a merger gives diseconomies of scale, consumers will punish it. If it improves service and prices, consumers will reward it.

Unlike the FCC, markets are impartial. Consumers are the proper arbiters of this proposed merger. Let them hand down the verdict.

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Posted in Antitrust, Economics, Technology

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Brewers 6, Cubs 4

Posted on August 28, 2011 | 3 comments

With another win, the Brewers will be guaranteed a non-losing season. The team is currently 80-54. They have an afternoon game today, get Monday off, then host the Cardinals.

Those Cardinals had a rough day, with the Pirates shutting them out, 7-0.

The magic number is 19 with 28 games to play.

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Posted in Sports

Brewers 5, Cubs 2

Posted on August 27, 2011 | Comments Off on Brewers 5, Cubs 2

Last night the Brewers won at home yet again. They’ve had the best home record in baseball for most of the season. Now that they’re also winning on the road, they’ve won a sterling 25 of their last 30 games.

The Cardinals edged the Pirates 5-4 in St. Louis.

Milwaukee’s magic number goes down by one. It is now 21, with 29 games left.

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Posted in Sports

Hurricane Irene Update

Posted on August 27, 2011 | Comments Off on Hurricane Irene Update

Here’s another natural disaster-related note for family and friends who may be worried. DC will escape the worst. Everyone here should be just fine.

Around dinnertime tonight we’ll start to see sustained 40 mph winds. The rain should total 2 to 4 inches. Our friends on the coast won’t be so lucky; hopefully the damage there won’t be severe. But in these parts, it will be more like a bad rainstorm than a hurricane. Some people will probably lose power, but that’s par for the course during a bad storm. Nobody seems to be panicking. Nobody in the Inertia Wins household is, at least.

Stay safe, everyone. And dry.

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Posted in Housekeeping