Tag Archives: free market

Victoria’s Secret saves the National Guard

From Wired:

On Monday night, Hurricane Sandy hit the armory of the New York Army National Guard’s 69th Infantry Regiment, leaving the soldiers without power, hot water, or anything but the most rudimentary means of communicating with the outside world. So the next morning, the Regiment’s officers made an emergency plea — to the producers of the Victoria’s Secret fashion show.

As they had done for the last three years running, the lingerie company was holding its annual television event at the Regiment’s historic armory, located at 25th street and Lexington Avenue in Manhattan. For the show, the producers had hauled in eight massive 500 kilowatt generators. Of course, the producers said, we’d be happy to help. Hours later, the lights flashed back on.

“We were dead in the water until Victoria’s Secret showed up,” says Capt. Brendan Gendron, the Regiment’s operations officer.

But that wasn’t the only thing the lingerie company was better at than the National Guard:

The soldiers were still having communications problems, though. Many of the local cell towers were down, and so was the armory’s internet’s connection. Luckily, Shapiro had answer for that, too. For the show, he had leased a T1 line connected to a microwave dish on the roof. “We plopped two routers in their command center,” he says, “and now they’re sitting on our internet backbone.”

The troops also needed help distributing food. The Federal Emergency Management Agency had begun bringing tractor-trailers’ worth of emergency provisions to the armory. It was up to the troops to break up the pallets, load them in military trucks, and bring them to the seven distribution centers in Manhattan where the Salvation Army would hand out meals to Hurricane victims. One problem: the 69th didn’t have a fork lift. So again, they turned to the Victoria’s Secret crew.

You gotta love it when the private sector saves the government’s ass in a crisis.

But you really have to appreciate when it’s done by a bunch of people whose job typically consists of making sure scantily-clad girls look good walking down a runway in boa-feathered wings.

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Post-Sandy price gouging laws and gas shortages

Yesterday, Matthew Iglesias at Slate warned us that many people living in states suffering from the freak storm Hurricane Sandy will find themselves in dire shortages as the free market gets tangled with price gouging laws:

Even in these polarized times, there are some things politicians of both parties can agree. Price gouging, for example, is wrong. New York Attorney General Eric Scheiderman, a Democrat, wants you to know it. But this isn’t just for soft-hearted liberals. New Jersey’s notoriously tough conservative governor, Chris Christie, also put out a weekend press release warning that “price gouging during a state of emergency is illegal” and that complaints would be investigated by the attorney general. Specifically, Garden State merchants are barred from raising prices more than 10 percent over their normal level during emergency conditions (New York’s anti-gouging law sets a less precise definition, barring “unconscionably extreme” increases).

The bipartisan indignation is heartening, but there’s one problem. These laws are hideously misguided. Stopping price hikes during disasters may sound like a way to help people, but all it does is exacerbate shortages and complicate preparedness.

The basic imperative to allocate goods efficiently doesn’t vanish in a storm or other crisis. If anything, it becomes more important. And price controls in an emergency have the same results as they do any other time: They lead to shortages and overconsumption. Letting merchants raise prices if they think customers will be willing to pay more isn’t a concession to greed. Rather, it creates much-needed incentives for people to think harder about what they really need and appropriately rewards vendors who manage their inventories well.

Today, gasoline is in short demand as retailers who were able to stay open are prohibited from adjusting prices in the face of inflated demand:

Drivers and homeowners scrambled to secure fuel for their cars and generators in the U.S. Northeast on Wednesday as storm-hit gasoline stations started to run dry.

More than half of all gasoline service stations in the New York City area and New Jersey were shut because of depleted fuel supplies and power outages, frustrating attempts to restore normal life, industry officials said.

Reports of long lines, dark stations and empty tanks circulated across the region. Some station owners were unable to pump fuel due to a lack of power, while others quickly ran their tanks dry because of increased demand and logistical problems in delivering fresh supplies.

Being able to adjust prices to reflect market conditions isn’t price gouging, it’s good economic sense.

As economist Art Carden eloquently wrote in 2011, “[I]n post-disaster situations rising prices perform vital economic triage by showing which uses of resources are now high-value and which uses of resources are now low-value.”

“A disaster means a big shock both to what people want and to the resources available to fulfill those wants. Freely-moving prices make sure resources are allocated to their highest-valued uses, and rising prices send people a very important signal: resources have gotten scarcer and need to be conserved. If houses are destroyed by a tornado, rising lumber prices tell someone in an unaffected area to think twice about building a new deck because the lumber is probably more valuable rebuilding houses. Rising gas prices tell people to think twice about burning scarce gas for a Sunday drive in the country. And so on.”

In other words, temporarily higher prices would encourage those not directly involved in cleanup to stay home and out of the way until the economy stabilizes.

But with price gouging laws, your desire to drive around looking at a storm’s destruction is just as valid as the crews who are working to clean it up, and makes the overall economic situation that much more painful, for a longer period.

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The Republicans are the real socialists

Commie Romney

“The Republicans are a bunch of communists.“

For years, this statement has been my way of pointing out to people that my Libertarian beliefs place me to the right of Atilla the Hun. Lately though, I have realized that the statement is true.

With their full throated support of the military industrial and prison industrial complexes, the Republicans are the originators and protectors of all the cushiest government jobs in the country. The Democrats are of course 99% as bad as the Republicans are on these issues, but at least some of them, occasionally, try to find non-lethal ways to waste our tax dollars. You shouldn’t vote for any of them.

The Northrup Grumans and the Corrections Corporation of Americas of this world are the true welfare queens. You can put a Gingrich-ian gloss on it, and claim that these companies are in the private sector because they work for corporate structures, but you would be fooling yourself. If an entity makes all of its money selling things to the government, then it is functionally a branch of government. It might be easier to fire people than it is at the Department of Education, but the folks at the top of the DOE don’t take home tens of millions of dollars a year.

This is socialism in practice. Our defense industry is make-work on a scale that would make FDR blush. At least his Works Progress Administration didn’t do anything. Since 1989, our defense industry has worked tirelessly to make us less secure, and invent reasons to send our soldiers off to die in deserts. What the defense industry does to our soldiers, and Islamic weddings, the prison industry does to the rest of us. It turns poor pot smokers of color into violent criminals, and poor white people into the commandants of rape camps.

These industries have locked whole regions of our country into a culture of dependency. Munitions workers, prison workers and their representatives in congress continue to vote for these depraved policies. Anyone who looks honestly at the results of our war on drugs, and our absurd policy of militarizing the world, can see that their effects are malign, but these policies are too entrenched to stop. Too many good government jobs depend on them.

So yes, when Republicans say that we are in danger of becoming a socialist country, they are absolutely right. This process did not start four years ago, however, it has been going on for a lot longer, and both parties are its authors and (hopefully not) finishers. Let me leave you with a little Abraham Lincoln*

From Whence shall we expect the approach of danger? Shall some transatlantic giant step the earth and crush us at a blow? Never! All the Armies of Europe and Asia could not, by force, take a drink from the Ohio River or set a track on the Blue Ridge in the trial of a thousand years. If destruction be our lot, we ourselves must be its author and finisher. As a nation of free men, we will live forever, or die by suicide.

*Sadly I am not enough of a Lincolnologist to come by that quote honestly, all credit is due to Titus Andronicus, an awesome band, for making me aware of it.

Robert Morris has written at some length on US foreign policy and the drug war. His videos and writings can be found here.

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Watering down quality is finally harming AB InBev

BloombergBusinessweek did an excellent exposé on the AB InBev – America’s largest beer-maker at 48% of U.S. market share — on their unquenchable thirst for profits over quality. The Plot to Destroy America’s Beer:

There has never been a beer company like AB InBev. It was created in 2008 when InBev, the Leuven (Belgium)-based owner of Beck’s and Stella Artois, swallowed Anheuser-Busch, the maker of Budweiser, in a $52 billion hostile takeover. Today, AB InBev is the dominant beer company in the U.S., with 48 percent of the market. It controls 69 percent in Brazil; it’s the second-largest brewer in Russia and the third-largest in China. The company owns more than 200 different beers around the world. It would like to buy more.

The man in charge of AB InBev is 52-year-old Carlos Brito. The Brazilian-born chief executive is a millionaire many times over. He speaks English fluently and dresses like the manager of a local hardware store. At the Manhattan headquarters, he wears jeans to work and tucks in his shirts. He keeps his company identification badge clipped to his waist where everybody can see it, even though everyone knows who he is. To the rest of the world, he keeps a low profile. He does not, for example, accept interview requests from Bloomberg Businessweek. That might be his character, and it might be calculated. The Busch family is a legendary American dynasty. Many people in the U.S. aren’t thrilled that a foreign company now owns Budweiser, America’s beer.

This is not to say that Brito lacks American admirers. Many can be found on Wall Street, where investors care less about where beers are brewed than about how profitable they are. This is where Brito shines. After InBev bought Anheuser-Busch, he slashed costs at the combined company by $1.1 billion in a single year. AB InBev’s margins widened substantially, and its share price has nearly quadrupled since the takeover. In 2011, Brito made Fortune magazine’s Fantasy Sports Executive League Dream Team as a designated hitter.

Anthony Bucalo, an analyst for Banco Santander (SAN), speculated in April that Brito’s ultimate plan is to acquire the beverage unit of PepsiCo (PEP). AB InBev already distributes PepsiCo’s soft drinks in Brazil, and it was through a distributor’s arrangement that the company got its claws into Anheuser-Busch. According to Bucalo’s theory, Brito wants to be the king of sparkling beverages in aluminum cans, regardless of their alcohol content or taste.

It seems that desire to cram dividends into shareholders pockets will have an adverse effect on their long term viability:

There’s one hitch. AB InBev’s CEO is a skilled financial engineer, but he has had trouble selling beer. The company’s shipments in the U.S. have declined 8 percent to 98 million barrels from 2008 to 2011, according to Beer Marketer’s Insights. Last year, Coors Light surpassed Budweiser to become America’s No. 2 beer. (Bud Light remains No. 1.) Meanwhile, Brito is alienating lovers of AB InBev’s imports by not importing them. And he’s risking the devotion of American beer lovers by fiddling with the Budweiser recipe in the name of cost-cutting.

Honestly though, did anyone actually think they could somehow make Budweiser worse? Way to go Brazilian scientists!

For a full list of beers that could have their recipes tampered with for short-term gain, see this Wikipedia page on InBev brands. Thankfully my taste for mass-produced domestic beer is limited to Blue Moon (a MillerCoors brand) when I’m not supporting local brewers.

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Uncle Sam: I like Sex and Candy


For years many people have noticed the hypocrisy of federal drug policy. While the federal government spends roughly $15 billion per year fighting the war on drugs (which is actually a war on the American people), the CIA has profited countless millions of dollars from running cocaine (from Central & South America) and opium (from Afghanistan & Asia).

Now, the government hypocrisy surrounding another victimless crime is coming to light. Fox News reports, “It all started when an argument over payment between a Secret Service agent and a Colombian prostitute spilled into the hallway of the Hotel Caribe, where a contingent of agents and military personnel were staying as part of a security detail in advance of the President’s arrival for last weekend’s Summit of the Americas in Cartagena, Colombia.”

The Guardian reports, “The secret service detail didn’t simply take a stroll to an isolated brothel. There are rows of sex clubs and brothels in the Cartagena prostitution zone, where many women from different countries also walk the streets in search of customers seeking sexual services. The US officials were among the hundreds of US sex tourists who, every year, visit these sex clubs and brothels… the US military code of justice… says, buying women in prostitution anyplace is a crime for US servicemen.” It is not a crime for other federal agents.

Across the United States roughly 100,000 people are arrested per year for offenses related to prostitution. The vast majority of the individuals arrested for prostitution related offenses have harmed no one. Yet when government officials are involved with a prostitute, no one is arrested. In fact, only six of the twelve Secret Service Agents involved in the scandal have been asked to resign.

This is yet another case of government hypocrisy. However, I believe the political uproar created by this scandal will lead to the creation of more legislation. Instead of passing another law regulating consensual activity between adults, the Congress and every State Legislature should instead remove all prohibitions on the voluntary exchange of money for goods and services.

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