Patterico's Pontifications

8/26/2015

Trump: Pandering on Oreos

Filed under: General — Patterico @ 6:59 pm

He’s not a conservative:

Hotel magnate and Republican presidential candidate Donald Trump confirmed on Tuesday that he will stop eating Oreos, a decision he came to after Nabisco parent company Mondelez International, announced last month that it’s replacing production lines in Chicago with new ones at a plant in Salinas, Mexico.

“I’m never eating Oreos again,” Trump said on Tuesday, reaffirming statements he first made last week at a rally in Alabama, where he said, “Mexico is the new China . . . I love Oreos. I will never eat them again. Nabisco closes the plant in Chicago and they are moving the plant to Mexico.”

A quick fact-check: that last sentence isn’t true. Mondelez is not closing the Chicago plant, but it is cutting 600 jobs there as a result of the new investment in Mexico, the Associated Press reports.

And why would a company making a foodstuff, whose key ingredient is sugar, find it cheaper to manufacture that in Mexico?

TOTALLY UNRELATED QUESTION: Why does Mexican Coke taste so much better than Coke made in the U.S.?

OR IS IT UNRELATED AFTER ALL? If you’re familiar with the absurd ways that the U.S. Government subsidizes sugar, you’ll see these questions are related. As the Dartmouth Business Journal explains:

America’s sugar farming industry is currently one of the most protected industries in the United States. Two centuries ago, the U.S. government embarked on this protectionist trend in order to gain the loyalty of the sugarcane farmers in the Louisiana Territory. Today, the original program has evolved into a series of complicated import tariff-rate quotas (TRQs) that heavily distort the sugar market. These TRQs are combinations of quotas, limits on the amount of the good that can be imported, and tariffs, taxes on these imported goods. The TRQ used to protect the American sugar industry allows a certain amount of sugar to be imported at lower tariffs, but for all sugar exceeding this amount, tariffs rise to around 150% of the sugar’s cost. On average, Americans pay 3 times the world price for sugar. This huge price distortion is one of the largest in the U.S. and has had far-reaching negative consequences, both at home and abroad.

One of the things this policy does, is drive businesses dependent on sugar across the border to Canada or Mexico.

If a candidate wants to talk about Oreos being made in Mexico — and if that candidate is a classical liberal, limited-government conservative — that candidate will pledge to undo sugar quotes and tariffs.

If, instead, the candidate is a huckster making a cheap populist appeal to Americans too ignorant to understand what’s going on, that candidate will run his mouth about Nabisco and pledge not to eat Oreos.

UPDATE: I have talked about sugar protectionism and its unintended side effects before, here.

Virginia Shooting: Awful

Filed under: General — Patterico @ 6:05 pm

There’s nothing to be gained from making some kind of political comment about this thing, or watching any videos, or naming the crazy scumbag who did it. It’s just sad.

“Human Action” and Robert Murphy’s “Choice,” Part 5: The Division of Labor

Filed under: Economics,General,Human Action and Choice — Patterico @ 7:45 am

This is Part 5 of my ongoing series of posts summarizing Bob Murphy’s indispensable book Choice: Cooperation, Enterprise, and Human Action. Murphy’s book is itself is a summary of Ludwig von Mises’s classic treatise “Human Action” — so you’re reading a summary of a summary. Hey, it’s a blog. Short and concise is what we do.

The idea of this series of posts is to popularize and spread the word about Austrian economics and educate the public. Rather than list all the previous parts, I have created a category for all these posts, called “Human Action and Choice,” so that all these posts can be read (in reverse order) with a single click. Note well: any errors in these summaries are mine and not Murphy’s.

Chapter 5 is a meaty chapter, but an important one. It revolves around the critical concept of the division of labor, which Mises saw as the foundation of all human society, and the reason that we have achieved whatever prosperity we have achieved. The importance of the division of labor, then, cannot be overstated. Understanding the division of labor allows one to spot economic fallacies all over — whether the fallacy is the so-called benefits of buying “local,” or the notion that a nation benefits its citizens by imposing trade barriers, or by preventing jobs from being exported overseas.

If every household tried to be completely and utterly self-sufficient, civilization would collapse. One of the key reasons we have the standard of living we have is because people specialize in particular tasks. The advantages of doing so are numerous. People don’t waste time switching between tasks. Automation is promoted because it makes sense to invest in machines. This is turn gives rise to economies of scale, which leads to tremendous savings. Many tasks require a minimum threshold of workers to accomplish them. And of course the division of labor allows people to use their natural aptitude to its greatest extent, or to acquire a special aptitude through experience.

But the benefits of the division of labor apply regardless of differing aptitude, as economist David Ricardo showed in the early 1800s with his explication of the principle of comparative advantage. This is critical to understand, and destroys the argument for tariffs and other protectionist measures. The notion is this: even if you are better than me at both tasks A and B, together we are more productive if you specialize in one task, and I specialize in the other. Namely, one should specialize in the task in which their advantage is most pronounced.

Murphy gives an example to illustrate the point. Say a store owner (Marcia) is better than the hired help (John) at everything. Store owner Marcia can convince someone to buy an item in 15 minutes, while it takes hired help John two hours to accomplish the same result. Marcia can tidy up the store at closing time in half an hour, while the hapless John takes an hour to do the same. The store owner Marcia is better than the hired help John at both tasks, but Marcia has the greatest comparative advantage in selling, since she can sell eight times as fast as John, and can tidy up only twice as fast. So at closing time, Marcia should concentrate on selling and let John do all the tidying up. She will make far more money this way than she would if she and John did not specialize. You can run any similar experiment with actual numbers and you will see that the math always works out in favor of specialization.

The division of labor is (of course) of no use without the ability to trade and cooperate. This, to Mises, was central. Again: Mises goes so far as to describe as the very foundation of human civilization the fact that humans are more productive when they act in concert with each other — as long as they are able to recognize that fact. Thus Mises rejects the naively sunny view that altruism is the fundamental underpinning of society — but he also rejects social Darwinism, in which stronger people dominate weaker ones for the good of humanity.

Finally, Mises posits that the highest productivity can occur only in a free market. While a command economy can enjoy the benefits of the division of the labor, those benefits will pale in comparison to the fruits of a truly free market. Future chapters (and posts) will illustrate this further.

This, From An “Impartial” Media?

Filed under: General — Dana @ 6:39 am

[guest post by Dana]

The image has now been removed from the ABC7 website.

Untitled-1

Reporting with complete independence, just like Jorge Ramos reassured us he would do upon disclosing that his daughter works for the Hillary Clinton presidential campaign.

–Dana


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