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

8/25/2015

Trump: Zero Class

Filed under: General — Patterico @ 7:47 pm

This really does deserve its own thread.

Fox has demanded an apology (which itself is silly). During the press conference from the post below, Trump said he will not apologize, and that Megyn Kelly should really apologize to him. For asking tough questions, apparently.

What a simpering, small, weak, obsessive little baby he is.

P.S. During the press conference he also justified his obsessive tweets about Kelly, saying: “When people treat me unfairly, I don’t let them forget it.”

Put that guy in charge of the IRS!!!

UPDATE: This is pretty good.

Donald Trump To Jorge Ramos: You’re Fired!

Filed under: General — Dana @ 7:12 pm

[guest post by Dana]

Jorge Ramos, Univision news anchor, found himself unceremoniously escorted out of Donald Trump’s press conference today because he would not stop badgering Trump, even though Trump hadn’t called on him:

As Trump took the podium, Ramos stood up and asked Trump a question about immigration, and Trump’s immigration plan. Trump, ignoring Ramos, called on someone else. Ramos continued trying to asking the question, to which Trump responded, “Excuse me, sit down. You weren’t called.” Ramos continued, and Trump repeatedly told him, “Sit down.”

Ramos then protested, “I have the right to ask a question.” Trump answered, “No you don’t. You haven’t been called.” Ramos again said that he has the right to ask a question, to which Trump retorted, “Go back to Univision.”

Ramos continued to press on, at one point stating “You cannot deport 11 million people” as Trump tried to take other questions.

Eventually, a man came over and escorted Ramos out of the event as Ramos continued to try to ask his question and Trump told him to sit down because he hadn’t been called on. As Ramos was being removed from the question he said, “Don’t touch me, sir. You cannot touch me.”

Apparently, Ramos returned to the conference later and was able to ask Trump questions.

I heard a couple of pundits on the news aghast at the lack of presidential decorum shown by Trump at the presser. Clueless that they are, this I-don’t-care-who-you-are attitude and refusal to subordinate himself to the GOP elites and media is precisely why he is ahead in the polls. They are totally unprepared to handle a problem like Trump. And that’s a fun thing to see.

–Dana

UPDATE BY PATTERICO: OK, this is good:

SCANDAL! Heckler Ejected from Trump Press Conference

Filed under: General — Patterico @ 6:41 pm

The headlines are all over the Internets. Trump ejects trusted Univision anchor from press conference! Here is a representative headline from the newsplainers at Vox:

Jorge Ramos is the most trusted name in Latino news. Donald Trump bounced him from a press conference.

Vox explains:

Donald Trump doesn’t like people who criticize him, as a general rule. Donald Trump also does not like Univision — he’s suing the Spanish-language news network for $500 million after it dropped coverage of his Miss Universe pageant.

So when Univision journalist Jorge Ramos — the most trusted name in Latino news — asked a question at a Trump press conference without getting called on, Trump had his security detail bounce Ramos from the press conference, shouting “Go back to Univision!”

Yeah, that’s not what happened.

This I know, because I watched the actual video.

What happened was that Ramos, a partisan hack pseudo-journalist, got up without being called on — and then, when Trump explained to him he hadn’t been called on, proceeded to disrupt the entire press conference. He would not stop running his mouth and having him ejected was the only reasonable choice. Trump did it in classic Trump style, with a little snide remark . . . but he didn’t shout.

And he ultimately let the guy back in, apparently, and let him ask his questions — once the guy decided that he wasn’t going to unilaterally take over the entire event and ignore all rules of professional courtesy and basic good manners.

You know, after Trump’s petty, thin-skinned, weak tweets last night obsessing over Megyn Kelly, I was disgusted by Trump, and ready to blast Trump again after reading these headlines about Ramos. Now I am blasting the people who lied about it.

P.S. Anyone know where I can find any video of the entire press conference? I’d like to see it, but when I try to Google for it I am drowned in dishonest headlines about Ramos.

UPDATE: Embeddable video of the whole press conference:

Thanks to nk.

UPDATE x2: I’m closing comments on this thread. Comment on Dana’s post, which has a better headline.

Those Severed Baby Heads Are Sure Funny

Filed under: General — Dana @ 5:18 pm

[guest post by Dana]

Stem Express CEO Cate Dyer is seen discussing different aspects of providing fetal baby parts in the latest Planned Parenthood video released today by the Center for Medical Progress:

StemExpress: I know we get requests for neural [tissue]. It’s the hardest thing in the world to ship.

Buyer: You do it as the whole calvarium.

StemExpress: That’s it, yeah, that’s the easiest way. And I mean we’ve actually had good success with that in the past.

Buyer: Yeah, Make sure the eyes are closed!

StemExpress: [Loud Laughter] Tell the lab it’s coming. So they don’t open the box and go, “Oh God!” [Laughter] So yeah, whereas so many of the academic labs cannot fly like that. They’re just not capable.

Buyer: Why is that? I don’t understand that.

StemExpress: It’s almost like they don’t want to know where it comes from. I can see that. Where they’re like, “We need limbs, but no hands and feet need to be attached.” […] They want you to take it all off, like, “Make it so that we don’t know what it is.”

Buyer: Yeah. Bone the chicken for me and then I’ll eat it.

StemExpress: That’s it. But we know what it is [Laughter]. […] Their lab techs freak out, and have meltdowns, and so it’s just like, yeah.

If their collective conscience was clear and they had no qualms about what they were doing, there wouldn’t be any meltdowns happening or any need to remove the brutal reality of the baby’s original form. After all, it wasn’t ever human, right? But they know. Clearly, on some level, they know.

There is also a discussion about getting intact babies:

SE: Oh, yeah, I mean if you had intact cases [abortions] which we’ve done alot. We sometimes ship those back to our labs in their entirety.

And then there’s the issue of quantity:

Buyer: What would make your lab happy?

SE: Another 50 livers a week.

–Dana

On “Black Lives Matter”

Filed under: General — Dana @ 6:49 am

[guest post by Dana]

Two op-eds with two different perspectives on the Black Lives Matters movement were published just two days apart, as well as a third video “op-ed” by an angry resident of Missouri.

First, Leonard Pitts wrote about the “moral cowardice” of the Black Lives Matter counter-claim that “all lives matter”, a claim that Mike Huckabee made on CNN:

When I hear people scream ‘black lives matter,’ I’m thinking, of course, they do. But all lives matter. It’s not that any life matters more than another.”

Pitts also objected to Huckabee’s claim that “Martin Luther King would be “appalled by the notion that we’re elevating some lives above others.””

Thus he says of the Black Lives Matter movement:

Namely because, while police abuse is not unknown in other lives, it is disproportionate in black lives. This is what Huckabee and the “All lives matter” crowd quail at recognizing. To treat where it hurts, one must first acknowledge that it still hurts, something conservatives often find hard to do because it gives the lie to their self-congratulatory balloon juice about how this country has overcome its founding sin.

That sort of willful ignorance has, unfortunately, become ubiquitous.

Which is why, for me, at least, the most inspiring sight to come out of Charleston following the racial massacre there was not the lowering of the Confederate battle flag, welcome as that was. Rather, it was a march through town by a mostly white crowd chanting, “Black lives matter! Black lives matter!”

To see those white sisters and brothers adopt that cry was a soul-filling reminder that at least some of us still realize we all have access — connection — to each other’s pain and joy by simple virtue of the fact that we all are human.

God love them, they did not slink guiltily from that connection. Instead, they ran bravely to it.

Second, GOP Presidential candidate Ben Carson wrote about the misdirection of the Black Lives Matter movement:

The idea that disrupting and protesting Bernie Sanders speeches will change what is wrong in America is lunacy. The “BlackLivesMatter” movement is focused on the wrong targets, to the detriment of blacks who would like to see real change and to the benefit of its powerful white liberal funders using the attacks on Sanders for political purposes that mean nothing for the problems that face our community.

The notion that some lives might matter less than others is meant to enrage. That anger is distracting us from what matters most. We’re right to be angry, but we have to stay smart.

Of course, the protesters are right that racial policing issues exist and some rotten policemen took actions that killed innocent people. Those actions were inexcusable and they should be prosecuted to deter such acts in the future.

But unjust treatment from police did not fill our inner cities with people who face growing hopelessness. Young men and women can’t find jobs. Parents don’t have the skills to compete in a modern job market. Far too many families are torn and tattered by self-inflicted wounds. Violence often walks alongside people who have given up hope.

And, compelling lifelong Missouri resident and Navy veteran Peggy Hubbard to record a searing video about the confused priorities of the Black Lives Matter movement were two recent deaths: Mansur Ball-Bey was a young black man who police claim tried to “run out the back door of the house where they were serving a warrant and that he pointed a stolen gun at them before they shot” and the death of 9-year-old Jamyla Bolden who was killed by a stray bullet from a drive-by shooting while she did her homework. Hubard takes no prisoners:

Last night, who do you think they protested for? The thug. The criminal. Because they’re hollering police brutality. Are you fucking kidding me? Police brutality? How about black brutality. You black people, my black people, you are the most violent motherfuckers I have ever seen in my life. A little girl is dead. You say black lives matter? Her life mattered. Her dreams mattered … Yet you trifling motherfuckers are out there tearing up the neighborhood I grew up in.

Not to be deterred by her critics, Hubbard responded to those accusing her of being an Uncle Tom:

“Given all the comments I received, black and white, saying, ‘Don’t stop, we need your voice,’ I’m going to keep going,” she said. “This is not a race issue. It never has been a racial issue … This is about accountability and responsibility … Last night we had another homicide … and we’re saying black lives matter. Black lives matter, white lives matter, Asian lives matter, Hispanic lives matter, Lithuanian lives matter, Russian lives matter, life in general matters … but it’s never gonna get better until we admit that we have a problem in our community.”

–Dana

“Human Action” and Robert Murphy’s “Choice,” Part 4: Rounding Out the Basics

Filed under: Economics,General,Human Action and Choice — Patterico @ 12:01 am

This is Part 4 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 . . . which sounds about right for a blog post, no?

The idea of this series of posts is to popularize and spread the word about Austrian economics and educate the public. 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.

In this post, we will be defining some terms, which is an exercise that is critical to any future discussion. We will also learn a concept that separates Austrian economics from classical economics: the heterogeneity of capital. Unlike classical economists, Austrians do not view capital as one large lump. They see the capital structure as composed of different types of capital, some geared towards longer-term goals than others. As we will see later, this more accurate view of capital has staggering implications for the business cycle. Based on my reading, it seems to me that this concept is utterly foreign to classical economics, and allows Austrians to better understand the effect of changes in the monetary supply and interest rates.

In keeping with the Austrian desire to explicate universally applicable concepts, we simplify everything to a desert island, with a hypothetical Robinson Crusoe, trying to manage his environment. This sort of approach drives the Paul Krugmans of the world crazy, but it helps illustrate universal concepts that apply to any human actor.

The key insight is to classify goods as “lower-order” or “higher-order” based on how close they are in the production process to satisfying a consumer’s desire. Lower-order goods are the closest to satisfying a desire. In particular, consumer goods are goods that directly satisfy a desire. For example, Robinson Crusoe is hungry, and eats a coconut sitting on the ground. The coconut is a consumer good, or “first-order” good, because it directly satisfies Crusoe’s needs. It is the lowest-order good possible.

Goods used to produce consumer goods are producer goods. A “second-order” good is used to directly produce a consumer good. A branch that Crusoe uses to get a coconut from a tree is a second-order producer good. If Crusoe uses a rock with a sharp point to help him saw off a branch (a second-order good), then the rock is a third-order producer good. As so forth.

In a complex economy, there are numerous orders of producer goods — and the higher-order they are, the further removed they are from directly satisfying a consumer’s needs. Mined iron ore is a very high-order producer good indeed, far removed from directly satisfying the consumer. The oven in a bakery is a lower-order producer good, because it is closer in the production process to delivering a muffin to the customer.

We will see in future posts that this division of producer goods into lower-order and higher-order goods — the “heterogeneity of capital” — is central to understanding the Austrian perspective. It allows Austrians to make insights regarding the business cycle that are simply beyond the reach of classical economists.

More definitions: Natural resources and labor are also classified as producer goods, and capital goods are factors of production created by people.

Any action is an exchange — even without a second person — because of opportunity cost. When you act, you exchange your chance to take action a at that moment, for a chance to take action b instead.

Action also must take place in time — and action implies that the actor is uncertain about the future. If he were certain of the future, why bother acting?

Getting a bit more complex now, we round out Chapter Four with a discussion of two related concepts: 1) the law of diminishing marginal utility, and 2) the law of diminishing returns.

THE LAW OF DIMINISHING MARGINAL UTILITY

The idea that people make economic decisions “on the margin” was a key insight of economists working in the 1870s, and this concept remains central to all economics today. The idea is that, when evaluating preferences, you don’t really compare one good versus another — you compare successive units of one good to successive units of another.

You always use the first unit of a good to satisfy your most important need or desire. Successive units are devoted to less important desires. This means that successive units are not worth as much to you. This is the law of diminishing marginal utility.

For example, if you lacked running water, and had to buy bottled water for all your water needs, you might put the first bottle to use in satisfying your thirst. The second might be used to bathe yourself. The third might be used for cleaning dishes, and the fourth to give your dog water. Maybe the fifth will be stored in the garage in case the store runs out of water. That first bottle is worth more to you than the fourth or fifth.

Just as obviously, as the supply of a good increases, the marginal utility of the good decreases, and vice versa. You pay less for water than diamonds because there is plenty of water (currently) to satisfy our most critical desires, like satisfying thirst. If there were so little water that you had to pay $10,000 (more than you’d pay for a small diamond), just to get a drink and not die of thirst, you’d pay it (if you had the money).

Murphy has all kinds of interesting examples that flesh out these concepts, which is one reason that reading his book is superior to reading a blog post summary of it.

THE LAW OF DIMINISHING RETURNS

Our last concept for the chapter is probably the most complex: the law of diminishing returns. Imagine you are producing something using two scarce resources: A and B. If you fix the amount of one of these variables (A), then there is a maximum amount of output per additional unit of B. In other words, you might get more total output by adding more B, but at a certain point that output will be less per unit B, meaning that adding additional units of B may not be justified (depending on the circumstances).

I told you it’s complex. We need an example to make it concrete.

In Murphy’s example, A is an industrial strength dishwasher at a restaurant, and B is a variable number of workers using the machine. Murphy has a chart assuming one machine (A) and then showing the number of dishes washed as you add more workers (B). I’m going to take the liberty of reproducing his chart here — and I hope he’s OK with that. (If he’s not, I’ll take it down.)

Screen Shot 2015-08-23 at 12.26.58 PM

As you can see, as you add workers, the number of dishes washed increases, to a point. 1 worker can wash 100 dishes. 2 can wash 300. 5 can wash 1000. The absolute number keeps going up, until you add the tenth worker, who is just in the way and actually reduces the total number of dishes washed.

But there is an upper limit to the number of dishes washed per worker: 210, achieved when there are three workers.

This is the law of diminishing returns.

Murphy notes that, during busy times, a manager may wish to employ more than three workers even though the number of dishes washed per worker goes down — simply because it may be critical to get, say, 1000 dishes washed per hour.

We are now finished with the chapters explicating the basic concepts of human action. In post 5, we will move on to action within the framework of society, and expound on the division of labor — one of the most important concepts in all of economics.

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