Another Easy Binary Choice

Kevin D. Williamson writes with his usual clarity and wisdom on economic matters at NRO in “[The Frontrunner]: Make America Great Again.”  Of course you should read the whole thing.  You should read everything that Kevin writes.  His article compares the similarities between Biden’s recent speech and The Donald.  He is absolutely right that The Frontrunner and The Donald have much in common on the economic front.  For us capitalistic orphans or friends of economic liberalism, as Kevin calls them, the 2020 election will not be a feast.

Where we disagree with Kevin is on the choice.  Kevin says:

For the friends of economic liberalism, 2020 is going to be a choice between testicular cancer on the left or testicular cancer on the right.

We would like a whole loaf.  We would be delighted with a half a loaf to feed us economic orphans.  With The Donald we get a slice, perhaps the heel, while with The Frontrunner we get nothing.  To paint them both with the same brush Kevin has to stretch the evidence.  For example:

Trump is more of a born-again Republican on taxes today, but in 2016 he complained long and loud about Wall Street traders beating the tax man,

The Donald has reduced taxes, and most importantly corporate taxes, grudgingly renewed NAFTA, and reduced regulations.  He is far from what Keven and MWG wants but he is the dominant solution in a binary choice.  The Donald should be an easy choice for economic liberals and capitalistic orphans in 2020.  It is likely to be a tougher choice for us in 2024 with folks like Marco Rubio and Josh Hawley.

Warren And Woodrow

David Harsanyi has a thoughtful article on Warren Harding at NRO.  We should use his insight to help us with our current political decisions.  He does have a little red meat in the second and third paragraphs:

Good riddance, Woodrow. Wilson was one of the most despicable characters in 20th-century American politics: a national embarrassment. The Virginian didn’t merely hold racist “views;” he re-segregated the federal civil service. He didn’t merely involve the United States in a disastrous war in Europe after promising not to do so; he threw political opponents and anti-war activists into prison. Wilson, the first president to show open contempt for the Constitution and the Founding, was a vainglorious man unworthy of honor.

Fortunately, we have the perfect replacement for Wilson: Warren Harding, the most underappreciated president in American history, a joyful champion of civil rights and republicanism. Harding deserves to be reinserted into the nation’s consciousness on the merits of his presidency alone. But considering that he also negated much of Wilson’s calamitous legacy, we have an even better reason to honor him.

Sidebar: American (in bold) is an excellent adjective in the quote.  Woodrow was not not Lenin, Hitler, Mussolini, Franco, Stalin, MaoIdi Amin or Pol Pot to name a few more despicable characters during the 20th century.  End Sidebar

David is much more interesting than Jonah’s Goldberg File to cancel Woodrow for two reasons.  First Jonah is just, but properly, negative about Woodrow.  All three of us agree that Woodrow was an awful person and awful president.  We agree that Jonah has been part of our education on Woodrow.  But in this time of cancellation of both reservations and people we need something positive.  David gives us Warren as something positive.

Second, and even more important, David recognizes that Warren is less than perfect.  He says Warren is remembered for his depravity and corruption:

And [Warren] was definitely a flawed president, far too trusting of crooked subordinates, most famously those who participated in the Teapot Dome, a scandal surrounding the leasing of federal oil reserves. (From my perspective, Harding’s views on tariffs and immigration, and his failed effort to poison-pill Prohibition, leave something to be desired, as well. But those are political, not moral or Constitutional, objections.)

We see the opposite point of view all too often.  The NRPlus Facebook page had a commenter that couldn’t abide by Calvin Coolidge because he has appointed a justice that enabled FDR and the Great Depression a decade later.  Humans can’t see checkmate in 15 moves.  Everybody makes mistakes and with public figures some of those mistakes are public.

Everyone is a failure if judged against perfection.  Even Bill Russell.  He won two NCAA championships, a gold medal, but “only” won 11 of 13 NBA championships. Prohibition was a disaster and Warren and Calvin have to share some of the blame for their lack of perspicacity.  There are no free traders among Warren, Calvin, and The Donald.  That is a more serious flaw.  Yet all three support freedom and particularly economic freedom in many other situations.  The Frontrunner might  not be as anti-freedom as Woodrow but clearly, to us, if you are pro-freedom then you need to support The Donald in 2020 despite his shortcomings.

Fighting The New Scams

Eugene Scalia is very kind in his WSJ opinion piece.  He says that investors are concerned about the environment, social factors, and corporate governance (ESG):

Many investors understandably want to do good while also doing well. But the standards for ESG investing are often unclear and sometimes contradictory.

We don’t understand but we are capitalistic orphans so we care about returns.  In one of the huge non-surprises:

Other studies show that when investments are made to further a particular environmental or social cause, returns unsurprisingly suffering

Let’s be honest.  It is a scam.  Entities promise to maximize something other than returns so that investors won’t leave because of low returns.  And, of course, it is very difficult to measure ESP as Eugene documents.  A simple question: Are wind farms good for the environment?  Are the dead birds and the rare earths used worth the returns to the electrical grid?

The excellent news is that The Donald’s administration is not buying.  The US Department of Labor says that fiduciaries have a primary responsibility to current and future retirees:

The department’s proposed rule reminds plan providers that it is unlawful to sacrifice returns, or accept additional risk, through investments intended to promote a social or political end.

Individuals can fall for ESG investing.  It is their money.  We support folks being able to sell ESG investing.  We would never recommend buying such products but if folks want purchase them then we won’t stop them.  What we want to do is stop folks from being forced to invest in ESG.  One of the things the proposed rule will do is help to give the fiduciaries some backbone when the activists come for them.

We never suggest that The Donald is anything more than a net positive compared to the alternative in 2016 and The Frontrunner.  Lots of folks point out The Donald’s negatives.  We are reminding you that Eugene and Betsy are part of that net positive.

Dr. King’s Humility

Jerome Christenson writes Op-eds for the Winona Daily News and La Crosse Tribune but the papers put them places other than the opinion section.  Recently, he helped us better understand one of our least favorite quotes.  Read the whole thing.  We did.  Jerome wrote:

“The arc of the moral universe is long but it bends toward justice,” Martin Luther King famously observed, and events and attitudes indicate him to be right.

As a theory, Dr. King’s statement is problematic because we don’t have any timeframe. It took humans centuries to get to the Magna Carta.  Since WWII results are mixed.  Cuba, Iran, and Venezuela, to name only a few, have bent the wrong way while Germany and Japan are notable successes.  What Jerome gets right is that the United States has been one of those successes:

But change was afoot. In the space of a short lifetime, we went from Jim Crow to Barack Obama – from a rigidly segregated military force to an African-American commander-in-chief.

Jerome is our age so we don’t think of it as a short life time and we are going to add segregated baseball but otherwise he is on point.  The United States has continued to make great strides forward in liberty in the last century.  Where we disagree is on the cause of those strides.  Jerome seems to buy into the discredited 1619 Project and might be confused about dates.

Let’s not minimize the depth of the racial divide challenging each and every one of us. Four hundred years ago, Africans were brought here as property and designated by the framers of the Constitution as being 3/5 of a human being – the former declaration of all men being created equal notwithstanding. [Emphasis added]

The Declaration and the Constitution set the framework for people to act but they are much more recent than four hundred years ago.  Freedom was rare and always limited at the time of the American founding.  Slavery was not.  Freedom is now more common and sometimes more complete now but it is far from ubiquitous and slavery is still too common.  We would argue that it is people rather than an arc.  The American Founders improved freedom in the US and encouraged the world.  The Founding wasn’t perfect, immediate, or everywhere.  Wikipedia confirms that Harry Truman desegregated the US armed forces:

 In 1948, [Harry] submitted the first comprehensive civil rights legislation and issued Executive Order 9981 to start racial integration in the military and federal agencies.

Branch Rickey, Jackie Robinson, and Pee Wee Reese led the successful breaching of MLB’s color barrier a year earlier.

Double Sidebar: We are not concerned that Branch, Jackie and Pee Wee all profited from their actions.  Capitalism, with its emphasis on voluntary actions rather than coerced ones, often, but unfortunately not always, leads to this happy state of affairs.
Pee Wee was a minor actor compared to Branch and Jackie in the integration of MLB.  We point him out because minor actors are important too.  And it helps explain why a lifetime .269 hitter is in the Baseball Hall Of Fame.  End Double Sidebar.

Dr. King led the struggle to continue to desegregate the United States.  People make decisions and those decisions matter.  The framework matters too.  The Declaration and the Constitution are gifts from the Founders to folks seeking freedom.  Dr. King connected with the Declaration.  On the other hand, we are reading Joseph Kanon’s The Good German.   It isn’t a great novel but it does make a great point that during Hitler’s regime  “ordinary” Germans often had extraordinarily difficult choices.

We don’t see that the moral universe is an actor.  We are the actors that choose to increase or decrease political and economic freedom.  Of course, when folks want to reduce your political freedom they say that they want to do something like stop hate speech.  And when they want to reduce your economic freedom they will say it is to give you security.

The direction towards or away from freedom is, at least in part, up to us.  The Founders gave the framework for freedom.  Amendments have improved it. Leadership matters.  We think Dr. King was being humble when he said that impersonal forces moved America towards justice.  He made a big positive impact on justice in America.  We can too.

Two COVID-19 Problems; One Solution

COVID-19 causes many problems.  Two have popped up this week.  Two very different sets of officials in two very different places are confronting two very different sets of problems.  The Italian government has a specific COVID-19 problem: the price of face masks.  The University of Wisconsin has a more general COVID-19 problem including the likelihood that both sources of revenue, student tuition and the state government, will not meet expectations.

The Italian government has created a problem for itself by replacing market signals with central planning.  Alberto Mingardi at the WSJ tells it all in the headline: Italy’s COVID Price-Control Fiasco.  As folks often say, to be fair, we should only report when government price controls are not a fiasco.  Still you should read the whole thing just to remind yourself of the problems of central planning.  Here is a tidbit:

Companies were allowed to import only masks that were already allocated to health-care institutions. No one was allowed to import masks and sell them to the highest bidder. Those who were buying up masks to hoard risked government confiscation. These moves clamped down on price gouging but created a shortage. Through a later adjustment, importers were able to keep 20% of their masks to sell on the market. Yet the signal was clear: importing face masks is better not left to “animal spirits.”

Central planning always leads to the need for more central planning.  Later, Alberto lets us know that the market worked for hand sanitizer.

On this side of the Atlantic, the University of Wisconsin System (UWS) has created The Blueprint For The UWS Beyond COVID-19.  UWS has two different meanings.  Sometimes UWS means all 26 campuses.  The Blueprint applies to all 26 campuses.  UWS also means UWS central administration.  They created the Blueprint.  It is no surprise when they conclude:

To address the significant costs of the COVID-19 pandemic, the University of Wisconsin System must play a more direct role in operations at the campus level to more rapidly achieve systemwide efficiencies.

We are convinced that UWS works because each campus has a fair degree of autonomy.  Perhaps you should read it all.  It is only seven pages and it sounds plausible but it will meet with all the problems of central planning.

So we have two different sets of officials on two sides of the Atlantic dealing with COVID-19 and they both decide that they need more power to solve the problem.  We know in Italy that the people being planned took “unexpected” actions.  Expected the “unexpected” in Wisconsin too.  Another action we can expect is for more officials to conclude that more central planning is the solution to COVID-19 problems.  We really should expect the “unexpected” from both the planners and the planned.

Prices And Bridge

American Contract Bridge League (ACBL) has a nice little monopoly.  If you are a serious duplicate bridge player then they have exclusive rights to hold tournaments or designate who holds them and decide on the allocation of points that allows us to put our rank in our obituary to impress our bridge playing friends.

Of course, COVID-19 has changed all of that.  No more in-person bridge tournaments.  Theeleven day tournament in Montreal in July has been cancelled.  Eleven days is not a typo.  To get an idea of all that goes on here is a list of the still scheduled event in Tampa in the fall.  On the other hand, COVID-19 has been great for Bridge Base Online (BBO) because you can find competition there.  This weekend BBO and ACBL joined forces to a Stay @ Home, Play @ Home tournament complete with very desirable gold points.  Here is 36 page document on classifications and different color points if you are interested.  We don’t play many tournaments but the prices for this online tournament were close to same amount as in-person tournaments.

There was an announcement of the tournament on BBO and a section for comments.  As one would expect, every comment complained about the price.  Most mentioned that an online tournament has less costs to ACBL than in in-person tournament.  An ACBL email gives us a counter argument of lower costs to the player:

Who doesn’t love a big regional – especially when there are no travel or hotel expenses! We hope to see every table full. There are I/N games, Gold Rush pairs, two-session Open Pairs and side games – something for everyone.

There is another argument that ACBL gets to indirectly in its email. The variable cost model puts revenue as units * price and costs as fixed costs (they don’t change with units) plus variable cost per unit times units.  When units approach zero the organization has a problem because they can’t cover fixed costs.  ACBL has that problem.  Here is what the email says later on:

At the beginning of April, staff was reduced to a 32-hour work week, taking a 20% pay cut. Management took the pay cut as well, but many saw no reduction in work hours. Now that we have a better idea of what is before us, we had to make the difficult and sad decision to furlough much of our staff. [Emphasis added.]

We could have an interesting discussion about which employee costs are fixed and which are variable.  It is interesting academically but not practically.  ACBL, like most organizations, is reducing costs by furloughing employees.

Price, of course, is really useful information for decision makers.  Complaints don’t matter.  Sales do matter.  How did bridge players react to the price on the first tournament?  The sections we played in were sold out or close to sold out.  We expect to see many more online tournaments.  Will they be successful?  The price mechanism will let us know.



Drinking Data II

We hadn’t seen these examples when we made light of the assertion that drinking was up when alcohol sales at package stores went up.  The data problems include the TP effect (hoarding), fear of stores being shut down, saving trips to the store, and missing the impact of bars.  The WSJ editorial board has some examples of this happening.  First they look at Pennsylvania closing its liquor stores:

Pennsylvania’s Liquor Control Board announced March 16 that liquor stores would close the next day. The state hoped to keep residents at home, but instead Pennsylvanians flocked to buy booze while they still could. Lines stretched around the block, and sales spiked to $29.9 million in a single day—“the most spent on booze in Pennsylvania in one day, according to complete sales records dating back 12 years,” the Philadelphia Inquirer reported last week.

Giving everybody just one day to stock up is a history making foolish governmental policy.  Of particular interest to us is the date.  The Pennsylvania spike happened during the week used to support higher sales in the previous article.  It also points out the folly of government prohibitions without citizen support.

Denver trying to do the same thing is even sillier.  It might be hard to leave a big state like Pennsylvania but it is easy to leave Denver.  Still they tried:

Denver saw a similar rush on March 23 when Mayor Michael Hancock announced that liquor stores would not be considered essential businesses. “It’s created a safety issue in the short term,” Argonaut Wine & Liquor co-owner Josh Robinson told the Denver Post. “The mayor said not to panic buy, but that is exactly what he encouraged people to do by shutting us down.”

We conclude that major purchases of alcohol could be a rational decision based on observed governmental actions.  That is one of the reasons why sales might not match consumption.  We still don’t understand TP.  Perhaps folks behave differently than us.




Price Controls

We reported with great sadness that Wisconsin had set up a mechanism to try to identify and punish price “gouging”.  We are even more distressed to find out that Michigan is trying to take action:

LANSING, MICHIGAN — Michigan Attorney General Dana Nessel has accused home improvement chain Menards of price[“] gouging[“] during the coronavirus pandemic.

Sigh!  Not only is the state of Michigan not helping its citizens but it is actively trying to stop companies from getting products to consumers.  We had hoped for bipartisanship but Dana, like The Suit, is a Democrat.  Don’t worry because bipartisanship is out there on this issue.  As The Frontrunner has made identity a critical criteria for nominations and Dana fits multiple criteria  we might see her name again.

Gel in and gel out when you go there but we would encourage you to go to Menards and buy something ASAP.

Fun With Price “Gouging”

Mark Perry makes fun of price “gouging” at Carpe Diem today.  As we said earlier, Wisconsin will not be the only state and the Democrats will not be the only party to do stupid things to try to deal with shortages.  Here is part of his warning:

WARNING: As I’ve written many times in the past about price gouging charging market prices for goods that are in high demand and short supply, the unintended and unseen adverse consequences of enforcing anti-price gouging laws are predictable, unfortunate, and avoidable. While government price controls may be motivated by an understandable desire to help consumers during the coronavirus pandemic by keeping prices for critical supplies low, those artificially low prices exert secondary effects that are guaranteed to retard the adjustment process.

Of course you should read the whole thing.

Price Controls Again

The Suit is predictable.  We can’t find it online but cub reporter Emily Hamer, a 2019 graduate (we showed you we found that to show we looked for the article both by The Suit and the reporter), reports that “Governor signs orders limiting retailers during COVID-19 emergency.”  He has even identified the enforcement agencies to combat “price gouging” which is “the increasing of prices of goods much higher than would be considered fair.”  Sigh.

It is hard to believe that COVID-19 is an emergency if we waste time on price controls.  We try to be kind to The Suit and his ilk but this is world-class stupidity.

Sidebar: To be clear, we mean price controls are stupid for the ruled.  They may be smart for The Suit and other rulers because it looks like they are doing something when they are actually stopping people from getting what they need.  End Sidebar.

Price controls means that the consumers will be looking for benefits and find more empty shelves. It means that retailers will either ignore the order or be worrying about limiting purchases and other things rather than getting us the stuff we need.  Higher prices also are a means to stop hoarding.  It means that the bureaucrats will either ignore The Suit causing one set of problems or, even worse, take him seriously and make life miserable for everyone by using up their time.

We want to be clear that GOP suits too.  That is really sad.  We capitalistic orphans are lonelier than the folks in quarantine.