A Geek With Guns

Chronicling the depravities of the State.

Archive for the ‘Markets’ Category

Bypassing Taxes

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One of the most heroic things any company can do is find exploits in the State’s tax code that allow it to provide a product to consumers for less. This both benefits the consumers and is detrimental to the government. I recently came across an article discussing how Converse, the maker of sneakers, bypasses an idiotic tax (a redundant term, I know) to bring its customers a more affordable product:

Have you ever noticed that thin layer of felt on the bottom of a pair of Converse sneakers? It gets torn up almost immediately, of course, as you walk on the shoes. So, why is it there in the first place? It turns out that that felt is there not for functional reasons, but for economic ones—shoes with fuzzy soles are taxed less when imported than those with rubber ones.

Jeff Steck writes on Gazetc that the difference between importing a fuzzy shoe—like a house slipper—and a rubber one—like a sneaker—can be huge. Changing the shoe material can decrease the tariff from 37.5 percent down to just 3 percent. Steck writes:

To benefit from a lower tariff, it isn’t necessary to cover the entire sole with fabric. According to the inventors, “a classification may be based on the type of material that is present on 50% or more of the bottom surface.” (6,471,491) This explains why the “fabric” fuzz extends mostly around the edges of my shoes, where it can take up a lot of area without interfering too much with the traction of the bare-rubber centers.

Why would the United States government put a 37.5 percent tariff on sneakers? Because doing so both enriches it and provides protection to local producers by artificially increasing the price of foreign sneakers. Of course, the tax code is ridiculously complex so any company willing to fund a decent accountant is usually able to find creative ways to either avoid tariffs completely or at least reduce the amount of tariff they have to pay.

While I’ve never had an interest in Converse sneakers, or sneakers in general, I almost want to buy a pair just to support this company’s actions. It’s always nice when a producer is willing to go to bat for consumers living in cesspools of socialist economic policy.

Written by Christopher Burg

July 20th, 2017 at 10:30 am

Violence is the Result of Prohibition

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Supporters of the war on drugs love to talk about the violence inherent in the drug trade. However, as this article posted by the Cato Institute points out, the violence we see in the drug trade today is the result of prohibition, not the drug trade itself:

Violence isn’t any more inherent to the distribution of marijuana or cocaine than it was to the distribution of alcohol in the 1920s. A resident of Chicago in 1929 could be forgiven for wondering whether all the violence on the front page of the Chicago Tribune represented something inherently dangerous in alcohol distribution, but we now know that it didn’t. Prohibition-era alcohol distribution was violent because it was illegal, not the other way around.

Today, the executives of Anheuser-Busch might laugh at the suggestion that alcohol distributors can’t settle disputes without resort to gunfire massacres. So might the members of America’s pharmaceutical industry, who manage to distribute billions of dollars in legal drugs without cutting anyone’s throat.

Unfortunately, Sessions’ logic seems to be seeping into other areas of the administration as well. President Trump, who once favored the legalization of all drugs, recently tweeted that drug violence in Mexico is a reason to further separate our two countries rather than acknowledging the immense role that U.S. drug policy has in stimulating Mexican violence.

Drug prohibition, not a porous border or anything inherent in Mexican society, is what has turned the Mexican drug war into an actual war.

Markets, the voluntary trade amongst consenting individuals, is the opposite of violence. Were it not for the prohibition against certain drugs the market for those drugs would be no more violent than the markets for alcohol and over the counter medication. We’re seeing this today in states like Colorado and Washington that have legalized cannabis. Violence in Colorado and Washington has actually decreased since the violence wrought against otherwise peaceful actors in the cannabis market are no longer being kidnapped by law enforcers.

Every law passed that creates a victimless crime also initiates violence. If, for example, a law was passed against gun ownership there would be a major increase in violence, not from gun owners, but from law enforcers brining violence against peaceful gun owners.

If people like Jeff Sessions actually want to address this issue of violence in the drug market then they need to start demanding the complete appeal of the laws that prohibit that market. Advocating for more stringent enforcement of those laws will only lead to more violence.

Written by Christopher Burg

July 12th, 2017 at 10:30 am

Unpredictable Government Actions Encourage Short Term Profit Seeking

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A lot of people, socialists especially, like to criticize market actors for prioritizing short term profit gains over anything else. I actually agree with this sentiment. However, unlike most critics, I don’t believe that the solution is more government because I believe the government is the cause.

Let’s say your company spent 10 years of research and development time to create a new product. You’re happy as can be with it and all signs point to it being a tremendous success. But just as you’re about to release the product the government creates a regulation that makes the product as it currently exists illegal. You’re now faced with a decision, do you redesign the product to make it compliant with the new regulation in the hopes the regulatory environment won’t change again or do you abandon the product?

This problem is a tremendous burden, especially in countries like the United States where the party in power can change every handful of years. One moment the party that favors your product is in power and things look good but then the next year the other party comes to power and things look grim.

I’m sure you can see how this kind of environment favors immediate profits over longterm profits. If you cannot predict what the regulatory environment will be four years from now you will have a hard time making plans that extend longer than four years. So you’ll probably seek as much profit as you can within those four years just in case your product line becomes illegal after that.

Anybody who wants companies to stop prioritizing short term profits at all costs should be demanding that the government step aside and allow the market to be free.

Written by Christopher Burg

May 18th, 2017 at 11:00 am

Automation is Wonderful

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Have your parents ever reminded you that your life is easier than theirs were? Most of us probably have. But try not to hold it against them. They heard the same thing from their parents who heard the same thing from their parents. And you will most likely tell your children the same thing. Each generation lives an easier life than the last thanks to automation.

Automation improves each and every one of our lives by making previously expensive, inaccessible technology affordable and accessible. This is why my blood pressure goes up when I read nonsense like this:

Fifty percent of the jobs will be gone in ~20 years. Not from the great sucking sound of jobs to Mexico that can be stopped with a wall. Not from moving offshore to China. From automation that is moving quickly from blue collar manufacturing to white collar information work. Second only to climate change, this is the greatest disruption of our time, and I don’t mean that word in a good way.

The article is yet another in a seemingly ceaseless stream of attempts to give legitimacy to an economic fallacy. The fallacy of machines taking our jobs is so absurd that Henry Hazlitt was able to thoroughly put it down in a single chapter of Economics in One Lesson.

What Ross Mayfield, the author of that wreck of an article, is advocating is that each and every one of us should suffer so that a handful of people don’t have to find a new line of work. Ironically, it was the evil of automation that allowed him to even publish that article. Were it not for computers, the Internet, and the availability of free (to publish and read, but as we know TANSTAAFL) publishing platforms like LinkedIn, Mayfield never would have been able to get his article published to such a wide audience. But I digress.

Let’s consider Mr. Mayfield’s world by taking a look at a fairly modern piece of automation, personal assistants like the Amazon Echo and Google Home. Through voice commands the Echo and Home are able to perform many of the tasks that once required a secretary. Paying a full time secretary was something only somebody with a decent amount of wealth could afford. Now, thanks to automation, the average American has access to many of the functions of a secretary for a fraction of the cost.

As I type this I am looking at a flat panel monitor. It’s much lighter than a smaller cathode ray tube (CRT) monitor, displays a superior image, consumes a lot less electricity, and cost less than what I could get a similar sized CRT for when CRTs were still a thing. How is this possible? For the same reason CRTs from a decade ago were both superior in every way and cheaper than the first CRT televisions, automation. Through automation resources once dedicated to hiring human labor are freed up for other activities such as research and development. When more resources are available for research and development superior technologies can be created.

We enjoy our current lifestyle because of automation. Imagine if the world had listened to Mr. Mayfield’s plea when electricity was invented. I’d be writing this post on a piece of paper with a fountain pen by candlelight… assuming I had enough free time to do so since I’d probably have to bust my ass 12 hours a day just to afford a place to live and food to eat. And when I finished writing it I would have to send it to a publisher in the hope that they would find it worthwhile enough to have their laborers configure their moveable type printing press to print off a few thousand copies for circulation. Oh, and you’d have to pay for it so that the publisher could recoup their costs and make a profit.

Does automation suck for the people who lose their jobs? Absolutely. But they can get new jobs just as candlestick makers did once the electric lightbulb became prolific. The loss of a few thousand or million jobs isn’t justification for hindering qualify of life improvements for everybody else in the world.

Written by Christopher Burg

January 6th, 2017 at 11:00 am

The Biggest Threat to Free Markets are Successful Entrepreneurs

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Everybody loves freedom so long as it’s the right kind of freedom. Neoconservatives love freedom right up until somebody wants to marry somebody of the same sex. Neoliberals love freedom right up until somebody wants to buy a firearm. Statist libertarians love freedom right up until somebody wants to opt out of paying taxes to fund the military national defense force appointed by the duly elected representatives of the Very Small Government. Likewise, a lot of people love free markets until they fail to serve the market. When that happens those people turn into big government twats:

With competition so fierce and profit margins so small — roughly 2.7 per cent on average — the role Quebec’s highly interventionist government should play in one of the province’s most dynamic industries remains a source of contention.

The debate is not new and was rekindled earlier this year when Carlos Ferreira, owner of a well-known eatery, said Montreal should impose quotas in neighbourhoods to limit competition and help struggling legacy restaurants stay in business.

“I don’t believe in the free market anymore,” Ferreira said at the time. “We have to protect the good restaurants.”

And by “good restaurants” he means his restaurant.

Although I won’t claim that Quebec’s restaurant scene is currently a free market, the market was free enough that the barrier to entry was low enough for Ferreira to enter. Now, like most established corporations, he’s finding that the pressures of continuously appealing to the market tiresome and wants the State to step in to protect him and his interest at the expense of everybody.

I say the expense of everybody because as things currently stand consumers have all of the power. If a restaurant starts serving shitty food consumers can go to a competing restaurant. New restaurants have to attract customers and that means appealing to consumers. What Ferreira wants is to restrict those consumer’s choices and therefore limit the power they have.

This is nothing new. The biggest threat to free markets are successful entrepreneurs because they’re the ones that throw money at politicians to get laws passed that hinder their competitors.

Written by Christopher Burg

December 30th, 2016 at 11:00 am

You Can’t Stop the Market

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The federal government put a lot of resources into shutting down the Silk Road. Was it worth it? Has the online drug trade stopped or at least been reduced? Of course not! People want access to recreational drugs and the market always provides. Since the death of Silk Road the online drug trade has actually flourished:

The successors to Silk Road, the darknet drug market shut down by the FBI in 2013, are raking in tens of millions of pounds in total revenue every month, according to a new report.

British dealers apparently have a serious finger in the pie, taking home roughly 16 percent of the global revenues, or around £1.75 million, between an estimated 338 vendors.

The State, however, can never admit failure. Through the magic of statistics it has declared itself victorious over the online drug trade:

The report, commissioned by the Dutch government to gauge the growth of darknet markets in the years following the demise of Silk Road, found some good news for beleaguered law enforcement: “cryptomarkets have grown substantially in the past few years, but not explosively,” though the numbers of vendors and hosting sites have grown. In fact, researchers found around 50 of these markets in total, however, the total volume of listings is now only six times larger than in 2013.

The volume of listings has only grown six times larger! It would have obviously grown even more if it wasn’t for the State’s efforts! This reminds me of the national debt, specifically when a politician claims that they have shrunk the debt because their efforts ensured it only grew twice as fast as it would have otherwise. If you’re very careful with your statistical definitions you can make any defeat appear to be a victory.

What’s the lesson here? Easy, the State is powerless against the forces of the market. While the State does win temporary victories it is always defeated in the long run. After all, how can a handful of people ever hope to defeat the entirety of humanity? When seven billion people are thinking of new and interesting ways to get their fellows the goods and services they want there’s nothing a handful of people wearing suits and sitting in marble buildings can do.

Written by Christopher Burg

August 17th, 2016 at 10:30 am

The Glories of Central Planning

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Socialists often criticize the market for allowing people to starve. They often say it’s unfair that somebody with surplus food is allowed to keep it while others starve to death. They also lambast the idea of property rights because the concept allows a person with a surplus of food to defend it against a starving thief. These are valid criticisms, mind you. But they also ignore an important fact. Markets and private property rights may allow some people to starve but you really need a centrally planned economy if you want to starve everybody:

The fight for food has begun in Venezuela. On any day, in cities across this increasingly desperate nation, crowds form to sack supermarkets. Protesters take to the streets to decry the skyrocketing prices and dwindling supplies of basic goods. The wealthy improvise, some shopping online for food that arrives from Miami. Middle-class families make do with less: coffee without milk, sardines instead of beef, two daily meals instead of three. The poor are stripping mangoes off the trees and struggling to survive.

Venezuela is an epitome of centrally planned economics. Much of the market has been “nationalized” (a fancy word for stolen by the State) and the Venezuelan government dictates a great deal regarding production and prices. Like the Soviet Union, Venezuela’s economy has collapsed and now people are starving.

In what must seem a twist of irony to proponents of central planning, there is hope for salvation. When the economy of the Soviet Union collapsed the thing that saved countless lives was the black market:

Everyday survival here requires of everyone – from childhood to old age – a street savvy that makes life in the inner cities of the West seem innocent by comparison. Many older Soviet people say the situation is much like it was after World War II. Survival is a degraded art form requiring such skills as knowing under which bridge the black-market gasoline dealers operate on Tuesdays and what sort of Western chocolates to give a schoolteacher on a state holiday so that a child can get decent treatment in the coming semester.

Anatoli Golovkov, the resident expert on economics at Ogonyok magazine, said, “There is nothing to buy through ordinary channels, but you can get anything you need if you are willing to play the game and pay big money. The whole process makes all of us cynical about the law and ourselves. It degrades us. But what’s the choice?

“For example, say I have guests coming, and I need a cut of meat, a couple of bottles of booze and a carton of good cigarettes. There’s really just one option. With a fistful of money, you go to one of the city markets. The state-run stalls are nearly empty. But you explain what you need to someone. He nods, and never saying a word, he writes down a price on a slip of paper and says, `Come back in an hour.’ When you come back, the package is all wrapped up in a copy of Pravda and off you go.”

When central planning begins starving everybody the market is there to save lives. It happened in the Soviet Union and it’s happening in Venezuela:

But in Maracaibo, the black market is an actual place. The contrabando, as sellers call it, sits on tables out in the open.

The odd part, to an American, is that this contrabando is available every day at Aisle 3 in my local Safeway: flour, rice, coffee, Tylenol. I went in with fixer/translator Yesman Utrera and photographer Jorge Galindo, on a specific mission: to find infant formula for our driver’s baby. By the time we found two cans to compare prices, both were sold.

The very thing that socialists accuse of starving people is the only thing that keeps people fed when socialism starts to starve them.

There are no perfect solutions. Every solution has pros and cons. The cons of the market and private property rights is that some people do indeed starve. But that is far less of a con in my book than the con socialism, which means everybody starves when the State can no longer keep the centrally planned economy propped up. When a centrally planned economy begins the collapse a major pro of the market comes into play: the incentive of personal gain spurs market actors to provide the goods people desperately need. Many will point out the high prices of dealing with these black market actors as a con of the market but they fail to understand that the high prices exist because the risks are so high. When a centrally planned economy begins to collapse it’s not unusual for the State to blame the very thing keeping people alive: the black market. In the hopes of keeping the economy propped up just a little bit longer the State sends agents to hunt, assault, kidnap, and/or kill black market actors. So the high prices aren’t the fault of the black market actors but the State that is trying to maintain its control over the ashes of the civilization it burned.

Written by Christopher Burg

June 29th, 2016 at 10:30 am

No Matter Who You Are, No Matter Where You Are, The Black Market Has Your Back

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What is the enemy of tyranny? Is it the ballot box? Is it the bullet box? No! It’s the black market:

North Korea’s isolation from most of the world is not just economic and diplomatic, but technological too. Only about 3 million of its people have access to its domestic telecommunications network, which does not permit access to outside countries. Its internet, meanwhile, is accessible only to the nation’s elites.

But some North Koreans have been able to circumvent these restrictions, thanks to the spread of illegal black market phones into the country. A new report from Amnesty International explains that these smuggled devices—referred to as “Chinese mobile phones,” even if they’re not actually from China—have become an important tool for North Koreans looking to connect with loved ones who have left the country and want to stay in touch.

If their relatives or friends at home don’t already have a “Chinese mobile phone,” the report explains, “often the person who has left will try to send them a phone, for example one bought in South Korea, Japan, or China.”

North Koreans who obtain one of these smartphones can connect with people outside the country by installing a Chinese SIM card in their device. They then must go to a part of the country close to the Chinese border, where they might pick up signal from a neighboring Chinese network.

No matter how repressive of a regime you suffer under the black market is there to provide you the goods you want. Are your overlords preventing you from communicating with the outside world? Never fear! The black market is here to provide you unrestricted telecommunications. Do your overlords prohibit you from owning the most effective means of self-defense? The black market is here to provide you with guns and ammo. Is there some government agency that artificially restricts your access to medication? The black market is here to provide you the medications you need.

The black market has been and continues to be the single greatest enemy to tyranny. By flagrantly providing illicit goods the black market shows that the emperor wears no clothes.

Written by Christopher Burg

March 17th, 2016 at 10:00 am

TANSTAAFL

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Everything should be free is the attitude a lot of people hold towards software. If you charge $9.99 for an application you spent months writing and will spend years maintaining you’ll probably receive at least some backlash for having the audacity to charge for it. But the universal principle of TANSTAAFL, there ain’t no such thing as a free lunch, >applies even to software.

The developers of Caddy, a web server that I’ve admittedly never used, wrote an explaining why they’re asking for money. As it turns out, in spite of what many people who don’t develop software believe, creating and providing open source software involves some notable expenses:

Today you will notice an addition to the Download page: a “Payment” section. Is Caddy no longer free software?

The truth is, it never was. There’s no such thing as free software. The question is, “Who pays the price?”

In the case of Caddy, it has been the developers. The obvious problem with this is that it’s not sustainable in our economy.

[…]

In less than a year, Caddy has well over 20,000 downloads — many of which aren’t counted as the project is cloned and built locally and deployed to both development and production environments. We’ve accrued over 4,500 stars on GitHub, processed hundreds of pull requests, and have dozens of participants in our chat rooms. I can’t speak for other Caddy developers because donations are private, but thanks to very generous donors last year, our web hosting is paid (for now) and I’ve received a little over $150 for my time.

[…]

Keep in mind that commercial offerings for similar web servers cost anywhere from $80 one-time to $1900/yr. (And none of them do what Caddy does.) My text editor costs $70, even just your domain name probably costs ~$12/yr. (If you support us well enough, we’ll send you swag!)

Too many people, typically those who don’t develop software, have the attitude that all software should be free (as in price, but the ambiguity of the term free is why I refer to software with unburdened source code as open source software instead of free software). The app economy is a perfect example of this. It’s why many developers have moved towards nickel and diming customers with in-app purchases or selling a subscription service. When they tried to charge reasonable fees for their software up front people bitched. And now people are bitching because software developers are relying on in-app purchases and subscription services.

Too many people have gotten it into their heads that software should be free (again, as in price). Don’t fall into that trap. Software development incurs a lot of expenses. Time, computers, electricity, and web hosting are just a handful of things needed for software development and none of them are free.

As I said, I haven’t used Caddy. But it does seem to be popular so I’m going to assume it’s a quality product. That being the case, I do hope enough users begin paying for it to keep the developers afloat. It’s always sad to see a good software product fall into obscurity because the developers weren’t being compensated and had to abandon the project for something that actually paid the bills.

Written by Christopher Burg

March 11th, 2016 at 11:00 am

There The Market Goes Again, Solving Problems Without Threats Of Force

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Humans aren’t very good drivers. We’re unable to watch everything that’s going on around us at all times, we’re easily distracted, and many of us seem utterly incapable of putting the cell phone down even when we’re driving. Not surprisingly, especially when you consider the number of vehicles on the road, a lot of collisions happen every day. The State benefits from this because it has create numerous laws that allow it to rake in cash when people crash into one another but do fuck all for safety. Fortunately the market is here to help and it doesn’t even need a gang of armed agents to shoot our pets:

In what may not come as a surprise, vehicles with automatic braking systems are involved in rear-end crashes (that is, accidents in which a vehicle hits a car directly in front of them) at lower rates than vehicles not equipped with the systems, says the Insurance Institute for Highway Safety, or IIHS.

The research focused on Forward Collision Warning (FCW) and Automatic Emergency Braking (AEB), as well as the suite of systems made by Volvo called City Safety, which includes advanced versions of those two technologies. The research examined vehicles from a number of different automakers including Acura, Honda, Mercedes-Benz, Subaru and Volvo, which were equipped with FCW and AEB, as well as vehicles that included just FCW or no crash prevention tech at all.

According to the IIHS research, equipping vehicles with both warning and autobraking systems reduced the rate of rear-end crashes by 39 percent and rear end crashes with injuries by 42 percent. That’s an overall reduction in crashes by 12 percent and a reduction in injury crashes by 15 percent.

Machines can be far better drivers than humans. With the right sensors they can watch everything that’s going on around them, they don’t get distracted, and they can multitask so sending information over a cellular connection doesn’t hinder their ability to drive. Adding automation to automobiles has been improving safety since, at least, power brakes became a thing. As the amount of tasks an automobile can do itself increases we will likely continue to see a correlating increase in safety.

What’s beautiful about these safety systems is that they don’t require the threat of violence to create. I’m sure the State will take credit for these automated breaking systems by making them mandatory but the State didn’t invent them, the market did. Automobile manufacturers have voluntarily developed these systems to make their vehicles safer and therefore, they hope, more appealing to customers.

Meanwhile the State will continue passing laws to needlessly change the roadways and highways, make more things a finable offense, and other such nonsense under the false claims of increasing safety while really increasing its revenue.

Written by Christopher Burg

January 29th, 2016 at 11:00 am