Minor Thoughts from me to you

Archives for Capitalism (page 2 / 2)

Greedy Capitalists or Selfless Socialists?

Michael Lewis writes about Greece, a collectivist nightmare:

The Greek state was not just corrupt but also corrupting. Once you saw how it worked you could understand a phenomenon which otherwise made no sense at all: the difficulty Greek people have saying a kind word about one another. Individual Greeks are delightful: funny, warm, smart, and good company. I left two dozen interviews saying to myself, "What great people!" They do not share the sentiment about one another: the hardest thing to do in Greece is to get one Greek to compliment another behind his back. No success of any kind is regarded without suspicion. Everyone is pretty sure everyone is cheating on his taxes, or bribing politicians, or taking bribes, or lying about the value of his real estate. And this total absence of faith in one another is self-reinforcing. The epidemic of lying and cheating and stealing makes any sort of civic life impossible; the collapse of civic life only encourages more lying, cheating, and stealing. Lacking faith in one another, they fall back on themselves and their families.

The structure of the Greek economy is collectivist, but the country, in spirit, is the opposite of a collective. Its real structure is every man for himself. Into this system investors had poured hundreds of billions of dollars. And the credit boom had pushed the country over the edge, into total moral collapse.

Contrast this to capitalism. When I see a well-off American, I can be reasonably sure that he got where he is through hard-work, thrift, and good luck. The vast majority of people in this land of cowboy capitalism are not cheating on their taxes, bribing the government, or lying.

Which society would you prefer to live in?

(Link and title idea from Russ Roberts.)

This entry was tagged. Capitalism Socialism

How to Do Real Social Justice and Feed Africa's Millions

For the last couple of years, I've been unhappy with the "short term missions" model that many churches use. It seems to involve a lot of good feelings about going somewhere else to experience "true poverty", working there for 1-3 weeks, coming home, showing lots of pictures of really poor people, and talking about the great need for Christian generosity. Now, I am a fairly generous individual. And I don't like seeing poor people suffer in poverty any more than you do. Despite the vast concern for social justice that's put into most trips, I don't think poverty will ever be reduced by them.

Poverty will be eliminated in the 3rd world the same way it was eliminated in the 1st world: growth. And that growth often involves taking the best scientific know-how we have, training people to understand how and why it works, and then letting them get on with the business of making themselves richer. (Growth often involves a strong rule of law and a government that doesn't steal from its own people, but I'll leave that topic for another post.)

I quoted from an article, just a few minutes ago, about the need for appreciating the "modern, science-intensive, and highly capitalized agricultural system" that we have her in America. But what about Africa? Will that really work over there?

Yes (from later in the same article).

Africa faces a food crisis, but it's not because the continent's population is growing faster than its potential to produce food, as vintage Malthusians such as environmental advocate Lester Brown and advocacy organizations such as Population Action International would have it. Food production in Africa is vastly less than the region's known potential, and that is why so many millions are going hungry there. African farmers still use almost no fertilizer; only 4 percent of cropland has been improved with irrigation; and most of the continent's cropped area is not planted with seeds improved through scientific plant breeding, so cereal yields are only a fraction of what they could be. Africa is failing to keep up with population growth not because it has exhausted its potential, but instead because too little has been invested in reaching that potential.

One reason for this failure has been sharply diminished assistance from international donors. When agricultural modernization went out of fashion among elites in the developed world beginning in the 1980s, development assistance to farming in poor countries collapsed. Per capita food production in Africa was declining during the 1980s and 1990s and the number of hungry people on the continent was doubling, but the U.S. response was to withdraw development assistance and simply ship more food aid to Africa. Food aid doesn't help farmers become more productive -- and it can create long-term dependency. But in recent years, the dollar value of U.S. food aid to Africa has reached 20 times the dollar value of agricultural development assistance.

The alternative is right in front of us. Foreign assistance to support agricultural improvements has a strong record of success, when undertaken with purpose. In the 1960s, international assistance from the Rockefeller Foundation, the Ford Foundation, and donor governments led by the United States made Asia's original Green Revolution possible. U.S. assistance to India provided critical help in improving agricultural education, launching a successful agricultural extension service, and funding advanced degrees for Indian agricultural specialists at universities in the United States. The U.S. Agency for International Development, with the World Bank, helped finance fertilizer plants and infrastructure projects, including rural roads and irrigation. India could not have done this on its own -- the country was on the brink of famine at the time and dangerously dependent on food aid. But instead of suffering a famine in 1975, as some naysayers had predicted, India that year celebrated a final and permanent end to its need for food aid.

What if the American church committed to getting over the West's passion for antiquated farming methods and decided instead to take up the mantle that the U.S. government dropped 35 years ago? We might find that we're far more likely to be of some use that way than we currently are. Instead of sending people over to marvel at poverty why don't we fund the same kinds of projects that enabled India to be self-sufficient?

Capitalism Will Feed the World's Poor

I talked earlier this week about capitalism and its blessings, in regard to cleanliness. Consider this, about the blessings of capitalism in regard to food.

What's so tragic about this is that we know from experience how to fix the problem. Wherever the rural poor have gained access to improved roads, modern seeds, less expensive fertilizer, electrical power, and better schools and clinics, their productivity and their income have increased. But recent efforts to deliver such essentials have been undercut by deeply misguided (if sometimes well-meaning) advocacy against agricultural modernization and foreign aid.

In Europe and the United States, a new line of thinking has emerged in elite circles that opposes bringing improved seeds and fertilizers to traditional farmers and opposes linking those farmers more closely to international markets. Influential food writers, advocates, and celebrity restaurant owners are repeating the mantra that "sustainable food" in the future must be organic, local, and slow. But guess what: Rural Africa already has such a system, and it doesn't work. Few smallholder farmers in Africa use any synthetic chemicals, so their food is de facto organic. High transportation costs force them to purchase and sell almost all of their food locally. And food preparation is painfully slow. The result is nothing to celebrate: average income levels of only $1 a day and a one-in-three chance of being malnourished.

If we are going to get serious about solving global hunger, we need to de-romanticize our view of preindustrial food and farming. And that means learning to appreciate the modern, science-intensive, and highly capitalized agricultural system we've developed in the West. Without it, our food would be more expensive and less safe. In other words, a lot like the hunger-plagued rest of the world.

(Hat tip to Wilson Mixon, at Division of Labour.)

Capitalism: The Anti-Pollutant

Back on Earth Day, Don Boudreaux wrote a nice letter to USA Today.

On this Earth Day, Bjorn Lomborg scrubs with facts the noxious notions and emotions that pollute public discourse about the environment ("Earth Day: Smile, don't shudder," April 21). Especially useful is his point that the world’s number one environmental killer remains the indoor air pollution suffered by persons in poor countries who burn wood, waste, and dung to cook their meals and to heat their homes.

As the historian Thomas Babington Macaulay reminded us, it wasn't until Europeans industrialized – or, as we say today, enlarged their 'carbon footprint' – that they were saved from that same filthy fate. Here’s Macaulay's description of the dwelling of a typical 17th-century Scottish highlander:

You'll have to click through to read the full letter. But his point is sound. For the average person, capitalism has't increased pollution. It's greatly decreased it.

Goldberg, Smith, and Hayek on Socialism

I recently read two good articles, from Jonah Goldberg, on socialism.

Capitalism vs. Capitalists

If by "capitalist" you mean someone who cares more about his own profit than yours; if you mean someone who cares more about providing for his family than providing for yours; if you mean someone who trusts that he is a better caretaker of his own interests and desires than a bureaucrat he's never met, often in a city he's never been to: then we are all capitalists. Because, by that standard, capitalism isn't some far-off theory about the allocation of capital; it is a commonsense description of what motivates pretty much all human beings everywhere.

And that was one of the reasons why the hard socialism of the Soviet Union failed, and it is why the soft socialism of Western Europe is so anemic. At the end of the day, it is entirely natural for humans to work the system--any system--for their own betterment, whatever kind of system that may be. That's why the black-market economy of the Soviet Union might have in fact been bigger than the official socialist economy. That is why devoted socialists worked the bureaucracy to get the best homes, get their kids into the best schools, and provide their families with the best food, clothes, and amenities they could. Just like people in capitalist countries.

It's why labor unions demanded exemptions and "carve-outs" from Obamacare for their own health-care plans. And why very rich liberals still try their best to minimize their taxes.

The problem with socialism is socialism, because there are no socialists. Socialism is a system based upon an assumption about human nature that simply isn't true. I can design a perfect canine community in which dogs never chase squirrels or groom their nether regions in an indelicate manner. But the moment I take that idea from the drawing board to the real world, I will discover that I cannot get dogs to behave against their nature--at least not without inflicting a terrible amount of punishment. Likewise, it's easy to design a society that rewards each according to his need instead of his ability. The hard part is getting the crooked timber of humanity to yield to your vision.

To understand that last point better, consider these two quotes.

From Hayek's The Fatal Conceit:

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

From Adam Smith's The Theory of Moral Sentiments:

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might chuse to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

(Hat tip to Russ Roberts, for the quotes.)

Finally, here's Jonah Goldberg writing about What Kind of Socialist is Barack Obama?

By these lights, socialism is a very sophisticated, highly technical, and historically precise phenomenon that has nothing to do with the politics or ideas of the present moment, and conservatives who invoke the term to describe Obama's policies and ideas are at best wildly imprecise and at worst purposefully rabble-rousing. And yet when liberals themselves discuss socialism and its relation to Obama, the definition of the term "socialist" seems to loosen up considerably.

... But is it correct, as an objective matter, to call Obama's agenda "socialist"? That depends on what one means by socialism. The term has so many associations and has been used to describe so many divergent political and economic approaches that the only meaning sure to garner consensus is an assertive statism applied in the larger cause of "equality," usually through redistributive economic policies that involve a bias toward taking an intrusive and domineering role in the workings of the private sector. One might also apply another yardstick: an ambivalence, even antipathy, for democracy when democracy proves inconvenient.1 With this understanding as a vague guideline, the answer is certainly, Yes, Obama's agenda is socialist in a broad sense. The Obama administration may not have planned on seizing the means of automobile production or asserting managerial control over Wall Street. But when faced with the choice, it did both. Obama did explicitly plan on imposing a massive restructuring of one-sixth of the U.S. economy through the use of state fiat--and he is beginning to do precisely that.

As they say, read the whole thing.

An example of private property helping the poor

I finished listening to an old EconTalk podcast, during my commute this morning. Russ Roberts was talking to Karol Boudreaux about her fieldwork on property rights and economic reforms in Rwanda and South Africa. They spent the first half of the conversation talking about Rwandan reforms and the second half talking about South African reforms. I was most fascinated by the South African portion. (It starts at about 30 minutes into the podcast.)

Karol talked about Langa township in South Africa. It was established as a place for blacks to live, but they weren't given any rights to the properties whatsoever. They had to get permission from the city government even to paint or repair their homes. By 1994, the government had started to turn over ownership to the people who lived in the homes.

I was thrilled to hear the story of Sheila, a very entrepreneurial woman in Langa township. (Her story starts about 39 minutes into the podcast.) Sheila had been a domestic helper in Capetown when she saw a receipt for two glasses of wine and a plate of cheese. She was stunned to see that that sold for more than she got paid in a month. She knew she was worth more than that. So, she decided to prove it.

After a few false starts, she hit on the right business plan. Tourists had been driving through Langa Township for years, to see the results of apartheid. But they never got out of their tourist buses. Sheila decided to give them an opportunity to start getting out. She opened up a restaurant in her house (after she'd received the title to it). She now serves meals to tourists, while telling them the story of her life and her experiences under apartheid. Her restaurant is well known for "authentic" South African food. It's primarily advertised through word of mouth and bloggers (how great is that?). The restaurant doesn't just support Sheila. She also employs five other people to keep things humming along.

Does South Africa have more economic freedom than the U.S.? In some ways, it does. Try opening a restaurant out of your home and see how long it lasts before the local authorities shut it down. But, in South Africa, Sheila was able to use her home to create a living for herself, create income for others, create something for tourists to see and do, and educate many people along the way. And it all happened because she had the economic freedom to use her property in the way she saw fit. Her tourist guests use their freedom to eat where they see fit and her desire to keep her restaurant's reputation protects her customers as they eat.

Sheila's story is a perfect example of the win-win results that come from letting people make their own economic decisions and bear both the profits and losses that they generate. It's also an example of how far you can go if you decide to change your circumstances instead of complaining about them.

Don't Fear the Rich

Who should you fear more, rich people or your local government bureaucrats? That's an easy question. You should fear the nice lady down at Village Hall. She has far more control over your life than any member of the upper class.

Walter Williams states it beautifully.

Warren Buffett and Bill Gates, with about $60 billion in assets each, are America's richest men. With all that money, what can they force us to do? Can they take our house to make room so that another person can build an auto dealership or a casino parking lot? Can they force us to pay money into the government-run retirement Ponzi scheme called Social Security? Can Buffett and Gates force us to bus our children to schools out of our neighborhood in the name of diversity? Unless they are granted power by politicians, rich people have little power to force us to do anything.

A GS-9, or a lowly municipal clerk, has far more life-and-death power over us. It's they to whom we must turn to for permission to build a house, ply a trade, open a restaurant and myriad other activities. It's government people, not rich people, who have the power to coerce and make our lives miserable. Coercive power goes a long way toward explaining political corruption.

I don't fear the rich. I fear a President and Congress who think they know how to run my life better than I do. I fear state and local governments that have the power to fine and imprison me if I don't live by their prejudices. I fear the government.

Do you?

The Blessings of Used Book Sellers

It seems that some people get annoyed when used book sellers visit library book sales.

Book dealers armed with handheld ISBN scanners are threatening to take over the used book sales run by volunteer fundraising groups for the Madison Public Library system, Morris said.

The scanners tell them how many copies of a title are in circulation and what it generally sells for -- powerful information to have if your aim is to find cheaply priced books that can be sold online for much more than you paid.

"You see them just literally hunched over ... shelves of books," Morris said, blocking book lovers like him from perusing the titles and maybe picking up a bargain they actually intend to read.

Thomas Boykoff, president of the board of directors for the Central Library Friends group, and Margaret Rentmeesters, who manages the book store at the library, acknowledge that the book dealers have become more common at book sales over the last two or three years.

But profit sometimes motivates unpleasant behavior.

"They sort of claim an area," Boykoff said, "Some of them just don't give a damn."

How horrible! How, how ... profit-driven! How evil! Or is it?

I love reading, but I just don't have time to get out to library book sales. While I wish I could, the timing just never quite works out.

Thankfully, there are people out there willing to trade their time for my money. They'll pore over the stacks, weeding through the books that no one wants, to find the books that someone wants. Then they'll list these books on Amazon.com, Half.com, Alibris, Deal Oz, AbeBooks, Powell's Books or other similiar sites. I can browse the online sites, find what I want, and have it delivered directly to my door.

These book sellers are no nuisance. They're a blessing and I'm grateful for them.

Aston Martin DB6 Couch

Here's another symbol of how rich our country is: the Aston Martin DB6 Couch:

db6couch.jpg This couch is an exact replica of an Aston Martin DB6 rear end. It's painted in a classic Aston Martin color, Silver Birch. The red leather is finished off with a Y-stitch on each cushion. Polished to perfection, this couch would look good in a garage full of Astons. You might not want to put this work of art in the garage though, at over $7,300 the thought of accidentally getting a little grease on the car couch might make you think twice. The limited edition couch comes with an engraved number plate and is available in any color scheme you would like. Matching headrests are not included.

We're rich enough that someone can make a couch that looks like a cars. Not only can the bright entrepreneur sell said couch, he can make a profit on it as well!

Next up: If enough people to buy the couch, competitors will enter the market in search of similar profits. As supply rises, prices will decrease. Soon, everyone can own their piece of an Aston Martin DB6. Start buying people -- I want my cheap DB6 couch!

Things that Might Interest Only Me

Diet and Fat: A Severe Case of Mistaken Consensus - New York Times

In 1988, the surgeon general, C. Everett Koop, proclaimed ice cream to a be public-health menace right up there with cigarettes. Alluding to his office's famous 1964 report on the perils of smoking, Dr. Koop announced that the American diet was a problem of "comparable" magnitude, chiefly because of the high-fat foods that were causing coronary heart disease and other deadly ailments.

That was a ludicrous statement, as Gary Taubes demonstrates in his new book meticulously debunking diet myths, "Good Calories, Bad Calories" (Knopf, 2007).

It may seem bizarre that a surgeon general could go so wrong. After all, wasn't it his job to express the scientific consensus? But that was the problem. Dr. Koop was expressing the consensus. He, like the architects of the federal "food pyramid" telling Americans what to eat, went wrong by listening to everyone else. He was caught in what social scientists call a cascade.

Because of this effect, groups are surprisingly prone to reach mistaken conclusions even when most of the people started out knowing better, according to the economists Sushil Bikhchandani, David Hirshleifer and Ivo Welch. If, say, 60 percent of a group's members have been given information pointing them to the right answer (while the rest have information pointing to the wrong answer), there is still about a one-in-three chance that the group will cascade to a mistaken consensus.

In the Battle Against Cancer, Researchers Find Hope in a Toxic Wasteland - New York Times

Death sits on the east side of this city, a 40-billion-gallon pit filled with corrosive water the color of a scab. On the opposite side sits the small laboratory of Don and Andrea Stierle, whose stacks of plastic Petri dishes are smeared with organisms pulled from the pit. Early tests indicate that some of those organisms may help produce the next generation of cancer drugs.

For decades, scientists assumed that nothing could live in the Berkeley Pit, a hole 1,780 feet deep and a mile and a half wide that was one of the world's largest copper mines until 1982, when the Atlantic Richfield Company suspended work there. The pit filled with water that turned as acidic as vinegar, laced with high concentrations of arsenic, aluminum, cadmium and zinc.

Today it is one of the harshest environments in the country. When residents speak of the pit, they often recall the day in 1995 when hundreds of geese landed on the water and promptly died.

But the pit itself is far from dead. Over the last decade, Mr. Stierle said, the couple have found 142 organisms living in it and have "isolated 80 chemical compounds that exist nowhere else."

Panel Sees Problems in Ethanol Production - New York Times

Greater cultivation of crops to produce ethanol could harm water quality and leave some regions of the country with water shortages, a panel of experts is reporting. And corn, the most widely grown fuel crop in the United States, might cause more damage per unit of energy than other plants, especially switchgrass and native grasses, the panel said.

The report noted that additional use of fertilizers and pesticides could pollute water supplies and contribute to the overgrowth of aquatic plant life that produces "dead zones" like those in the Chesapeake Bay, the Gulf of Mexico and elsewhere.

Book now for the flight to nowhere - Times Online

An Indian entrepreneur has given a new twist to the concept of low-cost airlines. The passengers boarding his Airbus 300 in Delhi do not expect to go anywhere because it never takes off.

In a country where 99% of the population have never experienced air travel, the "virtual journeys" of Bahadur Chand Gupta, a retired Indian Airlines engineer, have proved a roaring success.

"Some of my passengers have crossed the country to get on this plane," says Gupta, who charges about £2 each for passengers taking the "journey".

The Odyssey Years - New York Times

People who were born before 1964 tend to define adulthood by certain accomplishments -- moving away from home, becoming financially independent, getting married and starting a family.

In 1960, roughly 70 percent of 30-year-olds had achieved these things. By 2000, fewer than 40 percent of 30-year-olds had done the same.

Overlawyered: Welcome to West Virginia: Joe Meadows v. Go-Mart

Joe Meadows was drunk. Very drunk. 0.296 percent blood-alcohol content drunk, 12 or 13 beers worth. Fortunately, he didn't drive in that state. Unfortunately, he chose to sleep it off by resting under a parked 18-wheel truck. More unfortunately, the driver, Doug Rader, who didn't check to see whether there might be drunks lying under his truck at 1:40 a.m., ran over Meadows. Rader had EMT training, and was able to save Meadows's life, but Meadows lost a leg, and sued both the truck company and the store that owned the parking lot. A Kanawha County jury decided that Meadows was only a third responsible for his injury, which means he "only" gets two thirds of the three million dollars they awarded.

What is Orthodoxy? (Part 1, Part 2)

What is the "orthodoxy" in our "humble orthodoxy" anyway? What do we mean when we say "orthodoxy?" "What must we agree upon? What are the basics, what are the essentials?"

Now this is a dangerous question. And we have to proceed very carefully here, because if you take this wrong, this question can sound a little like the teenager in the youth group asking, "How far can I go? What's the least I have to believe and still be considered a Christian? What can I get away with?" Friends, that is not the spirit in which I'm posing this question. You want to pursue truth in every single matter about which God has revealed Himself in His word. If He's gone to the trouble of revealing Himself, you should care as a Christian, you should want to understand it, so that you can know more about who this God is that you're worshiping.

Part of what we need for doctrinal discernment is to understand what must be agreed upon and how serious errors are. Because you know not all errors are created equal--they're not all the same. We need to understand the significance of the doctrine that is in question.

... So God, the Bible, the gospel.

Those are the things that we must agree upon to have meaningful cooperation as Christians. True Christian fellowship cannot be had with someone who disagrees with us on these matters. These are the essential of the essentials.

Finally, for Adam, Pastor John Piper's view of Ayn Rand's philosophy. Several years ago, after I read Adam's copy of Atlas Shrugged, I disagreed with her view of altruism. But I couldn't put my feelings into words. Now I find that John Piper has.

Atlas Shrugged Fifty Years Later :: Desiring God

My Ayn Rand craze was in the late seventies when I was a professor of Biblical Studies at Bethel College. I read most of what she wrote both fiction and non-fiction. I was attracted and repulsed. I admired and cried. I was blown away with powerful statements of what I believed, and angered that she shut herself up in what Jonathan Edwards called the infinite provincialism of atheism. Her brand of hedonism was so close to my Christian Hedonism and yet so far--like a satellite that comes close to the gravitational pull of truth and then flings off into the darkness of outer space.

Sentences like these made me want to scream. No. No. No. Altruism (treating someone better than he deserves) does not have to involve "betraying your values" or "sacrificing a greater value to a lesser one." In other words, I agreed with her that we should never sacrifice a greater value to a lesser one. But I disagreed that mercy (returning good for evil) always involved doing that.

The Miracle of Specialization

One of the great things about the division of labor -- having each person do one job and do it well -- is the lengths to which complete strangers will go to make each others' lives better.

Take, for example, road signs. We drive by thousands of them each year. Have you ever thought about what it would take to make a better road sign? I haven't. But Don Meeker has.

The Road to Clarity - New York Times

In 1989, after his success with the waterways project, the State of Oregon approached Meeker with a commission to think up a roadside sign system for scenic-tour routes. The problem sounded modest enough: Add more information to the state's road signs without adding clutter or increasing the physical size of the sign itself. But with the existing family of federally approved highway fonts -- a chubby, idiosyncratic and ultimately clumsy typeface colloquially known as Highway Gothic -- there was little you could add before the signs became visually bloated and even more unreadable than they already were. ""I knew the highway signs were a mess, but I didn't know exactly why," Meeker recalled.

Around the same time Meeker and his team were thinking about how to solve the problem of information clutter in Oregon, the Federal Highway Administration was concerned with another problem. Issues of readability were becoming increasingly important, especially at night, when the shine of bright headlights on highly reflective material can turn text into a glowing, blurry mess. Highway engineers call this phenomenon halation and elderly drivers, now estimated to represent nearly a fifth of all Americans on the road, are most susceptible to the effect.

"When the white gets hit, it explodes, it blooms," Meeker, who has the air of a scruffy academic, went on to say.

And, he spent the next fifteen years coming up with a new font for road signs and getting it approved by the Federal Highway Administration. Isn't that fantastic?

Only an economic system that frees people from subsistence living can give people enough freedom and flexibility to spend 15 years designing a better road sign.

Or, take the story of UPS.

U.P.S. Embraces High-Tech Delivery Methods - New York Times

But increasingly, it is the researchers at its Atlanta headquarters, its technology center in Mahwah, N.J., and its huge four-million-square-foot Louisville hub who are asking the questions that will drive the company's future.

What if the package contains medicine that could turn from palliative to poison if the temperature wavers? What if it is moving from Bangkok to Bangor and back to Bangkok, and if customs rules differ on each end? And what if the package is going to a big company that insists on receiving all its packages, no matter who ships them, at the same time each day?

Increasingly, it is the search for high-tech answers to such questions that is occupying the entire package delivery industry. U.P.S. and FedEx are each pumping more than $1 billion a year into research, while also looking for new ways to cut costs.

Customers of both FedEx and U.P.S. can now print out shipping labels that are easily scannable by computers. Meteorologists at both companies routinely outguess official Weather Service forecasts. And both are working with the Federal Aviation Administration to improve air safety and scheduling.

The research at U.P.S. is paying off. Last year, it cut 28 million miles from truck routes "” saving roughly three million gallons of fuel "” in good part by mapping routes that minimize left turns. This year, U.P.S. began offering customers a self-service system for redirecting packages that are en route.

And now the U.P.S. researchers are working on sensors that can track temperatures of packages, on software that can make customs checks more uniform worldwide and on scheduling processes that accommodate the needs of recipients as well as shippers.

Absolutely incredible. UPS and FedEx are spending a combined $1 billion -- just to find a way to get a package to your door faster, cheaper, safer. Their researchers don't know me and they'll probably never meet me, but they're intensely focused on making my life better.

Only the profit motive produces that kind of incentive. (When was the last time a motor vehicle or postal employee cared about your time or happiness?) Only the division of labor allows that kind of single-focused effort.

Capitalism may not be a perfect economic system, but it's the only one I ever want to live in.

Road Logic -- As Seen on Slashdot

As seen on Slashdot

Garbage collection is fine as a private service, but roads? What would possibly improve by letting individual profit-seeking companies control where and when you are allowed to drive?

It's a simple answer. Individual profit-seeking companies only make a profit if you can drive when and where you want. Right now, only one "company" provides roads -- your local state government. And if they don't feel like building where you want to drive, tough luck. A private company would have a financial incentive to build a road where you want to drive.

Example: The population on the west side of Madison has been growing. More people have been moving to West Madison and to the West Madison suburbs. Traffic on the Madison beltline has been increasing, especially in certain sections of the western half. Traffic on County Road M has also been increasing. In some places, it's only a one-lane road.

The state of Wisconsin has no plans to widen the beltline or CR-M. They've publically stated that the earliest they'd even consider doing something would be around 2014. As a result, I increasingly do everything possible to avoid CR-M and the beltline during periods of high traffic.

Unlike the state, a private company would have an incentive to widen both of these roads and increase capacity. More capacity means more drivers. More drivers means more profit. It's a win-win scenario. They get more money, I get a faster commute. This is the beauty of free-market capitalism -- both parties win or there is no deal.

All of this only works, of course, as long as there is more than one private company building roads. Two competing companies would each have an incentive to get me where I want to go as quickly and efficiently as possible. A private company that has no competition -- for instance, one granted a monopoly by the state or local government -- would likely do little better than the government does. Competition is the magic ingredient that makes a free-market work.

So, why do you think roads should be government controlled instead of privately owned?

Living On the Excess

America is so rich that it's possible to make a living off of our trash. (You say wasteful, I say rich. It boils down to the same thing.) Madison's Capital Times published an article about the burgeoning art of dumpster diving.

So much is discarded, in fact, that it is possible to live almost entirely off of trash, or as New York dumpstering organizer and founding member of the Web site freegan.info Adam Weissman puts it, the excesses of capitalism. Weissman sustains himself almost exclusively by dumpstering, or as he refers to it, "urban foraging." Though he also trades items and gardens, the bulk of his sustenance is from garbage, he says in a phone interview.

He quotes Marx and talks about "opt[ing] out of the capitalist economic system." So, he's a bit of a nut. 'Cause, really, he'd be homeless and starving if it wasn't for the capitalist economic system that he' opting out of. Still, there is a lot of waste in a rich society. Some are using that waste to help others.

"The first time I saw it I was amazed and taken aback. There was more food than you've ever seen, just there. ... Sometimes it still hits you -- all this food is still good," says Spike Appel, frequent dumpster diver and chief organizer of the local chapter of Food Not Bombs, an "anarchist community project" that provides free vegetarian meals to the public.

Much of the food donated to Food Not Bombs is one step from the dumpster. This is not to say the produce, dips and baked goods are in any way spoiled. Ripe, organic produce is a hallmark of the meals provided by Food Not Bombs, as is the fact that they do not serve meat.

While the Food Not Bombs Web site advocates dumpstering as a way of obtaining food, the Madison chapter works with local businesses for donations. Food Not Bombs has an international following, and each chapter varies according to the resources in their community.

Interesting, no? Dumpstering is illegal. Many of the business that dump food, rather than donating it, do so out of fear of lawsuits and food safety regulations. The vast majority of that food is still perfectly safe. Why shouldn't we relax the regulations and remove the fear of lawsuits? Why not let that food be legally donated to the hungry rather than forcibly wasted?

Creating Wealth Through Innovation

Wealth is created every day. Wealth is created when someone creates something new and fulfills a need that other people didn't even realize was unfulfilled. Wealth is created when someone figures out how to produce an existing product faster or cheaper than it can currently be produced. Individuals innovate for several main reasons: to fulfill a need of their own, to save money, or to fulfill a need revealed by others.

Fulfilling these needs can often make an innovator very rich. Liberals come along and tax it all away for the greater good of society -- but that's another blog post.

Robert Jordan is a recent Wisconsin success story.

Robert Jordan's 20-year career as a long-distance trucker involved a lot more than hauling cheese.

After buying his own truck in 1993, he used the cab as a mobile laboratory to experiment with energy-saving ideas that would cut expenses and put more money in his pocket.

Now those experiments are paying off. Jordan, 51, of Juneau, has patented a battery system to run a truck's electronic equipment so idling isn't necessary. He's started a business called Idle Free Systems and negotiated agreements with Mack Trucks and Chiquita Brands to use his system.

With three employees, Jordan moved this month into manufacturing space in Watertown. He said he hopes to sell about 200 units this year at $6,000 each, which would mean first-year revenue of $1.2 million.

You may think that shoe innovation has gone about as far as it can go. You may think that shoes are the most stable, dependable market available. You'd be wrong. Mark Klein discovered a completely untapped shoe market.

In late July, Mr. Klein's company, Skins Footwear, intends to break the shoe in two, giving it an outer part, including the sole and upper, which he calls a "skin," and a removable inner part, which he calls the "bone."

"The bone is the constant fit and feel," he says. "Then there's this blank canvas for you to express yourself with the skins.""

The idea is that a shopper will buy a bone, for about $60, and several skins, which will range from $125 to $300. People will shift from one skin to the next, depending on what they're doing, much the way they can with other kinds of apparel.

Mr. Klein, who is 33, says he thinks that his patented skin-and-bones concept will eliminate the problem people have with shoes that look good but don't fit correctly, since the bone should guarantee the same fit for any skin in that size. He also says frequent travelers will appreciate the chance to pack only the foldable, lightweight skins, instead of full pairs of shoes.

Sounds good to me. The suggested price points are a little high right now, but if they come down a bit I'd certainly be willing to buy a bone and some skins.

Speaking of shoes, check out Masai Barefoot Technology created by Swiss engineer Karl Müller.

In the early 1990s, Swiss engineer Karl Müller realized that both shoes and backache are unknown to the Masai tribesmen - and that there is a causal connection between these two facts. By walking barefoot on the natural, soft, uneven ground of their East African homeland, the Masai activate also those muscles that atrophy when on walks on hard, even surfaces wearing conventional shoes.

During a visit to Korea he made the startling discovery that walking barefoot over paddy fields alleviated his back pain. Back in Switzerland, Müller began to develop a footwear technology that would make the natural instability of soft ground such as Korean paddy fields or the East African savannah accessible also to those, who have to walk on hard surfaces. In 1996, after years spent on research and development, Masai Barefoot Technology was mature enough to be launched on the market. MBTs are now available in over twenty countries, and approximately one million pairs of this revolutionary footwear technology are sold every year.

Speaking of Africa, the next story caught my eye because it mentioned the ideological division between those that want to help Africa through trade and those that want to help Africa through aid. (I wrote about African aid and trade just a few days ago.) As I read through the story, however, I discovered a great story of risk and innovation.

In 1997, Mr. Conteh recalled in an interview, he heard Laurent D. Kabila, then the country's president, deliver a speech in which he called upon his countrymen to rebuild Congo's infrastructure after the 30-year dictatorship of Mobutu Sese Seko. Mr. Conteh, who had no experience in telecommunications, said he was inspired. He decided to build the nation's first GSM (Global System for Mobile communications) digital network.

Mr. Conteh said he went, cap in hand, to the minister of communications to ask for the country's first GSM license. In January 1998 he got it "” but he first had to pay the government a license fee of $100,000. Over the years, and with little explanation, he said, the government, which is often terribly short of money, increased the license fee, first to $400,000, then $2 million.

Throughout the early days of his company, Mr. Conteh faced challenges unknown to Western businesses. Once, after equipment providers declined to send engineers to Congo during a dangerous time in the country's unending civil strife, he encouraged the citizens of Kinshasa, the capital, to collect scrap metal and weld them into a cellphone tower.

By the middle of 2006, Vodacom Congo had more than 1.5 million subscribers, according to Vodacom's annual report. Today, Mr. Conteh says, the company he founded has more than three million subscribers who have spent, on average, around $50 for a handset and who prepay about $2 for every five minutes of talk time. He says a recent offer for his shares valued Vodacom Congo at more than $1.5 billion. (He refused to name the interested party.)

Mr. Conteh is building a telecommunications network where none existed before. With 600 employees and 5,000 contractors, Vodacom Congo is one of his country's biggest employers. If he realizes his ambition to create a stock market and offer shares in his company, he will have created new wealth.

Wow. That's impressive. All four of these stories are impressive. All four of these stories are also great examples of how wealth is really created. Be wary of those who would promise wealth through redistribution. True wealth comes from innovation, not redistribution. Rather than focusing on shifting around existing wealth, we should be focusing on creating new wealth. These four men vividly demonstrated how it works.

This entry was tagged. Capitalism Innovation

WalMart and Corporate Welfare

I don't always agree with Capital Times columnist Mike Ivey, but I do today. He writes about WalMart's appetite for corporate welfare:

Wisconsin's largest employer draws more in corporate welfare than it pays in state taxes. Wal-Mart pocketed $852 million in net profits in Wisconsin off value-hungry consumers between 2000 and 2003. Over that same period, Wal-Mart paid only $3 million in corporate income tax here. That's a tax rate of 0.35 percent, a fraction of the 7.9 percent rate corporations doing business in our fair state are supposed to pay.

Pardon my West High math, but if Wal-Mart paid the going tax rate here it would have owed closer to $67 million. The Arkansas-based retailer has benefited from more than $20 million in public economic benefits in Wisconsin, according to one national study. Good Jobs First reported in 2004 that Wal-Mart stores and distribution centers in Baraboo, Beaver Dam, Menomonie, Milwaukee and Tomah received at least $21.75 million in local tax subsidies, the report says.

I'm a fan of WalMart and I applaud their efforts to bring lower prices to shoppers. But what they're doing in Wisconsin is neither "capitalism" nor "free enterprise". It's looting, pure and simple. The local governments that decided to give tax money -- taken from individuals -- to a big business should be vilified, demonized, and run out off office on a rail.

Things I Find Interesting

In no particular order:

  • Tibetan monks, who overstayed their immigration visas, were arrested by a SWAT team. A SWAT team? For Tibetan monks? It's not enough that they get visited by paramilitary Chinese troops? They have to get raided by paramilitary Americans as well?

  • Frank Miller is writing "Holy Terror, Batman!", a story that chronicles Batman's fight against al-Qaeda. Says Miller:

I'm doing this mainly as an explosion from my own gut in reaction to what's happening now, but also as a reminder to people who've seem to have forgotten that we're up against an utterly ruthless existential foe who is as vile as any we've ever faced. I'm appalled at the equivocations, and I wish that the entertainers of our time had the spine and the focus that the ones who faced down Hitler did. Superman punched out Hitler. So did Captain America. That's one of the things they're there for. These are symbols of our people, of our country. These are our folk heroes. It just seemed to be kind of silly to be chasing around the Riddler when you've got al-Qaeda out there.

  • Kevin Robke is selling DoubleUps, sheets designed to end the problem of sheet-stealing, forever.

  • Rule changes for figure skating have had some unintended consequences: skaters are skating uglier, less artistic programs because falling is more valuable than skating clean.

  • Ever wondered about the origins of ethnic slurs? I have. Callimachus has the answers.

  • Who is more objective about reporting: the "real" reporters or the bloggers? Take a look at reactions to the Gillette Fusion Razor and see for yourself.

  • The New York Times reports favorably on the many ways that capitalists are solving societal needs like poverty, literacy, and the environment.

  • David Friedman thinks that police officers should execute search warrants in the nude. He has good reasons too.

  • Did you know that your parking spot is worth more than your car?

  • Most people talking about the trade deficit are criminally clueless. (I'm looking at you, Lou Dobbs.)