Guest Post: Dave Chappelle Understands Free Trade Better Than Most Politicians

Chappelle’s words of wisdom should be inscribed on plaques to be placed on the wall in the White House.


by Allan Golombek

Dave Chappelle is a great comedian. But he may be an even better economist. He certainly understands free trade a lot better than some of the people who are currently in charge of directing U.S. trade policy.

In a recent comedy routine, Chappelle provided a succinct explanation of why it makes more sense for the United States to import some goods from China rather than try to pursue a protectionist trade policy aimed at producing everything domestically.

The Difference Between Wearing and Making Nikes

Chappelle summarized President Trump’s position vis-à-vis China: “I’m gonna go to China, and I’m gonna get these jobs from China and bring ‘em back to America.” Chappelle then interrupted his Trump soliloquy, asking: “For what, so iPhones can be $9,000? Leave that job in China where it belongs … I wanna wear Nikes, I don’t wanna make those things. Stop trying to give us Chinese jobs.”

Chappelle’s words of wisdom should be inscribed on plaques to be placed on the wall in the White House, the office of the US Trade Representative, and the Department of Commerce — and the trade ministries of some other countries. The reason people buy imported goods is because they feel they are getting a better deal for their money than if the product was made domestically.

Would it make sense for us all to make our own footwear, assemble our own smartphones, grow our own food, and — for that matter — build our own homes? If we tried to do that, where would we get the time and energy to treat cancer, create new technologies and medications, or give Pilates lessons? If we had to make our own iPhones and Nikes, would we be able to afford to buy them? And what would we have to give up to be able to?

Moreover, by offshoring the assembly of iPhones and Nikes, we actually keep domestic jobs competitive. Most of the value added to an iPhone occurs in the United States — Chinese workers assembling them and adding some of the parts just makes Americans more competitive. Nike employs tens of thousands of people in Vietnam, but the company also employs thousands in metropolitan Portland — jobs that pay better, jobs that can be maintained only by offshoring some of the less complex and lower-paying work.

Warning: NSFW Language

An Economy Needs More than Exports

Growing an economy is not a matter of turning imports into exports. Robust economies do more of both. The opportunity to import actually helps achieve productivity and prosperity more than the opportunity to export because it does more to broaden choice. Importing widens the circle of potential suppliers competing to meet the needs of intermediate producers. When a country opens its borders to imported goods, it facilitates comparative advantage, importing inputs from countries that are more efficient at making them — and thereby making domestically-produced final products more competitive.

On the other hand, countries that have tried to fight reality and produce everything for themselves have paid the price. In which economy would you rather live — North or South Korea? In the early 1970s, both countries had roughly the same GDP per capita. One of the reasons South Korea has raced ahead is that North Korea has pursued autarky. South Korea has become so much wealthier not simply because it exports far more, but because it exports and imports far more. By buying things they need from other countries, they free themselves to do the things they are best at doing. Importing is not a necessary evil; it is a necessary ingredient.

Unfortunately, many look at imports as money leaving an economy instead of value entering it. Many look back fondly to a time when almost all goods sold in the United States were manufactured in the United States. Perhaps we could resurrect that world — but only if we were willing to give up the iPhones, Nikes, laptops, medical technologies, and all of the other modern goods that trade has made possible.

The reason we are able to maintain a 21st-century lifestyle is because we pursue a 21st-century economy. Bringing back the 1970s economy would also entail bringing back the 1970s lifestyle that came with it.

By importing from developing countries, we are in effect hiring people at a cheaper price than we could obtain at home. There is a word for the result — “progress.”

Reprinted from RealClearMarkets.

Allan Golombek is a Senior Director at the White House Writers Group.

This article was originally published on FEE.org. Read the original article.

Guest Post: No, Capitalism Is Not Ruining Your Christmas Market

by Bill Wirtz

Glowing Christmas lights fill the cold streets of medieval European cities with little wooden booths selling steaming hot wine and cinnamon biscuits. However, the traditional look and idyllic atmosphere seem to be threatened by the evil of modern-day capitalism. That is, at least, the common saying of visitors of these markets. But are big companies actually ruining your favorite winter experience?

All We Want for Christmas Is... Sales
Your local Christmas market is a money-making machine regardless of it selling candles or car insurance. 

Christmas market, Barcelona, 1986

First off: Christmas markets are, at least in Europe, a billion euro industry. In 2014, the largest sales were counted in Germany with almost €2.5 billion ($2.9 billion) in revenue, followed by France with €820 million ($965 million). In a more detailed analysis on Christmas markets in the UK, researchers found that in the example of the city of Manchester, an average stall at a Christmas market generated £3,500 ($4,600) per day.

They add that if you also account for the tourism factor — as large amounts of visitors are either from abroad or coming from a different city and staying overnight — you're seeing spending of £10 million ($13.3 million). Christmas markets in Brussels, Belgium, and Strasbourg, France count between 1.5 and 2 million visitors. The Christmas market on Paris' Champs-Elysées counts over 200 booths and over a staggering 15 million visitors each year.

Your local Christmas market is a money-making machine regardless of it selling candles or car insurance. Claiming that the hot wine salesman in his wooden booth isn't as interested in making a profit as Coca-Cola which is giving out free samples would mean being blinded by emotion.

It's Beginning to Look a Lot Like... Prosperity
When presented with the choice of living under socialism or free-market capitalism, even those who preach socialism choose the latter. 

The Christmas spirit is supposed to advocate for empathy and compassion, as the biblical stories describe Jesus, a poor man, who preached charity despite receiving very little of it in return. These days, most "charity" is in the hands of the government through welfare programs. The reasons to oppose the welfare state are numerous, but outside of the inefficiency and cost of government bureaucracy, both government spending on welfare and charity fail to create value.

World Bank and UN reports celebrate a global success story: between 1990 and 2008, the world cut by half the share of the world’s poor, those living on less than $1.25 a day. The United Nations also points out that 2.6 billion people have gained access to improved drinking water while the number of hungry people has declined by 20 percent in the last 20 years. 

The origin of development is, of course, the wealth created by entrepreneurs and large businesses which have not only provided jobs in areas in which there were none before but whose reduced production costs have made high-end goods accessible to all. 

Compare this to socialism, the likes of which create starvation in Venezuela and North Korea or unclean drinking water in Cuba, not to speak of the massive injustices and infractions on people's individual liberty. When presented with the choice of living under authoritarian socialism or living under free-market capitalism, even those who preach socialism choose the latter.

Who Do We Celebrate?
Next time you see a large coffee machine retailer, think of the people whose lives were made better through these companies. 

Christmas decorations, Oxford Street, London, 1986

We are aware that the success stories of free-market capitalism improving the living conditions of the poorest of the poor through reducing living costs and improving access to quality good and services. However, they fail to be the ones who are actually celebrated around Christmas for providing these essential opportunities to people. We worship those who give handouts to the poor, but we hold those who enable poor people to rise and improve their living conditions in utter disdain.

When there is a large company selling their products on a traditional Christmas market, many see a greedy company ruining the flair of the Christmas spirit. It doesn't occur to them that millions of people are able to put food on the table and buy gifts for their children: something that prior to the emergence of free-market capitalism was a privilege reserved for the very few. All it takes to see this is to think of the millions of people oppressed by socialism, like those in Venezuela, who will, this year, spend among the worst Christmas Eves they have ever witnessed.

Next time you see a large coffee machine retailer or a booth advertising cleaning products at your local Christmas market, think of the people whose lives were made better through these companies.

The greatest gifts aren't wrapped in paper, but stats about poverty reduction.





Bill Wirtz is a Young Voices Advocate. His work has been featured in several outlets, including Newsweek, Rare, RealClear, CityAM, Le Monde and Le Figaro. He also works as a Policy Analyst for the Consumer Choice Center.

This article was originally published on FEE.org. Read the original article.

Guest Post: Why Black Friday leads shoppers to behave badly

Jaeha Lee, North Dakota State University

The manic nature of Black Friday has at times led shoppers to engage in fistfights and other misbehavior in their desperation to snatch up the last ultra-discounted television, computer or pair of pants.

What is it about the day after Thanksgiving – a day meant to celebrate togetherness and shared feasting – that inspires consumers to misbehave?

Fellow researchers Sharron Lennon, Minjeong Kim, Kim Johnson and I have in recent years been exploring the causes of consumer misbehavior on Black Friday, historically one of the busiest shopping days of the year. Our latest research shows how our emotions affect our likelihood to misbehave, as well as a significant difference between men and women.

A fight breaks out in a Walmart in 2016.

Black Friday mayhem

The term “Black Friday” first appeared in the journal Factory Management and Maintenance in 1951. It signals the beginning of the Christmas shopping season, when many retailers finally go “in the black” – that is, they become profitable for the year.

More recently, Black Friday has become a setting for consumer misbehavior as shoppers compete for deeply discounted products. Fighting, pepper-spraying, dumping merchandise, ransacking stores, robberies and shootings have all been reported on Black Friday. The Occupational Safety and Health Administration has even issued guidelines to retailers about how to avoid injuries and deaths.

In the U.S., the most shocking example of misbehavior occurred in 2008 when a Walmart worker was trampled and killed as shoppers rushed to enter the store.

So what causes some consumers to behave so badly?

It starts with the unique characteristics of Black Friday sales promotions and the frantic retail environment they create. Retailers heavily promote their most desirable items at deeply discounted prices in order to encourage more foot traffic. Demand for those precious few items naturally exceeds supply. That imbalance can lead to aggressive consumer behavior.

But another key ingredient is sleep deprivation, which results from the very timing of the sales, which may begin at midnight or early in the morning and require eager customers to camp outside a store all night. That means many Black Friday shoppers aren’t functioning at their best, resulting in grumpy moods and bad decisions.

Impact of crowded stores

Research my colleagues and I conducted in 2014 examined how two situational variables – large crowds and the rude, argumentative behavior of fellow shopper – affected the likelihood that otherwise jovial consumers would become Black Friday miscreants.

We created a questionnaire based on past research of the topic and asked several hundred students at four universities located in different regions of the country to fill them out. We analyzed only results from the 260 participants who reported to have shopped on Black Friday in the past and completed the survey.

On the whole, we found the large crowds that congregate on Black Friday actually had positive effects on consumer behavior, reducing dissatisfaction and aggression and thus errant activity as well. That is, as long as the shoppers were expecting to have to navigate very crowded stores.

All it takes is one bad seed, however, to ruin the experience for others. Being unable to purchase the advertised product seems unfair, leading to misbehavior and in turn making others more likely to follow suit.

Since an expectation of crowds seemed to make it less likely that shoppers would perceive inequities, posting signs at entrances or in advertisements reminding shoppers to bear with Black Friday’s crowded conditions may help keep customers civil.

Emotional shoppers

In our latest study, published in June, we examined how our emotions and personality traits influence consumers and whether there are differences between women and men.

Black Friday, Northern Virginia, 2013 (c) Rick Sincere

We designed an online survey in which participants – 411 students who indicated they had previously shopped on Black Friday – were randomly assigned to read one of three scenarios involving a customer trying to buy a discounted item the day after Thanksgiving.

In two of the scenarios, the customer went home empty-handed after not being able to make a desired purchase, either because the retailer ran out of the product or because the promotion had ended. In the third one, the participant read about a customer who managed to successfully snare the desired product – either a smartphone or clothing – at the greatly reduced price.

After reading the assigned scenario, participants completed a series of scales that assessed their emotions such as anger and thrill, their personality traits and their likelihood to misbehave on Black Friday.

Our findings showed that participants – both men and women – who had an emotional response to the scenarios, whether negative or positive, were more likely to be willing to engage in consumer misbehavior.

As for differences between the sexes, we found that men’s capacity for self-control was the primary trait that determined whether they were likely to behave badly on Black Friday.

In other words, possessing more self-control mitigated any anger that might lead to misbehavior. For women, self-control was irrelevant. What mattered for them was public self-consciousness – that is, how others viewed them. And surprisingly, women deemed to have a high degree of public self-consciousness were more likely to misbehave if they got angry.

Battle of the fittest

Black Friday creates a competitive environment since not all shoppers can get what they want. Thus, this competitive environment causes both positive and negative emotions. Consumers are thrilled when they get what they want and frustrated when they do not.

For retailers, Black Friday is meant explicitly to attract these large crowds in hopes of ringing in more sales. But besides leading to minor misbehavior, more people jostling over a small number of deeply discounted items can also lead to injuries or even wrongful death lawsuits. Retailers need to balance making more money and the safety of their customers and workers.

In general, reducing the number of unpleasant customers would improve the shopping experience for other shoppers as well as for store employees. Rather than ignoring or accommodating such shoppers, retailers should be proactive by clearly communicating store policies and quickly reacting to signs of aggression by removing the bad actors. Other steps retailers could take include adding checkout lanes to speed up traffic and putting more employees on the sales floor to improve responsiveness to shopper concerns.

Ultimately, customers are responsible for their own behavior. When shoppers behave responsibly, the Black Friday experience isn’t spoiled for their fellow customers and everyone is able to buy their digital goods and clothes in a safe and relatively stress-free environment.

This article incorporates elements of a piece written by the same author and published on Nov. 28, 2014.

Jaeha Lee, Associate Professor of Apparel, Design and Hospitality Management, North Dakota State University

This article was originally published on The Conversation. Read the original article.

From the Archives: Attracting and retaining businesses are the key to job growth, says Albemarle Supervisor Ken Boyd

Attracting and retaining businesses are the key to job growth, says Albemarle Supervisor Ken Boyd
August 3, 2010 9:56 PM MST

Controversy over Charlottesville’s use of taxpayer funds to lure a firm from Albemarle County into the city, as well as the Coca-Cola Bottling Company’s decision to leave Charlottesville after 70 years, have brought to the fore concerns about recruiting and retaining businesses in the area.

Albemarle County Supervisor Ken Boyd brought this issue up in a recent interview with the Charlottesville Libertarian Examiner, when he lamented that attracting new businesses is “something we want to do but we’re as anxious to keep the ones that we’ve got. We’ve been bleeding an awful lot of private sector jobs recently,” adding ruefully that “all our manufacturing jobs have just about left from the county.”

Lack of space
One problem Boyd highlighted was the lack of room for expansion, which was one of the reasons given for the Coke bottling plant’s move to a consolidated facility near Richmond.

Boyd pointed out that Albemarle has had “technology companies that have left the county because there’s not been a place for them to move to, they need to expand.”

Consequently, he said, county officials are “trying to take a very hard look at our land-use policies to make sure that there’s land available.”

He offered this illustration of the problem:

“I talked to a businessman the other day who moved his business to Greene [County]. The reason he did was because when he came” to Albemarle seeking a site for his company, “he was told to get through our bureaucratic process and it would probably be 18 months before we could approve a site for him. He went to Greene and he had his building up in six months.”

Boyd said the goal of economic development efforts is “to make sure there’s land available for somebody who is a plumber or an electrician or a carpenter, [so] that they have a place to thrive and grow their business here. We see them moving to other communities” even though “the work they do is here.” The problem, he said, is that “it’s too expensive to go through the process and get established in their business.”

Economic Vitality Action Plan
To address these issues, Albemarle County officials are now “in the process of talking about an Economic Vitality Plan,” Boyd said. “We’re trying to look at how an overburdening regulations impact our business community. We’re trying to figure out how we can stimulate private sector jobs.”

While the University of Virginia is an engine for job creation, as well as the Defense Intelligence Agency (DIA) and the National Ground Intelligence Center (NGIC), “these are all state and federal jobs,” Boyd said, and “we certainly want to grow the private sector, to make [it] an important part of the jobs we have available here.”

The Economic Vitality Action Plan that has been under discussion by the Albemarle County Board of Supervisors will be voted on at the board’s meeting on August 11.



Publisher's note: This article was originally published on Examiner.com on August 3, 2010. The Examiner.com publishing platform was discontinued July 1, 2016, and its web site went dark on or about July 10, 2016.  I am republishing this piece in an effort to preserve it and all my other contributions to Examiner.com since April 6, 2010. It is reposted here without most of the internal links that were in the original.

Marilyn Monroe and the Real Value of Profits

An obscure 1951 film that fell out of copyright gained some new life in the home video market simply because a then practically unknown Marilyn Monroe had a small supporting role.

DVDs of Home Town Story, written and directed by Arthur Pierson, are sold with big photos of Monroe on the cover, as though it is a “Marilyn Monroe movie.” It isn’t, but even if a few thousand people are induced to buy it for that reason, that’s a good thing, because the film has an important lesson about business and economics.

The actual marquee star of the movie (which runs a short 61 minutes, more like a TV teleplay than a feature film) is Jeffrey Lynn, who plays Blake Washburn, a small-town newspaper publisher who has just lost his seat in the state senate to the scion of a local manufacturer, John McFarland (played by veteran character actor Donald Crisp). Monroe plays a secretary at the newspaper and appears on screen for no more than five minutes.

Washburn is bitter about his campaign loss and, when he takes over the newspaper from his uncle, he embarks on an editorial crusade against big business, in particular railing against the profits made by large industrial corporations. His sometime foil in this is reporter Slim Haskins (played by Alan Hale, Jr., best known as the Skipper on Gilligan’s Island), who tells his boss to tone down the rhetoric.

While I watched Home Town Story, I initially thought this would be a typical left-wing agitprop piece from the early Cold War era, where the crusading newspaper editor would be the hero and the capitalist businessman would be the villain.

I was wrong.

About halfway through the movie, the whole tone of the film changes as business owner John McFarland shows up in the newspaper’s office. He wants to talk to Washburn about his editorials and offer an alternative point of view. Here’s the dialogue from that scene (which can be watched in full on YouTube):

McFARLAND: I’m interested in profits, both for myself and the customer. My main reason for coming here was to see if I could perhaps interest you in printing something about a pet theory I have. I call it “Profits to the Customer.”

WASHBURN: What do you mean?

McFARLAND: As I say, it’s my own private little pet theory. It’s very simple, not very complicated. You see, I’m not an economist, I’m just a businessman. I have to make a profit to stay in business.

WASHBURN: Sure, we all know that.

McFARLAND: I make a profit on every electric motor I sell but the customer must make a larger profit, because if he doesn’t, he won’t buy my motors and I’m out of business.

WASHBURN (incredulous): The customer must make a profit?

McFARLAND: That’s right … Yes, the customer must make a profit. For example, you have some typesetting machines out there. The manufacturer who sold them made a profit on them. But your paper would never have bought them in the first place if they couldn’t deliver something beyond their original cost. They must continue to work for your paper to be worth more to you than you paid for them. As a customer, that’s your profit.

WASHBURN (skeptical): My profit?

McFARLAND: Yes, you sell your newspaper to a man for five cents. He gets news, advertisements, and all kinds of information for his home and business. He gets service beyond the value of his five cents. As a customer, that’s his profit. The same story for everything else: the light bulb, the refrigerator, the telephone. For this, we pay a few dollars a month. Our profits are enormous in steps alone. In case of an emergency, it’s value can’t be estimated.

SLIM HASKINS: That’s a different slant from what we’ve been printing.

WASHBURN, after a long pause: As you say, that’s just a theory. But you can’t deny that you are a big business.

McFARLAND: In your editorials, you’ve been insisting that because a thing is big, it’s bad. It takes bigness to do big things. Our industries turned out equipment for our armed forces in a remarkably short space of time. It was a big job and it was well done. It helped us to win the war and preserve our country. That’s what American industry with its bigness was able to accomplish. Was that bad, Blake?

The last fifty years, we’ve come a long way. It used to take a week to get a letter across the United States. Now we do it in one day. The difference in time alone could affect the happiness of a family. It might even mean a matter of life and death.

In my time, I’ve seen advances in industry that have added twenty years to the average span of life. My father died in the old country at the age of forty, an old man. His work was absolute drudgery, slavery, on his own farm from five o’clock in the morning until eight o’clock at night. But because I live in America, I feel like a young man, and I’ll be 65 in April.

WASHBURN, irked: Why are you telling me all this?

McFARLAND: Well, I thought perhaps you might be interested in both sides of this profit question, and print something else for a change.

WASHBURN, steaming: Mr. McFarland, I don’t tell you how to run your plant, so please don’t tell me how to run my paper. I’ll print my own conception of business profits. Good day, sir.

McFARLAND: Well, I just thought I’d come in and talk – which I have.

Remember, Blake, when this country was first discovered, there was nothing here. Now look around you, everything you see is profits. Our transportation, communication, household appliances, medical equipment. Notice them sometime, Blake. They’re the real profits.

The plot soon turns to a school field trip, where Washburn’s young sister is trapped in an abandoned mine. With the help of equipment made by McFarland’s factory, and because McFarland has a private airplane he offers to Washburn to take the girl to a hospital in Capital City, the little girl’s life is saved. As a topper, as the girl is wheeled out of surgery, McFarland notices the motor operating a respirator helping the girl breathe: “Hmm,” he says quietly. “That’s one of ours.”

As a result, Washburn’s next editorial has a different approach.

“You know, Slim, seven hours ago, John McFarland with a pet theory I didn’t think was worth printing. Theories have a funny way of becoming facts.”

Curious about the writer and director of Home Town Story, and wondering where he might have come up with the ideas that inspired the film, I did a bit of research.

Arthur Pierson only directed two other feature films. Most of his work was in television, and he ended his career as an executive at Hanna-Barbera, the animation company best known for producing The Flintstones and The Jetsons.

Something early in Pierson’s career stood out, however. It turns out before he became a director and screenwriter, he was an actor. Between 1929 and 1940, he appeared in eleven Broadway plays.

In fact, in 1935, he was in the original Broadway cast of The Night of January 16th, written by Ayn Rand.

Now, you don’t suppose that Arthur Pierson, Hollywood director, got some of his ideas about business and profits from the Goddess of the Market herself, do you?

Does political affiliation affect our views of product and service brands?

How does political affiliation affect our perceptions of various brand-name products and services? Does ideology change the way we view brands? Or does it make no difference at all?

This is one of the questions explored by the market research firm YouGov in its annual Brand Index for 2013, which surveys consumers about their attitudes toward a wide range of brand names from Aflac and Amazon.com to V8 and Victoria's Secret.

Explaining the overall rankings, Lucia Moses wrote in Adweek:

Buoyed by strong sales of its e-readers and expansion of its free-shipping service, Amazon topped the list of best-perceived brands of 2013, as measured by YouGov's BrandIndex. Rounding out the top 5 were Ford, Subway, History Channel and Lowe's. Last year also was a good one for financial institutions, which began to earn consumers' forgiveness for their role in the economic meltdown: Four of the five best-improved brands in 2013 were banks.

In addition to its overall rankings, YouGov provides a breakdown of results by industry (e.g., airlines, hotels, and insurance) and by several demographic groups (LGBT, parents, Millennials, minorities).

YouGov explains its methodology like this:

These brands were rated using YouGov BrandIndex’s Buzz score which asks respondents, "If you've heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative?"

The Buzz Rankings chart shows the brands with the highest average Buzz scores between January and December 2013. Scores are representative of this segment.

All Buzz scores listed have been rounded to a single decimal place, however, we have used additional precision to assign ranks.

In answering that primary question, for instance, the top brand for LGBT survey respondents was YouTube -- perhaps unduly weighted by followers of Tyler Oakley and  Davey Wavey.  For both African-Americans and Hispanic respondents, the top brand was Walgreen's. Parents' top brand was the same as the country as a whole, Amazon.com, while for Millennials the top choice was Google.

YouGov's Brand Index divides Americans up into three political affiliation categories: Democrats, Republicans, and independents.

Intriguingly, the three groups only have one brand in common among their top five rankings: Subway, which was the 2012 overall winner in consumer perceptions.

Here are the top five for each of the three political categories:

Source:  BrandIndex.com

It's noteworthy that the Republicans' scoring of Fox News at 42.1 blows away any competitors in any categories. (Top-ranked Amazon.com had an overall score of 30.6.)  At the same time, Fox News doesn't even show up in the top five of the "networks" category, where the History Channel tops out the category at 26.4. (Neither CNN nor MSNBC shows up in the national top five, for what it's worth.)  Republicans and independents also like the History Channel, at 31.9 and 27.8, respectively, although that network is not included in the Democrats' top five.

Republicans also like Chick-Fil-A, giving it a score of 31.8 and a rank of 5.  The same quick service restaurant (QSR) is ranked fifth overall in that category, but with a nationwide score of only 11.9,

Democrats and independents both like Amazon.com, ranking it first, but the online retailer does not turn up in the Republicans' top five.

Similarly, Republicans and independents like Ford, both ranking it second, but the car manufacturer fails to show up in the Democrats' top five.

There is no separate breakdown for Libertarians' top brands.  Perhaps the sample size was too small.  It would be interesting to learn whether libertarian views of providers of products and services differs from those of conservatives and liberals.

Daily Progress to Charge More for Thanksgiving Day Edition

Today I received this message in my email box from Lawrence McConnell, publisher of the Charlottesville Daily Progress:

On Thanksgiving Day, we will deliver to you the biggest newspaper of the year! As always, it is loaded with information you can use and valuable advertising to get your holiday season off to the right start. Because of its sheer size, the Thanksgiving Day newspaper is one of the most expensive to produce and difficult to distribute. And many of our carriers must use additional help to complete deliveries in a timely manner.

Effective this year, we will charge a premium rate of $2.50 for the Thanksgiving Day newspaper. This charge will be debited to your newspaper account on Thanksgiving Day. The small increase in the rate for the Thanksgiving Day newspaper will result in a slightly earlier expiration date for your current subscription term.

We hope you can appreciate the value of the Thanksgiving Day newspaper and the necessity for the premium charge to partially cover our added expenses and those of your carrier.

Thank you for reading and supporting the Charlottesville Daily Progress.

Now, I am aware as much as anybody of the challenges the legacy media face these days. Revenues are down, expenses are up, subscriptions are down, newsstand sales are down while competition proliferates in the form of cable and satellite TV stations, talk radio, blogs, Facebook and Twitter, and web-only news sites.

But think about this for a moment: Just why is the Thanksgiving Day edition of the Daily Progress so big? Or that day's edition of any newspaper?

The answer should be obvious. It's because that day's newspaper carries more advertising than any other day of the year, with the possible exception of December 26.

In other words, the Daily Progress is saying, "Subscriber, we are charging you more because we are making more money that day."

I hope I'm not the only Daily Progress reader who noticed this attempt to turn us into Thanksgiving turkeys.

Trends of the New Economy

The last major economic crisis to have a discernible effect on culture as well as politics was probably the one that started in the mid-1970s and reached its nadir during the Carter Administration. It is memorable for such fads as Pet Rocks (1975), leisure suits (c. 1976-77), and the "preppy look" as satirized (and, ironically, solidified) by Lisa Birnbach's illustrated guide, The Official Preppy Handbook (1980).

While the brief recession of 1991-92 might have stimulated memorable cultural trends, they don't pop easily to mind. What emerged in the '70s, however, has been embedded in popular culture through That '70s Show (the early years) and last summer's guilty pleasure, Swingtown.

Whether the current economic contraction leads to similar trends that will one day be recalled fondly (or with cries of "What were we thinking?") remains to be seen. But a few mini-trends have emerged that are worth noting.

The Economist, for instance, has discovered a spike in sales of books by Ayn Rand, the Objectivist philosopher/novelist whose major works, The Fountainhead and Atlas Shrugged, generally have continuously steady sales even though the author died in 1982.

According to the British weekly:

Reviled in some circles and mocked in others, Rand’s 1957 novel of embattled capitalism is a favourite of libertarians and college students. Lately, though, its appeal has been growing. According to data from TitleZ, a firm that tracks bestseller rankings on Amazon, an online retailer, the book’s 30-day average Amazon rank was 127 on February 21st, well above its average over the past two years of 542. On January 13th the book’s ranking was 33, briefly besting President Barack Obama’s popular tome, “The Audacity of Hope”.

Tellingly, the spikes in the novel’s sales coincide with the news (see chart). The first jump, in September 2007, followed dramatic interest-rate cuts by central banks, and the Bank of England’s bail-out of Northern Rock, a troubled mortgage lender. The October 2007 rise happened two days after the Bush Administration announced an initiative to coax banks to assist subprime borrowers. A year later, sales of the book rose after America’s Treasury said that it would use a big chunk of the $700 billion Troubled Asset Relief Programme to buy stakes in nine large banks. Debate over Mr Obama’s stimulus plan in January gave the book another lift. And sales leapt once again when the stimulus plan passed and Mr Obama announced a new mortgage-modification plan.

There is a chart accompanying The Economist's article that dramatically illustrates the ups (and downs, but mostly ups) of sales of Atlas Shrugged.

At CPAC last weekend, a number of speakers posed the question, "Has Atlas shrugged?" with an implied affirmative answer. The Economist notes the existence of a Facebook group with the name, "Read the news today? It’s like ‘Atlas Shrugged’ is happening in real life," one of 111 groups dedicated to loving (or hating) the Ayn Rand novel. The group's 828 members are spread across the globe, but I note a disproportionate number from Scandinavia.

While some people are asking, "Who is John Galt?," others may be more curious about what John Galt is eating these days. The New York Times has a partial reply:

The cube steak is suddenly one of the hottest cuts of beef in the country, according to figures from the National Cattlemen’s Beef Association. The amount of cube steak sold during the last quarter of 2008 was up by almost 10 percent over the same period a year earlier. The overall amount of beef sold went up only 3 percent.

It doesn’t take a wizard to figure out that the economy’s swan dive has much to do with the cube steak’s resurgence. But even before kitchen budgets became tight, the cube steak had its fan base.

No doubt some entrepreneurial cookbook writer (or publisher) is already preparing new editions of recipes our parents, grandparents (or, in terms of the Facebook generation, great-grandparents) remember from the Great Depression and World War II. There's nothing like an economic downturn to create business opportunities.

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What Kind of Fools Do They Think We Are?

The audacity of the Bush administration knows no bounds.

Brian Wingfield and Josh Zumbrun report on Forbes.com:

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

The gossamer bailout will solve Wall Street's problems by flooding the financial industry with spun sugar.

Why not? If they're making up the numbers, any solution will do.

Just the Facts, Not the Meme, Ma'am

Colbert I. King is a man of impressive credentials. Before becoming a Pulitzer Prize-winning columnist for the Washington Post, he has been a Treasury Department official, World Bank executive, and vice president at what was once known as Riggs Bank.

So it comes as that much more of a surprise that, with the wealth of knowledge he has at his fingertips, he should make the mistake of repeating one of the most egregiously erroneous memes of the current -- if manufactured -- financial panic.

What's even more disturbing is that King could have avoided his error just by reading his own newspaper.

Here is what King had to say in his regular column on Saturday, September 20:

...banks have been foreclosing on homes at a rate not seen since the Great Depression.

Six days earlier, an economic analyst took on this oft-repeated but unproven claim in the pages of the Post's Outlook section. Donald Luskin actually checked out the facts, however, and wrote:

Patient zero in this epidemic is the Democratic candidate for president. As it would be for any challenger, it's in his interest to portray the incumbent party's economic performance in the grimmest possible terms. Barack Obama has frequently used the Depression exaggeration, including during a campaign speech in June, when he said that the "percentage of homes in foreclosure and late mortgage payments is the highest since the Great Depression." At best, this statement is a good guess. To be really true, it would have to be heavily qualified with words such as "maybe" or "probably." According to economist David C. Wheelock of the Federal Reserve Bank of St. Louis, who has studied the history of mortgage markets for the Fed, "there are no consistent data on foreclosure or delinquency going all the way back to the Depression."

The Mortgage Bankers Association (MBA) database, which allows rigorous apples-to-apples comparisons, only goes back to 1979. It shows that today's delinquency rate is only a little higher than the level seen in 1985. As to the foreclosure rate, it was setting records for the day -- the highest since the Great Depression, one supposes -- in 1999, at the peak of the Clinton-era prosperity that Obama celebrated in his acceptance speech at the Democratic National Convention late last month. I don't recall hearing any Democratic politicians complaining back then.

Even if Obama is right that the foreclosure rate is the worst since the Great Depression, it's spurious to evoke memories of that great national calamity when talking about today -- it's akin to equating a sore throat with stomach cancer. According to the MBA, 6.4 percent of mortgages are delinquent to some extent, and 2.75 percent are in foreclosure. During the Great Depression, according to Wheelock's research, more than 50 percent of home loans were in default.

Moreover, MBA data show that today's foreclosures are concentrated in that small fraction of U.S. homes financed by subprime mortgages. Such homes make up only 12 percent of all mortgages, yet account for 52 percent of foreclosures. This suggests that today's mortgage difficulties are probably a side effect of the otherwise happy fact that, over the past several years, millions of Americans of modest means have come to own their own homes for the first time.

One sentence there stands out for me, and bears repeating (italics added, below):

According to the MBA, 6.4 percent of mortgages are delinquent to some extent, and 2.75 percent are in foreclosure.

Luskin's article discusses several other aspects of the economy, as well, and would be a useful tonic to those chicken littles who insist the sky is falling.

With the Wall Street bailout on the near horizon, pickpocketed taxpayers and pickpocket legislators alike would be well advised to study the facts of history rather than just repeating the most frightening rumors that come to their attention.

Craig Ferguson Gets It

Late-night chat-show host Craig Ferguson may have been a U.S. citizen for less than a year, but he has a more profound understanding of the spirit of democratic capitalism than any three dozen professional pundits on Fox, CNN, or MSNBC.

The last few minutes of Ferguson's opening monologue tonight were devoted to a critique of the Bush administration's corporatist, quasi-fascist (yes, I am using "fascist" in an historically appropriate manner) plan to bail out Wall Street investors who made major mistakes.

Ferguson, a high school dropout, is an autodidact whose opinions do not always match mine but are nonetheless usually well-considered and thoughtful.

In his September 24/25 monologue, which mixes political commentary with naughty humor, Ferguson said:

Earlier on tonight, President Bush addressed the nation. He said, Congress must agree to the bailout of the Wall Street banks, and if we don't, then we'll invade somebody...

This is because the banks are asking the federal government for $700 billion. You know what that works out to? We all pay -- every taxpayer in America -- $3,600 each to the banks. Really.

That's right. Every man, every woman, every she-male in America, everybody has to pay. That's right, she-males, it's time you did your fair share for this country -- in addition for all the fine things you do for me.

You know, I don't know how I feel about this, the taxpayers bailing out the people on Wall Street. Let me think about it for a second. I HATE THIS!

This is the biggest robbery in American history! Or, at least, since the cute David lost American Idol and they gave it to the ratty one. I liked the cute one.

But I won't editorialize here. I'll stay neutral. Here are the facts; I'll remain objective about the financial crisis.

Basically what happened is that Wall Street are evil, they got really stupid, and they got drunk on greed. What happened is, they crashed their Ferrari, now they're crying like little bitches, and they want their Uncle Sam to buy them a new one.

No. No. No. That's not how it works here. Uncle Sam would be better off using his money to build them a nice prison. (chuckles)

I'm always suspicious of people, these traders, they don't make anything except money. You know, they just make more money. I mean, it's like, "What do you make? Do you make a car, do you paint pictures, do you make houses, do you make people laugh?" (All right, bad example, but you know what I mean.)

Or if you invest in a company that makes things, that's great, too.

I know taking a stand against Wall Street fat cats is a bold move. You know, people are not going to agree with me at all on this. It's like saying, "I hate crime" or "I hate poverty" or "I hate Trump." People are already with you, you don't even really have to say it.

What I mean is that these guys, what they do though, is that they shift money around to make more money. That's just gambling. I mean they use fancy terms to make it sound legitimate: short selling, profit chasing, bottom fishing.

I don't know what bottom fishing is. I think it's what Elton John does on vacation or something.

(To audience:) Don't "ahh" me, I didn't steal your damn money!

Here's the part where Ferguson shows his deep, if inchoate, understanding of how the free enterprise system works, and how it interacts with liberal democracy:

See, what happens is, the banks want us to lend them money. Irony, my old friend, we meet at last.

I say we do to the banks what they've been doing to us for years. I've been poor. I've had to go to the bank for money. They are never pleasant or particularly helpful...

Should we bail these people out? Here's what I think: No, let them go bankrupt.

That's what the free market does. That's the free market in effect. Some win, some lose. Right now, you lose, you hedge-fund bastards.

They're saying that if they go bankrupt, we will lose our freedom. That's crap!

Capitalism and democracy are not the same thing. Democracy creates equality. Capitalism creates inequality. They need each other to survive. They kind of complement each other, but they kind of hate each as well. They're like the Olsen twins, if you imagine.

That's what they are. They balance each other out. Evil/good, evil/good, and then somehow, it works.

I don't understand this government bailout. Where's the government bailout of the 10 million uninsured children? Where's the government bailout of the people who are losing their homes? Where's the government bailout of the people who are losing all of their money betting on Dancing With the Stars and gone horribly wrong?

Even the last little bit of tirade, which suggests a sort of leftish sentimentality to Ferguson's way of thinking, expresses well the concept of opportunity costs.

The government can take $700 billion from us taxpayers and pass it along to Wall Street fat cats without fear of judicial review or any sort of accountability, but that means there is $700 million that cannot be used for something else: college scholarships, laser weapons, or subscriptions to National Geographic for federal prisoners.

What's more important is that the government is substituting political decisionmaking, which, as Hayek explained so long ago, is constrained by the blinders of central planning, for the market, in which the wisdom of millions of actors (consumers, workers, entrepreneurs, investors, and analysts), performing millions of transactions (selling, purchasing, manufacturing, investing) leads to a general condition of equilibrium. (That is, what Ferguson referred to as the "balance" between capitalism and democracy.)

Perhaps if the late-night talk-show hosts, as well as the daytime radio hosts, jump on the anti-bailout bandwagon, the masses (that's you and me) will tell Congress to take the Paulson plan and put it where the sun doesn't shine.

At the very least, enough complaining from the people may lead Congress to do its job and deliberate about major policy questions, rather than rush to judgment stimulated by the Bush administration's (and the McCain and Obama campaigns') panic and hysteria. One would think they already learned from the mistakes made in passing the USA PATRIOT Act without first reading and understanding it.

My message to Congress: Slow down, take a deep breath, and remember how free enterprise and liberal democracy work. Don't leap into the tar pit of fascism without first thinking about it.

In the meantime, I hope somebody posts Craig Ferguson's monologue to YouTube and it gets wide distribution.

Update: Somebody at CBS-TV granted my wish and posted the last minute and 44 seconds of last night's monologue to YouTube. It's here.

Porn Producers Fight Back

Has it really come to this? Has the Internet spawned so much piracy and so many copyright violations that even the core business of on-line profitability must turn to the courts for relief?

From today's Los Angeles Times:

A major porn producer filed a lawsuit Monday against an X-rated knockoff of YouTube, alleging that it profited from piracy by allowing its users to post videos that include copyrighted material.

Vivid Entertainment Group filed the lawsuit in Los Angeles federal court against PornoTube and its parent, Data Conversions Inc., which does business in Charlotte, N.C., as AEBN Inc.

The suit is apparently the first of its kind in the adult film industry, which has done a better job than the major Hollywood studios in finding ways to profit from putting entertainment products on the Internet.

But in the last year or so, the rapid increase in consumption of all manner of videos on the Web has in some ways hurt the porn producers more than the mainstream companies because consumers of adult fare often get what they are looking for in clips of five minutes or less. Free short clips are easy to find on the Web, undercutting the established porn producers, which earn most of their money from long-form videos.

"We've decided to take a stand and say 'no more,' " Vivid co-Chairman Steven Hirsch said. "We will go after all the free sites."

But wait! There's more:

The suit accuses PornoTube of hosting excerpts of tapes that include such Vivid titles as "Night Nurses," "Where the Boys Aren't 7" and the private work of TV personality Kim Kardashian. The suit seeks damages of $150,000 per infringed work.

Other porn companies also are upset by the explosion in Web video sites, many of which rely on user submissions that borrow heavily from copyrighted material.

"What's happening in the industry is an unacceptable amount of theft," said Jon B., a vice president at Red Light District who asked that his full name not be used because family members don't know what he does.

He said Internet piracy might be reducing his company's profit 35%.

I think the LA Times has come up with a way to make the business pages more -- well, "vivid" is an adjective that comes to mind. Here's the story's conclusion:

Piracy has always existed, but it's more detrimental for the company as it tries to sell more of its content over the Web, Hirsch said. Competing with free Internet videos is bad enough, but competing with free versions of Vivid's material is maddening, he said.

Industry revenue as a whole is up, but it is getting split into more pieces, said Farley Cahen, publisher of Adult Video News Online magazine.

"In the past, it was peer-to-peer networks" that took a modest amount of technical ability to use, Cahen said. "Now, there's PornoTube, XTube, RedTube -- any kind of -Tube you can think of."

"There are longer and longer clips that are free, and the companies are at a loss over what to do."

I just can't wait for this lawsuit to reach the U.S. Supreme Court. That is one case where I'll want to be present for oral arguments.

I Should Be Glad I Work from Home

According to Friday's Washington Post, today (Saturday) has been designated "Cranky Co-Workers Day." Whether that's a holiday or not is another question, but the Post's Vicki Elmer describes it like this:

Cranky Co-Workers Day is designated as the time to recognize the role of the unhappiest in our midst.

One blogger suggests that you take that cranky cubicle dweller out for a drink -- a martini -- to try to turn around his or her mood, at least temporarily.

Another says that having the grump as a regular character in your personal blog may help put things in perspective, or at least give you a regular joke that people will find relevant.

We figure most workers have at least one cranky colleague, if not in the same row of cubicles, then in the same building. About three in 10 workers in an OfficeTeam survey say a colleague is rude or unprofessional, and among those, two-thirds say the bad behavior is frequent.

Telecommuting has more advantages than saving gas and reducing traffic congestion, doesn't it?

One more question, though: Why does Cranky Co-Workers Day fall on a Saturday? Don't most people still work M-F, with weekends off? Is this just a way to avoid another office party with stale cake and flat sodas ito celebrate yet another employment-related holiday?

That was more than one question. Here's the last one: What would Samuel Gompers say about this?

Gay Stories with Odd Angles

Tomorrow's edition of The Forward features a report on the large number of gay men and lesbians who exhibit an interest in Yiddish culture, including especially klezmer music.

The author, New York attorney Kathleen Peratis, asks:

Never heard of the Queer Yiddishkeit movement? Until last summer, neither did I.

Then, an Israeli friend told me he had learned from his (straight) daughter, a doctoral student in women’s Yiddish literature at Berkeley, that a large proportion of her colleagues are gay. Really? Interviews over the next several months of past and present YIVO staff members, klezmer performers, Yiddish scholars and others confirmed it: Gay Jews have flocked to Yiddish and klezmer.

Peratis suggests some possible explanations for this connection:

The affinities between gay people and Yiddish, and especially bundist, culture are, when you think about it, obvious: both are staunchly secular, cosmopolitan, progressive and often marginalized. “Queer Yiddishkeit gives me permission to go back to the world of my grandparents without leaving myself behind,” juggler Sara Felder said.

“It’s about alienation from the Jewish religious establishment,” said Alisa Solomon, a former staff writer for The Village Voice. “There’s a kind of analogy people make with the marginalized status of Yiddish itself. It’s an outsider stance.”

She also writes that the association is not exactly recent, pointing to articles from the 1980s and 1990s that make a similar connection. But it goes back even farther, she says:

The presence of gay people and gay themes in Yiddish culture, however, is not new. Queer Yiddishists tell us, for example, that Yiddish cinema in the 1930s contained “encrypted messages” on homosexuality — think Molly Picon in her trouser role in “Yidl Mitn Fidl,” what Eve Sicular calls “cross-dressing in the service of family values.” She refers to the “gay subtext of Yiddish cinema during its heyday, from the 1920s to the outbreak of World War II, which reveals distinctly Jewish concerns of the time” such as “conflicted identity, passing, and same-sex attachments.”

Now I know why I spent Thanksgiving weekend last year reading Michael Wex's fascinating book, Born to Kvetch.

On another topic entirely, the March issue of Details magazine -- which appears on newsstands on February 27 -- reports that

America's most desirable managers all have one thing in common: homosexuality.

In the article, correspondent Danielle Sacks cites a recent academic study:

In The G Quotient: Why Gay Executives Are Excelling as Leaders . . . and What Every Manager Needs to Know, author and USC business-school professor Kirk Snyder argues that gay bosses embody a style of personalized attention that allows high-maintenance Gen Xers and Yers to maximize their performance. "Gay executives tend to look at how each individual brings unique abilities, and they see their job as figuring out how best to take advantage of those skills," he says.

In fact, during Snyder's five-year study of American executives, he stumbled on some startling findings: Gay male bosses produce 35 to 60 percent higher levels of employee engagement, satisfaction, and morale than straight bosses. This is no small achievement: According to human-resources consulting firm Towers Perrin, only a measly 14 percent of the global corporate workforce are fully engaged by their jobs. And the Saratoga Institute, a group that measures the effectiveness of HR departments, found that in a study of 20,000 workers who had quit their jobs, the primary motivator for jumping ship was their supervisors' behavior.

So what makes gay bosses different? It may have to do with the way they survived high school. "Gay people are constantly having to dodge and weave and assess how and where they're going as they grow up," says Snyder. "And that manifests itself as three huge skills: adaptability, intuitive communications, and creative problem-solving." In other words, your boss is cool with your leaving a little early one day a week to pick up your kid from school, or happy to offer a learning experience that helps you close a crucial deal.

What could all this mean? Perhaps it means that when you mutter under your breath something about your boss being a "first-rate c**ks**ker" (this is a workplace-friendly blog), you're really expressing your admiration and envy of him.