Entrepreneurial Idea?

I was thinking tonight about items that have big prices but can be shared among consumers. For example, computer programs such as Microsoft Office or the language learning program Rosetta Stone, are both on the expensive side as far as single consumers go, especially if neither products will bring with them monetary remuneration.

But, perhaps, a Craig's List of sorts could be set up for isolated consumers wanting to go in with other consumers on such products? For instance, I want Rosetta Stone French and RS German, and I'm sure another consumer SOMEWHERE in the world wants to do the same, and the RS software can be used twice. Not only would this 'sharing' cut the $600 price in half, but also both me and the other customer would be less willing to rip an illegal copy off the internet. Thus, both consumers and producers are made better off.

Of course, how many consumable goods can be duplicated in such a way as computer programs? I can only think of things like Photoshop, Office, and Rosetta Stone. The products have to be duplicable. I think.

Either way, this idea does set up an information exchange, which is essential to markets. I think it would work, though it would not necessarily bring in big profit margins to the host of the exchange. Would some products be made so incredibly accessible to previously isolated consumers that product prices would rise substantially? No telling, but I like the idea.

Hmmmm.

More on Strawberries and Such

Back to our Strawberry producers here, it's obvious that because the strawberry farmers were destroying their crops, they made entrepreneurial errors. That is, the decision to continue producing strawberries that was made before the growing season was wrong. Obviously, these producers should have invested less time/labor/capital/other resources in the production of strawberries than otherwise. If the strawberry farmers could go back in time, they would correct for this error, and reduce the amount of factors that went into the production of their crops.

But they can't go back in time. They look to the future with their presently owned resources and products, and make decisions based upon future prospects. Destroying some of their surplus crop raises the per unit price of strawberries, enabling them to produce more than otherwise in the future.

I think that's what our strawberry critics forget: production is future oriented. Producers can't look at the past and base their production decisions off of this alone. What the critics are asking strawberry farmers to do is to compound the errors already made in production. Assuming that strawberry farmers could go back in time, it's as if the critics are asking them not to, to instead produce so many strawberries as to reduce their profit margins and hence their incentives and abilities to continue with production in the future, and ultimately to serve the demand of consumers in the market.

In other news, William Easterly's The White Man's Burden was a fantastic read about the follies of foreign aid, about how local, on-the-ground strategies that attack small problems related to poverty and squalor are often much more effective than grand utopian schemes of eliminating an entire feature of poverty (say, hunger or AIDS) in one fell swoop. I feel as though I understand the IMF, World Bank, etc. much better than I did a month ago. Without giving them much justice, I would have to say they're mostly 'bureaucratic clap-traps:' Big talk without the strategies to make for effective walk.

But, I've been told that I have a bad case of confirmation bias.

Bad Argument

I've read and talked to a lot of people whom are opposed to the recently passed healthcare legislation. Often, they have really good points as to why it's no good and won't achieve its ends. However, there's a defense that even many respectable economists use that I believe is lame. That is, that

"a clear majority of Americans oppose this healthcare bill."

Brushing aside the fact that we have no idea if a "clear majority" opposes this or not because most people haven't ever talked to a pollster in their lives, this argument is fundamentally flawed. It rests on the premise that majorities mean something, that if a majority of Americans wanted this bill, then it'd be OK.

It means that the mass genocide of Jews in the late '30s and early '40s was OK only if a majority of Germans gave the thumbs up; that bombing the WTC was only OK if a majority of extremists agreed; and that Chinese communism is justified only if most of its citizens don't mind.

This is clearly ridiculous.

Majority opinion confers absolutely no legitimacy upon any argument whatsoever. Even if 100% of all people believed that healthcare legislation was right (and thus could lower costs), or that protectionism was good for them, or that 2 x 1 = 89, they are still in every case wrong. It doesn't matter how many idiots they have on their side.

Strawberry Fields Forever

TBO: "Wholesale prices that were $17 to $19 for a flat of eight containers have now fallen to $5 to $6 a flat, Grooms and Parke said. Parke said some farmers have tried shipping berries to stands to sell on consignment, but if they only return $3 a flat on each shipment, they lose money on each deal."

No, it's greed, according to Yahoo!. Apparently, the right thing for everybody to do is run at losses; let's just produce things that nobody wants to pay for. Or at least that's what the homeless shelter folks would have us do. In a way, though, they are a loss that society is running itself. They know no better.

In other news, I spoke to a German family at work today. I overheard them speaking their native tongue, and not knowing what it was at first, I inquired about their nationality, and followed up with a terrific joke. The conversation went like this:

Me: "What nationality are y'all?

German Father: Jocularly, "We're German. Is that OK with you?"

Me: "Well, sure, I guess we can all forgive and forget, right?"

German Family: Silence.

The parents looked stunned and confused. The children just looked confused. Did he really say that?

Yes, yes I did.

In Other News...

In the neon circle: What's in the bill is irrelevant now. Not like anybody besides the privileged political class and wealth looters need to know the 'benefits,' anyway.

In the red: Notice that there has never been a "Pepsi shortage" or a "sock shortage?" Yet when an entire populace of a state is made to fund public utilities, we face blackouts, shortages, congestion, and overall piss-poor quality relative to most other goods consumed freely. Even in the light of this, they still got 216.

What a joke.

Deflation vs. Malinvestment

Reading through an investor's newsletter this morning, I came across snippets that almost contradict each other. I'll explain that. But it's as though some (most) mainstream investors and academicians want to have the cake and eat it too. It's like me going to work, hoping it's not busy, and still making bank; it ain't happening.

This guy says: "Now, there is no exact way to determine the right size of the money supply. It definitely needs to grow each year by at least the growth in the size of the economy, the population, and productivity, or deflation will appear. But if money supply grows too much then you have inflation." [Emphasis mine]

He clearly injects the deflationary bogey, and of course doesn't explain the implications of it, but instead implies that it is clearly and at all times bad and catastrophic, which is emphatically untrue. We'll see why here:

"More than five million homeowners are behind on their mortgages; There are over six million Americans who have been unemployed for at least six months, a record 40% of the ranks of the jobless; The private capital stock is growing at its slowest rate in nearly two decades; Roughly 30% of manufacturing capacity is sitting idle; Nearly 19 million residential housing units, or about 15% of the stock, is vacant; Commercial real estate values are down 30% over the past year; The average American worker has seen his/her level of wealth plunge $100,000 over the last two years, even with the recovery in equity markets this past year; Bank credit is contracting at an unprecedented 15% annual rate so far this year as lenders sit on a record $1.3 trillion of cash" [Emphasis mine]

I've highlighted the words and phrases that are ubiquitous in any recession that the Fed (or any central bank) has presided over, those being 'unemployed, low stock growth rate, idle capacity, vacancies, decreased values, decreased wealth, decreased credit.'

I have studied under the school which says that if you fear deflation, and combat it with low interest rates and artificial injections of liquidity in the market, you're going to get all of the bad things associated with bad investments, namely, idle stock, underemployment, and lower asset values. You cannot avoid the former without encountering the latter.

Deflation is not bad per se (Ask the 1880s). There is no reason to believe that long-term deflation is anymore pernicious than long-term inflation. I've simplified it, but succinctly put, expectations matter. More on that here.

4,051 Decks of Cards

were used to make this incredible structure. I couldn't embed that particular video, but here's another of the same man: