Tag Archives: free market

Involuntary Collusion: A Regulation Even This Libertarian Can Embrace

Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

Libertarians and capitalists rightfully despise regulations in a free market since it erodes, thwarts, and deincentivizes innovation. But one thing that has always caused me to wrestle with my non-regulation-is-king beliefs is the concept of regulating involuntary collusion. I’m coining the phrase mind you, so don’t bother Googling it.

Companies are supposed to compete with one another by either lowering prices, increasing quality, or both—each one taking a unique approach to the same end. If they are free to innovate, the consumers win as companies go to war on the gridiron of commerce.  Anyone who has ever ran faster than the person next to them, solely because that person was running faster than them, knows that competition yields greater performance.Foot Race

Now let’s talk about collusion. It is illegal for business heads to get together and agree to cooperate in some way as to benefit themselves at the expense of the consumer or worker.

For instance, NFL team owners could not collectively decide that they are paying the players too much and all agree to cut payroll across the board. Nor could they decide they don’t consider game jersey profits high enough and agree to bump the price 10% across the board. I’m not going to go into the  history of collusion, but suffice it to say that it violates the concept of free market capitalism because it’s the opposite of competition; it’s cooperation.

The astute of you will notice I used the word collectively that last paragraph. So you might ask why it’s OK for employees to collectively bargain? It is certainly legalized collusion after all. Short answer—I have no %$#&ing idea why it’s allowed. I covered this in my article Why is this even legal? so I won’t go into it here.Rally Held To Stand In Solidarity With Union Workers Across The Country

Now that we understand what a free market is supposed to be and what collusion is, what do I mean by involuntary collusion?

Free market capitalism allows for consumers who don’t like what one company is doing, to find another that doesn’t engage in that practice. However, in industry there exists the term Industry Standards which threaten this principle. Sometimes it just refers to a best practice where years of competing have brought all companies to a similar ultimate conclusion. For instance: tool companies like Mac or Snap-On who give a lifetime warranty on their tools because their competition is doing it and they need to keep up. Since you can’t “one-up” a lifetime warranty, it just becomes an industry standard best practice. But other times it involves companies doing something that the public despises, yet because all companies do it, consumers can no longer avoid the practice.

A perfect example of government regulating this is the National Do-Not-Call List. Companies found that automated telemarketing was cheap, easy, and effective. Even though consumers hated these robo-calls, many corporations adopted this practice leaving consumers without the ability to avoid it. So we the people had to look to government to make them stop.

In these situations, companies all do the same thing, just as they would be if they were colluding against the consumer, but they never agreed to it—it just happened involuntarily through corporate evolution.

Let me give a non-government example of how such legislation can be effective and important. In auto racing, weight is the enemy; therefore nothing is needlessly added to a car that would add weight, unless that thing generates more speed that overcomes the loss of speed from the added weight.

However, safety equipment doesn’t make a car go faster, the weight is a hindrance; it exists solely to protect the driver in an accident. So race series directors often must enact regulations that require such safety equipment be on the cars of all participants. Race teams are paid to win, so if you don’t force them all to comply, the ones who do, always lose to the teams who throw caution to the wind. The only way to get one team to comply and make life safe for their drivers is to require they all comply—leaving no one with a competitive advantage. Think of it as the governing body of racing protecting the rights to life of the driver.070812_dd_ww_IMG_6162[1]

So in the same vein, I do believe that because our country is based on free market capitalist principles, it’s important our government ensure the market is indeed free. It isn’t enough to know there are multiple companies in the marketplace—we must insure they are indeed competing with each other.

With this in mind, I feel it important to say that even as a libertarian and free market guy, I am 100% behind the new laws in six states prohibiting employers from requiring employees to disclose personal online passwords and data. Companies are hiring you for your ability to work. Whether you like to bathe in peanut oil and play with Barbies while watching Big Bang Theory reruns on your own time has no consequence on your ability to enter data into a computer. What you do in the privacy of your own home or amongst friends is none of their business.

My right to privacy is directly linked to my right to pursue happiness, something our Declaration of Independence says I was born with, and my government has a duty to protect.

Businesses are supposed to succeed by appealing to consumers, not by collectively taking advantage of them. We’ve seen what happens when we allow companies to collude by watching business tycoons past. It was anything but good for the people, the workers, or the economy—it becomes, in effect, a conglomerate monopoly.

Andrew Carnegie, Cornelius Vanderbilt, John D Rockefeller
Andrew Carnegie, Cornelius Vanderbilt, John D Rockefeller

So while I want us to deregulate on a massive scale that would cause Republicans and Democrats alike to shiver from the cold harshness of liberty, I do think lawmakers would be well served to find instances where companies have adopted an industry standard where by which businesses are no longer competing; unwittingly or not, against the consumer, and then quash it accordingly. The strength of our economy and our liberty depend on it.

No one is worth that amount of money! What Dictates Someone’s Payscale?

Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

This last election showed that painting those with money out to be people who have unfairly attained wealth at the expense of the masses is sadly resonating here in America. We are supposed to be the land of opportunity; where one can achieve as much success as their imagination, hard work, and risk can take them. Yet once they do, the quasi-socialists of today attack instead of praise, and the masses harbor jealousy and animosity instead of admiration and respect.

One of the arguments that irritates me like sand encrusted toilet paper is the no-one-should-be-worth-that-much argument. Fairytales like Robin Hood and almost every movie with a happy ending have ingrained us to believe that just by being altruistic, hard-working, and smart, you should achieve fame and fortune.Robin Hood

The reality is that Robin Hood would have likely been shot, and rightly so—he’s a thief. Hard work doesn’t come close to guaranteeing you a better living—it most often just leads to more hard work. Altruism is hardly a harbinger of hope for wealth neither. Do you know of any active duty soldiers listed on the Forbes 500 list? Neither do I.

So do the socialists have a point? Let’s apply some logic with a side of skepticism.

Are people who are rich stealing from the poor? I mentioned I don’t know of any soldiers on the Forbes 500, but I don’t know of any career criminals on there either. Contrary to the Hollywood portrayal of high-profile con artists, et al., the fact is that most thieves are broke and about two steps away from a lengthy prison stay. So they certainly don’t make up the 2%.

Are they taking advantage of the poor by paying them less than what they are worth? Anyone with a modicum of understanding in regards to economic history knows that companies competing in a free market yield a better product at a lower cost. But what people so often fail to realize is that employees are competing in a free market too. If a person goes to work somewhere, and the company doesn’t pay well, most go work somewhere else. Companies who have a reputation for thrift eventually only get the dregs of the working world applying, and then it’s not long before they go out of business at the mercy of companies who opted to treat their employees better.

Business moguls of a past era such as Andrew Carnegie, Cornelius Vanderbilt, and John D. Rockefeller were not competing in a free market; they were collusionists and monopolists. But we Americans created laws to protect the consumer from capitalists who endeavored to destroy the free market over a century ago by passing anti-trust laws and prohibiting collusion. There’s likely no one left that has been taken advantage of in such a way.

Andrew Carnegie, Cornelius Vanderbilt, John D Rockefeller
Andrew Carnegie, Cornelius Vanderbilt, John D Rockefeller

So then why are NFL players paid millions while soldiers are paid modest 5-figure salaries? I’ve struggled with this one for a while, because I don’t feel good about it either. As I racked my brain for answers, it dawned on me that the number one factor in what people get paid is irreplaceability. If we’re talking about entrepreneurs; add risk to that.

I know the anti-capitalists on the left hate corporate bosses, but the fact is that every one who has ever dreamed, has dreamed of owning their own business or being independently wealthy. So let’s logically draw the scenario out. If you started your own company, and within that company you had a need for a job that was fairly rudimentary, would you pay someone a fortune to do it? Of course not. You would hire a person at a low wage, because no matter how dirty, altruistic, or physically demanding that job might be, if you are 99% sure you could train a gorilla to do it, why would you pay anyone more? If the person doing it leaves, it’s pretty easy to plug a new person into the mix and have them trained and running in little time.

However, if your new business involved a biological research lab which required someone with a background in the study of the molecular structure of cancerous cells and how they react to radiation exposure, you can’t just grab a homeless guy off the street and hope for the best, can you?

So when we look at most everyone who is employed, the more money they make is in direct correlation with how easy it would be to replace them. As much as it pains me to say this, many have the abilities required to be a school teacher, police officer, or a soldier. It is not however easy to find a guy who can jump three feet, catch a football in one hand, while being tackled, and yet somehow have the wherewithal to reach out his toes to get both feet in-bounds. It aches my heart to know an athlete makes more than a soldier, but my logic generally holds true.Detroit Lions v Seattle Seahawks

When it comes to entrepreneurs, I mentioned the addition of risk. Any gambler or stock investor will tell you that if you want to make a million dollars, you have to start with 10 million. Those who have only seen movies about gamblers and investors have been duped by Hollywood into believing that you can put up a dollar and win millions. You might think the lottery disproves this, but the fact is that for every one million won, there are several million lost. Entrepreneurs make money by risking almost all that they have on an idea that they think you the consumer will consider irreplaceable, such as your smart phone that you can’t live without. Therefore, irreplaceability + risk = success.

So the bottom line is that hard work is only a good way to not get fired, altruism is a good way to be loved by many, and intellect is merely a good foundation for success, but only if applied in such a way as to make you more irreplaceable.

If you want to make a fortune, you must find a way to become one in a million. If you really want to make a fortune, put your bank account, home, and first-born at risk and invent something irreplaceable. But all that being said, virtue is its own reward, and as long as you are happy in your career, and you feel good about who you are as a person, try being happy instead of jealous for those who have attained more than you. As long as they did you no harm, there’s no logical reason to advocate taking what they’ve achieved away from them or hating them for achieving a success greater than your own. The American dream isn’t just for you—stop being selfish. If you must have an emotion about them, try being motivated to be like them instead of tearing them down.

It’s spelled F-O-X News. Enough With The Hate, It’s Pathetic

Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

One thing that irritates me like pepper spray on my nether regions is when people use the term “Faux News” to describe Fox News. I’m not a dog being led around by the News Corp leash; I get my news from a number of sources. I use Google Reader with feeds from approximately 40 different outlets focused on different themes that are generally news or science based. As someone who prides himself on exercising proper skepticism, I feel it is important to be quite diverse in gathering information. So I look for numerous sources, and then do my best to weed out the ones who prove to be less than honest. I would never recommend someone getting all their news from one source.Fox News

There are a couple of issues on the “Faux News” front that annoy me in particular. The first being that people often don’t seem to differentiate opinion from hard news.

On Fox for instance, Bill O’Reilly, The Five, Red Eye, and others are opinion, while Brett Baier, Shep Smith, and others are hard news. The hard news people just bring you the stories and facts. Opinion however, is people interpreting those facts and providing analysis of what they presume those facts mean.

Opinion journalists therefore are often prone to spin and distort things in a light that is favorable to their ideals. You’re a fool if you think CNN, MSNBC, Bill Maher, Jon Stewart, and the networks don’t spin too. That’s just what opinion journalists do. But you can’t rightfully attack a network based on the opinions of one panelist. That’s like attacking the NFL because of what Mike Vick did. If Piers Morgan or Sean Hannity misspeak in some way, attack them, not their networks as a whole, because I guarantee there are others in their organization that are nothing like them.

Fox, MSNBC, CNN and the networks provide plenty of hard news that is good and factual. The charges that Fox lies are generally from people who just don’t agree with the opinions of the op-ed talent, and can rarely cite examples where the hard news people blatantly lied. Opinions, by definition, do not have a right or wrong answer. If you don’t like the opinions of the analyst, then don’t watch, but insulting them because they don’t agree with you is childish and pathetic.

The problem with hard news, is that it is often boring to people. News agencies have been delivering hard news for years, but once opinion programs started picking up entertaining talent, people preferred that over just a boring rendition of the facts. Human nature seems to be that most of us like hearing from people we think are similar to us because we trust those people more.

Jon StewartSo while some think opinion is bad because it distorts facts, the truth is that it gets more people interested in the news who otherwise wouldn’t be. People like Jon Stewart, Bill Maher, and Greg Gutfeld bring news with humor in such a way that younger crowds who would never watch hard news all of a sudden find themselves caring about the issues of the day. The more people learn, the better off we all are. We didn’t get to the top of the food chain by being ignorant.

So being the free-market capitalist I am, I love that the news has evolved to meet the consumer’s wants, instead of making us suffer through boring anchors of old who are just as likely to put me to sleep as they are to pique my interest. More importantly, I’m happy we have freedom of the press so left-leaning folks can watch MSNBC and I can watch Fox.

The other problem I have with the Faux News folks, is they’re not only insulting Fox, but they’re insulting everyone who watches it. Being a Libertarian, I love that Fox allows people like John Stossel, Greg Gutfeld, and Judge Napolitano to have a voice. Most other news media often ignore libertarians, yet Fox kills in ratings because it provides information to non-left-wing people like me that we would otherwise not get.Greg Gutfeld

To me, it’s said with the same hate and ignorance used by racists, sexists, and other hate groups. I would almost never watch MSNBC because of their statist bias, but I don’t insult them for it. If the Michael Moores and Janene Garafolos of America want a news program to watch, MSNBC is there for those people; more power to them.

The bottom line is that America is too often a nation of haters. Hip-hop music lovers call people who like country music inbred. Rock lovers call people who like rap music thugs. Conservatives call leftists commies; the left call conservatives greedy bastards. Just about everyone calls libertarians anarchists or potheads, of which I am neither. The intent behind these insults is to demean those different from you, which is no different from all the racial, homophobic, or sexist epithets people used in the past.

Piers MorganIf you feel the need to insult someone who is different from you or has a different opinion than you, you are the problem in my opinion, and it’s time to grow up. America’s freedom and free markets guarantee that no matter what you like in this world, as long as it doesn’t threaten someone’s rights, you have a right to consume it or sell it. The left would be furious if people like me tried to get MSNBC off the air, yet they’ll sing it from the mountain tops that Fox lies, and should be shut down.

I’ve always said, if you can’t win, don’t bemoan your competition, motivate yourself to be better. If you find yourself on the losing end, the problem isn’t your competition; it’s you. So until the other networks start beating Fox, maybe they need to look in the mirror and see what’s wrong with them that people don’t care for their message as much. But to sling insults and demand the competition be shut down, while it would make Hugo Chavez proud, has never been, nor should ever be the American way.

So you watch yours, I’ll watch mine, and let’s stop insulting people because they differ from you. The beauty of America lies in our differences, not the people who like to attack us for being different. We all know racism and sexism are bad, but it’s time hate in general be seen for the unhealthy emotion that it is.

The Beetle is Dead and Government Killed It

Any time new technology comes out, it is expensive. Completely new machines are often the folly of the affluent; the masses won’t get to enjoy them until decades later. ENIAC, the world’s first computer was debuted in 1947, but it wasn’t until 1981 that IBM brought us the PC and made the computer something we all could enjoy.

ENIAC
ENIAC

Cell phones were clunky boxes that only successful businessmen carried, and they were far too expensive for the proletariat to buy until science and the free market cut them down to size; both physically and financially.

So let’s talk about cars. 100+ years ago, the price of a car was significantly greater than the price of a horse. Plus, if you wanted a new car, you had to buy one. If you wanted a new horse, all you had to do was get your male horse together with a female horse, throw a little Barry White on the record player, and voilà! A new horse emerges months later, free of charge.

Cars were initially met with skepticism, disdain, and envy because they were loud, unreliable, and expensive. Here’s the thing though, horses have a relatively slow top speed, and even giving them the Lance Armstrong treatment isn’t going to get them up to a point where they can do 60+ mph for hours on end. So the value in cars is unmistakable. Although the technology was new, the dreamers saw that cars were the future and got to work building them, even if at the time, only the top 1% need apply.

Fast forward to the 30’s. Adolf Hitler was certainly a murderous %$@#$, but even violent psychopaths on occasion display some sort of twisted goodness, and this was his. He felt that cars shouldn’t just be for the rich and Ferdinand Porsche was commissioned to build the “people’s car” (Volkswagen) for the average Joe to buy, and the 911’s not-so-hot older sister was born.beetle

The history of the Beetle is legendary. But let’s look at what it was—a cheap car. It looked good, had character, four wheels, an engine, and occasionally brakes. That was pretty much it. The car sold millions around the world, not because it was fast, had all the options, or was an exclusive ride, but because it was affordable.

A drivetrain, wheels, seat, and steering wheel wrapped in a steel overcoat, by itself, has tremendous value to anyone needing to get from points A to B. All the other options that have been added through the years add value, but they also add price which some people simply can’t afford.

A bare bones car appeals to two types of people. Those of us who are broke but need to go to work, and those of us who race and consider Colin Chapman’s “Weight is evil” philosophy to be that which was handed down from the gods. People who are broke and people who like to race aren’t a small demographic. We’re out there, and we’re in the millions. We want a cheap, bare bones, nothing is there that doesn’t need to be, kind of car.

Colin Chapman's Brainchild, the Lotus Seven
Colin Chapman’s Brainchild, the Lotus Seven

So what am I whining about? The same thing everyone whines about; our well-meaning, yet ever meddling and oppressive government of course!

Any car you buy in America must be equipped with OBD2, air bags, anti-lock brakes, tire pressure monitoring systems, seat belts, windshields, achieve a certain MPG, meet government specified crash standards, and a whole host of other requirements our governmental overlords have legislated.

All of these gizmos and gadgets add two things; weight and cost. They have one thing in common as well; they’re not uniquely necessary on an automobile. So the ability to buy a modern-day Beetle is dead, and government killed it.

cons
United States Constitution

Our constitution was designed so that “we the people” would always be free to make our own decisions by limiting the powers of government to infringe upon our rights. So how does forcing me to buy an air bag that I can then legally turn off do an ounce of good? Riddle me that Batman!

A free market should allow us to buy whatever we want as long as we aren’t harming someone else by using that product, but none of these safety features actually accomplishes that goal. Instead they merely serve to infringe upon our rights to make decisions about how safe we choose to live our lives. As a libertarian, that infuriates me. That is not, nor was ever, the role of our government as laid out by our founding fathers.

I’m not one of those libertarians who float conspiracies like air biscuits; freely and aromatically-challenged. I truly believe that our politicians mean well. But let me give you an analogy. If we were going full-blown Bear Grylls in the wilderness, no cell phones, transportation, or means of getting help, and you fell and impaled your brain with something, it would be obvious you need emergency surgery. So armed with my hunting knife, I go to work. I’m no Dr. House however, so what is going to happen? You’re going to die; that’s what.

Hugh Laurie as Dr. Gregory House M.D.
Hugh Laurie as Dr. Gregory House M.D.

Were my intentions evil in performing surgery on you? Of course not, I was trying to save your life! So why did you die? Because while my intentions were good, I don’t know what the heck I’m doing.

This is our government in a nutshell. They do their best to protect us from harm, but many of them have never worked in the auto industry and know little about it. So they make decisions every day without having the slightest comprehension of the ramifications of them.

In a proper free market society where our government does what it is supposed to do, what would happen is that government would insist we the people had information. We don’t need cars that meet certain crash standards, we only need to know what crash standards a car meets, and then we can make our decision as an informed consumer.

Ariel Atom
Ariel Atom

It is time we the people tell our government that we choose what we want and you don’t get to dictate that to us. If I want to buy an Ariel Atom and drive it to work every day, then I shouldn’t have to buy it with “some assembly required.” Give me the information I need to be an informed consumer, and then get the hell out of my way.

The Justice System Needs An Overhaul

Gary Nolan (and THE Scrappy Doo)
Gary Nolan (and THE Scrappy Doo)

Imagine our justice system is an old sports car. It was sleek, fast, full of bells and whistles, and a blast to drive—a triumph in modern design for its time. However, like an old sports car, it has been abused, laden with aftermarket junk, the maintenance neglected, rusting away in the yard, and most of the electronics are reminiscent of the infamous Lucas Electronics (jokingly referred to as the Prince of Darkness because the lights rarely worked) whose switches are said to have three positions—off, dim, and flicker.lucas[1]

This description reminds me of our justice system. Over the years, it has gone from a system seeking justice to a system of winners and losers with little regard for justice.

We have people like Gloria Allred, who just want money and recognition instead of justice. We have prosecutors who get so enthusiastic about a high-profile case that they ignore exculpatory evidence just to improve their conviction rate. There are justices who don’t seem to understand that the legislative branch is separate from their own, and we have litigants who look to get rich at the expense of the innocent.

A free market allows lawyers to compete, but the system has done little to penalize those who abuse it. I want to see our LEGAL system be a JUSTICE system again.  So, I’m proposing a “Common Sense Legal Reform Act” which includes, but is not limited to the following:

Scales of Justice
Scales of Justice

Some states have “Loser Pays” legislation; this should be nationwide. Loser pays prevents civil cases where people are unjustly enriching themselves.

For instance, when I was in the insurance industry, we often paid claims that were properly denied because the cost of defending our position in court was more than the cost of the claim, and it did not make fiscal sense to fight it. If these leeches are lawyers, or have one in the family, it often doesn’t cost them anything other than the filing fee, and they end up getting something they do not deserve.

“Loser Pays” legislation would help immensely in reducing such frivolous lawsuits as it would both deter individual from suing unjustly since they would pay if they lost the case as well as encourage victims to fight them regardless of the cost. Many businesses have failed, jobs lost, and bankruptcies incepted because of such unjust litigation. If you are curious, read more about it here.

Manhattan Institute on Loser Pays

Proper management technique entails recognizing the difference between an innocent mistake and a purposeful wrongdoing when disciplining employees. If I had an employee make an innocent mistake, a little coaching was often all that was needed. On the other hand, if someone knew it was wrong and did it anyway, it was potentially a firable offense.

The legal system is composed of legislators, lawyers, judges, police, and a myriad of other trained professionals. Most people don’t take an oath to uphold the law when they start a new career; but these folks sure do, and they should not only know better than to violate those laws, but should be penalized more severely if they break them.

Chief Justice Roberts Being Sworn In
Chief Justice Roberts Being Sworn In

“We the people” trust them to be supremely honorable in their duties, and if that trust is broken, the belief of a government serving its people is lost in a cesspool of distrust. Children used to want to become cops; now they hate them. Why?

While most are invaluable servants of the community, there are a few rogue officers who commit serious felonies. The less than severe penalties they often receive for such corruption infuriate those of us who trusted them. While I may know most are good and honorable, it often only takes one bad apple to ruin the tree for those who are not so fair and optimistic.

Lawyers and judges should be disbarred, police should be removed from serving, and legislators should be impeached for what, in a normal workplace, would be “fireable” offenses. They must hold themselves to the highest of standards and police themselves even more vigorously than they police us. If a doctor purposefully does wrong, they lose their license to practice.  But when Charles Rangel does wrong, he gets nothing more than a glorified tongue lashing and it’s deplorable.

Liability is a term that is often abused and should be redefined to protect the innocent. If someone slips on the ice on my sidewalk because I didn’t shovel it, I’m liable? Give me a break! Let natural selection run its course. If someone is not intelligent enough to exercise caution while treading ice, then they deserve a bump on the head. I should be charging them for the education. Ice-slip-drink[1]

While good Samaritan laws currently exist in some states to protect doctors, it wasn’t long ago that if a doctor stopped to help someone dying on the side of the road, he could be sued if the person died because the doctor couldn’t scrub up, sterilize equipment, etc.

Liability should be restricted to an action where the defendant knew what they were doing was wrong and put people at risk with no mitigating circumstance to excuse it. The idea that I can be held liable because I didn’t anticipate someone getting hurt as a result of my inaction is ridiculous. People should be responsible for damage from their own ignorance, not me for not foreseeing the results of such idiocy.

I’m sick of warning labels on kids bikes that say, “Warning: experienced riders” or labels on paper respirators that say, “Warning: Does not provide oxygen”. FYI, both were featured on an episode of Stossel and are a result of our overly generous definition of liability.WWL2011_blue_bicycle-400[1]

America must get back to basics with the justice system, prevent “get rich quick” schemes, and worry more about the spirit of the law than the letter of it. Until we force Congress to ignore the campaign-generous trial lawyers and address the issue, innocent people will be financially raped by those who have done nothing to deserve such wealth. Where is the justice in that?