Nonsense, horsefeathers, and idle musings from a decade in South Korea (2002-2012).

31 October, 2012

Why You (Yes, Even You) Should Care About the War on Drugs

By Aaron
31 October, 2012

Video: Documentary filmmaker Eugene Jarecki discusses his latest film, which details the failure of U.S. drug policy.

Libertarians are often caricatured as caring only about legalizing marijuana and ending the broader War on Drugs. And, to be fair, stereotypes don't come out of nowhere. There are, however, reasons why folks of all political stripes ought to take an interest in this subject. The following bullet points are, by now, old hat, but as filmmaker Eugene Jarecki readies his documentary on the Drug War for release (see video above), they bear repeating.

And so...

  • If you are concerned about the United States federal budget deficit and debt, you should care about the Drug War. Whether you think that the money spent on futile attempts at enforcing the nation's drug laws would be better spent elsewhere, or whether you would support the taxation of legalized drugs such as marijuana, this issue ought to be on your mind. Consider, for instance, this graph (from here), which will concentrate the mind of any deficit hawk:

  • If you are concerned about crime, safety, and the fact that the United States has the largest prison population in the world, you should care about the Drug War. The Drug War, just like the prohibition of alcohol in the 1920s, imprisons non-violent adults for voluntarily selling, buying, or possessing certain substances, while creating a population of violent criminals who rob and murder to protect their territory and supplies. Legalize (or at least decriminalize) these substances and this violence will rapidly dissipate, as will the United States' prison population.

  • If you are concerned about poverty and inequality, you should care about the Drug War. Poor folks in the inner city (and especially those from minority backgrounds) are disproportionately affected by the Drug War and the violence it inspires. The nation's school system can hardly be expected to save the children who come out of the  neighborhoods most heavily blighted by this violence. So even if you'd prefer to lock up all the adults for any connection to the drug trade and continue the status quo, consider that, by doing so, you're simultaneously setting up the next generation of criminals. 

  • If you are concerned about national security and the strength of U.S. borders, you should care about the Drug War. To date, more than 50,000 people in Mexico have been killed in the war between drug cartels and the Mexican government. If you're not yet concerned about a failed narco-state on America's southern doorstep, you might want to think about getting concerned soon.

  • And finally, if you believe that what other folks put into their bodies - whether it be Doritos tacos from Taco Bell, nicotine from Lucky Strike, or weed from Jackson County, Oregon - is none of your business, then you should care about the Drug War. 

So what should be done? Well, these suggestions from the Cato Handbook for Policymakers would be a good place to start:

  • Greatly de-emphasize counternarcotics activities in Afghanistan, since they undermine America’s much more important struggle against al Qaeda and the Taliban;
  • Stop pressuring the government of Mexico to escalate the war on drugs, since that policy is leading to a dangerous upsurge in violence that threatens to destabilize the country;
  • Recognize that the "supply-side" campaign against cocaine and other drugs from the Andean region has produced few lasting gains, an inevitable outcome since global demand for such drugs continues to grow;
  • Accept the decriminalization and harm-reduction strategies adopted by the Netherlands, Portugal, and other countries as a better model for dealing with the problem of drug abuse; and
  • Move toward abandoning entirely the failed prohibitionist model regarding drugs.

30 October, 2012

Hurricane Sandy, Meet Grover Cleveland

By Aaron
30 October, 2012

President Grover Cleveland, as he appeared whenever he vetoed legislation, which was often.

In 1887, Texas was hit by one hell of a drought which ruined crops across a large swath of the state. The members of the United States Congress, as is their wont, insisted that something had to be done to help the parched Texans and thus drew up a bill appropriating $10,000 to purchase grain and seed for the farmers of the area, which they promptly sent down to a White House then occupied by Grover Cleveland. 

Cleveland, however, promptly vetoed the bill. Why, you ask, would he do such a thing, especially when the legislation called for such a small amount of money (approximately less than $300,000 in 2012 dollars) to help such an obviously needy group of citizens? Did Cleveland hate Texas? Was he just a hard-hearted scrooge who enjoyed the tales of suffering coming out of the Lone Star State? Was he secretly shorting the stock of a seed company? 

Nope, none of the above. Instead, in Cleveland's own words...

I can find no warrant for such an appropriation in the Constitution, and I do not believe that the power and duty of the general government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadfastly resisted, to the end that the lesson should be constantly enforced that, though the people support the government, the government should not support the people. The friendliness and charity of our countrymen can always be relied upon to relieve their fellow-citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood.

In other words: "There are folks in our country who need help, and I'd like to help them. Indeed, I encourage everyone to help them. So don't go distorting my words and misunderstanding me: it's not that I don't want to lend them a hand. But I have neither the desire nor, more importantly, the authority, to employ a man with a gun to force you to help them. Besides, I have more faith in you, my fellowman, than to believe that, absent my goons putting a boot up your ass, you would not help a person in need."

My, how things have changed. As the East Coast of the United States begins to mop up after being hammered by Hurricane Sandy, government officials at all levels are tripping over each other to see who can promise the most local, state, and federal aid, all while trying to out-emote each other on the cable news stations. The current occupant of the White House, Barack Obama, has retired to his command center to "monitor the situation" and has pledged help to all who need it, while New Jersey Governor Chris Christie - an arch boogeyman free-marketeer in the eyes of the political left - has called for as much federal emergency aid as he can get

Color the ghost of Grover Cleveland perplexed.

Of course, some - actually, many - will argue that only a large, centralized bureaucracy like the Federal Emergency Management Agency (FEMA) can adequately respond to natural disasters like Hurricane Sandy. And it is true that, in many instances, the federal government helped to create the very problem that now has people screaming for the government's help - for instance, by subsidizing insurance for fools who want to build their homes in flood zones (see, also, here).

So perhaps these folks are right that only FEMA can save us now, but (surprise!) I'm skeptical. 

Trouble is, the mindset required in order to advocate large government programs like FEMA (originally established during the Carter years to handle nuclear crises), Social Security, and Medicare can be summed up as follows: "Most humans, except me and the politicians I support, are too stupid and short-sighted to properly plan for the future and too cruel to help their fellow citizens through a rough patch." 

I, obviously, do not share this dark view of humanity. Perhaps my optimism stems from my days as a child in the Seventh-Day Adventist Church, where every week an offering was collected and earmarked for some medical aid mission to Zimbabwe, or for a house-building mission trip to Mexico, or to help poor Filipino folks build a school on Mindanao. There was, of course, subtle social and religious pressure to drop a few dollars or coins into the collection basket, but the church was never able to force anyone, under threat of violence, to chip in. My fellow parisioners - like people the world over - simply wanted to help, to know that they were doing a good thing, and given the opportunity, they seized it. 

Moreover, private organizations (churches, mutual aid societies, and yes, even businesses) tend to have a better idea of what particular groups of needy people actually need and are faster in responding to those needs. Consider this 2009 paper by the economist Steven Horwitz, which details Wal-Mart's quick response in the wake of Hurricane Katrina. By now, the failures of government at all levels in the days before, during, and after Katrina have been well-documented. Less discussed, however, is the fact that Wal-Mart was on the ground in affected areas almost immediately with truckloads of supplies and, in some cases, even free prescription drugs - all long before FEMA and other government agencies got around to making an appearance. Here's video of Horwitz discussing this subject:

As I said, people want to help and will do so if given an opportunity. Unfortunately, government programs have a way of crowding out voluntary charity (as if there were any other kind), thereby chipping away ever so much at the experience of helping others, which is part of what human society so intricate and meaningful.

29 October, 2012

Here We Go Again: The Broken Window Fallacy (Sandy Edition)

By Aaron
29 October, 2012

I suppose it was inevitable that someone would suggest that Hurricane Sandy - currently battering the Eastern seaboard of the United States - could benefit the economies of affected areas (video also here):

Tell that to the folks whose homes, cars, and livelihoods have been destroyed - and to the insurance companies who, instead of investing their resources in productive capital markets, must shell out funds to help those people rebuild. This, then, is one reason why GDP is such a lousy number when it comes to calculating actual prosperity.

And so, one more time, here's a quick explanation of "The Broken Window Fallacy," which explains why wars, terrorism, natural disasters, vandalism, government "stimulus bills" and other acts of destruction merely make us poorer (video also here):

I'm quick with this video, of course, because the Broken Window Fallacy never fails to make an appearance when disaster strikes, as evidenced by my posts on 2011 Christchurch earthquake in New Zealand and the 2011 tsunami/earthquake in Japan.

27 October, 2012

Adam Carolla on Luck

By Aaron
27 October, 2012

Words of wisdom for your Saturday evening (video also here)...

26 October, 2012

The ROK Government's War on Porn

By Aaron
26 October, 2012

Korea has a curious relationship with sex. On the one hand, the nation's cities are covered in houses of ill-repute (anything from a massage parlor to a karaoke room to a barber shop could be a front for prostitution), which Koreans largely accept, even if the government occasionally goes through the motions of cracking down. On the other hand, however, the country is a net importer of pornography, as the production of its own domestic industry is largely stymied by laws prohibiting the exhibition of naughty bits and, by extension, penetration. All of which just goes to show that you can never quite predict where the lines separating prudery from permissiveness will be drawn.

In its latest attempt to move those lines, the Korea Times reports the Korean government has recently been cracking down on online porn, which it says is responsible for a recent wave of sexual assaults around the country. Of course, the government has, to my knowledge, offered no evidence demonstrating causality between porn and the assaults (and no, simply showing that the assailants had previously seen a blue movie would not serve as proof). I, for one, would certainly be curious to know whether sexual violence is up, down, or the same over the past five, ten, or twenty years - that is, in the time since Koreans have had easy access to online smut.

Perhaps, sometime in the near future (ahem, over here), someone will bring to the government's attention the stacks of empirical evidence which suggests that porn and rape are, in economic terms, substitutes, not complements. That is, a man who has access to porn may be less, rather than more, likely to force himself upon anyone else. I think that might be interesting and, more important, relevant to the folks in charge of drawing up this crackdown on porn.

For now, however, the Korean government will badger private companies into doing the state's bidding, forcing internet companies, for instance, to install anti-porn software on their websites and locking up those who do not comply. If I were a betting man, though, I'd wager that Korean males - being, well, males - will find a way to watch other people bonk online.

Regular readers will have already guessed that I'm not smitten with the Korean government's attempt to "protect the children" (where are the parents?). That said, it has resulted in sentences such as this, from the Times story:

Last year, nearly 55 percent of male students in middle and high school said they watched porn online...

Meaning, of course, that 45 percent of male students in middle and high school simply lied through their teeth or were still relying on their dad's old stack of magazines.

And since we're on the topic of porn, here's an episode of Penn & Teller's Showtime show Bullshit!, which tackles the hysteria around just this topic. It is, I should warn you, not safe for work or young ears, though YouTube also doesn't permit the display of naughty bits, so you'll note that the best scenes have been blurred. I'm sure, however, that you know where to find those sorts of scenes if you're so inclined.

Penn and Teller: "Bullshit!: The War on Porn" (NSFW)

25 October, 2012

What Norman Borlaug Got Wrong

By Aaron
25 October, 2012

It is true that the tide of the battle against hunger has changed for the better during the past three years. But tides have a way of flowing and then ebbing again. We may be at high tide now, but ebb tide could soon set in if we become complacent and relax our efforts. For we are dealing with two opposing forces, the scientific power of food production and the biologic power of human reproduction. Man has made amazing progress recently in his potential mastery of these two contending powers. Science, invention, and technology have given him materials and methods for increasing his food supplies substantially and sometimes spectacularly, as I hope to prove tomorrow in my first address as a newly decorated and dedicated Nobel Laureate. Man also has acquired the means to reduce the rate of human reproduction effectively and humanely. He is using his powers for increasing the rate and amount of food production. But he is not yet using adequately his potential for decreasing the rate of human reproduction. The result is that the rate of population increase exceeds the rate of increase in food production in some areas.

That is from Norman Borlaug's 1970 speech in acceptance of the Nobel Peace Prize. Borlaug, of course, is known as "the father of the Green Revolution" for his work in the development of high-yield, disease resistant crops that made famine a spectre of the past. It might even be argued that Borlaug saved the lives of more people than anyone else who has ever lived (hard to measure, but the number is perhaps in the hundreds of millions and is rising every day). 

This excerpt from Borlaug's speech caught my eye, however, because it was Borlaug, as much as anyone else in recent memory, who helped put to rest Malthusian worries about food production not keeping pace with population growth. It seems to me that Borlaug, of all people, ought to have been an optimist about Planet Earth's ability to feed an increasing population. And yet, here we have Borlaug worrying that some areas don't produce enough food to match population growth.

To be sure, even today, the UN Food and Agriculture Organization notes that approximately 870 million people around the world suffer from undernourishment, mostly in the developing world (a number which, I must point out, has been falling for at least the past 20 years). A look at this FAO map, however, shows that these countries tend to be the ones in which the citizens' access to world food markets is blocked or disrupted by lousy political regimes, wars, or, to a lesser extent, geography. 

Yes, hunger is a problem for the people in these areas, but not because that specific geographic area isn't producing sufficient calories. After all, large cities like New York, Tokyo, and London produce almost no food whatsoever, yet the residents of these cities do not starve. Moreover, in the USA as a whole, some have estimated that up to 50% of all food goes to waste. Rich countries thus have a surplus of food, much of which could likely be exported to those with growling stomachs.

In countries like India, where hunger and malnutrition remain a problem despite the country's fertile agricultural regions, waste is similarly a cause of hunger, albeit for different reasons. Readers may recall the resistance Wal-Mart faced as it tried to bring its world-class efficiency to an Indian market where asinine regulations, crumbling infrastructure, and inefficient transportation mean that 35% of fruits and vegetables go to waste.

There is, in short, plenty of food in the world, if not right outside one's door then certainly available for importation. For a variety of reasons (none of which are Borlaug's fault), however, it isn't ending up in the bellies that could most use it. Rather than worrying about population growth as a cause of hunger, then, keep your eye on the real ball - that is, the human-created barriers which prevent the earth's abundant supplies of food from reaching those who need it.

For more on Norman Borlaug, have a listen to this interview he did with Penn Jillette:

Voting Schmoting

By Aaron

Gordon Tullock in "Voting Schmoting" from Tilapia Film on Vimeo.

In the video above, the great economist Gordon Tullock (best known for his work in public choice theory with 1986 Nobel Prize-winner James Buchanan) explains why he doesn't vote. Quite simply, says Tullock, his vote doesn't decide elections and thus doesn't matter. 

“People think they should vote because they’ve been told that in school, and there’s a large volume of propoganda at any point in time," says Tullock. "Many people are under great delusions as to the importance of their vote. They think their vote makes a lot of difference, but as a matter of fact it doesn’t.”  

But, but, but...what if everyone behaved like Tullock and declined to vote? 

In the event, quips Tullock, he'd start voting, as his vote would then decide the whole election. 

I share Tullock's rational lack of interest in voting, but I'd also offer one more reason why, perhaps, members of academia, the media, and the policy research field ought not to vote. The primary focus of these professions should be about dispassionate analysis and skepticism toward all sides of any policy debate. I wonder, though, if the act of voting for a certain candidate or policy doesn't flip a certain small bias switch in the voter's brain, making that person more inclined to be defensive about that candidate or policy even in the face of evidence which should demand criticism. Of course, I have no empirical research at hand to back up my suspicions on this account, so if you do work in any of these fields, don't let me make up your mind about whether or not to vote.

And finally, just because you don't exercise your right to vote does not mean you're not availing yourself of your rights as a free individual or living up to what you see as your "civic duty." Indeed, if you truly want to affect change in your country's public policies, you'll likely have a much greater impact by writing letters to the editor of your local newspaper, discussing (in as friendly a way as possible) matters of public policy with your friends and family, or - and this may be the best way of all - getting out into your community and volunteering to solve the problems around you rather than hoping that your inconsequential vote might ripple through the atmosphere and somehow solve them for you.

Besides, as PJ O'Rourke puts it, when you vote, you just encourage the bastards.

See also: 
Don Boudreaux, "I Won't Vote"
Katherine Mangu-Ward, "Your Vote Doesn't Count"

h/t: Mark Perry

24 October, 2012

Over at KBC...

By Aaron
24 October, 2012

Over at Korea Business Central, I am the author of the latest "Korea Economic Slice." I've posted it below for posterity, but feel free to excoriate me in the KBC comments section here.

A Paper-Thin Defense Against Political Hobgoblins in Korea

“The whole aim of practical politics,” wrote the American humorist H.L. Mencken, “is to keep the populace alarmed – and hence clamorous to be led to safety – by menacing it with an endless series of hobgoblins, all of them imaginary.”

The corollary is that a nation’s constitution – if indeed the nation is to be one of free individuals – must be the first line of defense against the wanton invocation of such crises, which the political class conjures chiefly as a way to increase its own power. As the ongoing tension between the Korean government and large discount retailers has shown, however, the authors of Korea's constitution did their best to avoid the sort of hard choices that must be made if citizens are to be free within a rule of law, rather than subject to the arbitrary and capricious rule of those who wield political power at any given moment.

Article 119 of the Korean Constitution begins by stipulating that the nation’s economy is to be predicated on “a respect for the freedom and creative initiative of enterprises and individuals in economic affairs.” Since the 1990s, large retail chains like E-Mart, HomePlus and Costco have steadily become the shopping stop of choice for many Korean consumers, who flock to the stores for various reasons, including convenience, selection, and quality. Not once during this time has a customer found herself kidnapped off the street and forced to buy her staple items from one these big box outlets. By applying their creative initiative, the individuals who manage and staff these stores have offered consumers an appealing shopping experience, and consumers have exercised their freedom to spend their time and money as they please. Such shifts in consumer preferences, hardly a new phenomenon, have meant that the owners of smaller, more traditional shops have had to either adapt or close down, just as the makers of traditional Korean clothes had to do when people began to prefer jeans and sneakers.

Such a preference for these megamarts, however, does not accord with the worldview of those whom economist Thomas Sowell has referred to as “the Anointed,” that is, elite members of politics, academia, and the media who believe that ordinary citizens are simply not as bright or as compassionate as they are. How else to explain the vast numbers of consumers flocking to large retailers instead of to small and traditional markets? Don’t these consumers know that a more fulfilling shopping experience, as defined by the Anointed, can be had at back alley vegetable stalls, which are slowly disappearing thanks to those soulless behemoths on the boulevard?

This, cry the Anointed, is a crisis!

The solution? Forbid large retailers to open new stores in certain regions and sectors; pressure them to refrain from selling certain items; and force them to close their doors for two days each month in an attempt to force consumers to patronize small markets. As justification for such interventions, the Anointed need only look at the second half of Article 119, which states that the state has the authority “to regulate and coordinate economic affairs in order to maintain the balanced growth and stability of the national economy, to ensure proper distribution of income, to prevent the domination of the market and the abuse of economic power, and to democratize the economy through harmony among the economic agents.” As added legal ammunition, policymakers point to Article 126, which, though it initially promises that the state will control neither the property nor the management of private enterprises, nevertheless grants the government the power to seize control of such outfits in order to meet “urgent necessities” within the national economy.

In other words, bureaucrats and politicians – the tip of the Anointed’s spear – have full authority to disrupt any pattern of peaceful exchange which does not conform to their notions of propriety. Those seeking political power most often do so out of a belief that they are qualified to boss others around, and it is a rare politician indeed who eschews additional accretions of state authority. It comes as no surprise, then, that in the eyes of the Anointed, the economy is forever “unbalanced” and short on “harmony,” thus necessitating “urgent” government action. Cloaking their proclamations in language designed to incite panic and tug at public heartstrings, the political class, ignoring the Constitution’s nod to economic and personal freedom, have arrogated to themselves the power to decide when, how, to what extent peaceful human interaction will be permitted.

At its core, a nation’s constitution is a recognition of the fact that the state holds a monopoly on the legal use of violent force, a power which may be necessary but which is also inherently dangerous and which thus must be constrained. This is particularly relevant in a country like Korea, where a history of colonialism and dictatorship should make citizens especially leery of granting any government – whether of the left, right, or center – the power to arbitrarily thrust itself into the private affairs of individuals. Yet, as the government’s punishment of large retailers shows, Korean citizens are once again losing their freedoms to political hobgoblins, against which the country’s constitution offers no protection.

23 October, 2012

Collusive Merriment

By Aaron
23 October, 2012

In the latest example of "reality imitating art," the Joong Ang Daily reports today that representatives of large and small retailers met in Seoul on Monday to"discuss how to resolve their deepening conflicts." Regular readers of this site will recall that small retailers in Korea, feeling the competitive pinch from larger discount stores (E-Mart, HomePlus, Costco, etc.), have recently sought to employ the government cudgel against their rivals. For its part, the government (at the local, regional, and national levels) has put in place restrictions on when large stores can be open, what products they may sell, and where they can locate new outlets. 

All of which has stirred up quite a kerfuffle.

And so, a bunch of head honchos got together and have apparently agreed to play nice. By now, however, we ought to know that when producers play nice with one another, consumers had best watch their wallets.

Large stores voluntarily agreed to limit the number of new outlets they roll out and close existing ones on some weekends, according to the Ministry of Knowledge Economy.

The non-binding pledge came after small vendors and traditional markets blamed large retailers for unfairly poaching their business by expanding aggressively. 

If you're experiencing flashbacks to Ayn Rand's 1957 novel Atlas Shrugged, you're not alone. In reading the Joong Ang's story this morning, I couldn't help but think back to the scene in Atlas in which the National Alliance of Railroads passes their so-called "Anti-Dog-Eat-Dog" rule, allegedly implemented to prevent "wasteful competition" between railroads and to give all players a fighting chance, but which in reality is merely a ploy to drive a more successful railroad out of business.

Of course, the end result of such collusion - and of the sort that took place in Seoul this week - is that consumers either can't get what they want, or must pay higher prices for lower quality.

In Atlas Shrugged, Rand may well have been thinking back upon Adam Smith's warnings about the get-togethers of businesses types. In The Wealth of Nations, Smith cautions:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

It was with no small amount of dismay, then, that I read these lines in the Joong Ang story: 

With Knowledge Economy Minister Hong Suk-woo presiding, they agreed to form a “Retail Industry Development Consultative Group” by Nov. 15 to create a lasting and effective conflict-solution platform. 

Exasperating as this is, it's hardly surprising. I long ago gave up on the Korean government's - and, more specifically, the Korean Fair Trade Commission's - promises to  "strengthen consumer's rights" (see here, here, and here for past instances of my frustration with the FTC).

Amidst all these dirty dealings, one company nevertheless continues to endear itself to me. Costco, which has refused to close its stores on Sunday in defiance of a Seoul city ordinance, was notably absent from Monday's spectacle in collusion. At least one business is still standing up for its right to make an honest profit and, in the process, do right by its customers. 

20 October, 2012

What is "Local?"

By Aaron
20 October, 2012

For my friends with "Buy Local" inclinations in their food choices: should a resident of Detroit, Michigan, be buying his produce from farmers in the Ann Arbor area (44 miles away but in the same state), or from farmers in the Windsor, Ontario, area (2 miles away but in a different country)? Just curious what guides your thinking here. 

19 October, 2012

Corporate Welfare Queens: Formula One

By Aaron
19 October, 2012

Here we go again: for the third time in, um, three years, the Korean Grand Prix - the only Formula One event on the Divided Peninsula - turned out to be a money-loser. As The Diplomat reports, attendance was up only slightly from last year, and this despite an appearance and dance lesson from Psy (he of the now wildly worn-out "Gangnam Style") and discounts of up to 40% for tickets. In other words, the powers-that-be couldn't even pay people to show up for the races. 

Not that they didn't try.

Care to take the wildest of guesses, then, as to who gets to pick up the tab for the money lost by Korea's South Jeolla Province in hosting this latest F1 event? That's right: taxpayers, most of whom probably cared not a whit as to whether Sebastian Vettel or Fernando Alonso or Herbie the Love Bug took home the trophy (Vettel, by the by, won). Indeed, in the mostly agricultural South Jeolla Province, most of said taxpayers were probably too busy tending their fields or at least taking a much-deserved nap to even know that the finest technology in the world was topping 200 MPH just a a stone's throw from their house. 

Nevertheless, says the South Jeolla government, the bill's in the mail. Pay up.

As someone who loves cars and auto racing and speed and technology, I have a soft spot for events like this. That should give me an extra ounce of credibility, therefore, when I say that, despite my love of the event, I do not wish to force anyone else to foot the bill just so I can hang around and watch a bit of motoring. If I want to watch such shenanigans, I ought to pay for it myself. Seems fair, no? 

Whether in the United States or Korea or any other nation, conservative politicians often make much of the "welfare queens" (usually, in America, portrayed as a poor woman of African extraction) that are rapidly draining the nation's treasury. Seldom, however, do they mention the "corporate welfare queens," as Richard Epstein calls the business interests who wheedle subsidies and tax breaks out of local and national governments for projects and events (such as an F1 grand prix or the Olympics) that bring little in the way of lasting economic benefit to a local community but which bestow worldwide exposure upon, say, the advertisers whose banners you see in the background and who use the facilities that those taxpayers built. 

So, as I've written before on this very topic (i.e. Formula One), if these events are such a windfall for (local) businesses, then by all means let them make the investment by pooling their resources and paying for the facilities. If the investment was a wise one, god bless 'em. If not, well, at least the rest of us aren't on the hook. 

18 October, 2012

Consider the System, Not the Individuals

By Aaron
18 October, 2012

In Korea, where I lived until this past August, it's an election year. In the United States, where I now reside, it's an election year. Indeed, one could be forgiven for thinking that 2012 is an election year in every last nation on earth, from France to Kiribati and all points in between because, well, it mostly is. For someone like myself, who views politics and politicians of all stripes with a special sort of contempt, this has made for a long year. 

Every election cycle, we're bombarded with noble assertions by each candidate and his/her supporters which run, more or less, as follows: "The only reason for our troubles is that my opponent is an ignoramus. If we could just elect smarter, more virtuous individuals - i.e. me - to public office, everything would be hunky-dory." 

Such claims are usually accompanied by high-minded journalists pleading for a kinder, gentler, cleaner brand of politics. Take, for instance, this recent op-ed in The Korea Times by Lee Chang-sup, in which the author laments the cronyism that has tainted every Korean president in recent memory:

...President Lee has wasted much of his presidency on naming his cronies and former classmates to key public posts. Like his predecessors, including Chun Doo-hwan, Roh Tae-woo, Kim Young-sam, Kim Dae-jung and Roh Moo-hyun, the president was victimized by cronyism and nepotism. Their corrupt ties have made former presidents’ postretirement life unhappy and inglorious, having disillusioned the public, fanned regional antagonism and deepened the feud between conservatives and liberals. Likewise, President Lee may also face a tough postretirement life for his thoughtless abuse of cronyism in running the government.

The author then goes on to make the usual milquetoast demands for improved transparency, meritocracy, more fairness, and better behavior in general from the political class. He concludes:

Cronyism and nepotism breed kleptocracy and crony capitalism. The current presidential candidates should ponder about how he or she can best break this pattern and serve the five-year term with dignity intact. His or her first job as the new president would be ending the pervasive cronyism and introducing meritocracy. Winning the presidency should no longer be a trophy for power-hungry cronies and old-boy networks.
First, a correction: it is statism which breeds cronyism, nepotism, and kleptocracy, and crony capitalism. Limit the power of government to arbitrarily intervene in the lives of citizens, to pick winners and losers, and to dispense favors, and you also limit the corruption that has become so much a part of politics. After all, why bother lobbying the government for goodies if the government has no goodies to hand out?

On the author's concluding sentence, however, I share his sentiments: the presidency should not be a prize for the most power-hungry contestant. Having said that, what should be doesn't much matter in reality. Politics attracts power-hungry people because the essence of desiring political office is believing that one is qualified to order other folks around. This has led P.J. O'Rourke to quip that politicians, as a group, ought to be diagnosed with Narcissistic Personality Disorder. The symptoms: 

  • Has a grandiose sense of self-importance (e.g., exaggerates achievements and talents, expects to be recognized as superior without commensurate achievements)
  • Is preoccupied with fantasies of unlimited success, power, brilliance, beauty, or ideal love
  • Believes that he or she is "special" and unique and can only be understood by, or should associate with, other special or high-status people (or institutions)
  • Requires excessive admiration
  • Has a very strong sense of entitlement, e.g., unreasonable expectations of especially favorable treatment or automatic compliance with his or her expectations
  • Is exploitative of others, e.g., takes advantage of others to achieve his or her own ends
  • Lacks empathy, e.g., is unwilling to recognize or identify with the feelings and needs of others
  • Is often envious of others or believes that others are envious of him or her
  • Regularly shows arrogant, haughty behaviors or attitudes

Not surprisingly, a government with plenty of power to wield attracts the sort of person who enjoys wielding that power over others and using it to benefit those whom he/she favors. As Lawrence Reed wrote, summarizing F.A. Hayek's discussion of "Why the Worst Get on Top" in The Road to Serfdom:

Give government lots of power and silly people who have little tolerance for the lives and views of others will line up to get government jobs. Those who respect others, who leave other people alone, and who want to be left alone themselves, apply elsewhere—namely, for productive jobs in the private sector. The bigger government gets, the more the worst get to the top of it...

Or as Douglas Adams once put it: "anyone capable of getting himself elected president should by no means be allowed to do the job." 

With the three main Korean presidential candidates (as well as Messrs. Obama and Romney in the USA) arguing not over whether but by how much to expand the size and scope of government, I hope Mr. Lee over at The Korea Times will brace himself for more of the cronyism that he bemoans. Such corruption goes hand-in-hand with unchecked government power. 

17 October, 2012

Transpacific Bullies, Part II: Norco, California

By Aaron
17 October, 2012

While the municipal government of Seoul takes out its populist rage on Costco, the city of Norco, California has found itself overrun by the sort of unlikely scourge that, in the minds of city officials, necessitates - absolutely demands! - immediate action by city officials. 

What is this pestilence, you ask, that has Norco's political leaders shaking in terror?


Yes, you read that correctly: the Norco Mayor Kevin Bash believes that carwashes are "spread too thin" and he has thus proposed that the city ban the development of any and all new carwashes. 

Not surprisingly the owners of existing carwashes have jumped up in favor of the mayor's proposal, as it would protect them from the sort of competition that makes running a business such a chore. Instead of innovating better products and services, then, why not just get the city government to ban new competition outright? 

Which makes this story yet another illustration of the ol' idea of "concentrated benefits, dispersed losses." The owners of Norco's existing carwashes are an easily-defined and (probably) well-organized group which stands to benefit tremendously if the city government bans the construction of new carwashes. Carwash owners, therefore, are plenty willing to spend considerable time and energy in lobbying the government for special favors. Consumers, meanwhile, who would likely be irked by the higher prices they'd have to pay for a product of lower quality under such a band, are busy and can't devote their waking hours to fighting an ordinance that may cost them a few dollars a month. These drivers are thus unlikely to traipse down to City Hall and object to Mayor Bash's latest hair-brained idea. Unfortunately, many an asinine policy has ridden this sled straight into action (see, for example, US import tariffs on sugar).

Not, of course, that anyone is capable of telling us just how many carwashes are "too many," but as one astute Man-on-the-Street points out in the NBC 4 video above (also here), if the existing carwashes are supporting themselves and staying in business, then there obviously aren't "too many."

This video, which is a surprisingly good lesson in several basic principles of economics, also points out that a Norco carwash is not just a carwash, as the local sud-slingers offer a variety of products and services that distinguish them one from another. Some are of the self-serve coin-op variety, others offer full details, some are locally-owned, and some are part of larger national chains. Saying that there are too many carwashes in Norco, therefore, is a bit like saying there are too many supermarkets, ignoring the fact that Ralph's is not Trader Joe's, which is not Whole Foods, which is not Costco, which is not the local Korean market, etc.

As F.A. Hayek pointed out, competition is a continuous "discovery procedure" which enables producers to know what products and services will best meet the demands of consumers. This process of discover, which works hand-in-hand with Schumpeterian creative destruction, never ends and should not be snuffed by government diktat unless we desire a lower standard of living. Indeed, where would we be now if governments had decided that we had "too many" pharmaceutical companies in, say, 1960 (let's not get started on the FDA), or that there were too many food companies in 1950?

Fortunately, they didn't.

16 October, 2012

Transpacific Bullies, Part I: Seoul, Korea

By Aaron
16 October, 2012

Costco's a popular place in Korea, as this QiRanger video illustrates.

After a two-month hiatus - best and most succinctly explained by the travels and travails involved in moving from Seoul to Southern California - this post marks my return to this dank, dusty corner of the internet. I may (or may not) have much to say about our new surroundings and our adaptation to them after ten years abroad, but for now matters of greater substance are clambering for attention.

In uprooting ourselves and moving to a different hemisphere, I naturally anticipated a fair bit of uncertainty about life, at least in the short term. In one respect, however, I needn't have worried, as some things simply never change. To wit: politicians and government bureaucrats the world over bring to their jobs a nitpicky thuggishness that makes me feel at home wherever I happen to be. 

Dating back to at least last year, the city government of Seoul has done its damndest to force large discount retailers such as E-Mart, Lotte Mart, HomePlus, and Costco to close their doors on two Sundays each month, claiming that such closures would redound to the benefit of traditional markets and mom-and-pop stores (see here and here for my earlier commentary). Nevermind that these same small businesses make up a sizable portion of Costco's clientele; and nevermind that never - not once - has a housewife found herself snatched off the street by goons from HomePlus and forced to buy her chicken feet from the local Tesco outlet; and nevermind that a Seoul court ruled that the city government had overstepped its bounds in forcing E-Mart, Lotte Mart, and HomePlus to close (Costco, importantly, was not party to the lawsuit), thus paving the way for the three retailers to resume unfettered operations. Never you mind any of that: what the government wants, it shall get by means fair or foul.

When Costco - which, as mentioned, was not party to the lawsuit against the city - resumed Sunday operations in the wake of the court decision, the Seoul government began to levy fines of 10 million KRW (+/- US$9,500) for each Sunday the retailer opened in violation of the prohibition. According to the city, Costco was not eligible to resume selling its 55 gallon drums of mayonnaise on Sundays because it had not partnered up with the other big box stores in the legal battle against the prohibition. According to Costco, "Screw you, Seoul city government. Our profits are such that we can simply pay the fine and continue giving our customers what our overflowing parking lot indicates they want." 

That Costco officials clearly have a better understanding of the rule of law and of legal precedent than do those at Seoul City Hall has only served to infuriate local officials. And as Stafford Lumsden (aka The Chosun Bimbo) brought to my attention, hell hath no fury like a bureaucrat scorned. Last week, the city launched a series of inspections on Costco stores around Seoul, citing the retailer for violating "a total of 41 rules concerning sanitation, price tags, waste disposal, product design, parking and traffic control, emergency lights, firefighting equipment and other safety measures." Costco now faces a two-week suspension on meat sales and the city has decided to double down, literally, by penalizing Costco 20 million KRW for each of the three Sundays it opened its doors.

Of course, this bullying of Costco may be good politics for Seoul's elected officials, who can claim that, in one stroke, they are both protecting "the little guy" from an evil Big Business while also bolstering their nationalist bonafides by sticking it to an evil Multinational Big Business.

Consider, however, that Costco is guilty of nothing but unlocking its doors and allowing folks to come inside for a look around. That's it. Indeed, the only reason that the government is pushing for these closures is that the large retailers are so darn popular - else how could politicians claim they were a threat to any other business? What the government is actually doing, then, is punishing Korean consumers for shopping decisions that do not accord with their political needs and preferences. After all, it is consumers who, on the most convenient shopping day of the week, will have to look elsewhere and pay higher prices for their groceries.

Rather than allow free citizens to peacefully shop where they please, local officials - in cahoots with organized interest groups like small retailers and traditional market associations - have turned to the playbook of thugs in their battle against consumers and peaceful association.

As I've said repeatedly on this site, if you have to resort to the use of force to implement your idea - in this case, "helping small business" - then your idea was probably lousy from the outset.