“That’s a return on investment a lot of people in the private sector would envy,” he said.

There is so much wrong here that it’s hard to know where to start. First of all, was he joking? Perhaps—actually, I’d say he was half-joking. So let’s take the serious half seriously and ask what his little quip accomplishes.

In my mind, what stands out is how he blurs the line between economic power and political power. Economic power is productive ability—essentially, it’s Apple’s ability to offer an iPhone that millions of people want to buy. Political power is coercion—essentially, it’s the government’s ability to separate citizens from their property by threatening punishment, or by direct seizure.

The term “return on investment” offers a measure by which one can compare the profitability of placing money in various productive enterprises. If ROI is 2% in grocery retailing but 5% in petroleum refining, then that’s one factor in making an investment decision. But the government does not produce economic goods, nor does it generate profits. All it can do is seize the profits of productive enterprises.

Government officials who want to augment their power have every incentive to blur this distinction. Baer would like some of the aura of profitability to rub off on him. We shouldn’t let him get away with it.

If a common criminal “invests” $250 in a pistol and makes off with $10,000 in cash from a bank, has he achieved a 4,000% “return on investment”? Of course not. Clearly the robber produces nothing, he only takes. It would be a corruption to apply the term “return on investment” to his activities.

Taking money at the point of a gun—whether the gun belongs to a robber or a federal prosecutor—is not and can never be productive, and it’s a moral offense to equate the two. I’ve written elsewhere about why I question the propriety of the antitrust regime, as well as the penchant of federal antitrust enforcers to brag about their criminal prosecutions of businessmen. Baer’s little half-joke deserves to be completely condemned.

(This is cross-posted from LaissezFaire.)

Image: Anders Sandberg via Compfight

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• Yes, Iraq is unraveling: “Now we know—and to be honest, the answer is hardly a surprise. Iraq is a basket case these days, and none of its problems came out of the blue.”
• Hezbollah Aids Syrian Military in a Key Battle. Recall that this is the same Hezbollah that the Obama administration sought to “engage” diplomatically just a couple of years ago.
• An Atrocity in Syria, With No Victim Too Small. To describe the details of this story as “grisly” is a gross understatement. Incidentally,  just a few years ago the Obama administration sought to “engage” diplomatically with Assad’s regime.
• The reality on the ground in Syria is horrific. Naturally, we hear from the UN a shopworn banality: “U.N. Calls for Political Transition in Syria.” A transition from butchery to what kind of political outcome, when both sides are manifestly abhorrent?

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Here’s the published quote, selected from a much longer interview: “They [regulations] impose an enormous cost on companies and all individual Americans of the amount of paperwork and regulations that you have to go through when you’re not doing anything wrong.”

I think it’s worth amplifying on that true and insightful comment with two points of context:

1. Contra the setup of the story, “big vs. small government” is not the best way to frame the debate. The real issue is “the proper role of government,” a question on which ARI differs from both conservatives and liberals. We are in favor of proper government functions like the police force, a function which in a laissez-faire society would not be reduced. But we would entirely eliminate improper functions, like wealth redistribution programs and regulations that burden the innocent.

2. There’s a conservative line that “government costs too much”—as if a high price tag should discourage Americans from pursuing justice and saving lives. Dr. Ghate’s point differs from that. The tremendous costs are important, of course, but only in the larger context that regulations penalize the innocent, and that preventive law is an evil that infringes upon individual rights.

Image: Mr. T in DC via Compfight

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Long before General Motors neared collapse, it was a proud and flourishing symbol of American manufacturing. In the 1950s, GM was the first company to ever make $1 billion in a single year, and it had 50% of the domestic automobile market. GM executives used to proudly quip, “we’re still losing 5 out of every 10 sales!” What happened to this great company?

Many factors are acknowledged as contributing to GM’s decline: it juggled too many brands, over-extended its dealer network, failed to respond rapidly to market cues, and struggled to work with its union, the United Auto Workers.

But the extent of its problems with the UAW is astonishing—and the problems themselves warrant explanation. Consider some of the onerous arrangements that GM’s management agreed to. …

Read the whole thing.

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• Obamacare “scares the daylights out of” small businesses, who, through a crippling new tax, will be forced to pay the medical bills of others.
• Last fall one compounding pharmacy made headlines when steroid injections it sold caused a meningitis outbreak. Now the FDA wants to control all compounding pharmacies. Whatever happened to being treated as innocent until proven guilty?
• Grocery stores will have to spend $1 billion in the first year alone to meet Obamacare’s requirement of displaying calorie labels on all their foods. Says one executive at Kroger, “We might have thousands of SKUs for birthday cakes and thousands of types of prepared pizza. The problem is [Obamacare] forces us to label all of that, down to the olive bars and salad bars.” Much of the cost will go towards not signage but just figuring out how many calories are in each food item they sell.
• Last week Obama addressed concerns over the “train wreck” that is expected from implementing Obamacare, saying, “We still have a lot of work to do in the coming months to make sure more Americans can buy affordable health coverage.” One crucial task is convincing young people to sign up for insurance (in order to fleece them to pay for the medical bills of others). Look out this summer for a mass marketing effort in this vein.

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Shaywitz opposes the growing movement to demonize, and eventually end, the consulting relationships through which doctors help pharmaceutical companies develop and market new drugs. After noting how hard it is to find commercially feasible ideas, Shaywitz writes:

To advance even a solid idea requires, ideally, close communication between industry and outside experts: university researchers, who often developed the science and understand it the best; practicing clinicians, who can describe where the medical needs are the greatest, and what properties an ideal therapeutic would have; and patients, of course, who understand better than anyone else what they need, and where existing approaches may fall short.

We should strive to cultivate, not demonize, these sorts of interactions.

This is just a taste of Shaywitz’s solid, fact-rich argument in favor of preserving such collaboration against a rising tide of attacks. Unfortunately, Shaywitz’s argument falters when he attempts a moral defense of drug companies’ profit-seeking.

Shaywitz, an adjunct scholar at the conservative American Enterprise Institute, takes an approach similar to that favored by AEI’s president, Arthur Brooks. (My colleague Don Watkins has analyzed Brooks’ weaknesses here, here, here and here.) In essence, Shaywitz asserts that drug company profits should be tolerated because they allow companies to serve other people’s needs. In support he quotes Whole Foods CEO John Mackey: “Making high profits is the means to the end of fulfilling Whole Foods’ core business mission. We want to improve the health and well-being of everyone on the planet though higher quality food and better nutrition, and we can’t fulfill this mission unless we are highly profitable.”

This kind of argument amounts to: “Please excuse our profits—we’re really out to benefit others, not ourselves.” No matter how often conservatives resort to this strategy, it will always ring false because it concedes the impropriety of profit-seeking while simultaneously attempting to excuse it. Such arguments are worse than useless in the current controversy, because the anti-collaboration movement succeeds by decrying the profit motive as a source of corruption and conflicts of interest.

In reason, however, the progenitors of progress in medicine—especially the scientists, physicians, engineers, and executives who work in and for pharmaceutical companies—have no need to apologize or justify themselves altruistically. What’s urgently needed here is a defense based on rights—the moral right of doctors and drug companies to work together to advance their own productive interests, and their legal right to do so without interference from government regulators.

Image: Eric via Compfight

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Orange County, California, is surely no free market when it comes to the mobile food industry. But contrast the industry’s presence in O.C. to the dearth of food trucks in New York City, as described in this recent New York Times column:

As I was walking through Prospect Park recently, I wanted to find a healthful snack for my son and something for me. The only options, though, were the same sort of carts that my dad took me to in the ’70s: Good Humor ice cream, overpriced cans of soda and overboiled hot dogs sitting in cloudy water. This seemed ridiculous. In the past few decades, food in New York City has gone through a complete transformation, but the street-vendor market, which should be more nimble, barely budges. Shouldn’t there be four Wafels & Dinges trucks for every hot-dog cart?

Why are food trucks not easy to find in New York City? He blames regulations:

There are numerous (and sometimes conflicting) regulations required by the departments of Health, Sanitation, Transportation and Consumer Affairs. These rules are enforced, with varying consistency, by the New York Police Department. As a result, according to City Councilman Dan Garodnick, it’s nearly impossible (even if you fill out the right paperwork) to operate a truck without breaking some law. Trucks can’t sell food if they’re parked in a metered space . . . or if they’re within 200 feet of a school . . . or within 500 feet of a public market . . . and so on.

Things can get so bad that one food-truck employee spent eight hours in jail for vending falafels without the proper license!

The author concludes by comparing New York City regulations with the Third World:

In Ecuador, for example, it takes about 56 days and 13 separate procedures to get all the legal paperwork done to start a new business. In the United States, it’s an average of six days and six procedures. But if you want to open a mobile-food business in New York, it’s essentially like starting a business in Ecuador — and that’s if you can somehow arrange a permit.

I do not agree with everything the author says, but this whole article is worth reading because it illustrates how regulations can mire and discourage business activity.

Photo Credit: Telstar Logistics via Compfight cc

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“The Web’s New Monopolists” floats a number of trial balloons, including:

• The desirability of regulating companies like Twitter and Facebook as “utilities”
• Whether Internet giants such as these, not to mention Apple, Amazon, and Google, should be seen as “scary monopolies that somebody needs to do something about”
• Whether a company like Facebook should be nationalized
• Whether “it’s possible to spin a credible tale of antitrust lawyers enabling disruption and innovation” through enforcement measures such as those against Microsoft in the 1990s.

What’s on display here is the idea that the more success a company earns, the more it must put up with coercive control over its business practices. Fox’s conclusion says it all:

So all praise to today’s would-be utilities and monopolies, as they try to build enterprises that own their markets and that we can’t do without. But when they actually succeed, don’t think we shouldn’t be sniffing around in their business. At a certain point, it becomes our business, too.

Unfortunately, the businessmen subjected to antitrust enforcement typically accept it as a cost of doing business. “There’s a joke in Silicon Valley,” says UC Berkeley economist Carl Shaprio. “‘You know you’ve really made it when you’ve got antitrust problems.’ That’s the sign of success.”

Notably, Fox’s article contains not a single quote or mention of anyone—businessman, academic, or policy analyst—who opposes antitrust regulation of Internet companies on principle.

Image: Cliff via Compfight

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In case you didn’t think the UN could get even more bizarre (and dangerous), try this one. Iran will soon become the President of the Conference on Disarmament. The Iranians rotate into the job for four weeks near the end of May. Their qualification for the position? Iran is the member state that comes next in the English alphabet after Indonesia.

Iran will have the task of managing the 2013 Conference agenda, which includes “the cessation of the nuclear arms race and nuclear disarmament.” On the one hand, since the mullahs running the country are engaged in a mad race to acquire nuclear arms, chairing a meeting on disarmament may be a bit of a struggle. On the other hand, the Conference just talks, and talking for its own sake is an Iranian art form.

Bayefsky hits the nail on the head: “Now the proverbial foxes guard the chicken coop. It would be funny, except that the Iranian fox really intends to devour the chickens.” Read the whole thing.

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Disappointed that lawmakers in the United States haven’t been doing more to stop projects that would bring oil to America, Gore reflected that the lack of gumption to stop the pipeline was most likely because people were failing to take the issue personally. He said that when people view these issues as a matter of personal values, they are more likely to take action:

“When these kind of issues settle into a choice between right and wrong, then the moral clarity that eventually develops makes it possible to move quickly.”

I absolutely agree.

We are surrounded by technology that oil has made possible, and sometimes it can be easy to forget exactly how valuable those things are to us. I’m taking a moment today to reflect on some of those values.

Oil makes fuel which has allowed us to make trips that would never have been possible just one hundred years ago. Kerosene-based rocket fuel put men on the moon and satellites into space that allow us to find our location anywhere on Earth, listen to music or watch television, track storms and communicate worldwide.

The gasoline which powers our automobiles makes journeying to stay in touch with family easy. In the mid-1800s my great-great-grandfather moved away from the family farm in Wisconsin to make his own way in the neighboring state of Minnesota. He never saw his brothers and sisters again, and his children never met their grandparents. There was never any bad blood between them; it was simply that the distance between the two farms was too great to make visiting possible. He packed up, made the journey and never looked back. There were just 400 miles between the two farms.

Oil-based technologies now make that journey easy—simply jump into your car and go. Mechanized combines and diesel tractors unburden a farmer from a great deal of physical labor and make a weekend trip possible—even in the dead of a Minnesota winter.

Oil makes jet fuel. Living in California, I am able to see my family in Minnesota by simply boarding a commercial airplane. These vehicles can weigh over 800,000 pounds and sail through the sky, making a journey that would have taken my great-great-grandfather well over a hundred days had he chosen to travel the Oregon Trail out to California. A direct flight makes the trip in about five hours.

But a single barrel of oil makes more than just fuels–about 16% of each barrel goes toward making products such as: sunglasses, telephones, asphalt, dishwashers, microwaves, surf boards, refrigerators, umbrellas, roofing, shampoo, nylon rope, clothes, insect repellent, skis, footballs, water pipes, yarn, hair dye, movie film, soft contact lenses, artificial limbs, motorcycle helmets, syringes, CDs and DVDs, aspirin, deodorant, shoes, stuffed animals, pacifiers, extension cords and shower curtains.

The list goes on for pages. But even on this short list above, how many things are there that have made your life better, easier, safer, longer and happier?

Keep these precious things in mind the next time Al Gore or anyone else tells you that you should choose to give up these “unethical” values and force everybody else in the country to do the same.

Standing in front of this group in Canada, Gore’s message was clear. He rejected the idea that there was any circumstance, any use, any origin of oil that makes it justified, redeemable or proper to use.

“There’s no such thing as ethical oil,” he said. “There’s only dirty oil and dirtier oil.” This remark apparently triggered a round of audience applause.

Without any viable alternatives to oil, it is unclear how strangling the pipeline at the border will be a cause for celebration. Consider the view of morality implied in Gore’s outlook. On his view, human innovation, human health, human happiness and human flourishing—all these are dispensable, and should be sacrificed. In my view, moral clarity implies just the opposite and a well-due round of applause for oil.

Image: Mike Baird via Compfight

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