Positive Liberty

I receive the regular email update, The Lighthouse, of the Independent Institute, a West Coast libertarian think-tank. I like the Independent Institute, and I like economic arguments, but this time they laid a major egg, in economist William Shughart’s argument against daylight-savings time, in a BusinessWeek Pro and Con.

Physicist Richard Feynman coined the term “cargo cult science” to describe work that has the superficial appearance of science, but that lacks “a kind of scientific integrity, a principle of scientific thought that corresponds to a kind of utter honesty—-a kind of leaning over backwards.” Shughart, I hate to say, despite being a Professor of Economics with a very respectable resume, engages in cargo cult economics in his argument against Daylight Savings Time. Continue Reading »

Are your investments insufficiently risky?

How about placing a bet in a derivatives market for motion pictures.

Since making a bet on a movie so is about the closest any of us will ever get to being actual show business producers, here’s possibly the funniest four minutes in the history of motion pictures (the next five minutes are pretty good, too):

My anti-capitalist friends are persuaded that really big corporations have managed to free themselves from the competitive pressures of the market, the original “too big to fail” argument.* I remember a friend from grad school who hated Starbucks because it was “so big that no one could compete with it.” In his mind, they’d always been big, apparently having sprung full grown from the head of Zeuss or something. And he continued to insist that there was no other place near the University of Oregon to buy coffee, even after I pointed out that we had enjoyed coffee together in the UO bookstore, the bagel shop, the pub, and—wait for it…—the coffee shop two doors down from Starbucks. All of these were on the same block.

Wal-Mart, of course, is the great behemoth of the retail market, so it ought to be wholly immune to competitive pressures, being able to–as John Kenneth Galbraith would say–create consumer desires so there would always be demand for their supply.

And yet it seems it isn’t so. Continue Reading »

William James Morrison, aged 90, died on Tuesday in his home in Utah.

Only a handful of classic toys have approached the lasting popularity of Morrison’s aerodynamic invention. Morrison sold the rights to his Pluto Platter to Wham-O in 1957, the company renamed and marketed the Frisbee and hundreds of millions have been sold ever since. There’s a “Frisbee golf” course in a public park not far from my home. I’d never heard of such things until I moved here several years ago, but it turns out that they’re quite popular. And, of course, it is almost a legal requirement that some undergraduate play Frisbee catch with his dog (preferably wearing a red bandanna) on every college quad in America come springtime.

Frisbees and Slinkies and Hula-Hoops and so forth are precisely the sort of things that never get invented and produced in a command economy. They’re far too “frivolous” for technocrats to “waste” precious state resources on. And that, in a nutshell, is why planned, command economies are inherently inferior to market economies. In the latter, people can decide as individuals what is or is not worth the few dollars a Frisbee costs or, for that matter, the extra tens of thousands of dollars a luxury automobile costs.

Producers can, of course, become very rich figuring out what consumers want and providing it to them — and I hope Mr. Morrison made a tidy sum even though he did sell away the rights to his invention long ago — but markets exist not to make producers rich but to allow consumers to maximize their own happiness given their own scarce resources. It would never occur to a command economy planner that a Frisbee might contribute to that happiness, let alone that people as individuals should be permitted to decide such matters for themselves.

RIP, Mr. Morrison.

Today is Bubble Wrap Appreciation Day and a notable milestone event, as the ever-popular children’s toy/packaging material celebrates its 50th year.

As is so often the case, the invention of bubble wrap resulted from a combination of inventiveness and pure serendipity.

…two engineers, Marc Chavannes and Al Fielding…were trying to make a plastic wallpaper with a paper backing. Surprisingly, this product didn’t take off. They quickly realized, however, that their invention could be used as a cushioning material for packaging. At that time, only abrasive paper products were used for packaging, which did not suffice for cushioning heavy or delicate items.

The company they founded now has annual revenues in excess of $4 billion–not bad for a couple of guys who failed to create the product they envisioned. But as Joseph Schumpeter argued, the entrepreneurial spirit is not motivated primarily by money, but by creativity. Or as my colleague Oded Gur-Ari, director of Adrian College’s Institute for Entrepreneurial Studies says, “Entrepreneurs are people who see a problem and find a solution to it.” Even if inadvertently, yes?

And, to throw in the requisite ideological soapboxing, this is why we should favor free societies over tightly regulated societies–because of the differential in promoting and rewarding entrepreneurialism. Ethical arguments aside (and I suppose, if pushed, I would admit that ethical arguments might have some power as well), mere utilitarianism recommends freedom.