Associated Press Announces New Business Model

I am not familiar with the news website The Associated Press, content or quality otherwise, but methinks this is a bad business model. Stating that people should pay for merely linking to your content is dubious enough, but stating that you plan on planting spyware on your consumers' computer seems like an awfully bad idea:

Each article — and, in the future, each picture and video — would go out with what The A.P. called a digital “wrapper,” data invisible to the ordinary consumer that is intended, among other things, to maximize its ranking in Internet searches. The software would also send signals back to The A.P., letting it track use of the article across the Web. [New York Times]

Are they purposely trying to commit suicide? It makes one wonder how they even got to where they are at now.

"Buying Local"

It has recently come to attention that the UAW, at least in Michigan, prohibits cars of foreign make from parking in union hall parking lots and that any violators of the rule are to be towed away. Such sentiments are not limited to the UAW: in the past few weeks I have noticed that the editorials continuously call for people to purchase goods and services produced only within the local economy. The premise underlying all of this, of course, is that keeping money within the local economy improves the local economy.

This, however, fails to establish the context. While so many are quick to condemn businesses for daring to outsource work and to import foreign materials, none ask the most important question: why are these businesses choosing to outsource? By not answering this question we risk merely making the economy worse, so let us examine the possible reasons.

I am not aware of any explicit reasons as to why the companies based in Michigan would want to outsource (e.g. harmful legislation, favorable conditions overseas, et cetera), but we can conclude that their reason(s) fall within two categories: 1.) the cost of running business is cheaper in particular foreign locales, and/or 2.) the quality of production is greater in particular foreign locales. Few businesses uproot their operations "just because".

Michigan editorials are calling for either people to purchase things only locally or for companies to relocate their operations locally, but by not answering the question above, what do we risk losing? If businesses are relocating because the cost of business is cheaper elsewhere, then we will have to face higher prices than we otherwise would have to pay; if businesses are relocating because the quality of production is greater elsewhere, then we lose that superior quality. If it is a combination of both factors, then we have lost much.

The point is that we must have in mind the full context before choosing to take a course of action. If we do not, then we are merely making guesses, even if educated ones.

"Buying local" as a principle does no good or harm; it is meaningless without the context of appropriate factors. People, for instance, bought locally in The Great Depression. The Smoot-Hawley tariff mostly, if not entirely, cut off U.S. trade with other countries. "Buying local" improved the economy none since people were subject to such excruciatingly high taxes back then in order to fund New Deal programs.

When thinking about these issues we must chant the mantra context, context, context within our minds.

Burning the Casino Down

One particular difficulty I run into when discussing economics is that so many people seem to be ignorant of the fact the economy has principles and causal factors by which it runs; instead they think of the economy as some sort of big casino that the government needs to regulate after a bad deal, especially so in this recession. Luckily, however, we have people like Doug Reich to provide excellent commentary. Today I would like to point your attention to his post titled Obama: Please Try This at Home, which examines the underlying reasons as to why economic stimuluses do not work and why the ones recently passed will actually do harm. What is so great about the post is that it is written in a language specifically for those who have no knowledge of formal economics, so it is perfect for forwarding in e-mails. I cannot quote any notable excerpts since the whole essay is worth reading.

I would also like to direct your attention to his philosophical/psychological analysis titled Rational Animal Spirits, which is a dissection of the mentalities of our current central planners (i.e. politicians) and an explanation as to why forgoing principles is very harmful, if not fatal. A noteworthy excerpt:

If you are trying to eliminate the effects of a particular problem, do you think it would ever help to understand the causes that give rise to the effects? For example, if a building were on fire, do you think it would help that the firemen in charge understood what tends to fuel a fire and what tends to extinguish it? If they did not understand the causes, wouldn't they be as likely to throw a ham sandwich on the fire as to pour water upon it? ...Obviously, if one does not understand the causes, the solution may actually be worse than the problem itself. At best, the supposed solution can only mitigate or eliminate effects through random chance.

Both of these analyses give further clarity into our current times and show us what must be done about the economic crisis: the government must stop throwing gasoline on the fire.

A Bit Longer...

While this may be contradictory to my previous post about benevolent comedy, I cannot help but hold this as my favorite magic trick of all time:

Benevolent Biff

Forgive me for being light on my posting as of late; I have been facing a small bit of difficulty that has prevented me from being Johnny-on-the-spot with maintaining a steady stream of posts, but I do have several ideas for some posts, including one in particular I have been contemplating for several weeks, if not months. I shall not reveal them lest I give any other writers an idea. :-) For now one will have a positive article to be tided over with.

Here is a link to my favorite comedy comic, The Book of Biff. There is simply far too much vicious comedy out in the media these days, comedy where you are expected to take amusement at someone's suffering, however mild. Such things I cannot laugh at, for I prefer benevolent comedy. The difficulty is that benevolent comedy of decent quality can be hard to find.

As for The Book of Biff, the comic is about random moments in the life of a man with flowing eyebrows and an overwide mouth. In many ways the comic can borderline on Charlie Brownian misfortunes such as with Biff's constantly being laid off or having his property destroyed, but in the end optimism and resolve reign through. Some of my particular favorites are here, here, and here.

What are your favorite things that showcase a benevolent sense-of-life?

So...You Have Finished Saving the Economy Then?

Via FreeColorado.com I have learned about this video:



For those that are unable to watch the video, here is my personally typed up transcript, with emphasis added and but one grammatical note inserted in brackets:

The problem is, can you really get the American people to say this is important and force their representatives to do the right thing? That requires mobilizing a citizenry. That requires them understanding what is at stake. And climate-change is a great example, you know, when I was asked about the issue of coal. You know, under my plan, of a cap-and-trade system, electricity rates would necessarily skyrocket. Even regardless of what I say whether coal is good or bad. Because I'm capping greenhouse gases, coal-powered plants, you know, natural gas...you name...whatever the plant's worth, whatever the industry was, they would have to retrofit their operations. That will cost money [and] they will pass that money onto consumers.

This is an strange assertion coming from a guy who has stated a few months ago that the he would be trying his best to save the American economy; now he is alright with explicitly stating that he has knowingly drafted a plan that will harm the economy? Astonishing.

But the President may not have been up on his Henry Hazlitt, for he only noted the direct impact. The absolute impact, so to speak, is enough to bring America into its second depression, and that is not speaking hyperbolically. Many have been pointing out as of late that this cap-and-trade legislation is the new Smoot-Hawley tariff.

The Smoot-Hawley tariff is one of the primary factors that started the Great Depression. (A tariff is a tax that is imposed on foreigners for importing their goods into a certain geographical area.) This particular tariff was so outrageously high that is prevented almost entirely, if not entirely, foreigners from importing anything, so in retaliation the trading countries imposed a high tariff of their own which effectively prevented American businesses from exporting goods and thus isolated America trade-wise. As a result, businesses suffered by losing their export sales, consumers suffered by having to buy inferior products or by losing some products entirely, and prices went up. (While this tariff may have been vital in starting the Great Depression, it was not what made it decade-long. For an examination of the economic policies that made the Great Depression great, please refer to the book New Deal or Raw Deal?)

The currently discussed cap-and-trade legislation would be more harmful than Smoot-Hawley in that it would affect the entirety of the American economy. Obama has stated that electricity rates would skyrocket, but does he acknowledge that every aspect of the American economy depends on energy in some way? Not only would electricity rates skyrocket, but all prices would skyrocket as well, thereby crippling the economy and preventing it from recovering until the legislation is repealed.

This is a good time of all times to contact your elected officials.