iPandora

I came across the Blueberry Story recently. It didn’t pass the sniff test, but I couldn’t immediately explain why.

Jamie Vollmer was the CEO of an ice cream company that made, at one time, what some considered the best ice cream in America. He was also a sharp critic of the public school system, and shared his criticisms before an assembly of teachers and educators.

I was convinced of two things.  First, public schools needed to change; they were archaic selecting and sorting mechanisms designed for the industrial age and out of step with the needs of our emerging “knowledge society”.  Second, educators were a major part of the problem: they resisted change, hunkered down in their feathered nests, protected by tenure and shielded by a bureaucratic monopoly.  They needed to look to business.  We knew how to produce quality. Zero defects! TQM! Continuous improvement!

At the end of this particular talk he took questions from the audience.

As soon as I finished, a woman’s hand shot up.  She appeared polite, pleasant – she was, in fact, a razor-edged, veteran, high school English teacher who had been waiting to unload.

She began quietly, “We are told, sir, that you manage a company that makes good ice cream.”

I smugly replied, “Best ice cream in America, Ma’am.”

“How nice,” she said. “Is it rich and smooth?”

“Sixteen percent butterfat,” I crowed.

“Premium ingredients?” she inquired.

“Super-premium! Nothing but triple A.”  I was on a roll.  I never saw the next line coming.

“Mr. Vollmer,” she said, leaning forward with a wicked eyebrow raised to the sky, “when you are standing on your receiving dock and you see an inferior shipment of blueberries arrive, what do you do?”

In the silence of that room, I could hear the trap snap….  I was dead meat, but I wasn’t going to lie.

“I send them back.”

“That’s right!” she barked, “and we can never send back our blueberries.  We take them big, small, rich, poor, gifted, exceptional, abused, frightened, confident, homeless, rude, and brilliant.  We take them with ADHD, junior rheumatoid arthritis, and English as their second language. We take them all!  Every one! And that, Mr. Vollmer, is why it’s not a business.  It’s school!”

He was unable to reply to such ideas. And it took me a day to realize what was wrong with this teachers argument.

First, there is truth in both what Mr. Vollmer said and in what this teacher said. Neither of them are completely correct, and neither of them are completely wrong.

The big hole in this educators argument is that children are not the only resource in a school.

When you’re building a product commercially you gather all sorts of raw materials and assemble them and process them to create a finished product. Businesses are primarily rewarded by doing this more efficiently and with more quality than other companies. However, simple physical raw materials are never the entire picture.

You can take blueberries and cream and sugar and eggs and ice and salt and throw them together all day and it will not turn into ice cream. You must have a goal, a guiding principle, a primary idea which directs the process from beginning to end. This idea begins before any raw materials are assembled and achieves fruition and is born into reality in the end product.

In a school children are both a raw material and eventually the fruition and reality of this idea. A healthy, intelligent, wise, productive and strong member of society is the hoped-for result of any school. When children are the raw material (as small children first coming into the school) they indeed cannot be turned away. The school must take any and all. The teacher is right about this.

However, there are many other raw materials which may (and indeed should) be turned away at the loading dock for insufficient quality. Teachers are one of the raw materials of our education system. Those who can’t do, teach, is a sad but true tale of many who comprise the front lines of education in America. Low academic standards does not attract the best and the brightest to this profession. Many of the best teachers teach because they love to. Many others do it because they cannot find so secure a position with as healthy a payroll or extensive benefits in the private sector.

Education philosophies are another raw material that can and should be examined in light of reality and not in light of the establishment’s preconceived notions of the state of the world.

Specific subjects that do not pertain directly to healthy functioning in society also ought to be turned away at the door.

The lesson that schools should take from business, first and foremost, is that competition is good for everybody involved.

The only people who will be hurt by school vouchers, charter schools, more local control of education, and less federal nannying are teachers who aren’t up to snuff and entrenched and ensconced administrators who cannot really justify their silly existence.

The teacher was right, they can’t turn away children from school. Every child can and will benefit from learning truth. But learning and truth are not necessarily the same, and to fail to see the difference and to support a system that is so obviously and painfully failing yet another generation of children is to fail to see yet another blade laid to the neck of our great nation.

Is it too much to ask for a company who recognizes it should only succeed on it’s own merits? Apple isn’t it, that’s for sure. Market domination by litigation is an ugly thing.

Kinda ironic Apple used those “Think Different” ads with the 1984 send-up and they’re now resorting to cajoling the government into enforcing an artificial monopoly on their behalf.

Judges who accept such frivolities ought to be tossed out on their butts. And the companies that make such stupid claims, well, I can think of some things we buyers can do to them.

Once upon a time, Apple portrayed itself as David to Microsoft’s Goliath as it battled the ultimately dominant force from Redmond. A generation later, the world’s attention has shifted from PCs and laptops to mobile devices, and Apple now finds itself in the role of Goliath. It knows full well that dominance isn’t permanent, and anything that can be done to slow down new entrants should indeed be done. That it continues to let a certain degree of historically entrenched fear guide its actions isn’t necessarily a negative thing. Tension, after all, is a great driver of increased performance. But at this level, at this scale, and at this crucial moment in the history of the mobile market, it runs the risk of slamming the industry it helped define into neutral as lesser-endowed players run for the hills.

In that respect, Apple really shouldn’t be living in fear of HTC, Nokia, or any other potential competitor. The real fear belongs to consumers like us, and it should be directed back at Apple.

“Is Apple Afraid Of Google?” at BetaNews.com.

A small village in Nepal

Barb posted a letter written to a grandson explaining and illustrating the principles of the free market and the benefits of that system over systems more concerned with equality of outcome rather than equality of potential. She got the original article from the Free Market Foundation of South Africa.

More people need to read and understand this.

April 1942

Mr dear grandson:

I will answer your question as simply as I can. Profit is the result of enterprise which builds for others as well as for the enterpriser. Let us consider the operation of this fact in a primitive community, say of one hundred persons who are non-intelligent beyond the point of obtaining the mere necessities of living by working hard all day long.

Our primitive community, dwelling at the foot of a mountain, must have water. There is no water except at a spring near the top of the mountain: therefore, every day all the hundred persons climb to the top of the mountain. It takes them one hour to go up and back. They do this day in and day out, until at last one of them notices that the water from the spring runs down inside the mountain in the same direction that he goes when he comes down. He conceives the idea of digging a trough in the mountainside all the way down to the place where he has his habitation. He goes to work to build a trough. The other ninety-nine people are not even curious as to what he is doing.

Then one day this hundredth man turns a small part of the water from the spring into his trough and it runs down the mountain into a basin he has fashioned at the bottom. Whereupon he says to the ninety-nine others, who each spend an hour a day fetching their water, that if they will each give him the daily production of ten minutes of their time, he will give them water from his basin. He will then receive nine hundred and ninety minutes of the time of the other men each day, which will make it unnecessary for him to work sixteen hours a day in order to provide for his necessities. He is making a tremendous profit � but his enterprise has given each of the ninety-nine other people fifty additional minutes each day for himself.

The enterpriser, now having sixteen hours a day at his disposal and being naturally curious, spends part of his time watching the water run down the mountain. He sees that it pushes along stones and pieces of wood. So he develops a water wheel; then he notices that it has power and, finally, after many hours of contemplation and work, makes the water wheel run a mill to grind his corn.

This hundredth man then realises that he has sufficient power to grind corn for the other ninety-nine . He says to them, �I will allow you to grind your corn in my mill if you will give me one tenth of the time you save.� They agree, and so the enterpriser now makes an additional profit. He uses the time paid by the ninety-nine others to build a better house for himself, to increase his conveniences of living through new benches, openings in his house for light, and better protection from the cold. So it goes on, as this hundredth man constantly finds ways to save the ninety-nine the total expenditure of their time � one tenth of which he asks of them in payment, for his enterprising.

This hundredth man�s time finally becomes all his own to use as he sees fit. He does not have to work unless he chooses to. His food and shelter and clothing are provided by others. His mind, however, is ever working and the other ninety-nine are constantly having more time to themselves because of his thinking and planning.

For instance, he notices that one of the ninety-nine makes better shoes than the others. He arranges for this man to spend all his time making shoes, because he can feed and clothe him and arrange for his shelter from profits.

The other ninety-eight do not now have to make their own shoes. They are charged one tenth the time they save. The ninety-ninth man is also able to work shorter hours because some of the time that is paid by each of the ninety-eight is allowed to him by the hundredth man.

As the days pass, another individual is seen by the hundredth man to be making better clothes than any of the others, and it is arranged that his time shall be given entirely to his speciality. And so on.

Due to the foresight of the hundredth man, a division of labour is created that results in more and more of those in the community doing the things for which they are best fitted. Everyone has a greater amount of time at his disposal. Each becomes interested, except the dullest, in what others are doing and wonders how he can better his own position. The final result is that each person begins to find his proper place in an intelligent community.

But suppose that, when the hundredth man had completed his trough down the mountain and said to the other ninety-nine, �If you will give me what it takes you ten minutes to produce, I will let you get water from my basin,� they had turned on him and said, �We are ninety-nine and you are only one. We will take what water we want. You cannot prevent us and we will give you nothing.� What would have happened then? The incentive of the most curious mind to build upon his enterprising thoughts would have been taken away. He would have seen that he could gain nothing by solving problems if he still had to use every waking hour to provide his living. There could have been no advancement in the community. The same stupidity that first existed would have remained. Life would have continued to be a drudge to everyone, with opportunity to do no more than work all day long just for a bare living.

But we will say the ninety-nine did not prevent the hundredth man from going on with his thinking, and the community prospered. And we will suppose that there were soon one hundred families. As the children grew up, it was realised that they should be taught the ways of life. There was now sufficient production so that it was possible to take others away from the work of providing for themselves, pay them, and set them to teaching the young.

Similarly, as intelligence grew the beauties of nature became apparent. Men tried to fix scenery and animals in drawings � and art was born. From the sounds heard in nature�s studio and in the voices of the people, music developed. And it became possible for those who were proficient in drawing and music to spend all their time at their art, giving of their creations to others in return for a portion of the community�s production.

As these developments continued, each member of the community, while giving something from his own accomplishments, became more and more dependent upon the efforts of others. And, unless envy and jealousy and unfair laws intervened to restrict honest enterprisers who benefited all, progress promised to be constant.

Need we say more to prove that there can be profit from enterprise without taking anything from others, that such enterprise adds to the ease of living for everyone?

These principles are as active in a great nation such as the United States as in our imaginary community. Laws that kill incentive and cripple the honest enterpriser hold back progress. True profit is not something to be feared, because it works to the benefit of all.

We must endeavour to build, instead of tearing down what others have built. We must be fair to other men, or the world cannot be fair to us.

Sincerely,

Grandfather

Unrestricted free market

Gary A writes article on the investing opinion site SeekingAlpha.com claiming that while limited government sounds good, it’s not a reasonable policy if the goal is market stability:

I support the free market but unlike them I don’t trust the free market. I don’t think that having just capitalists in charge of the free market can possibly keep it free very long. Capitalists cannot police themselves. Every game has rules. Try playing baseball without umpires. Try playing tennis without line judges. There are even rules when racing at the Indianapolis 500.

I agree with him, to an extent:

I agree that having capitalists in charge of capitalism can and has caused many a problem. Having Marxists in charge of a market causes even more.

The issue is that there is no suitable force acting upon the individuals that make up a government capable of restraining their choices actions.

And the more levels of government that are constructed to check and balance any system of man only lead to more levels of waste and corruption as they, in turn, fall to the very same forces.

The brilliance of the original American system was that it pitted this thirst for power against itself by building three branches of government with competing but not overlapping responsibilities.

This system worked well enough, for in that inherent tension there was stability left for those under it.

As the government’s greatest enemy was itself, instead of the people, the people were free to go about their ways.

As the government power alignment adjusted, mainly beginning with Lincoln’s power consolidation in the Civil war the forces of government were aligned and now could seek to take power, not from each other, but from the populace.

So is it a perfect system? No. Is it better than the alternatives? It depends on how you define better. I would say it is, with better being that state where there is least government intrusion into my affairs and then only so much as is necessary to prevent me from infringing unjustly on another’s affairs.

Of course, then you get into what is just and unjust.

The whole problem is that unless you accept a sovereign moral force who/which defines morality for us unsovereign beings, there is really no way to define right except through might.

Those in power get to define morality apart from that sovereign moral entity. And without an acceptance of a sovereign moral entity there is no legitimate basis for a universal and effective set of ethics to guide the behaviors of individuals, groups, corporations, societies, or nations.

Yes, I believe it all boils down to whether or not you subscribe to the idea there is a higher power who will judge you for your actions and your intentions and the results.

Los Angeles School District

The San Francisco Chronicle posted an article today regarding a rather stunning happening in the LA School Board.

Liberal Democrat, former teacher’s union organizer, and current Mayor of Los Angeles Antonio Villaraigosa was the driving force behind a policy just handed down which stipulates that almost a third of the public schools in LA must convert to charter or magnet schools.

Charter schools inject the free market into public education through several methods including merit pay for teachers, competition for students, and greater autonomy for the school from the school district.

Villaraigosa noted the LA School District was plagued by violence and a 50% dropout rate spurred him into this path which is diametrically opposed to the majority of leadership in his party and the teacher’s unions.

One teacher quoted in the story says “this is the power that teachers have always been asking for, the authority to choose what is happening in our schools. With power comes responsibility. We are accountable for the results, and I don’t mind that.”

This is public education’s fall of the Berlin Wall. The old model of the compulsory, one-size-fits-all, factory-style public school is being tossed on the scrap heap of history, to be replaced by upholding the U.N. Charter of Universal Human Rights, which guarantees the right of parents to direct the education of their children.

Props to Mayor Villaraigosa for this stand which will no doubt earn him the ire of many of his regular supporters.

Read the whole article Revolution in U.S. education is in California.

The Internet circa 2003

Latest in our series on the beneficent free market is this wee screed on the internet.

The internet is a good thing. A powerful thing, I think everybody can agree with that. But I would argue it is a good thing too.

I don’t gloss over the terrible things people can find on the internet, the addictions it foments and feeds, the filth it spreads or the lies and slander that so easily pass for worthwhile information on it’s myriad nooks and crannies.

As with anything truly powerful, those who use it best seem to be those who would misuse it and abuse other with it.

But for all the garbage you can so easily stumble upon, there is great good. The potential and realized good both far outweigh the potential and realized evil in the same way the slightest candle will chase and overpower the shadows of the darkest room.

The internet is good because the internet allows information.

This would seem like a tenuous argument at best, but let’s not leave the argument there.

The internet is good because the internet allows information of all types, from all sources, to all consumers.

As Lady Justice holds her scales blindly and impartially, the internet is oblivious to any contextualizing of either the informer or the informed. The information itself can be contextualized, and due to the sheer mass of information on the internet, any single bit can be matched with any other bits to provide context and deeper insight into any piece of information.

But the internet itself does not care. It’s greatest strength is also it’s greatest weakness. The internet does not care what or who or how or why or anything else regarding the information that is posted and shared and disseminated through it’s labyrinthine pipes.

Fear is always the result of misinformation or too little information. From the macro fears of life “does God care for my future?” to the micro fears, “spiders!!!!!”, information is the best and most effective form of fear slaying. Reading the bible (maybe even on the internet) we can read God’s promises regarding our lives, and then looking back through our own lives and seeing the providential Hand working through the good times and the bad, that fear can be slayed by information. Using other information we can determine whether or not a given spider is dangerous to humans.

Thus the greatest enemy of fear is information, real and true information.

Now the obvious argument is that lies and disinformation are so very common on the internet, often masquerading as truth very effectively.

However, the internet also addresses that issue by nature, once again, of it’s open information structure.

Prior to instant background checks and credit reports and the globalized economies, trust was a necessary part of a business relationship. Today we still have trust-based systems for those times when a resume just isn’t enough.

References, people who know something and are in positions of trust and recognition, are often called upon to verify the abilities and character of a person. When one is unsure of whether or not someone else can or should be trusted they confer with a third party who has legitimate reason to be trusted and thereby determine the trustworthiness of the person.

With the internet, in it’s connected and interconnected state, we can easily find legitimately trustworthy people and then infer, from those they trust, other trustworthy sources. It is all about the free exchange of ideas and information.

Further, the antagonism that naturally results in such a free-for-all atmosphere further bolsters legitimate reputations as negative information can only with the greatest of difficulty be quashed or controlled, and more often than not, will free itself regardless the efforts of those seeking to control it. Those legitimately trustworthy will weather and withstand the onslaught and thereby gain further credibility.

The internet is the death of FUD (Fear, Uncertainty, and Doubt) in that it enabled anybody to speak the truth, share the truth, and find the truth,and be sure it is the truth easily, and with high levels of certainty. It is the greatest leveler of the masses.

The internet could not exist were it not for the freest society in the world pushing and encouraging and growing it beyond the wildest dreams of those researchers at DARPA so many years ago.

Hey, it even allows me, a 20-something nobody to publish my pointless and babbling rants in a public forum with equal opportunity for success as authors of the first degree and highest reputation.

787 Dreamliner

Conservatives are often accused of being pro-business while Liberals consider themselves more pro-people and therefore the better of the two.

As a conservative, I accept that accusation and wear it proudly. I am pro-business.

Liberals, in their desire to be more pro-people than pro-business, though, haven’t the foggiest idea they’re actually hurting people more than helping them.

The illustration today comes from the far north-west corner of the contiguous 48, Seattle.

Boeing has just decided to not build it’s new 787 Dreamliner factory in Seattle. The taxes and regulatory environment is simply too taxing. It costs Boeing too much money to expand their operations in Seattle, and so they’ve moved to North Carolina.

In Seattle it would have taken years to navigate the permit process to build the massive new hangars. In North Carolina, it took days.

Because the government of Seattle and Washington state have failed to make it easy enough for businesses to begin, run, and maintain operations, thousands of jobs will be lost directly, or moved to North Carolina, and the myriad of dependent suppliers and small businesses which were supported by the employees of Boeing will lose most or all of their income.

So the liberal mind says “Yes! We showed that polluting monster who’s boss!”. And the conservative shakes their head.

Many people will move from Seattle to North Carolina now to continue working. These are productive and well-payed people who likely paid significant taxes on their income to Seattle and Washington state. With even less tax revenue the city and the state will have to decrease social services to the unproductive public teat slurpers.

Now that can’t make the liberals happy. So they’ll raise taxes on the poor saps left behind so they don’t have to lose any of their bought-off voting bloc.

North Carolina is directly benefiting from increased construction in the short term, and a massive influx of highly skilled jobs as well as the necessary social structures and new markets for delis and theatres and parks and playgrounds. By being pro-business North Carolina will reap the benefits of massive growth in tax revenue without even raising their tax rates.

There’s nothing pro-people about an anti-business environment.

There are caveats or qualifications to 100% business centric government that I believe are reasonable and necessary.

First, I don’t agree with any government, federal, state, or local, applying special tax breaks and exemption from processes for the purpose of attracting a single company. North Carolina has pushed through a deal that makes it easier for Boeing to operate in that state than an average business started by Joe Entrepreneur. Overall, the state is still much easier to work in than Seattle, but I believe, on principle, that the fact the state government had to scramble to build this special package should have indicated their overall regulatory and business environment isn’t quite what it ought to be for everybody.

Second, government regulation is often pro-specific-business rather than anti-general-business. Al Gore profits measurably from “green” technology. He’s put his money where his mouth is. Pro-green regulation benefits him directly as companies will work with his outfits to implement the required changes.

Regulation can also be pushed by large corporations which will still effect them, but because they are so much larger, the monetary penalty will be a much smaller percentage of the large company’s operating costs than for a small company. The small company will no longer be able to compete as the regulatory costs hit them hardest.

Regulation can also be used to stifle competition and build artificial barriers to the self-regulating abilities of the free market. Network Neutrality is an example of this. Google and other large content companies are the primary supporters and lobbyists for network neutrality. They are dependent on the infrastructure companies, such as AT&T to actually get their content to the end users, and they want to use the bludgeon of federal regulation to protect them from free market pressures brought by the carriers.

With the caveats that pro-business should mean, in an ideal world, pro-all-businesses, we find that a pro-business government environment is directly pro-people as well.

If governments realized the nature of this, there would be a race to the bottom in taxation and government leanness as states vied for the privilege of being the best for business. And the growth in business would mean more employed people, higher standard of living, and more tax revenue.

The final question is: are they willfully or ignorantly blind?

Previous articles on the free market:

• Chipotle And The Beneficent Free Market
• Walmart And The Healthy Free Market

I, Pandora has had a mixed history on Network Neutrality.

Network what?

Network Neutrality is one response to fears that infrastructure and service companies, such as AT&T, Verizon, and Comcast, spell doom for the freedom of the internet as they inevitably begin controlling access to content, enhancing access to content they own, control, or partner with, and limiting access to content they deem contrary to their best interest.

The majority of Network Neutrality supporters want the FCC to step in and set rules requiring the infrastructure/service companies provide equal access to all content and forbidding them from interfering in any way with the freedom of the internet.

Sounds good, right?

As with any other debate, you have to get to the deeper issues. And this debate is rife with deeper issues.

When I first heard of Network Neutrality I was gung-ho for it. I did not understand the goals at the heart of this push.

“Don’t be hasty, master Hobbit!”

There was a reason liberal Democrat leaders were more for this program than Republicans and conservatives. Liberals dream of more regulation and control and private and free systems. The freer the system the stronger the urge to a liberal to regulate it.

My confusion over Network Neutrality did not continue long. I supported it in March of 2007, and by August of that year I wrote about the inherent conflict between government regulation and innovation.

Government regulation is the enemy of innovation.

In the arguments over Net Neutrality, I feel for the plebes. I don’t want my traffic throttled any more than it already is by the ISP. But is it the government’s responsibility to control this? And if we allow the government to say who can access the internet and at what speed, where is our moral authority when the government wants to say who can’t access the internet?

Perhaps I am more libertarian than I like to think myself to be.

Later I quoted Rep. John Sununu (R – New Hampshire) regarding the slippery slope of wishing for government interference:

If the Internet has taught us anything, it’s that it’s pretty presumptuous to predict what the future will be. We should be very, very cautious about imposing regulations based on what we think competitors will do in the future and how we think consumers will respond based on what we think competitors will do.

Gee, that sounds familiar.

Oh, yea. Attorney General Eric Holder, in a 60 minutes spot on healthcare and specifically Medicare and Medicaid’s extremely high levels of fraud made perhaps the most blind statement regarding human nature I’ve ever heard from a lawman:

People didn’t think that something as well-intentioned as Medicare and Medicaid would necessarily attract um… fraudsters.

People not thinking. Not considering the implications of what they want.

Just because it’s well intentioned doesn’t mean it’s right and good and free of the failings that so plague us mortals.

Are Verizon, AT&T, and Comcast completely good in their actions so far regarding the internet? No.

Comcast has been slapped once for purposely throttling connections to certain types of content during peak times load times.

But is the government the solution?

In my article regarding regulation versus innovation I make it clear that while there is a place for regulation, that regulation is best applied to the government itself, limiting it’s ability to tamper with our system of free enterprise.

There is a question I’d ask of anybody regarding this issue. If Thomas Edison were alive today which entity would be the greatest enemy of his innovation: Government or Business?

Sonia Ericson, writing in TechNewsWorld today provides a meaningful and realistic and proven alternative to network neutrality: private control.

ICANN is currently the organization closest to being “in control” of the internet.

It’s a private organization which controls the distribution and changes to the domain names which make the internet navigable.

(A)sking the FCC to “protect” the Internet means inviting government oversight, which injects more politics — not less — into the operation of the Net.

Sonia then talks about someone I’ve met:

Ashwin Navin, cofounder of BitTorrent, also says he doesn’t support government regulation of the Net, even though his name appears on an OIC letter. He says he’d rather see Internet service providers come up with a self-regulatory plan based on a pledge to keep the Net open and the creation of a third body to arbitrate. Indeed, Navin says that his own company’s scuffle with Comcast was ultimately solved without formal rules after a netizen noticed that Comcast was degrading service and brought the matter to the public’s attention.

“The problem is disclosure,” Navin says. “Consumers need to know if the ISP, which is the most invisible layer in the stack, is responsible for an improved or degraded experience for any of the services they use.”

Geek Out Alert!

In my days working for Fry’s Electronics, Ashwin’s step-dad hired us to build and repair his wireless network. He introduced me to Horchata and I watched the Blue Angels practice over his backyard. Ashwin and his brother came by once while I was there and I basked in the presence of those gods of the internet, the business minds behind BitTorrent.

But Ashwin has a point. A good point. A point I may elaborate on further in the future.

Suffice to say that information is the grease for the wheels of the free market and capitalism. And the internet, above all else in the history of markets, has enabled the dissemination of information more efficiently and the finding and gauging of information more easily.

Why do we trust the government to act in our best interest when it comes to such a powerful information force as the internet? The government has no competitors to blow the whistle on it’s misdeeds. The government self-interest lies in a dearth of information.

Trust the government and be taken for a fool. I’ll not be joining you in your foolishness.

In case you had trouble guessing: I like businesses.

If there weren’t business there wouldn’t be internet, iphones, cars, bicycles, buildings, tents, sleeping bags, fresh produce in the middle of winter, heat and A/C, in cars too, hospitals, medication, surgery…

You get the picture.

We’ve had government since the beginning of time, and it hasn’t done a thing directly to benefit or develop beneficent products and services (except nuclear energy and other war-related items).

We’ve also had businesses since the first person decided he’d rather spread and grow his wealth instead of laboring over the same rows in the same farm for his own families sustenance.

Chipotle is an excellent example of a good business.

Our wealth allows us to pay premium price for food raised and prepared in a reasonably environmentally conscious and sustainable manner.

And it tastes good, too.

Walmart is not too different from Chipotle.

The monstrous store chain that’s easy to hate until we need cheap razer blades and jeans and socks and hand towels and garbage can liners. Then everybody loves it.

Except the unions, who are never going to love Walmart until it caves to their regressive and stiflingly stupid and anti free market strong man tactics and effects.

I pray Walmart never does, and for good reason.

When Walmart enters an area, consumers win as the often cheaper prices at Walmart “encourage” the other stores to moderate their own prices.

The prices are not always better, but they are better enough of the time and for enough products to justify the crowds you normally find at these supercenters.

Does Walmart Save You Money? (read the comments, many people report savings in the $1000′s each year while others disagree with their perception of the business practices)

But enough about prices already, Walmart benefits your health!

Huh?

Indeed, studies are showing that people living near a Walmart or “club store” (Costco, Sam’s Club, etc) are lighter on average.

But don’t all the fat and ugly people shop at Walmart? No, it’s just the ugly people and me.

In an article published in Forbes Magazine, Art Carden, an Professor of Economics at Rhodes College in Memphis TN, reports on studies showing that the increased buying power people experience when benefiting from the Walmart effect has a direct and close correlation to the health of those people.

There are several reasons this may be, and the why or how is always a bit murkier than fact of correlation, but all of the possibilities enjoy sound economic sense.

Those benefiting most from the Walmart affect are…

…women, the poor, African-Americans and people who live in urban areas.

The arguments as to why and how and many, as I noted earlier, and some may find them difficult. Read it a few times if necessary.

Our evidence is indirect, but we think it shows that price changes can have subtle and sometimes hard-to-detect consequences. Any change in price results in two phenomena. The first is the substitution effect: a change in consumption mix due to a change in relative prices. If a bag of salad is $2 and a bag of potato chips is $1, then the price of salad in terms of chips is two bags and the price of a bag of chips is half a bag of salad. If a Wal-Mart opens and reduces the price of salad to $1 a bag and the price of chips to 75 cents a bag, the “salad price” of chips has risen (from 1TK2 bag to 3TK4 bag) and the “chip price” of salad has fallen from 2 bags to 4TK3 bags. In short, salad has become cheaper relative to chips.

This argument is based on basic price comparison. If the salad cost 2 times what chips cost before Walmart,  Jack and Jill are more likely to buy the salad now because it only costs 1.3 times more than the chips now.

Then there is the income effect:

If Wal-Mart sells food at lower prices–even if our incomes don’t change–every dollar can buy more. Therefore, we’re richer.

The crux of their findings is that people, when given a choice and a suitable price range, will purchase healthier foods.

Our data suggest that we buy healthier food when our purchasing power increases. There is a small increase in consumption of fruit and vegetables in places where Wal-Mart does a lot of business and a decrease–or smaller increase–in fatty food consumption relative to places where Wal-Mart doesn’t do business. That is, people might consume more fatty foods, but consumption of those unhealthy goods increases more slowly than it does for the rest of the population.

There are other facts, findings, and arguments in the article. I urge you to read the whole thing: Wal-Mart’s Weight Effect.

The point is, don’t be too quick to denigrate or disparage the current state of our free martket system.

It’s not always pretty, and it’s easy to find fault.

However, compared with any other system out there, capitalism and the free market are the best at providing escalating levels of service and product to the most people most equitably and with the least amount of downside.

It’s been proven time and again, yet we in America now are dangerously close to forgetting completely, if we haven’t already.

The free market and capitalism isn’t about the blind, mindless pursuit of money at all costs, that’s anarchy.

Free markets and capitalism are about working in tandem with those around us to maximize our return by providing the best service or product to others. It’s a mutually beneficial system.

And we’re in danger of throwing it away.

In our increasingly government-controlled (-manipulated, -throttled, -ridden) economy, we get to see how people who do not believe in the free market expect the engines of American capitalism to run.

It’s not like we haven’t been able to see this before. After all, the 20th century is littered with the corpses of Command and Control Economies.

But this is the first (second: FDR tried really hard too with the alphabet soup of government agencies he successfully wielded to lengthen the Great Depression far beyond what it should’ve been) time we get to see what happens when our own beloved economy is ridden by the government to extremes we’ve not seen before.

Exhibit A is GM. Now bankrupt and after accepting huge loans from the government, the government will shortly own a majority of this company.

And now the revisionist history begins.

Today’s Bloomberg report on the bankruptcy, paragraph 1:

General Motors Corp. won court approval on its first day in bankruptcy to sell assets as soon as next month after collapsing under $172.8 billion in debt and failing to adapt to consumer demands for smaller cars.

All well and good except for one thing: Consumers are not necessarily demanding smaller cars.

Google “best selling cars” and you get a pretty consistent picture: trucks are selling well, and so are full-size sedans. The only compact cars in the top 10 of any list are the Honda Civic and Toyota Corolla, and they’re in the middle of the list. In the worst 10 selling lists are bloated SUVs such as the Hummer. No surprise there.

Green machines (hybrids and ultra-compacts) have always been a lethargic segment of the auto sales and they’ve suffered as much as anybody else with the economic issues.

The Bloomberg article was reworded shortly after initial press this morning and has dropped the bit about demand for small cars. (you can still find the original wording at this splog (spam blog) site that rips headlines to create content for itself. Not actually linking to prevent follow spam: http://itsp.info/index.php/2009/06/02/gm-bankruptcy-judge-approves-asset-sale-on-first-day-bloomberg.html).

One of the major plans of the now government owned GM is to increase production of one of the most lethargic segment of vehicle: ultra-compacts and small hybrids. From  Bloomberg again:

One idle GM facility in the U.S. will be retooled to make small, fuel-efficient cars as part of an agreement with union workers, GM said May 29.

Now what kind of business is run by making cars for which there currently isn’t a real market?

Especially for a company emerging from bankruptcy, this kind of action is pointless and worse.

Unless the leadership of that company is aware of changing market conditions well beyond the awareness we’ve seen to date, or they know something we don’t.

Unfortunately for what appears to be the deepest desire of most the leadership in the Obama administration: you cannot control demand so long as there is choice.

The only way communist countries control demand is by controlling the entire market. And even when presented with only one option, they still usually get to choose whether or not to take it.

Because the government will very likely own 60% of GM, they will be very interested in one or both of these two options: running the company according to the ideology, and making a return on their investment.

The ideology of the current government makes those two options almost completely exclusive. You cannot control the market and demand in what is still, essentially, a free market.

My prediction: GM will continue hemorhaging money. Lots of money.

Our tax dollars will continue to be poured into the black hole of stagnating demand segments and poorly made vehicles.

Until the price fixing monopolistic unions are torn free and GM is free to hire talent at wages the market supports…

Until GM recognizes the necessity of meeting the market where it is instead of where it ought to be according to some Command Economy wet dream…

Until the free market is allowed to destroy those who do not adapt and innovate…

…We will continue to be force to send good money after bad. And we’ll be told we like it.