Distill THIS! (or: How The State Gives Small-Scale Distilleries Nightmares)

Business, Corporatism, Statism
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A friend shares the following story:

I was talking with a buddy of mine last night: a lawyer currently working for the state, getting his MBA on the side. He’s been researching the possibility of setting up a distillery firm, and we talked about it for close to an hour. Very interesting stuff, and he’s got some great ideas for how to break into the market and his unique angle.

But the funny part is that probably 45 minutes of that hour was spent talking about his strategy in light of the manifold regulatory hoops and tax laws he has to navigate. Between licensing and taxes, which as you can imagine for hard liquor are absurd, his business model is 100% dominated by meeting the requirements of the state. Some examples: before you can boil an ounce of alcohol, you need local, state, and federal licensing in place. You can’t get the federal until you have the state and local in place, and getting all three takes anywhere from 8-24 months. The problem is that to fill out the paperwork you have to have the facility, equipment, stock, etc. all in place and ready to go; you can’t fill out paperwork for a nonexistent distillery. So he’s looking at having to hold a facility with the equipment for two years while the feds sit around.

You can’t just put up or rent any building, either. Your firm’s place of business has to be in a Class 3 piece of land, which basically means you have to set up out in the middle of nowhere or in a really depressed part of a city. (He lives very close to Baltimore, so he’ll be going for the latter.)

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At What Point Does a Scholarship Athlete Own Anything?

Articles, Business, Corporatism, Libertarian Theory, Political Correctness, Pop Culture, Statism
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“Pryor and four teammates were suspended Thursday by the NCAA for the first five games of next season for selling championship rings, jerseys and awards. They also received improper benefits — from up to two years ago — from the tattoo parlor and its owner.”

~ Article at ESPN.com

The situations of Ohio State University Quarterback Terrelle Pryor, leading rusher Dan Herron, No. 2 wide receiver DeVier Posey, All-Big Ten offensive tackle Mike Adams and backup defensive end Solomon Thomas should be pretty well known to the sports fans in our studio audience.  The sports airwaves have been chock-full with commentary on it for the last few days.  From a sports reporting standpoint, the coverage has often been quite good and pretty far ranging.  ESPN generally, and Pat Forde and Adam Rittenberg specifically, have covered the issue and the rather obvious duplicity of the NCAA in some detail.  For the overarching view of the issues, I recommend those columns.  To get an impression of my view of the duplicity of the NCAA, I highly recommend this video from Michael Smith.  Smith and I agree completely, the NCAA was duplicitous in its application of sanctions against these players and against The Ohio State University.  But there is more to it than that, and it is upon those differences that I will focus in this brief rant.

To make a long story short, and save the reader from wading through the MSM reporting, here is the synopsis.  These players sold and/or bartered with items and notoriety they had been given or “earned” in their capacity as football players at The Ohio State University.  Those benefits included both cash and services, in the fashion of tattoos from a local tattoo parlor in Columbus.  (No, I’m not making this up.)  They have been found guilty of “receiving improper benefits.”  Their punishment is:  being suspended for five games next football season.  They will all compete in the Sugar Bowl this season.  (No, you didn’t misread anything.  That is exactly what is happening.)

There are really only two issues of interest from my libertarian perspective.  First is the issue of ownership and its privileges. One would hope that rules imposed by the NCAA would somehow reflect an understanding of private property ownership.  Let us call that Standard One.  Secondly, there is the issue of rules and regulations.  If there is a rule in place that circumvents my ownership, e.g., an agreement, either implicit or definitive, that I will not receive “benefits” from ownership until such time as said agreement is no longer in place, what punishment fits the “crime” of breaking that contract?  One would hope that penalties levied by the NCAA would reflect some understanding of punishment that fits the crime in the most obvious sense.  Let us call that Standard Two.

These are the only questions that exist in the Ohio State Affair, or Tattoo Gate, as I will hereafter refer to it.  As anyone who has witnessed the amazingly transparent actions of the NCAA over the last few months can attest, what can be generally said about the imposition of NCAA sanctions is this:  The NCAA generally opts for a punishment that fails to meet either standard.  This case is no different.  In fact, Tattoo Gate is an object lesson in how to be damned certain that one’s actions meet no discernible standard at all.

If a person owns an item, the disposition of that item should be the business of that owner only.  In short, he can do whatever he wishes with it, including, but not limited to, sell it, give it away, bury it in the back yard, or burn it for warmth.  The obvious (read:  statist) exception of intellectual property aside, this seems pretty straightforward.  Clearly then, something else must cover the case of NCAA athletes.  This is where Standard Two comes in.  The NCAA apparently believes, and I’ll even agree with them for arguments sake, that the “contract of scholarship athleticism” precludes actions that might otherwise be appropriate for an owner of real property such as a championship ring or other soon-to-be-useless whatnottery.  Tattoo Gate is not about ownership.  Tattoo Gate it is about rules.

So then, a scholarship athlete cannot sell NCAA-sanctioned trinkets while participating in NCAA activities and/or while maintaining eligibility.  To do so constitutes the receiving of improper benefits and is justification for punishment.  Clearly, the players in question broke the rules.  Just as clearly, imposing a sanction of five games—approximately one-third of a college football season—is a hefty penalty.  Why then would the NCAA impose the penalty next season, effectively allowing the players and the team to benefit from their presence in a (high-profit-generating) bowl game?  That’s a very good question, and a question that no one seems able to answer.

If the infractions were egregious enough to warrant a large penalty—like five games—it would seem to warrant immediate imposition of said sanctions.  If it the infraction is minor enough to allow for imposing a sanction that won’t take place until next season (when at least two or three of those players could be gone to the NFL) it would also seem to not be worth mentioning.

What the NCAA has done, effectively, is harshly punish while simultaneously not punishing.  That’s an elegant implementation of justice and a fine example of what those of us who watch the actions of the NCAA have known for quite some time:  The NCAA is, in the vernacular, FOS.  (That means, loosely translated:  Full of Feces.)  Of course, many of us knew that before Tattoo Gate.  Didn’t you?

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Followup on Thoughts on iPad from a Slightly Disappointed Fanboi

Business, Technology
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Earlier in the year, I posted Thoughts on iPad from a Slightly Disappointed Fanboi. Having had most of the year to use it, I’ve got some updated thoughts.

I still like the iPad. But my use of my iPad has declined, for reasons given below. I think it is beautifully designed. As for hardware, I can only think of a few improvements that could be made, none of them essential: reduce weight (maybe by changing from aluminum to come carbon-fiber body) and perhaps thickness; add a front camera for video chat; and increase screen resolution. The iOS is good, and continues to improve over time. The addition of multitasking and app icon folders was an improvement. There are a few snags still in the OS–limitations on handling files, etc., but these should improve over time. …

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Blinded by Science

Business, History, IP Law, Technology
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Geoffrey recently warned of the perils of centralized innovation. In contradistinction to that very warning, I came across this footnote (chapter 14, footnote 3) in Friedrich A. Hayek’s famous ‘The Road to Serfdom‘:

The case of the alleged suppression of useful patents is more complicated and cannot be adequately discussed in a note; but the conditions in which it would be profitable to put into cold storage a patent which in the social interest ought to be used are so exceptional that it is more than doubtful whether this has happened in any important instance. [emphasis in original]

In Hayek’s favor, there was no internet or WikiLeaks back then (but then again, perhaps that was AT&T’s fault!)

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The Perils of Centralized Innovation

(Austrian) Economics, Business, Corporatism, Technology
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Gizmodo has an interesting post about How Ma Bell Shelved the Future for 60 Years. It is an excerpt from The Master Switch by Tim Wu.

Here is the money quote:

This is the essential weakness of a centralized approach to innovation: the notion that it can be a planned and systematic process, best directed by a kind of central intelligence; that it is simply of matter of assembling all the best minds and putting them to work in unison. Were it so, the future could be planned and executed in a scientific manner.

Yes, Bell Labs was great. But AT&T, as an innovator, bore a serious genetic flaw: it could not originate technologies that might, by the remotest possibility, threaten the Bell system. In the language of innovation theory, the output of the Bell Labs was practically restricted to sustaining inventions; disruptive technologies, those that might even cast a shadow of uncertainty over the business model, were simply out of the question.

~*~

Cross-posted at Prometheus Unbound.

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