The market giveth and the market taketh away

Business
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Mercy for Animals videoThe media are in a kerfuffle about a short-term egg shortage caused by Target and other supermarket chains dropping a major supplier, Sparboe Farms, following reports that workers at its production facilities abused chickens and failed to follow the company’s animal welfare policy.  The revelations were punctuated by a graphic undercover video released by animal rights group Mercy for Animals, which showed workers stuffing chickens into cramped battery cages, pulling rotting carcasses out of cages, “torturing” birds by swinging them around by their legs, and so on.  No matter how you feel about animal rights, it’s not pleasant to watch.

Sparboe, for its part, has shifted its damage control into overdrive, posting updates about steps it has taken to “rectify problems” and pointing out that it is the first egg supplier to receive USDA certification.  Which, given these reports, provides some insight into the worth of government certifications.

I expect a government response will be forthcoming, and Sparboe may face fines and possibly a regiment of FDA inspectors swarming over its farms in the months to come.  But anything the government can do in its enforcement role pales next to the punishment which can be meted out by the market.  Even if millions of consumers haven’t suddenly adopted veganism in response to the video, they still have let their displeasure be known, and the result is that Sparboe has lost significant business and is now forced to reevaluate its practices in order to regain consumer trust.  Which is exactly as it should be.  No amount of regulatory oversight will prevent every problem in our food supply (this year has also seen the deadliest listeria outbreak, from tainted cantaloupe, since the 1920s), but with the ease with which information disseminates online, the market will help ensure such problems do not go unnoticed by consumers, who are then free to vote their conscience.  If only the market was free to punish every business, no matter how large or small, for bad decisions and unethical practices.

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Bureaucrats Gone Wild — Episode #526

Anti-Statism, Business, Nanny Statism, Statism, Victimless Crimes
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Massachusetts fisherman Carlos Rafael pulled in what should have been a life-changing fish this week, but before he could unload it for a huge payday, his local chapter of ridiculous-rule-enforcers, A.K.A., the National Oceanic and Atmospheric Administration’s (NOAA)  enforcement division, took him down. (Whew! That was close.) You see, although Rafeal had filed all the appropriate paperwork to catch tuna, the behemoth in question was caught in his boat’s nets and not via rod and reel, as is specified, well, someplace. As a result, the authorities had no choice but to pinch the fish when Rafael’s boat returned to port. The expected $400,000 payday that could come from the sale of fish will very likely go into NOAA’s asset forfeiture fund. Nice racket. (Or, should that be, nice rod and reel?)

H/T:  James Nellis

…cross-posted at LRCBlog.

Bureaucrats Gone Wild — Episode #526 Read Post »

The Chamber Says: No Unauthorized Progress!

Business, Corporatism
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Auburn, Alabama, experienced some tornado damage the other day, and the place was just a mess. Trees were down. Houses had collapse. Fences were in tatters. Yards were trash heaps. The damage was not major by any standard but there was plenty to do in the wake of this one.

As happens, enterprise was there to make a buck fixing things up. Contractors came from all states in all directions. The unemployed suddenly had work. Skills that had been dormant were suddenly needed. This isn’t the Broken Window fallacy; it is just a reality that new kinds of work needs to be done and enterprise jumps at the chance. Good for enterprise and good for those who need help repairing the damage.

So get this. The following note appeared in my inbox this morning, from the Chamber of Commerce:

The chamber would also like to remind those of you who have damage to your personal property to ask for proof of a license to do business in Auburn as you are negotiating with contractors and other businesses for cleanup, roof repair and other services. Additionally, we as a chamber encourage you to use your local chamber members first. For your convenience we have provided you with a list of chamber members who could offer their service to you.

What’s the priority? Getting the job done or preserving the cartel of favored businesses? We know where the Chamber stands.

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On Sweatshops, Liberty, and Social Justice

(Austrian) Economics, Business, Libertarian Theory, Nanny Statism, The Left
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Over at the Center for a Stateless Society, Michael Kleen asks whether compassionate libertarians can agree to oppose sweatshops as a matter of social justice. Ah, but what does he mean by “oppose” and “social justice”?

Libertarianism is not about people just getting by; it is about maximizing human liberty. Liberty cannot be achieved as long as eking out a living in dangerous conditions for 12 to 14 hours a day is an individual’s most attractive option.

So there could not have been liberty prior to modern times?

Either this line of argument was not thought out or Kleen subscribes to a Marxist-style determinist-materialist conception of history. I hope for the former, as these lines strike me as a propagandistic rhetorical flourish.

Incidentally, the conception of liberty used by Kleen here equivocates between the libertarian conception (i.e., not being subject to the threat or use of initiatory physical force) and a more left-liberal/socialist conception of liberty as positive economic freedoms. I’m afraid compassionate libertarians cannot get on board with such a conflation. To treat both as a matter of political justice is to try to wed contradictions, because “promoting” positive economic freedoms in this way will necessarily require the violation of rights (liberty). This is the mistake made by statist socialists and left-liberals.

Although Kleen uses the term “social justice,” he actually conflates political justice and social justice here and elsewhere in his post. If one insists on using the term “justice” in reference to positive economic freedoms, it is important to distinguish social justice (more a matter of personal morality and unenforceable in a libertarian legal system) from political justice (liberty/rights, which are enforceable in a libertarian legal system).

Kleen also seems to conflate pointing out that people often choose to work in a sweatshop because they see it as better than the alternatives with endorsing sweatshops as ideal work environments. I can’t speak for everyone who doesn’t see sweatshops as unjust and an indictment of capitalism, but I think that most do not think of sweatshops as ideal or unequivocally good. We just do not think that capitalism, as amazing as it is, can magically allow a poor, agricultural society to just skip over the terrible working conditions of the Industrial Revolution in its transition to an industrial or post-industrial economy.

Sweatshops are simply often better than the alternatives available and opposing them via statist means will only be counterproductive, harming the very poor such policies are meant to help. This does not mean we “favor” sweatshops in the abstract or propose them as an ideal business model. It does not mean we do not sympathize with the plight of the poor working in such conditions. Having to point this out makes me feel like I do when libertarians oppose the state performing some function and statists of all parties assume that means we don’t want that function performed at all — e.g., we oppose social-welfare policies so that must mean we hate the poor and want them out on the streets, starving to death, dying of disease. Hardly.

Kleen’s post contains a few other nits in need of picking:

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“The mountains are high and the emperor is far away”

(Austrian) Economics, Business
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Reason.com has posted an excellent article on Wenzhou, China, a city built almost entirely upon private enterprise:

For the last 30 years, private citizens in this southeastern China metropolis have largely taken over one of the least questioned prerogatives of governments the world over: infrastructure.

Driving down the cluttered and half-constructed streets of this 3-million-strong boomtown requires frequent U-turns and the patience of Buddha, but every road eventually leads back to a factory. Each factory is in turn surrounded by a maze of roads filled with hundreds of small feeder shops selling spare parts, building materials, and scraps. Every haphazard street in this town seems to have an economic purpose….

Wenzhou shopping districtThe official channels of financing and investment are routinely bypassed, replaced by local institutions with their own governance and lending rules.  It all works, if a bit haphazardly:

Gray-market lenders are often established, though technically illegal, financial institutions that lend primarily working-capital loans at rates as high as 10 percent a month. Contacts often modify interest rates based on how well you know them. Forms of repayment enforcement differ. Weng points out that in a community so dependent on guanxi—relationships—defaulting on a contact’s loan could blackball you from future business opportunities….

Lending also takes place through a number of formal lending institutions that have become informal depositing institutions. Pawnshops in Wenzhou are very different from those in the West. The shops can give out loans of millions of dollars backed by property and stocks, and they can pay depositors interest rates three to four percentage points higher than the official lending rate at banks.

It’s a vivid example of what can be achieved when the central planners are too far away to have much influence and local bureaucrats learn to simply get out of the way.  If only U. S. bureaucracy was so ineffective!

“The mountains are high and the emperor is far away” Read Post »

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