Through my usual peruse of the news paper, I came across this article in the WSJ. To sum up, new apps for smartphones are making it easier for customers to compare prices across stores. Say you are shopping for an Xbox. With the app, you can see what Target, Best Buy, Gamestop, etc.
Sounds like a great deal, right? I mean, what could be more competitive? This is capitalism at its best: consumers making knowledgeable choices, helping to keep prices low and fostering competition among even the big box stores.
Not everyone sees it this way. Specifically, Sen. Olympia Snowe of Maine. She wants these apps to be done away with. She says they are “anti-competitive”. Aside from the fact that she apparently has no clue when “competitive” means, let’s rephrase her proposal:
Snowe wants customers to not be able to shop around. They must only buy these goods at whatever price the local store is offering. No Internet shopping, no price checking, no sales.
I cannot imagine anything more blatantly condescending. Not to mention Grinch-like. This is crony-capitalism at it’s best. Consumers aren’t willing to make the “right” choices, so we must make them for them. And they can only shop at our approved stores.
Forgive me for channeling my inner pundit here, but shame on Sen. Snowe for even considering such a thing.
2011 has been quite a year, hasn’t it? 3 near government shutdowns, dictators from Africa to Asia gone. Debt talks, summer slowdowns, poor Japan, protests worldwide, and much more.
Despite all this, the US economy kept chugging along. The private sector has added nearly 2 million jobs this year. US Industrial Production is growing at a faster pace during this recovery than the previous 2 recessions (2001 and 80’s). Retail Sales are past the pre-recession level. It is important to remember that our recession was deep, but all these signs are good and the leading indicators point to further growth in 2012!
2012 promises to be am important year going forward. The Supreme Court will rule on the health-care law, a ruling that could affect federal power for years to come. We have a presidential election. Possible end of the world. We shall see.
In conclusion, I want to wish everyone here and on our unofficial sister blog, Cafe Hayek, a Merry Christmas, Happy Hanukkah, and a bloody happy New Year!
Here’s to a happy, and more free, 2012!
Edit: Because he whined, a very metal Christmas to our good friends at our official father blog, The Metal of Honor. The Metal of Honor is written by Luke and James. Luke is not the worst kind of people and James is good people, too. If you enjoy heavy metal music, check it out.
Yes, this is an economics blog, but I’d like to get a little philosophical. Much of this post has laid the foundation of my economic and political beliefs.
What is freedom? Think about that. What is that concept that we have built our nation on? Freedom of religion? Freedom from fear? Freedom of speech, assembly, redress, of baring arms? What does all that mean?
“Freedom is not simply the right of intellectuals to circulate their merchandise. It is, above all, the right of ordinary people to find elbow room for themselves and a refuge from the rampaging presumptions of their ‘betters.'”
This quote comes from Thomas Sowell. Think about it for a moment. Freedom is not just about speech or intellectual theories. It is about living the way you want, free from harassment. The ability to live as you wish, worship who you wish, consume what you wish, run your business as you wish. That is freedom. Every day, we come up against barriers to our freedom. Movement is restricted. I cannot go to Cuba, for example. If I am a smoker, I cannot go out in public. These ar erestrictions on freedom.
The role of government is meant to protect freedoms, not inhibit them. However, we have a government (all levels, from town to federal) that constantly restrict our freedoms for some Greater Good. Any issue that makes someone feel uncomfortable is banned (think about organ sales and drugs, to name a few). Our ability to choose is being curtailed. That’s what it’s all about: choice. Can you not see that what’s right for you is not right for me?
Freedom is about accepting everything, not just those things we like. If we only allow the things that make us feel comfortable, then we don’t support freedom; we just like the idea of freedom.
Let’s bring this back to economics for a moment. Check out this post by Jeff Neal.
Ok, back to me. Let’s wrap this up with a critical thinking exercise:
Think about what freedom means. When you have done that, ask yourself the follow-up question “does this apply to all people? Does this apply to rich, poor, black, while, Chinese, Japanese?” If the answer is “no,”, then your definition of freedom needs to be reworked until the answer is “unconditionally yes.” Freedom is not conditional.
Dr. Russ Roberts of George Mason University did a short(ish) blog post on the first few weeks of the recession on his blog Cafe Hayek. It’s a good read. Check it out.
This is just a really good blog post from the UK (HT Mark Perry via Don Boudreaux). There’s not much more I can say on the matter.
I know it’s been a while since I blogged last. I blame the Turks.
Anyway, I’d like to discuss the Paradox of Thrift. John Keynes says that, in bad economic times, people will keep money in their pockets, thus perpetuating the recession.
Keynesians would say spend for investments. Others would say to save money to supply loanable funds for investments.
On both sides, you are talking extremes. One says only consumption is wrong. The other says only saving is wrong. But both sides are correct in this matter.
What we want is some spending and some saving. It’s ok to buy some things on credit (a house, for example), but you do not want to be going nuts. Unnaturally low interest rates will cause this to happen.
Likewise, it’s ok to save money for future (retirement, for example). But you don’t want to put every penny you earn int your account. Unnaturally high interest rates will do this
There is a way to reach the desired equilibrium of spending and savings. Just as prices coordinate supply and demand, interest rates coordinate savings and consumption (loanable funds and investment). If we allow interest rates to naturally develop in the same manner prices naturally develop, we can reach a level of savings and spending where the economy can grow. If we continue to try and manipulate interest rates, we will continue to see bubble after bubble, like the Tech Bubble (savings bubble), the Housing Bubble (spending bubble) or the soon-to-be Higher Education bubble (spending again).