Cafe Hayek

I'm Lovin' It!

George Will celebrates a great American institution: McDonald's.  Here's a key paragraph:

McDonald's exemplifies the role of small businesses in Americans' upward mobility. The company is largely a confederation of small businesses: 85 percent of its U.S. restaurants -- average annual sales, $2.2 million -- are owned by franchisees. McDonald's has made more millionaires, and especially black and Hispanic millionaires, than any other economic entity ever, anywhere.

A Wonderful Anniversary. Drink Up!

Today is the 74th anniversary of the repeal of alcohol prohibition in the United States.  In this short article, University of Michigan law professor Adam Pritchard and I explain why prohibition began when it did and why it ended when it did.

Continuing Assaults

At a family gathering this weekend in New Orleans -- as I enjoyed a rich, very yummy, and sodium-laden bowl of okra gumbo -- I complained to a cousin about the recent calls to have the government force food-preparers to use less sodium.  Karol -- sitting nearby and enjoying her own sodium-enriched Cajun dish -- lamented with me the fact that our freedoms are increasingly under assault (pun intended).  But, she pointed out, the alleged justification for such intrusions isn't so much a simple nanny-state itch to treat us as children but, rather, the need to control health-care costs.

Of course Karol is correct.  This "stop each of us from imposing costs on others" justification is typically used to support motorcycle-helmet regulations, smoking bans, and, now, eat-less-salt commands.  And as more and more of Americans' health care is provided collectively, the ring of validity to such justifications increases in volume.  As Russ points out, if you're paying, I'm ordering the expensive menu items.

If you are obliged to subsidize the costs of my behavior, then you clearly have an interest in restricting any of my behaviors that might potentially raise the costs you bear as my subsidizer.

But a question: if the proponents of greater collectivization of health-care provision not only recognize this fact but cite it as a justification for restricting personal freedoms that would otherwise be no one else's business, it seems to follow that these proponents of collectivization of health-care provision would recognize also that the problem is so general that it indicts the very idea of collectivization of health-care provision.

Because such collectivization creates a giant tragedy of the commons – because such collectivization enables each of us at each moment of making health-care choices to impose most of the costs of our choices on others – such collectivization will require not only that government restrict our access to fun but unhealthy life choices (such as eating lots of Cajun food), but also restrict our access to medical-care.

So the idea that a young mother whose child has a runny nose will be able to skip off to the pediatrician pronto for a diagnosis and treatment is chimerical.  Just as collectivization of health-care provision will encourage people to eat too much sodium and too much bacon, it will also encourage people to seek medical treatment too frequently and too frivolously.  And in both cases, these attempts to free-ride on the largess of the collective will oblige the protectors of the collective to restrict personal freedoms and personal choices lest the collective be utterly ruined.

More on the Absurdity of "Localization"

Warren Meyer over at Coyote Blog adds positively to the debate over "localization."  Here's the bulk:

[Localization] is absolutely absurd, for any number of reasons.  I'll just list three:

• It doesn't work.  The total energy used for transport, say of food products, is a small percentage of the total energy used in the total production process.  The energy transportation budget is generally smaller than efficiency gains from scale or from optimizing location.  For example, a wheat farm in Arizona on 50 acres is going to use a lot more energy (and water, and fertilizer, and manpower) than a wheat farm on a thousand acres in North Dakota.
• It leads to poverty.  Our modern society, our lifestyles, our lifespans all are a result of the fantastic increases in efficiency we have reaped from the division of labor.  A push to localize all production reverses the division of labor.  Many products, such as semiconductors, become outright impossible on a local scale.
• It leads to starvation.  It is hard for us to imagine famine in the wealthy nations of the world.  Crop failures in one part of the world are replaced with crops from other parts of the world.  But as recently as the 19th century, France, then the wealthiest nation on earth but reliant on local agriculture, experienced frequent crop failures and outright starvation.

More on the food-miles stupidity here.  And an interesting study that shows that processed foods greatly reduces waste and trash to landfills was here.

Update: More on food miles here at Reason

Rwandan Coffee, Commerce, and Cooperation

Karol and I -- actually, it's mostly Karol (who spends lots of time these days in Africa) -- write here about the civilizing effects of commerce.

And Think of the Horrors Unleashed by Penicillin!

Here's one of the most absurdly ridiculous lines that I've read in a long time; it was penned by Alexander Cockburn, writing in the November 5, 2007 issue of The Nation:

Line up some of the more notorious Nobel Peace Prize recipients, such as Kissinger, and if you had to identify the biggest killer of all it was probably Norman Borlaug, one of the architects of the Green Revolution, which unleashed displacement, malnutrition and death across the Third World.

Shameful, on so many levels (one of which is that this sentiment drains credibility from the bulk of this article by Cockburn, which attempts to expose Al Gore's hypocrisy).

(HT: Joe Mann)

By the way, Gregg Easterbrook, in his tribute to Norman Borlaug (from the January 1997 issue of The Atlantic) wrote that

Perhaps more than anyone else, Borlaug is responsible for the fact that throughout the postwar era, except in sub-Saharan Africa, global food production has expanded faster than the human population, averting the mass starvations that were widely predicted -- for example, in the 1967 best seller Famine -- 1975!   The form of agriculture that Borlaug preaches may have prevented a billion deaths.

And here's an earlier entry from here at the Cafe about Dr. Borlaug.

The Politics of Prohibition

Why did the U.S. government prohibit alcohol starting in 1920?  And why did it end this ignoble "experiment" in 1933?  I have a theory.  (Hint: the reason for both the launch and the sinking of alcohol prohibition centers on tax revenue.)

They care so much about me

They protect me from late taxis. They protect me from big retailers. Now, they're protecting me from trans fats:

The Montgomery County Council unanimously approved a ban on partially hydrogenated oils in restaurants, supermarket bakeries and delis yesterday, becoming the first county in the nation to restrict artery-clogging trans fats.

....

Montgomery's measure follows similar legislation in New York and Philadelphia, which ordered trans fats removed from restaurant menus this year and next. The county's new health regulation will take effect in January for restaurants and other establishments serving food and in January 2009 for establishments offering baked goods, other than packaged goods made outside the county.

Sara Lee cakes, for example, will be exempt. Dunkin' Donuts, which bakes doughnuts in its stores daily, will have to comply. The annual church supper, which fits the county's definition of a food service establishment, would have to stop using trans fatty oils unless organizers get a waiver from the county health department. Foods with 0.5 grams of trans fat per serving are allowed.

My favorite part of the article:

Council member Duchy Trachtenberg (D-At Large), the bill's chief sponsor, said she thinks the food industry will be able to adjust. Some Montgomery establishments, such as the Silver Diner and Marriott Corp., stopped using trans fats voluntarily.

"The goal is to protect the public health," she said. "People want to know what they are eating."

I wish it were a quote. She thinks the food industry will be able to adjust. Great! It should work out. Probably. Besides, people want to know what they're eating so we'll prevent them from eating something as a way to let them know what they're eating.

There is nothing in the article that discusses the costs of the ban in either reduced freedom or higher food costs that will be passed on to consumers. There is nothing in the article about the impossibility of enforcing the regulation. There is one negative paragraph in the entire article, a hint of the possibility of unintended consequences:

Restaurateurs say that it could be difficult for them to find healthy replacements for trans fatty oils and that they might have to use artery-clogging palm and coconut oils or butter.

A Good Weekend for Pesticides

The spinach e-coli outbreak comes from organic spinach. The Washington Post reports:

Federal health officials last night linked a deadly E. coli outbreak in bagged spinach products to a California farm company that sells organic produce in 74 percent of the country's grocery stores.

My memory is that un-natural produce, the produce that is grown with pesticides has a lower chance of carrying e-coli. Is this true? Please post some evidence on this issue in the comments.

And on the opposite page comes this pro-pesticide story:

The World Health Organization reversed a 30-year-old policy yesterday and declared its support for indoor use of the pesticide DDT to control mosquitoes in regions where malaria is a major health problem.

This is bad news for mosquitos and good news for human beings:

About 1 million people die each year of malaria, most of them African children under age 5.

WHO expects opposition to the policy change from some environmental groups. Kochi appealed directly to them in his announcement.

"I am here today to ask you, please help save African babies as you are helping to save the environment. African babies do not have a powerful movement . . . to champion their well-being," he said.

Kochi is the head of the malaria division of WHO, the World Health Organization.

Let the spraying begin.

The Greatest Benefactor of Humanity Whose Name Isn't Close to Being a Household Word

Back in May 2004 I posted on Norman Borlaug -- one of the greatest, and least-known, benefactors of humanity.  The Hoover Institution's Henry Miller recently wrote this nice review of a new biography of Borlaug.

Unnatural Oblivion

Someone forwarded this article to me yesterday.  Its title is "Poverty and the Environment."  Its author is Anup Shah.

When I read such stuff, I don't know if I should chuckle or weep.  This article is so unscientific, so unhinged from fact, so devoid of serious argument, so unaware of the real case for global capitalism, that it is a comic spoof of itself.  But it also seems to be written by a serious, concerned person -- and to reflect the opinion of many serious and concerned (if intellectually lazy) people.

The most glaring problem with this article is its unquestioned acceptance of the notion that the earth's resources are fixed in quantity -- so the more resources used by rich people, the fewer are the resources available for poor people.  It also assumes, in the spirit of a cartoon aimed at six-year-old children, that global outcomes are the planned results of masterminds -- if the outcomes are good, the good masterminds (the superheroes) are ascendant; if the outcomes are bad, the bad masterminds are ascendant.

But the quotation that most caught my eye and made my head shake with bewilderment is this one; here Shah is quoting favorably from a book by Vandana Shiva, entitled Stolen Harvest:

The gain in "yields" of industrially produced crops is based on a theft of food from other species and the rural poor in the Third World. That is why, as more grain is produced and traded globally, more people go hungry in the Third World. Global markets have more commodities for trading because food has been robbed from nature and the poor.

Talk about a fixed-pie view of reality.  Do people such as Shiva and Shah not realize that until very recently -- roughly the past three-hundred years -- the vast majority of the people in the world, as for almost all of human history, were routinely threatened with, and often actually victimized by, starvation?  Do people such as Shiva and Shah not realize that the earth's population today (at about 6.2 billion) is nearly ten times larger than it was a mere 300 years ago (at about 625 million)?  Given that today at least one billion of us spend our entire lives without worrying one minute about whether or not we will have enough to eat, how can anyone seriously argue that the amount of food now available daily to each of the more than one-billion citizens of western, industrialized societies is "stolen" from people living in less-developed societies?  Is it even remotely plausible that the vast increase in the amount of per-capita food consumption for the entire world -- a world today with ten times more people than were alive in 1700 -- is made possible by our stealing this food from the mouths of earthworms and other species?

Do people such as Shiva and Shah not know of the vast literature that shows a powerful and positive relationship between economic freedom and increased living standards?  Are they unaware of the arguments (and, frankly, the data) that resources are augmented and largely created by human enterprise, rather than moved from point or person A to point or person B?

If You Can't Beat 'Em, Intoxicate 'Em

It's reassuring to learn that the demand curve for booze slopes downward to the right -- that is, the less costly booze becomes, the greater are the quantities of booze that people drink.

(Hat tip to Roger Meiners.)

To Sinclair: Ain't that the Dickens?!

Speaking of The Economist’s Question – "As compared to what?" – I recall a conversation I had last month with a young American college student who asked if I approve of the working conditions described in Upton Sinclair’s novel The Jungle. (The Jungle, you’ll recall, contains dismaying descriptions of working conditions in early 20^th-century slaughterhouses in the United States.)

I granted my young friend his assumption that Sinclair’s descriptions are accurate. But I then asked: As compared to what? What were the alternatives 100 years ago for those men and women who chose to work in slaughterhouses?

Before the centralization of butchering – which was a major economic event begun in the early 1880s, made possible by Gustavus Swift’s successful development of economically efficient refrigerated railroad cars – almost all consumption of fresh meat took place within a few days and a few miles of its slaughter. Lack of refrigeration required that butchering be local. And butchering back then was real butchering – actually killing animals on the spot – rather than merely carving up carcasses delivered to local supermarkets from afar.

So any sound analysis of the work conditions of early 20^th-century slaughterhouses must ask and reasonably answer these (and other) questions:

- What jobs would slaughterhouse workers perform had they not been employed in slaughterhouses? How dangerous were these other jobs?  What did these other jobs pay?

- How dangerous was butchering before the rise of the slaughterhouses? Were pre-slaughterhouse butchers less likely or more likely than slaughterhouse workers to have fingers or arms severed?

- What were other effects of slaughterhouses?

One other likely effect is that slaughterhouses made cities and towns cleaner. With butchering centralized in midwestern factories, New York, Boston, Richmond, and other cities and towns throughout America had less need of local butchering places. This fact, in turn, meant less smell (and, probably, disease) from the local slaughtering of large mammals.

While it’s hardly conclusive evidence, this quotation from Charles Dickens’s Great Expectations (1860-61) suggests that cities in pre-slaughterhouse times featured an unpleasantness that we today are thankfully unaware of. In this passage, the narrator (Pip) mentions his first encounter with London’s Smithfield area – that is, that part of London in which animals were butchered for meat:

So, I came into Smithfield; and the shameful place, being all asmear with filth and fat and blood and foam, seemed to stick to me.

Centralized butchering rescues cities and towns from this smelly and bacteria-laden "filth and fat and blood and foam."

Rolling in their Graves

There's a restaurant in San Francisco callled the Mao Zedong Village Cuisine Chinese Harvest Restaurant.  I got a surreal kick out of the evil monster having a restaurant named after him—you try and save the world and your legacy is a joint in SF, CA.   One online reviewer of the restaurant had a different take:

mao zedong was a ruthless dicator responsible for the death of millions in the cultural revolution and the failed great leap forward. why on earth would any restaurant celebrate the death and misery that this man represents? would you patronize Hitler's Hamburger Haven, or Osama's Oyster Bar? if the idiot owners of this restaurant did their research, they would realize that a significant number of richmond district residents fled china to escape communism and mao zedong. this restuarant's name is highly offensive.

Hmm.  Good point.  I suspect the owners have a different impression of Mao's legacy.  The disconnect between the man and the monument did remind me of this NJ rest stop.

UPDATE:  From Nacim Bouchtia comes this photo, from a restaurant in Santa Monica:

Inside he found propaganda posters. So that's two and counting.  Restaurants named after Mao (but not Hitler) illustrate the puzzle raised by Anne Applebaum in her superb book, The Gulag—romanticizing Nazis or their regime is socially unacceptable.  Why is it okay to romanticize Communists and Communism?

Zapp's Potato Chips

In the first 1992 presidential debate, then-candidate Ross Perot famously quipped "you make more making computer chips than potato chips." This clever little phrase was part of Perot’s explanation for why America needed a high-tech-focused industrial policy (my term) to handle the demise of the cold-war defense industries.

I typically respond with two observations to people who insist on the intrinsic merits of computer chips over potato chips.

First, I’d rather eat potato chips than eat computer chips – but I admit that potato chips don’t work as effectively in my laptop computer.  Second, Herman Lay – founder of Frito-Lay’s – made a fortune producing potato chips.

Here’s another chip entrepreneur whose story is interesting: Ron Zappe.

Zappe founded Zapp’s Potato Chip Co. in 1985. It was successful from the start, today employing 100 people at its plant in Gramercy, Louisiana (which is about half-way between New Orleans and Baton Rouge) and producing 150,000 bags of chips per day. Zapp’s chips are now the number two selling snack food in Texas and Louisana.

I’m pretty sure that Mr. Zappe is a wealthy man.

He once worked for Ingersoll-Rand and then started a few companies selling oil-field equipment. That industry went south in the mid-1980s when oil prices plummeted. His companies followed suit.

What’s a guy in his early 40s to do?

Ron Zappe used his creativity and energy to start a company producing Cajun-spice potato chips – gourmet chips, even, as some (including moi) insist.

Zappe built his Gramercy, LA, plant in 1985 in a building recently vacated by an automobile dealership. Gramercy was then filled with laid-off oil and gas workers.

This is one, relatively modest example of the market’s vibrancy. Had huge subsidies poured in from Washington to keep south Louisiana’s oil-and-gas firms artificially profitable, Ron Zappe might today still be peddling the pumps he peddled before moving into chips. Would he have been better off? Maybe, but probably not.

But I for one would have been worse off. Being a New Orleans native, I discovered Zapp’s chips just after they first hit the market. I love them. I absolutely adore them. They’re spectacular. Were it not for the fall in the prices of oil and gas, and the consequent release of resources (including Mr. Zappe) from the energy industry, I and other fans of Zapp’s chips would be all the poorer.

I thank my long-time friend Kerry Dugas for alerting me to Ron Zappe's story.

What's Good for the Goose.....

The current issue of Wine Spectator reports on the increasing difficulty Americans’ endure in getting foie gras. One reason:

In February, citing unspecified concerns over food safety, the U.S. Department of Agriculture suspended imports of foie gras, sausages and pâté from France.

Another reason:

Bills have been introduced in California and New York – the locations of the only U.S. foie gras producers – to halt the force-feeding of birds to make foie gras, which would essentially shut down the businesses. Animal-rights activists argue that the ducks and geese are overfed to the point of becoming ill and are often kept in crammed quarters.

Perhaps the accusations of the animal-rights activists are correct. But why a foie gras ban? If enough consumers are sufficiently concerned about the health and comfort of ducks and geese, foie-gras producers would have incentives to find more humane ways of fattening and keeping their animals – ways that would be used to market foie gras to concerned consumers. (The fabulous supermarket chain Whole Foods is a vibrant testament to the market’s eagerness to satisfy such consumer demands. My wife, Karol – confessedly more sensitive to the welfare of animals than I am – finds Whole Foods attractive largely because of this reason.)

There’s another benefit of relying upon voluntary market adjustments to satisfy consumer concerns about animal welfare: it avoids an unnecessary slope that might well be slippery. This benefit came to mind when I read Chez Panisse owner Alice Waters’s objection to the possible ban on foie gras. Quoting Ms. Waters: “There are just a lot more important things to ban.... How about banning supersized Cokes – things that are creating diabetes and killing people?” Ms. Waters accepts the legitimacy of regulatory bans, but doesn’t find foie gras to be relatively important enough to get the attention it’s now receiving. But what happens once Cokes, Slim Jims, and Big Macs are banned? Foie gras might well be next in line of importance, not only for the ill-effects its production has on ducks and geese but also for the ill-effects its consumption has on humans; the fat content of this delicious stuff is incredibly high. How will Ms. Waters object then?