December 18, 2007
The government believes you should use ethanol as a fuel. They have enacted policies to incentivize ethanol production. Those policies, as I pointed out here, have unintended consequences:
But let’s look at what’s happened. First, we started hurting poor Mexicans by threatening their access to affordable corn tortillas, a staple of the diet for the impoverished in that country. Then, it was found that the high cost of feed corn for animals will end up resulting in high costs and lower supply of meat. And now, it’s spreading to milk. You know, full of calcium, the stuff we tell children will give them strong bones? Great work, Congress!
And now it’s hit me square in the gut, in my beer supply:
I’ll explain what’s happened to the price of Malt and Hops and why, what can be done about it, and why you are going to see prices jump likely between 15 and 25% on the retail end for Craft brews in a matter of weeks.
In late September I was told by another brewery that malt was going up about 40% and hops 30 to 40%. I started calling suppliers and they confirmed this was true, and also that they have no prices locked in yet. Additionally, I was informed that many farmers are not honoring their contracts to the fullest extent (don’t blame the farmers please) due to the crazy price situation that’s evolving in crop farming, with corn being twice the price it was last year.
What does corn have to do with it? Our supplier tells us that with Uncle Sam’s push and financial support for ethanol the price of corn has doubled and many farmers grew corn instead of barley this year. In the UK, where the EU has also required ethanol production, rape seed is the crop of choice and again, a lot more profitable than growing barley and wheat. Couple this with bad weather and growing conditions this year and in Europe and you have a crisis in barley supply. We were told this was coming in early summer, but we assumed our malt company might have meant a 10 to 15% increase in price, not this. When we finally got nailed down pricing last week, one malt price was up 45% and the other up 56%.
As a homebrewer, I just felt this pinch. I knew it was coming eventually, but wasn’t sure how soon or how drastic it would be. I needed to buy some malt for this weekend’s brew session, and went to my usual supplier, who usually has the best prices on just about everything. I was shocked to see that malt prices had jumped 30-50% (depending on variety) since my last order in November.
I’ve been further dealing with the effects of a worldwide shortage of hops, as supply has become inconsistent and prices have shot up, but I can at least blame that on the market. There are some very natural supply-and-demand forces that have affected that market over the last decade, and the market will respond to increase supply. And, to be fair, there are weather-related reasons that the barley crop was not as plentiful as past years. But when government steals my tax dollars and uses them to further exacerbate shortages in the things I want to buy, it’s a double-whammy, and it makes me resent them even further. Instead of having natural supply-and-demand, there is entirely unnatural and inefficient government-created demand that is taking away the incentive to supply malt.
The last thing I need is government policies creating additional cause for shortages. It may be rather “unimportant” that I homebrew beer. And after all, as a hobbyist, I’m willing to spend plenty of money on my hobby, as my constant equipment purchases show. But I look at brewing as a potential future career, and watch as struggling breweries are now forced to deal with this shortage and hope that their consumers are willing and able to afford price increases.
For me, this is an annoyance. For some craft brewers, this might be the difference between being able to stay afloat in business and shutting their doors. It may just be beer, but as I pointed out when discussing the milk, tortilla, and meat price increases:
Simply put, look at how the cost of government is affecting your food. In addition to all the farm subsidies, price supports, and all the other nonsense, they decided to make a completely separate mandate regarding ethanol in the energy supply. What happens? Your cost of living goes up, and your standard of living goes down.
They’ve made some lobbyists and farmers very rich with these policies. And being politicians, they’ve been using your money– not theirs– to do it. They take your taxes, use them to create incentives which make what you want to buy more expensive, and then (especially in the example of beer) tax the hell out of the end product anyway.
I realize some of our readers are in favor of government. So please, can you even attempt to justify this? Why should I be paying three different ways for the government to make some farmers very rich?
July 25, 2007
So life is pretty good for me right now… Positive things occurring at work, a new baby on the way, a lot of exciting news in the beer world, I live in the middle of sunshine next to the ocean and today’s my birthday.
But sometimes I see news that worries me. In this case, it’s financial. I reported on this over at The Liberty Papers, regarding a housing crash that may rival what we saw during the Great Depression, and knowing that if our government does anything to try to fix it, they’ll only make it worse.
But it’s still a good day… I’m happy and healthy, and I’m sure I can be whoopin’ and hollerin’ all the way down.
May 4, 2007
This sounds like a pretty sweet deal:
If the typical stay-at-home mother in the United States were paid for her work as a housekeeper, cook and psychologist among other roles, she would earn $138,095 a year, according to research released on Wednesday.
This reflected a 3 percent raise from last year’s $134,121, according to Salary.com Inc, Waltham, Massachusetts-based compensation experts.
The 10 jobs listed as comprising a mother’s work were housekeeper, cook, day care center teacher, laundry machine operator, van driver, facilities manager, janitor, computer operator, chief executive officer and psychologist, it said.
So wants to hire me? I’ll cook and clean, and I’ve got a history of armchair psychology (usually after drinking gin)… I’ll bet I could do this job and still have time to blog on the side…
Plus, that way I could actually start paying my wife to be as stay-at-home mom when she starts being one in August… Right now she’s not making squat.
“Unintended consequences.” This is a phrase that needs to be drilled into the heads of every Joe Six-Pack in this country. When government tries to fix something, they routinely create unintended consequences that end up making everyone else worse off. Often (as in any complex system) these things are difficult to see and even more difficult to trace back causally.
But we’ve got a winner. And it’s perfect to teach Average Joe Six-Pack, because government regulation is raising the cost of that six-pack…
We witnessed the tens of thousands of demonstrators decrying the rapidly (and exorbitantly) rising price of corn in the “tortilla protests” in Mexico City earlier this year. The protests came about as a result of the growing demand for corn-based ethanol, the Bush administration’s biofuel of choice. But now there appears to be a new dietary staple under threat from the rising demand for ethanol: German beer.
Der Spiegel Online reports that a 2006 barley shortage will raise the wholesale price of German beer this May. Many brewing industry lobbyists attribute the price rise to farmers forgoing barley for corn in order to satisfy the global demand for biofuels, especially from the United States. In the past year, the price of barley has doubled on the German market, from â‚¬200 to â‚¬400 per ton.
But it’s not just Germany that is set to see soaring beer prices. The chief executive of Heineken (the Dutch brewer) warned in February that the expanding biofuel sector was starting to cause a “structural shift” in European and U.S. agricultural markets, which could precipitate a long-term upward shift in the price of beer. Already, futures prices for European malting barley have risen since last May by 85 percent to more than â‚¬230 a ton, and barley production in the United States has fallen to 180.05 million bushels (in 2006)â€”the lowest level since 1936. Global stockpiles of barley have shrunk by a third in the last two years. All of this augurs ill for beer drinkers, who may soon be paying significantly more for their pints.
So let’s lay this one out here:
1. Bush demands that we replace a certain percentage of our fuel with ethanol.
2. Because of American sugar tariffs, that ethanol is made with corn.
3. The price of corn shoots through the roof (creating consequences like increasing dairy, meat, and Mexican tortilla prices).
4. Because of rising prices, more farmers stop farming their other crops and focus their land on corn.
5. More corn means less barley, and thus the price of barley goes up as supply dwindles.
6. Beer prices rise.
Government intervention in fuel costs just happens to distort all sorts of other markets, including the market for beer. And when we start talking about beer, this isn’t academic for me: this is personal.
I think there is only one answer I have for this… Homebrewing, and to get the full cost savings of brewing my own, I need a Crankandstein so that I can buy my barley in bulk and crush it as needed. I’ll be brewing 2.5 cases of beer for less money than one case of Miller Lite!
Hat Tip: Doug @ The Liberty Papers
March 17, 2007
“Lace wasn’t selling in the quantities it once did, and the tradition was starting to slowly disappear,” says Malgorzata Stanaszek, co-owner of KONI-art, the company that stitches the lingerie. “Our friend then said, as a half-joke, ‘Why don’t you make thongs? They’re popular now.’”
Stanaszek, 32, recruited her mother and two sisters into the business, and they started stitching the thongs and selling them on the Internet in 2004. Now Stanaszek says she employs 65 women who work from home churning out lace panties, G-strings, thongs and bras for customers around the world. Orders come from across Europe and as far away as Japan, China, New Zealand and the United States; a Koniakow thong sells for about $20.
“Our company has a global reach,” Stanaszek says from her tiny office at the main crossroads in Koniakow’s sister village Istebna, a smattering of wooden houses lining the road that snakes along the mountain’s crest.
Yep. So much for the typical jokes about Poles. In a competitive environment, they adjust to changing desires and adapt to the times. As a descendent of Polish immigrants* to the US, fixing our reputation as dullards comes as a welcome change.
Of course, if they had it their way, the moralists in Koniakow would ensure the lace industry simply dies:
“It’s really not beautiful at all what they’re doing,” said Joanna Pielka, an elderly woman on her way to church in Istebna. “Do there have to be so many holes?”
Stanaszek says some older lace makers remain opposed. “There is a small group of people that is against the underwear, and they will remain that way,” she said.
Of course, they are fighting against this development even though it’s increasing their own sales of non-sexy lace:
Publicity about the thongs has benefited older lace makers too, says Tadeusz Ludzki, who owns a gift shop in Koniakow.
“Some older woman are happy too … because the traditional lace items are also selling better,” Ludzki says. “More tourists come and so more of the traditional items also sell.”
The undie-makers are undeterred, though. In a quote sure to make a libertarian’s heart all a’flutter:
“There’s no shame in doing this. Shame would be stealing,” she said. “This is work.”
Amen. Voluntary exchange of goods for money. Good for you.
(To support these brave women, you can find them at Koni-Art USA.)
* Warbiany is a Polish name, albeit heavily butchered by Ellis Island. I think nobody knows the exact original spelling, but discussions within my family have suggested it might be near to Vrbjanj. Either way, it has blessed me with a truly unique name. I know that I’m related to every Warbiany in the world. That’s a lot cooler than being named “Smith”!
March 12, 2007
Back when I was living in Lake Forest, California, right around the corner was a place called Club Aficionado (caution on the link, it doesn’t like Firefox. Jerks). I went in there one day to check them out, and realized it wasn’t only a cigar store, it was a private club. In the back, they had a full bar, tables, big-screen TV, etc. They were telling me all about the local big-wigs who were members. I thought about it, figured out how much it cost to be a member, and decided I could make much better use of the money.
Since then, I’ve visited another local cigar club called Red Cloud. My future brother-in-law is a member, so the last time I was in California we stopped off for a smoke and a couple games of chess in the lounge. At the time, I started wondering if a business like this would make sense here in Georgia. After all, I’m in a relatively affluent area where something like this might give big-wigs a chance to hobnob with each other.
But then I realized a crucial difference between Georgia and California. In Georgia, it’s not illegal to smoke in public establishments. Thus, for California to even have a cigar bar, they must create a private club in which to enclose it.
Now, as my brother-in-law pointed out, they’re not just selling a place to smoke a cigar. They’re selling a bit of exclusivity. After all, we were there on a Saturday night at 9 PM, and the place was only mildly crowded. If you’re like me, and you like to sit at a bar and have a drink without the constant smash of people running into you, reaching over you, and generally invading your personal space, it makes a lot of sense. And because it’s a paid membership, there is a vested interest in making sure that your needs are catered to. Which is nice.
But when I had thought initially about the idea of a place like this opening in Georgia, I thought only of the benefits of private membership. I hadn’t considered the fact that private membership would be a legal necessity for the place to even exist. Could a place like this live outside of the legal constructs that California imposed? After all, I might be willing to spend a few hundred bucks a year for a membership to a nice private cigar bar, if it was the only place I could smoke a cigar. But I wouldn’t be willing to do so if there were free cigar bars around, which is something that doesn’t exist in California.
What this brings up is a nice example of the Bootlegger and the Baptist (also see this excellent Econtalk podcast with Bruce). This economic theory described by Bruce Yandle suggests that while a southern Baptist might fight to stop Sunday sales of alcohol in order to assuage his conscience, there is an economic benefit to the bootlegger who fills the market niche of selling alcohol illegally on Sundays at a very high profit. The bootlegger and the baptist aren’t working together, but they exist in a mutually beneficial arrangement (hurting only the consumer).
I think this is the same situation. In California, the nanny statists have decided that private property is public, and thus they can stop us from smoking to protect us from ourselves. This, though, hasn’t stopped the desire of individuals to go out and have a drink and a cigar. So a secondary industry springs up, charging people membership fees in order to legitimize their right to have a cigar in “public”. The nanny statists are happy (well, not as happy as they would be if they stopped it completely). The owners of the cigar clubs are happy, because they’re charging several hundred of dollars a year (over a thousand for a storage locker for your smokes) in order for the privilege of smoking in their establishment. The only people hurt, as is usually the case, is the consumer, who ends up spending a lot of money or losing his freedom.
The cigar club that we went to was a very nice place. I got to sit in a nice, comfy, high-backed leather chair, and proceed to beat the pants off my brother-in-law in chess (twice, actually). All the while I was smoking a very fine cigar and drinking an Arrogant Bastard. All in all, it was quite an enjoyable hour as we killed time before heading to a poker game. In fact, it’s someplace that I might consider joining if I lived there and thought I’d use it enough. But let’s remember exactly why it exists: because government took away freedom.
Got this in an email this morning:
You guessed it ‘IN GOD WE TRUST’ IS GONE!!!
Who originally put ‘In God We Trust’ onto our currency?
My bet is that it was one of the Presidents on these coins.
All our U.S. Government has done is Dishonor them, and disgust me!!!
If ever there was a reason to boycott something, THIS IS IT!!!!
DO NOT ACCEPT THE NEW DOLLAR COINS AS CHANGE
Together we can force them out of circulation.
Please send to all on you mail list !!!
Ugh. I normally don’t give much attention to email forwards, but this one takes the cake. They show a picture of the front of a coin, casually leaving off the fact that the “In God We Trust” is printed on the edge. And, of course, they suggest that “one of these presidents” put the motto on the currency, leaving off that it was first done during the Civil War, so 15 presidents saw a currency without this, and that it wasn’t officially done until 1957, in the height of the fight against “godless communism”. But I guess the facts are but a distraction when you’re trying to whip people into a frenzy.
It’s made even worse when understanding that the US Mint recently mis-struck a quantity of coins that went through the QA process without these edge markings, so a portion of these coins were released without this motto or “E Pluribus Unum” appearing at all.
What does this mean? Well, not a whole lot, really. As with most email forwards, getting careless with the facts allows someone out there to sit around and laugh about how many people forwarded his lie. He’ll see who ends up eventually sending the message back to him, and what an uproar it might cause as millions of unthinking netizens have taken his email at face value.
And even more people will believe that there’s a sinister plot out there to remove religion from the public square.
I had to respond to this everyone on this email, to set the record straight. But as I’m known to do, I put a little spin on it with this quote from Napoleon.
Never ascribe to malice that which is adequately explained by incompetence.
Government is, and always has been, incompetent. Now, that’s not to say that the people within government are incompetent, only that the system itself produces worthless and counterproductive outcomes. Our government “forgets” to stamp the edge of coins and lets it through their QA process because there’s no incentive for them not to. Outside of a boycott, those coins are becoming collector’s items, and once the readers of this email forward see the properly-produced coins and read the edge, any potential boycott will evaporate.
If you’re going to boycott this currency due to some worries about a motto, you’re wasting your time. However, there is a very good reason to boycott the government. After all, would you normally patronize a business who has shown anywhere near as much of both incompetence and malice as the government does? Of course, it’s tough to boycott an entity with a gun to your head and its hand in your wallet…
March 7, 2007
I wrote a piece over at The Liberty Papers about the potential destruction/decline of the American economic empire.
Basically I look at it this way: The housing meltdown, coupled with a recession and the bursting of an enormous mortgage-backed securities and derivatives markets, will make our economy take a serious hit. That, coupled with the inability to cut taxes further, a government in major deficit, and a tight credit market, and the situation will be nearly impossible to get out of for a while. Further, our government will attempt to provide liquidity by printing dollars, inflating away the housing crunch, and inflating away a lot of actual wealth at the same time.
Further, with the news that Venezuela is looking to divest the dollar as a reserve currency (worried about inflation), and the implicit assumption that a quickly-inflating dollar will cause more countries to do the same, and America could hit a level of hyperinflation worse than we’ve ever known here.
Bad, bad stuff.
So I’m wondering how to protect myself against it, and potentially reap some profit off the situation. Right now, the wife and I have a decent modest sum (at least considering our age) in 401k and Roth IRA, currently in vanilla mutual funds (decent risk for hers, S&P-based index funds for mine). I’m looking at the idea of rolling my 401k over into an IRA, where I have more ability to place it in investments I can control.
I think right now seems like a great time to jump out of the broader stock market and get into commodities (probably precious metals) and energy. After all, we’ve done fairly well in our generic stock market holdings over the past few years. But the market seems to be dropping out of a period of stable growth (as was evidenced in last Tuesday’s 400-point drop in the Dow), and that will destroy leveraged positions. Precious metals should do very well in an inflationary environment, and I think energy will carry some stability in an economic downturn, as energy usage is somewhat inelastic.
I was thinking about taking my wife’s holdings (about 33% of our total position) and splitting it between gold/silver directly and gold/silver mining stocks. I was then thinking of taking my holdings, and putting about half of it into the energy sector, and the other half in foreign holdings (if I can get them somewhere I think will avoid following America’s economic meltdown).
For those of you who understand investing a little better than I do, what do you think?
January 5, 2007
I’ve never claimed to be an economics whiz, but I know a few of my readers are. So I was hoping someone would be able to tell me whether I’m right or wrong.
My understanding is that in the long run, inflation is pretty much a bad thing for everyone. However, in the short run, it can be beneficial to some people and detrimental to others. The conventional wisdom is that the first people to get their hands on that “new money” get the most benefit, because they get the buying power before the currency has weakened. This would seem to me to benefit [fixed-interest] borrowers, because borrowing money before interest rates have raised with inflation means that your soon-to-be-inflated wages will make it easier to pay off that dollar amount.
Conversely, the people who would be most hurt by inflation would be fixed-interest lenders and investors. Lenders lend money at a low interest rate, then find the inflation rate to quickly start approaching that interest rate, making their real rate of return flat or negative. The same occurs to investors. As inflation increases, you need to get higher and higher rates of return to keep your real rate of return high enough to make it worth investing.
So here’s where I sit. I bought my house with 0% down just under 2 years ago, when interest rates were low. By my understanding of fractional reserve lending, the “new money” is created in the lending process by banks, which means that I got the new money. A little bit of inflation will inflate my wages as well as the value of my house, but given the low interest rate, may actually reduce how heavy the home ownership burden rests on my shoulders. Since I’m young, I have started investing, but the amount I’m earning in interest isn’t really that much of an issue right now, so I’m not getting behind on investments. In fact, though, liquidating some investments to pay down variable rate (i.e. credit card debt) may actually be a very good decision in the long run.
By my understanding, it seems to me that I’m actually the beneficiary of some inflation right now. After a good 5 years or so, I’d love to see it come to a halt, but it seems like right now it actually helps me. Am I right?
December 7, 2006
Alternate Title: How cynicism ruins something sweet.
My wife got an email from her sister (with an admonition to “get on it”) the other day. She made me sit through the sappy forward, and afterwards, I had her forward it to me to teach a little lesson.
The lesson is subjective value. How much does it cost to have kids? From the below email (no clue where their number comes from), it’s about $160K. But the email goes on to tell about all the wonderful things you get for that money… All the experiences you have, that you won’t have without kids.
But there’s an implicit assumption in this email that you value those things more than money. Or, the more sinister reading is that you should value those things more than money, and if you don’t, you’re cold and heartless. But that’s the thing about value. We all value different things. My wife values european cars, even if they’re overpriced and prone to require repair. I don’t care so much about the badge, but I value economy and functionality, so I’ve got a nondescript truck with a manual transmission and without cruise control. And we’re both happy.
There are a lot of couples who value $160K, vacations every year, and the freedom to sit quietly together in front of the fire, sharing a bottle of wine. Other couples value smelly, loud, demanding rugrats who litter toys all over a house and get deep into things they should stay out of. My wife, for example, loves stinky babies who sit there and do nothing but eat, sleep, cry, and poop. I can do without those first few years, and look forward to the day when I can be the teacher and guide to help my kids navigate life, filling their heads with all the quirks and beliefs that make me such a misfit.
But no matter how many sappy email forwards you send, you’re probably not going to get someone to change their values. At best, you can set up a system (like classical liberalism) where people are free to fulfill their own values, as long as those values don’t conflict with another person’s rights. Values are subjective, and email forwards like this are only sappy to those who share the values.
(sappy email below the fold)
PS – I’m sure when they’re my stinky loud babies, I’ll love them. I’m not that heartless. Just heartless enough that I don’t love yours!
The Price of Raising Children
This is just too good not to pass on to all.
Something absolutely positive for a change. I have
repeatedly seen the breakdown of the cost of raising a
child, but this is the first time I have seen the
this way. It’s nice.
The government recently calculated the cost of
raising a child from birth to 18 and came up with
$160,140 for a middle income family. Talk about
sticker shock! That doesn’t even touch college
But $160,140 isn’t so bad if you break it down. It
* $8,896.66 a year
* $741.38 a month, or
* $171.08 a week
* That’s a mere $24.24 a day
* Just over a dollar an hour
Still, you might think the best financial advice is
don’t have children if you want to be “rich.”
Actually, it is just the opposite. What do you get for
* Naming rights. First, middle, and last!
* Glimpses of God every day.
* Giggles under the covers every night.
* More love than your heart can hold.
* Butterfly kisses and Velcro hugs.
* Endless wonder over rocks, ants, clouds, and warm
* A hand to hold, usually covered with jelly or
* A partner for blowing bubbles, flying kites.
* Someone to laugh yourself silly with, no matter what
the boss said or how your stocks performed that day.
For $160,140, you never have to grow up. You get to:
* carve pumpkins,
* play hide-and-seek,
* catch lightning bugs, and
* never stop believing in Santa Claus.
You have an excuse to:
* keep reading the Adventures of Piglet and Pooh
* watching Saturday morning cartoons
* going to Disney movies, and
* wishing on stars.
* You get to frame rainbows, hearts, and flowers under
refrigerator magnets and collect spray painted noodle
wreaths for Christmas, hand prints set in clay or
Mother’s Day, and cards with backward letters for
For $160,140, there is no greater bang for your buck.
You get to be a hero just for:
* retrieving a Frisbee off the garage roof
* taking the training wheels off a bike
* removing a splinter
* filling a wading pool
* coaxing a wad of gum out of bangs, and coaching a
sports team that never wins but always gets treated to
ice cream regardless
You get a front row seat to history to witness the:
* first step
* first word
* first bra
* first date
* first time behind the wheel
* and first love and first heartbreak
You get to be immortal. You get another branch added
to your family tree, and if you’re lucky, a long list
of limbs in your obituary called grandchildren and
great grandchildren. You get an education in
psychology, nursing, criminal justice, communication,
and human sexuality that no college can match.
In the eyes of a child, you rank right up there under
God. You have all the power to heal a boo-boo, scare
away the monsters under the bed, patch a broken heart,
police a slumber party, ground them forever, and love
them without limits, So . . one day they will, like
you, love without counting the cost. That is quite a
deal for the price!!!!!!!
Love and enjoy your children!
November 16, 2006
This news came across my inbox today. With sadness, I must pass it along:
Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of Presidents Nixon, Ford and Reagan, died Thursday. He was 94.
In more than a dozen books and in his column in Newsweek magazine, Friedman championed individual freedom in economics and politics.
His theories won him a Nobel Prize in economics in 1976.
Milton Friedman, in addition to his economic work, was a champion of individual freedom and bears his mark on the philosophy of the authors here. He is a central figure in the philosophy of libertarianism and free-market economics. He will be missed, but in that emotion, he will also be remembered.
As a blogger, I’m a regular reader of Catallarchy, where his grandson, Patri Friedman, posts. In addition, I regularly read Milton’s son David Friedman’s blog “Ideas”, and read his book, The Machinery of Freedom. Being involved in the world of blogging, reading their work (and sharing Patri’s affinity for poker), it makes something like this a little bit more personal. So I’d like to extend my condolences to both of them, and their entire family, for their loss.
Below The Beltway linked with Milton Friedman Dead At 94
November 8, 2006
Over the past few years, cable companies have been battling ESPN over the cost of carrying the ESPN channel. It’s long been part of the “standard” cable offerings, but ESPN, knowing their status as the “WorldWide Leader in Sports”, have steadily been raising their costs to the cable providers. It’s gotten to the point where cable providers have been threatening to make it a pay channel.
ESPN, though, rather than taking their foot off the throttle, have kept the pressure up. ESPN GamePlan was understandable, because they were offering pay content for games that wouldn’t normally ever be broadcast nationally. That works well for fans who have left their alma mater’s locale, like I have. For a cost of $99 per season, you can subscribe to ESPN GamePlan and get all the games you desire. But ESPN decided to take it to the next level. They created a new channel, ESPNU, which is dedicated to college sports. And they’ve used this to exert more pressure on cable providers.
You see, ESPN GamePlan games are often available through local affiliates. I have had situations where I’ve caught Purdue games on CSS (Comcast Sports South), which normally would have required a subscription to GamePlan. Those games are usually broadcast locally to the school on ESPN+ channels. But ESPNU is different. It’s a channel like ESPN or ESPN2, in that games broadcast on ESPNU are only available on ESPNU. And they want all cable providers to carry ESPNU. Many have chosen not to, at this point.
Games carried on ESPNU require me to head out to a sports bar to watch. It’s actually been a little tougher than normal, because one place I would normally go to watch games doesn’t even carry ESPNU. So it requires going to certain sports bars. Granted, since I’m a fan of Purdue, a mid-level Big Ten team, I understand that it’s going to be a little tough for me to always find my team on TV. But ESPN knows that if they really want to get cable providers signed up for ESPNU, they must piss off fans of bigger programs. So earlier this year, Ohio State played a conference game on ESPNU, much to the chagrin of Columbus residents. OSU fans seem to think it’s a god-given right to watch Buckeye football on basic cable. Last weekend, I believe (I could be mistaken) that the Michigan – Ball State game was on ESPNU. ESPN is trying very hard to use their “monopoly” power to ensure local cable providers will add ESPNU to their lineups.
I use the term “monopoly” in quotes for a reason. ESPN is the “WorldWide Leader in Sports” for a reason, and that’s because they’ve done it better and cheaper than anyone else for quite some time. But they’re not a state-enforced monopoly, they’re a natural monopoly. And they’re pissing off their customers. You know what the result of that will be? As I pointed out before the season started, the result will be the Big Ten Network. In a natural monopoly, competition will arise which forces the monopoly power to change its ways, or lose its monopoly status. The Big Ten Network is the first attempt at doing just that, offering the games not carried by ESPN, ESPN2, or a major network, and putting on its own channel that may carry less of a price tag than ESPNU.
This is a real-life example of the natural breakup of a natural monopoly. And I’m not going to guarantee it’s going to be a clean fight, and I’m not going to guarantee everything will come up roses. But I think it will work itself out, and it will do so without the power of government. Not that anyone will pick up on the lesson, but I feel like someone has to point it out.
The Liberty Papers»Blog Archive linked with ESPN Power Struggles
October 12, 2006
Sometimes I forget just how different the South is from the Pacific Northwest. I spent the early part of this week in Baltimore for a trade show, and the format of the show meant myself and the sales engineer spent a lot of time with no customers around. We ended up chatting for most of the day with the marketing guy from Oregon in the next booth, and he ended up joining us for dinner that evening, as he was without a car, and the hotel for the show was a long way from any halfway decent restaurants.
I should have known what I was getting into at lunch. We were sitting around talking about gas, alternative fuels, etc, and I heard a typical leftist talking point: “I think we should slap another dollar of taxes onto gasoline, so that we can encourage the use of alternative fuels and more fuel-efficient vehicles.” I held my tongue, because I was in a work setting. All I ended up saying was “Well, that’s certainly not what I’d do.” What I was thinking was that while I have an ideological argument against using tax policy to influence behavior, there is a much stronger argument. The costs of such a policy would far outweigh the benefits, in reduced economic growth, government mismanagement of the tax largesse, and higher costs to consumers to purchase these expensive technologies. That’s to be expected when you’re using a blunt-force government policy, i.e. using a chainsaw to remove an appendix when you really need a scalpel.
So that night, we ended up heading out for dinner. A bit of a boring meal for me, as he and my coworker, both divorced, were discussing strategies for meeting women on match.com. As a married guy, I sat back with my beer and meal during that portion.
But on the way home, we stopped at a gas station, and he followed up his earlier comment, explaining how “glad he was that Oregon didn’t have any self-serve gas pumps.” We got onto the topic, and he trotted out the first idea, that “it’s a safety issue.” I was not so interested in holding my tongue any more (might have been due to beer), and had to point out that we don’t really have much of a “safety” problem pumping gas in the rest of the country. Basically, that’s an argument from pure common sense, and he must not have had an answer, because he moved on.
He followed up with his concerns about how he didn’t want to have to get out of his car, and how if there was a line at a station, people could go to another one. He mentioned that he heard a radio show where a station owner called in and said it only cost him $0.03 per gallon to pay someone to pump the gas, and how great it was that they had it. Well, that was cause for another simple answer. “If it’s so great, and cheap, why do you need the government to enforce it?” Again, no real answer, so he moved on.
He followed that up with two arguments. First, that it’s great to have these jobs for high school and college kids, and how much of a benefit that is. Second, that he’d been to gas stations in California, where they’re dirty, dangerous, and you don’t see that in places where they have more people on staff. Well, we had just arrived back at the hotel, so I couldn’t take the time to refute him. Of course it’s great for the kids who get the job, but how great is it for those of us paying for it? And while he might have been to some stations in California, I can point to quite a few counter-examples. Perhaps he’s seen these sorts of dirty, dangerous stations in Compton, but I didn’t see too many in Irvine.
But as I don’t spend too much time with people of his ideological stripe these days, it was a bit instructive. I learned that a leftist is completely willing to use the power of government to make everyone bow to his wishes. And that if it’s in his interest, he’ll latch onto easily-refutable, feel-good arguments that hold no weight under scrutiny. Of course, he’s more than entitled to his opinion, and it’s possible he thinks my arguments against him hold no merit. But there’s a big difference. He wants to use the force of government to make me pay for and conform to his wishes. I ask for nothing but freedom. But I’ll bet he thinks he’s the one with the moral high ground.
September 6, 2006
It must appear so, because they’ve been nice enough to drop gas prices. That’s the only explanation I have for coming back from Hawaii to see gas prices under $2.50 a gallon here in GA.
I guess those guys in their wood-paneled conference room where they set the nation’s gas prices have decided that they’ve been making enough profit lately, and that while they were gouging us before, they’ve decided to change their ways and play nicely.
Either that, or we’ve had news of potential increases in supply. But the laws of supply and demand are just for economists, I prefer to blame oil execs.
August 4, 2006
They might, if Rep. Steve Davis has his way:
As some of you may know that this past year I introduced the Georgia Fair Tax, HB 1667, on the last day of the session. I actually had the bill drafted prior to the session and was seeking a fiscal note, however I did not meet the deadline to submit tax legislation to the Department of Audits (freshmen learning). I still tried to get the fiscal note during the session but to no available, but introduced the bill anyway on the last day to open discussion during the off season.
Never the less, I had some time to review it and some time to research other aspects including the impact on the gas tax. I have made some minor changes to the bill and have submitted the bill to the Department of Audits, many months before the November deadline. You can view the new draft legislation here. I have received confirmation(view it here and here) of the request and they are preparing the analysis and fiscal note. I would like to point out this is a piece of draft legislation that will be adjusted during the legislative process and I encourage any and all recommendations from my constituents as well as my colleagues in the General Assembly.
Perhaps if it works extremely well here, the rest of the country may actually take notice. Georgia is already a job-friendly state due to the relatively low cost of living and educated population in the Atlanta area, and this will only help.
Hat Tip: Jason Pye
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