From the category archives:

Economics

Fighting for Food-Truck Freedom

by Jacob Huebert on August 18, 2012
in Economics, Law, U.S. Constitution

My colleagues and I at the Liberty Justice Center recently filed a lawsuit against the City of Evanston, Illinois to challenge the city’s food-truck law, which says that you can only operate a food truck in Evanston if you also own a brick-and-mortar restaurant there.  Obviously, that rule serves just one purpose: to protect restaurants from competition.

Watch the video about our client, Beavers Coffee + Donuts, and the case:

You can also read about the case in the Chicago Tribune and the Chicago Sun-Times. And here’s the Complaint filed in the Cook County Circuit Court.



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Competition or Cartel Control?

by Jacob Huebert on March 3, 2012
in Economics, Law

For the past six months, I have been working for the Liberty Justice Center, a new public-interest litigation center dedicated to advancing economic liberty. Here’s a short video on our first case, brought on behalf of a Bloomington, Illinois woman who was stopped from opening a vehicle-for-hire business based on nothing more than a city bureaucrat’s arbitrary command. The video tells our client’s story and explains why the licensing scheme we’re challenging — which resembles many others across the country — violates due process and makes no economic sense.

You can also read my article on the case from the Daily Caller and listen to a radio interview I did on the case with liberty-friendly Bloomington radio host Robert Rees.

Needless to say, the opinions I express on this website are my own and not necessarily those of any organization.



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An email from a D.C.-based tea party outfit urges me to sign a petition “to fix the USPS.”

Their proposed solution to the U.S. Postal Service’s $8 billion deficit is Congressman Darrell Issa’s Postal Reform Act, which would reduce mail delivery to five days a week, allow advertising at post offices and on postal vehicles, and reduce postal workers’ benefits.

If the tea party movement is as radically anti-government as some make it out to be, this seems like an odd piece of legislation to promote. It merely tweaks the way the postal service functions; it does nothing to address the real problem, which is that the USPS is a government-run monopoly. If the bill passes, some tax dollars might be saved in the very short term, but the USPS will be just as badly managed as it always has been, and it will continue to rack up huge deficits. Take away one way for it to lose money, and it will surely find others.

At best, this bill seems to reflect the idea that government could function well if only it were “run like a business” — just cut some expenses, increase some revenue, and all could be well. But as Ludwig von Mises explained in Bureaucracy, any attempt to run a governmental organization as though it were a private business will fail because the organization still will not be able to engage in economic calculation and still will not be able to operate on a meaningful profit-and-loss basis as private businesses do. Postal workers and managers will still be focused on how to comply with bureaucratic rules, not on how to make money.

The only “reform” that can “fix” this is genuine privatization — that is, taking away the postal service’s monopoly privileges and subsidies and forcing it to either make a profit or go out of business.

I suspect that this bill’s promoters have little to do with the grassroots tea party; the finer details of postal policy are not the sort of thing that inspires a mass movement. I hope tea partiers who care about liberty — and I know there are many — will do as their figurehead Michelle Bachmann claims to do and read Mises, and then see why it’s pointless to waste time promoting legislation like this that doesn’t address the fundamental problems that have given rise to the big government they say they dislike so much.

Cross-posted at the Mises Economics Blog.



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Freakonomics Minus Economics

by Jacob Huebert on April 7, 2011
in Economics

I listened to this “Freakonomics” podcast on fire safety, and not only does it have nothing to do with economics, it would seem that the people behind it are entirely unfamiliar with the economic way of thinking.

The podcast starts by telling us that fire deaths decreased by about 90% over the course of the twentieth century. These days, there are only about 3,000 deaths from fire in the U.S. each year. Great.

Then they put on a government fire-safety expert who tells us that’s not nearly good enough — he wants that number down to zero. Toward that end, he thinks we should all be required to have sprinkler systems installed in our homes, as California now requires for new houses.

This had me really ready for a dose of sound economics. I thought they would then put on an economist to explain why the optimal number of fire deaths is not zero because that would require a ridiculous expenditure of resources, if it’s even possible. I thought the show would explain that at some point, the marginal dollar spent on fire safety isn’t worth it.

[click to continue…]



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What’s Wrong With Free T-Shirts?

by Jacob Huebert on February 17, 2011
in Economics

Before each year’s Super Bowl, t-shirt makers print thousands of shirts that announce one team as the winner and thousands of shirts that announce the other team as the winner.  That way, they can be ready to sell the actual winner’s championship t-shirts as soon as the game is over.   The loser’s t-shirts aren’t destroyed but are instead donated to charity and shipped off to poor countries to be given away.  So although the Green Bay Packers beat the Pittsburgh Steelers in this year’s Super Bowl, there will soon be thousands of Africans wearing shirts celebrating Pittsburgh’s fictional victory.

At economist William Easterly’s AidWatch blog, co-blogger Laura Freschi says the shipment of all those shirts to poor countries is a bad thing. She lists three reasons:

1.  It’s not needed. Seriously, neither the developing world as a whole nor the specific recipient countries named by World Vision suffer an undersupply of T-shirts.

2.  It’s not cost effective. The cost of collecting, sorting, shipping and distributing bulky, low-value items like a bunch of T-shirts does not justify the (very questionable) benefit. And don’t forget to include the opportunity cost, the lost chance to allocate those same, considerable resources to provide something better, like clean water or medicine. (A World Vision PR rep told the New York times in 2007: “Where these items go, the people don’t have electricity or running water.”

3.  It can perpetuate local community’s dependence on free handouts and stifle home-grown economic initiatives, not to mention putting out of business local shirt sellers.

Though I appreciate AidWatch’s concern for the world’s poor — and especially its criticism of the U.S. government’s destructive foreign-aid policies — reasons #1 and #3 on this list are premised upon economic fallacies and therefore aren’t good reasons to stop giving the shirts away.

The first reason is bad because there is always an “undersupply” of goods that are free, assuming people will willingly take more of them. Presumably the people who receive these t-shirts would otherwise have to pay for their shirts and appreciate getting free ones. After all, even in the U.S., there are cheap t-shirts everywhere, and many people are still happy to get one for free.

The third reason is even worse because it mirrors common arguments against “cheap imports” and free trade. If t-shirts become cheap in these countries and no longer need to be produced and sold by locals, presumably those locals can direct their efforts toward the production and sale of something else. So now people in those countries will be able to have the free t-shirts plus additional things that they wouldn’t otherwise have. As free-market economists often point out, the purpose of an economy is to create wealth, not to create jobs for its own sake or to preserve particular jobs — so the free shirts are good for the economy because they increase the overall quantity of goods.

That leaves reason #2, which at least isn’t obviously fallacious. The idea here apparently is that if you want to help poor people, water and medicine are far more important than shirts. That seems reasonable enough, though it’s not at all obvious that resources currently spent on distributing shirts would otherwise be spent on distributing water and medicine. But if that is the case, then that’s the argument AidWatch should focus on — and it should scrap arguments that depend on and perpetuate the economic ignorance that plagues both the first world and the third world.



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The mainstream media is reporting that low consumer credit scores are hurting the economic recovery.

Today I appeared on CNBC’s Street Signs to argue the opposite view: that lower credit scores, and thus less consumer debt, are a good thing and the only way to real long-term prosperity. Have the “experts” learned nothing from our recent experience?




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