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on three more from Planet Money
The crew at Planet Money can get so close sometimes, I feel like I could just tap them into a broader assessment of some of the issues raised by their stories, and a greater appreciation for the laissez faire perspective of classical liberalism. Here are some taps that struck me on three episodes I listened to during yesterday's walk ...
Tires, Taxes and the Grizz (episode 467):
This story recounts the tale of protectionist measures on behalf of an alliance of automobile tire factory workers and owners, who joined forces to compel every other American to pay higher prices for their products, by means of getting politicians to slap high tarriffs on tire imports from China. The reporting describes how the known and quantifiable costs levied on Americans for this have been 20 times the benefits accrued to those workers and factory owners, on the order of billions of dollars that consumers have to pay for keeping their cars safe on the road.
While those costs are generally dispersed, the story begins with a picture of how the costs can be concentrated on not very affluent people, people like the rest of us who face 40% higher tire prices but choose a "lease" arrangement because they can't scrape together enough at one time to pay the full price for tires for their vehicles. I would like to see the Planet Money team collect up the aggregate of costs for all the tariffs that Americans are forced to pay out to accommodate the politically powerful interests who support such measures. Identifying those beneficiaries and relating them to individuals who have concentrated costs would be a great theme for a series of podcasts.
Kid Rock versus the scalpers (episode 468):
Evidently, Kid Rock is reasonably famous in pop music circles, and he has some novel marketing ideas for the business of providing live musical entertainment to large numbers of people. What I liked about this story is how it illustrates a case of the non-monetary motivations that enter in to our social behavior, even when there are also clear monetary components in those interactions. Kid Rock has a reputation that he has (seemingly) sincerely cultured of being one of the masses, and his fans seem to like that part of his public persona.
But he is also trying to make a living providing entertainment to those fans, and has started to think through the incentives that drive scalping of tickets for music and other entertainments. Limited supply of performances by particularly well known and liked entertainers leads that demand to push up the prices for good seats, but unplanned consequences arise if Kid Rock and his fellow musicians and other famous entertainers don't price the original tickets at something close to the market clearing level. In that situation there develops a secondary market that is serviced by people who are perjoratively referred to as scalpers. But Kid Rock, and perhaps others, have been working out how to thread this needle, keeping the mass of ticket prices within relatively easy reach of large numbers of people, keeping reserved a premium set collection that can be serviced at the market clearing (higher) prices, and increasing the number of shows in high demand locations.
All this to the effect of sustaining and maintaining Kid Rock's reputation of the masses, and a concrete example of how the monetary and non-monetary aspects of our lives intersect in untold numerous ways. I call this a clear case of economics, and think the Planet Money team could point this out more clearly in the course of such stories.
Rhino horns and clean water (episode 469):
This episode contains two distinct stories, related by their setting in Africa, a continent beset with corruption and war, in no small measure aggravated by a century of colonial oppression from the 18th and into the 20th centuries.
Rhino horns are subject to a growing black market, driven in part by what seems to be a unscientific belief that the powdered form is a good hangover remedy, but caused by the fact that it is illegal to make a market in that commodity. The predictable (but somehow always unforeseen) result has been the indiscriminate slaughter of rhinoceros across the African savannah, all to obtain that small horn that so characteristically projects from the head of those animals. There may be hope in this situation, inasmuch as there are growing efforts in some African circles to abandon the ban and allow people to farm rhinoceros, thereby increasing the general supply, enabling a formal market, and eliminating the criminal element that dominates the current horn scene. The Planet Money treatment of the wrap-up, however, left something to be desired, when it projects the possible consequences of this change in discrete either-or terms - either we will have rhinoceros farms or we will continue to have nature preserves where rhinos run wild. I call this a false dichotomy because it ignores the fact that there is still demand on the part of tourists to see those huge animals running wild and drinking up the local watering hole; rhino farms and nature preserves can coexist and benefit from each other, at least insomuch as a larger rhino supply arising from farm operations will diminish the drive for poaching the parks.
Clean water is a crucial concerns for much of the third world, and it's lack is something for which the blame lays at the feet of policy makers and politicians worldwide (foreign aid being how we take money from poor people in rich countries and give it to rich people in poor countries). But the main point is one of poverty, and when we compare the situation there to that which we enjoy in the States it is easy to see that the cause is for bad water in parts of Africa is not a technological one - the technology of water treatment and supply is well known and accessible worldwide. The reason Americans enjoy plentiful supplies of water (to the point of wasting it) is that our culture has grown wealthy enough that we can devote the necessary material and other resources necessary to develop that infrastructure. The water problem in Africa is symptomatic of poverty, and won't be truly solved until the broad standard of living across those populations has grown sufficiently to satisfy and grow beyond that required for their higher and more immediate needs of sustenance.