Price gouging saves lives

Given the hurricanes that Houston just suffered through, and Miami is currently preparing for, the subject of “price gouging” has naturally arisen.

First of all, the phrase itself indicates more of a moral reaction to, rather than a value-free description of, what happens to prices of goods in the midst of a calamity. It sounds as if someone is manipulating prices so as to inappropriately taking advantage of people who urgently need particular goods at a dire time of need.

However, “price gouging” is the best way to allocate scarce resources under extreme circumstances. High prices encourage more supplies to come in, which will eventually being prices down. Plus with market prices acting unimpeded, people need to decide how much they actually need, so it discourages hoarding. In fact, a very strong argument can be made that allowing market prices to work actually saves lives.

To learn more about how “price gouging” is actually a necessity, please see the following resources:

Is there only one way for wages to go up?

While I have followed Vox Day for several years, and respect him and his work, a recent post of his shows that he has an incomplete understanding of economics.

Putting together the post’s title and its beginning, he argues thusly:

The only way to raise wages [i]s to reduce the supply of labor. American workers can only benefit from the elimination of labor visas, increased limits on immigration, and stepped-up deportation, as evidenced by the response of Maine businesses to a “shortage” of H-2B visas.

Before addressing the article to which Day refers, I want to address the categorical manner in which he says wages can be raised.

Why do wages go up?

I agree that the methods Day cites will raise wages for American workers. For example, there has been increasing evidence that American companies have abused foreign worker visa processes to bring in lower-cost workers, at the expense of qualified yet higher-cost American workers.

However, I would like to think Day recognizes that this is not the only way to raise worker wages. In fact, through free markets, capital accumulation and higher wages go hand in hand. As Ludwig von Mises explains in Human Action:

In the capitalist society there prevails a tendency toward a steady increase in the per capita quota of capital invested. The accumulation of capital soars above the increase in population figures. Consequently the marginal productivity of labor, wage rates, and the wage earners’ standard of living tend to rise continually. But this improvement in well-being is not the manifestation of the operation of an inevitable law of human evolution; it is a tendency resulting from the interplay of forces that can freely produce their effects only under capitalism.

In other words, in the near term, it certainly makes sense that restricting the supply of labor will lead to its price going up. However, as time passes, there is a symbiotic relationship between capital accumulation, labor productivity, and wage rates. The less interference to that relationship, the better for everyone involved.

Now that I’ve discussed how wage rates go up, I turn to the article to which Day is referring.

Maine businesses scramble for seasonal workers

Day points to a Daily Caller report, indicating that Maine businesses are scrambling to find local workers because of a shortage in foreign guest workers.

Businesses in Bar Harbor, Maine are turning to locals to make up for a shortage of foreign guest workers that normally fill summer jobs in the bustling seaside resort town.

Because the H-2B visa program has already reached its annual quota, Bar Harbor’s hotels, restaurants and shops can’t bring in any more foreign workers for the rest of the busy summer tourist season. Like hundreds of similar coastal resort towns, Bar Harbor has for many years depended on the H-2B visas for temporary workers. The program allows non-agricultural companies to bring in foreign labor if they are unable to find suitable employees domestically.

Now they are coming up with creative ways to attract local labor, reports the Bangor Daily News.

The Bar Harbor Chamber of Commerce will hold a job fair Saturday in an effort to recruit significant numbers of workers from the region. Just about every kind of business in the town is looking for help, says chamber executive director Martha Searchfield.

“All types of businesses — retail, restaurants, the tour boats, all the trips, everything. All types of workers are needed,” she told the Daily News.

The shortage is so acute that companies are sweetening incentives for local workers. Searchfield says some businesses are offering flexible schedules that might appeal to older workers who might be interested in working only a day or two each week. And other companies have gone so far as to offer higher wages to entice locals.

Day, of course, applauds the situation.

That’s not a problem, that’s an indication of a solution. As long as tens of millions of Americans remain unemployed, there is absolutely zero net benefit to the economy or to American workers from immigration. All immigration accomplishes is to increase income inequality to the advantage of very large US corporations and the financial class that caters to them.

While I do not necessarily disagree with this, I also think that Day’s analysis is incomplete.

In addition to immigration, another key reason for high unemployment has been the disastrous drive across the country to raise the minimum wage.

Fortunately for Maine residents, its legislature developed some common sense and withdrew a previously-passed increase:

Last November, the Maine State Legislature voted to raise the minimum wage for restaurant servers. Then in mid-June, they voted to lower it back down.

And lots of Maine’s restaurant workers were thrilled.

The minimum wage for tipped workers in Maine is half that of the state’s regular minimum wage ($9). It’s called the “tip credit” rule, as it allows employers to take a credit of up to 50 percent from their employees’ wages, because servers will generally make that money back (and hopefully more) in tips. If tips and wages, together, don’t equal the state’s minimum wage, employers are required to make up the difference.

State Senator James Dill, a Democrat who initially voted to raise wages, told the Washington Post that after the Nov. referendum passed, he received “hundreds” of calls and emails from servers who were worried about their livelihood.

As a result, Dill threw his support behind a Republican measure to return the “tip credit” rule. After passing through the Senate on June 7, the bill was brought before the House on June 13, where it passed with a vote of 110-37.

Maine Governor Paul LePage signed the bill into law last week. It will go into effect 90 days after Legislature adjourned, reports the Bangor Daily News.

Restaurant workers wanted to retract the increase for two reasons.

[S]ervers were worried about the ramifications of the new laws for two reasons: first, that it would force employers to raise prices on their menu items, which could affect their current tips; and second, and perhaps more importantly, that employers might be forced to cut servers’ shifts as a result.

Preventing the minimum wage from rising encourages businesses to hire unskilled workers. Combined with competing with fewer foreign workers, lower-skilled Maine residents should have had a better shot at finding a job this summer:

Firms faced with minimum wage laws often substitute skilled for unskilled labor. In a report for the Show-Me Institute, labor economist David Neumark offers an illustrative example: Suppose that a job can be done by either three unskilled workers or two skilled workers. If the unskilled wage is $5 per hour and the skilled wage is $8 per hour, the firm will use unskilled labor and produce the output at a cost of $15. However, if we impose a minimum wage to $6 per hour, the firm will instead use two skilled workers and produce for $16 as opposed to the $18 cost of using unskilled workers. In the “official data” this shows up as a small job loss — in this case, only one job — but we see an increase in average wages to eight dollars per hour in spite of the fact that the least skilled workers are now unemployed.

This summer, it’s looking good for Maine residents who were otherwise prevented from working. Immigration abuse and a lower minimum wage is allowing them to find jobs.

In the long run, however, an unhampered free market allows capital accumulation and higher wages to coexist.

 

Should looters of ancient artifacts go to jail?

Archeology

Hershel Shanks, editor of the Biblical Archeology Review, poses a hypothetical scenario that raises pressing questions about the current state of the antiquities market:

Imagine a young Bedouin looter exploring one of the hundreds of complicated and dangerous caves in the Judean Desert by the Dead Sea. He discovers an extraordinary ancient gold artifact with a Hebrew inscription referring to King Solomon.

One of the Israeli antiquities dealers who sees it reports it to the authorities, who quickly trace it to the young Bedouin and seize it from him. It is displayed in the Israel Museum, which has to remain open until midnight to accommodate the crowds. It is an international sensation. The New York Times sends two of its most knowledgeable reporters to write the story.

The young Bedouin looter is arrested by the authorities and tried for looting and sentenced to two years in prison. The gold inscription soon comes to be regarded as Israel’s most valuable ancient inscription.

This of course is a thoroughly fictional account. But it does bear some resemblances to a real occurrence—something that is reported in the Archaeological Views column of this very issue of BAR.

What makes me feel the need to explore the situation is the fact that the looters alert the archaeologists to the existence of the other valuable finds in the cave and get sent to jail for it, while the archaeologists learn from the looters where to dig.

There are thousands of caves in the Judean Desert. They are large and twisting and dangerous. They have produced archaeological riches beyond avarice. Yet for some reason they cannot all be located and explored. They are often accidentally explored—sometimes by looters. When the looters are caught, they are jailed—instead of congratulated—for the find. Somehow it doesn’t seem right. But somehow I am pretty sure I am wrong. Maybe an archaeologist can explain why to me.

The primary problem Shanks is identifying relates to property. As I have mentioned in an earlier blog post, many countries with sizable yet undiscovered archeological artifacts have effectively nationalized their ownership to the state. While archeologists can receive permission from a government to perform digs, the price signals that could indicate their relative significance have been effectively elminated. As a result, the state treats knowledgeable locals as criminals, while their “crimes” provide clues to archeologists on where to dig next.

What both antiquities-rich nations, and the archeologists that work there, currently do not recognize is there would be a wide range of benefits if people were able to own land that held artifacts. Through the price system, property owners would be incentivized to hold and develop land believed to hold valuable objects. Archeologists could work peacefully with these landowners to obtain rights to perform digs on their land that could lead to obtaining valuable historical information. Finally, the local people would benefit because they could help landowners and archeologists with valuable services.

Unfortunately, both governments and scientists would have to be open to learn about how markets work before they would be open to such liberalization.

Nevertheless, one can always hope, right?

 

 

U of Washington study shows the minimum wage isn’t working in Seattle

For decades, liberals have been under the illusion that raising the minimum wage magically raises incomes for poor people. Unfortunately, unless one slept through Econ 101, one cannot help but recognize that raising the minimum wage helps only a portion of the working poor, and keeps the marginally productive out of the workforce.

Seattle was one of the first cities who noisily proclaimed the dawn of a new era for the working poor by gradually raising the minimum wage in that city to $15 an hour. However, a new study by University of Washington economists shows statistically what ought to be obvious logically.

When Seattle officials voted three years ago to incrementally boost the city’s minimum wage up to $15 an hour, they’d hoped to improve the lives of low-income workers. Yet according to a major new study that could force economists to reassess past research on the issue, the hike has had the opposite effect.

The city is gradually increasing the hourly minimum to $15 over several years. Already, though, some employers have not been able to afford the increased minimums. They’ve cut their payrolls, putting off new hiring, reducing hours or letting their workers go, the study found.

The costs to low-wage workers in Seattle outweighed the benefits by a ratio of three to one, according to the study, conducted by a group of economists at the University of Washington who were commissioned by the city. The study, published as a working paper Monday by the National Bureau of Economic Research, has not yet been peer reviewed.

On the whole, the study estimates, the average low-wage worker in the city lost $125 a month because of the hike in the minimum.

The reaction among liberal “economists” (a phrase that I’ll address later) has been swift, primarily because past statistical studies have shown presumably the positive impact from raising the minimum wage.

The paper’s conclusions contradict years of research on the minimum wage. Many past studies, by contrast, have found that the benefits of increases for low-wage workers exceed the costs in terms of reduced employment — often by a factor of four or five to one.

“This strikes me as a study that is likely to influence people,” said David Autor, an economist at the Massachusetts Institute of Technology who was not involved in the research. He called the work “very credible” and “sufficiently compelling in its design and statistical power that it can change minds.”

Yet the study will not put an end to the dispute. Experts cautioned that the effects of the minimum wage may vary according to the industries dominant in the cities where they are implemented along with overall economic conditions in the country as a whole.

And critics of the research pointed out what they saw as serious shortcomings. In particular, to avoid confusing establishments that were subject to the minimum with those that were not, the authors did not include large employers with locations both inside and outside of Seattle in their calculations. Skeptics argued that omission could explain the unusual results.

The article clearly demonstrates how economics is currently practiced. Essentially, economists are no more than statisticians who use data to back up preferable policy objectives. They do not explain how people create and exchange scarce resources so much as come up with equations and relationships that rationalize what they think government policy ought to be.

In comparison, Austrian School economists seek to understand how people act in the as value-free a manner as possible. While they may have their own opinions about what government policy ought to be, the Austrian School seeks to understand how people actually behave. It is through this process that one can understand, without the need of economic data, the harmful effects raising the minimum wage would have on the working poor.

While it is encouraging to see a statistical study come to the same conclusion, do not expect liberal economists to change their mind on the matter anytime soon.

California Lieutenant Governor concerned about “job-killing robots”

The beauty about being a liberal politician in a liberal state is one gets countless opportunities to be concerned about the negative consequences of previously-implemented policies.

For example, an inevitable outcome of California’s minimum wage law, under which the wage will rise to $15 and hour by 2022, is businesses dependent on manual labor will seek to automate those tasks as much as possible. However, because the memories of liberals are those of gnats, politicians can point to the symptom and call for ACTION against such a pernicious trend.

In the case of the minimum wage, Brietbart points to a Guardian article that reports Lieutenant Governor Gavin Newsom’s concern that the increased use of technology is killing jobs:

The graduating computer science students at the University of California at Berkeley had just finished chuckling at a joke about fleets of “Google buses, Facebook shuttles and Uber-copters” lining up to whisk them them to elite jobs in Silicon Valley. The commencement ceremony for a cohort of students who, one professor confided, were worth around $25bn was a feel-good affair.

Until, that is, Gavin Newsom took to the lectern and burst the bubble.

The smooth-talking Democrat, and frontrunner to win California’s gubernatorial race next year, warned the students that the “plumbing of the world is radically changing”. The tech industry that would make them rich, Newsom declared, was also rendering millions of other people’s jobs obsolete and fueling enormous disparities in wealth. “Your job is to exercise your moral authority,” he said. “It is to do the kinds of things in life that can’t be downloaded.”

No, Lieutenant Governor, their job is not to exercise moral authority; their job is to find a job.

Honestly, it takes a tremendous amount of guile for a grown man to whine to a bunch of smart kids that their career paths may lead to the next political crisis. That is especially the case because his party’s policies have created the very conditions for their future success!

Don’t believe me? One of the companies that irritates Newsom to no end designs robots … for the fast food industry.

[Newsom] frequently complains about Momentum Machines, a secretive San Francisco startup promising to transform the fast-food industry with robotic technology. The ambition, according to the company’s founder, is to “completely obviate” human workers.

“There’s an empathy gap,” Newsom said. “I really feel intensely that the tech community needs to begin not just to solve these business problems but to begin to solve societal problems with the same kind of disruptive energy that they put behind developing the latest app.”

So let me get this straight. Out of empathy, California passes a law that keeps more and more low-skilled people out of the work force. Businesses look to automating previously affordable manual work just to stay in business. So businesses lack empathy because they are trying to solve a problem government policy created.

If this is what it means to show empathy, keep it far, far, away from me!

So what is Newsom’s “solution” to the “empathy gap”?

Serious thinker that he is, he doesn’t know. However, one possibility is what socialists call “universal basic income”.

He is “not opposed” to universal basic income, an idea popular among Silicon Valley utopians that would see all citizens receive some kind of regular and unconditional payment, and is interested in a proposal from Bill Gates to tax companies when they replace humans with robots.

But Newsom said he was not ready to endorse either policy. Adopting politician-speak, he said his team was “starting to lean in to create the tenor of a policy approach” that will involve rethinking the education system and massive investment in apprenticeships.

Then he reverted to a more frank response. “I’m struggling to figure it out,” he said. “So I don’t have the damn answer.

May I offer a suggestion, Lieutenant Governor?

Perhaps you can look at the state’s minimum wage law for a clue about what to do next?

Homelessness in Los Angeles County skyrockets

Mac Slavo reports through ZeroHedge that the number of homeless people in Los Angeles County has exploded:

The number of homeless people in Los Angeles is skyrocketing. In just one year, the figures revealed that the homeless population in the city grew 20% while the numbers for the wider Los Angeles County were even higher at 23%.

Given the fact that Democrats run the county, the solution they have provided is to throw money at the problem:

The county needs to build more than 550,000 affordable rental homes for low-income households, the [Los Angeles Homeless Services Authority] says. Los Angeles recently approved new measures to raise $1.2 billion in bonds to build 10,000 new units of housing for homeless people. There are also plans to raise about $3.5 billion over 10 years to pay for other homelessness projects.

This is in addition to the $100 million the Los Angeles City Council has pledged to tackle homelessness.

Unfortunately, none of these measures will alleviate homelessness in the county, primarily because they don’t address the the high cost of living in LA.

One primary reason living in LA is so expensive is because lots of people live here. However, another reason is all of the tax and regulatory burdens that exist in the county.

The county’s sales tax is 8.75%. Between the high taxes, the increasing minimum wage, and onerous zoning and building restrictions, it is becoming more challenging for poor people to find jobs and affordable housing, let alone keep them.

U.S. monetary policy is also a key factor why living in LA keeps getting more expensive over time. The Federal Reserve system expands the money supply by printing money (albeit electronically nowadays) out of thin air. Those closest to the monetary spigot benefit the most from money creation. Those farthest away from it, such as the working poor, suffer the most: as prices keep going up, their low and fixed incomes pay for less and less.

If county Democrats were truly concerned about the poor in general and the homeless in particular, they would reduce taxes and regulatory burdens to create a more vibrant job market, and make it more attractive for investors to build housing that people could afford. They would also learn how monetary policy hurts the poor and work to stop unnecessary money creation.

Unfortunately, none of this is happening. Unless and until county leaders recognize the errors of their ways, and understand how monetary policy is hurting the poor, all one can expect regarding homelessness in Los Angeles County is more of the same.

The Praxeology of Coercion

In the Winter 2016 issue of The Quarterly Journal of Austrian Economics, Rahim Taghizadegan and Marc-Felix Otto discuss how a “violence cycle theory” can be built upon the study of how people obtain goods through coercion.

ABSTRACT: As the first application of the praxeological discipline of “Cratics” (Taghizadegan and Otto, 2015), a theory of the supply and demand of bads is developed. On this foundation, a violence cycle theory will be introduced in analogy to the praxeological business cycle theory (according to Ludwig von Mises). Central to this approach are the subjective perceptions of threats and possible bluffs regarding the backing of those threats. Such a violence cycle theory can explain the stability of structures of violence and reveal new interpretations of the “long peace” hypothesis.

Comparing violence cycle theory to business cycle theory

Taghizadegan and Otto make an interesting parallel Austrian business cycle theory and their violence cycle theory.

Austrian business cyle theory

According to Austrian economics, an economy is best coordinated when its participants are able to freely buy and sell goods to whomever they want. That way, the goods that are available, and the prices at which they’re offered, meet the most urgently-felt needs of consumers. That includes the availability of money, the price of which is the interest rate. When market participants are unencumbered, there is sound coordination not only between buyers and sellers, but also between present consumption and anticipated future consumption.

However, according to ABCT, when interest rates are brought down (through whatever means) to encourage lending, a tension arises between present consumption and anticipated future consumption. Capital projects that create the business cycle boom are built on the assumption that future consumption will support its financing, when that isn’t the case. When it becomes clear that those projects will not become profitable, the bust occurs, resulting in a recession, which is necessary to bring the economy back into proper alignment.

Violence cycle theory

In an earlier paper, Taghizadegan and Otto developed the praxeological discipline of “cratics”, which is a theory of the supply and demand of “bads”. A bad is a negative outcome that a person would experience if it occured. Person X would threaten person Y with bad outcome B unless Y provides X with good G instead. Rather than an economic exchange, through which both parties would benefit, it would be a “cratic” (or in Franz Oppenheimer’s framework, political) exchange, though which the negative utility of giving up good G is less than the negative utility of experiencing bad B.

One consequence of the political “transaction”, should Y believe that X is willing to carry out the threat, is that person Y feels aggreived because of the harm X inflicted upon him. However, if X continues to feel comfortable threatening Y to receive more goods from him, that sense of feeling persecuted will grow.

Absent such persecution, if people were able to interact with other on a voluntary basis, there wouldn’t be a developed sense of injustice among a certain group of people. While one person may have a claim against another person because of a particular wrong, freely developed dispute resolution procedures should allow those specific people to address that issue.

However, if a class of people were capable of extracting resources from the rest of the population by invoking a constant threat of punishment for noncompliance, this provides the conditions for developing a “violence cycle”. On the surface, there is very little overt violence in the community. However, as time passes, the population’s trust in its overlords diminishes. Once it evaporates, there is a significant risk of a violent backlash.

Today’s cratic “booms”

If we applied this line of reasoning to today’s political environment, one can see at least two cratic “booms”: the pervasive leftism in Western governments, and American foreign policy.

We can also see the beginnings of backlashes against both booms. With regard to Western leftism, Brexit, the election of Trump, and central Europe’s pushback against Europe receiving enormous waves of migrants are the early, crude reactions to an ideology that seeks that subsume people into an increasingly centralized, government-coordinated society. Similarly, Russia, China, and militant Islam are reacting against an American foreign policy that assumes that the planet is a mere object with which to manipulate.

A promising theoretical development

Taghizadegan’s and Otto’s development of a violence cycle theory is, indeed, a promising one. Among other things, it bolsters my thought that Rene Girard’s Mimetic Theory, which studies how people develop their desires through identifying the desires of their models, can both inform and reinforce praxeology. By further exploring praxeology in general, and cratics in particular, hopefully there can arise a scientific language that will reinforce the urgent need for people to interact peacefully with one another so that everyone may prosper and flourish.

Inevitable consequences of the minimum wage

In one of my first blog posts, I drew this picture:

Minimum wage graph

It’s a simple supply and demand chart that shows what happens when the minimum wage is raised. A gap occurrs between the number of workers willing to work at, and that will be hired at, that wage. The end result will be fewer workers working at that wage.

This is what happens when California doesn’t listen to such common sense:

A burger-flipping robot has just completed its first day on the job at a restaurant in California, replacing humans at the grill.

Flippy has mastered the art of cooking the perfect burger and has just started work at CaliBurger, a fast-food chain.

The robotic kitchen assistant, which its makers say can be installed in just five minutes, is the brainchild of Miso Robotics.

A California fast food joint wants to automate flipping burgers?

Go figure.

h/t Instapundit

Cultural artifacts and property rights

In the November/December 2016 issue of Biblical Archeological Review (which is available only to subscribers), Huntington University Professor Mark Fairchild published an article entitled “Turkey’s Treasures in Trouble”. While the article meanders, it ultimately focuses on the conflict between scholars and local inhabitants on how cultural artifacts should be excavated and treated.

Dr. Fairchild concludes his article by presenting the conflict in a manner that clearly puts scholars in a far better light.

Simply put, Turkey has vast treasure buried undergound. In the past, Turkey scarcely realized the value of its hidden treasures and was ill-prepared to excavate them. Today, however, Turkey’s universities are training the next generation of historians and archeologists who are eager to explore Turkey’s past. In recent years, a few new digs have begun at some sites around the country. But Turkey’s resources are limited. Meanwhile, scores of ancient sites are left unprotected and are being ravaged by locals who are hoping to hit the jackpot.

Given this blog’s love/hate relationship with memes, his position can be summed up thusly.

it-belongs-in-a-museum-indiana-jones-1435014709

A professor walks into a tea house…

To put Dr. Fairchild’s characterization of locals seeking to “hit the jackpot” into context, perhaps it helps to read a particular encounter he had with locals:

On one trip I came to Balkis, a small village in northwest Turkey in search of the ruins of the ancient city of Kyzikos. As I turned off the road and pulled into the lot of a small cafe, the eyes of a dozen men stared at me. In Turkey men commonly gather at the village cafe and sip çay (tea) at tables outside. I was a stranger, and they don’t typically see many strankers in Balkis. After a few customary greeting, I was invited to sit offered çay. I don’t like çay, but I drank it anyway, knowing that I was making a connection with the villagers.

How magnanimous of him to sit down with the common folk.

He continues:

Whatever discussions the men were having prior to my arrival were now suspended, and I was the focus of their attention. In short order, the questions came: “Where are you from?” and “What are you doing here?” I explained that I was a professor at an American university, and I was interested in examining the ancient ruins of Kyzikos. Most of the men were not familiar with the name Kyzikos, but I explained that I was looking for an ancient city located in the woods and surrounding countryside. Most of the men knew of ruins that existed out in the brush, but they didn’t know anything about them. After a bit of discussion, the men determined that Ahmet (not his real name), one of the men, should accompany me to the ruins.

At the end of the day, Ahmet insisted that I have dinner with him and his family. Ahmet actually lives within the Roman baths of Kyzikos. Before dinner Ahmet introduced me to his neighbor, who had returned from prison about a year previously. His neighbor had been caught trying to sell antiquities on the black market. He explained to me that he had dug up a frieze with a beautiful relief of winged charioteers. He broke up the relief panel to smuggle the pieces out of the country, but he was caught and jailed. As we were talking, it dawned on me that I had just seen a frieze similar to this at the Bandirma Museum the day before. I was puzzled when I viewed the objects because the frieze appeared to have fresh breaks, and the separate pieces had newly exposed surfaces. I pulled out my camera and flipped back to the shots I had taken a day earlier. As I showed the photos to Ahmet and his neighbo, they affirmed that this was the frieze that Ahmet’s neighbor had uncovered. Undeterred, Ahmet’s neighbor continued his clandestine activities. To him, the rewards far outweighed the risks.

The curse of cultural patrimony

Dr. Fairchild’s day in northwest Turkey is an excellent illustration of Steven Vincent calls “cultural patrimony,” or deciding “who has the right to own and exhibit mankind’s aesthetic and archaeological treasures.” In essence, countries such as Turkey that have extensive, but yet-to-be excavated, cultural artifacts have proclaimed all such objects as state-owned. They do so primarily to protect a nation’s identity and sense of self-determination. Governments then issue excavation permits to archeologists, who are restricted in how found artifacts can be examined and displayed.

Unfortunately, such restrictions merely create black markets for valuable goods such as cultural artifacts. They create unnecessary tension between scholars who want to increase knowledge about a particular culture, locals who want to earn a living finding and selling artifacts, and collectors who want to preserve them.

Currently, antiquities laws favor scholars who develop close ties to governments handing out excavation permits. One can call it crony archeology.

However, these laws prevent collectors who cherish these artifacts from lawfully purchasing and preserving them. As one antiquities dealer put it to Vincent, “A strong market assures a free flow of antiquities and acts in the best interests of everyone–archaeologists, collectors, and the people in source and market nations.” In fact, governments who restrict the excavation of cultural artifacts frequently value them far less than scholars and collectors. For example, a 5,000-year-old burial site in central Anatolia (Turkey) was “covered over with concrete and turned into a recreational area.”

How property rights can protect cultural artifacts

If governments truly want to protect cultural artifacts in their borders, they would allow people to not only buy and sell them freely, but also buy and sell the real estate in which these artifacts are currently buried. Everyone, except for cultural warriors, would benefit. Locals would be able to buy property they believe holds artifacts that are valuable to scholars and collectors. Scholars would be able to interact more freely with locals and collectors alike, each of whom are incentivized to know where antiquities may be and why they are significant. (They might even be able to avoid drinking çay in the process.) Collectors would have a far greater selection of artifacts from which to choose. Finally, the public would benefit from the increased selection, distribution, and knowledge of these artifacts.

Given the current state of affairs, governments are not going to privatize the collection of artifacts anytime soon. However, that does not mean that such a privitization would not be of great benefit to everyone.

Why Say’s law is always true

Alasdair Macleod has written an elegant essay on why Say’s law is always true.

In essense, Say’s law states that an economy comprises equally of buyers and sellers. On the surface, this may seem obvious. Unfortunately, John Maynard Keynes, in his influential work The General Theory of Employment, Interest and Money  mischaracterized Say’s law so as to imply that the law assumes the economy operates at full employment. By knocking down that strawman, Keynes uses the rest of The General Theory  to argue that government should stimulate demand by increasing spending. As Macleod shows, however, Keynes built his policies on a fundamental fallacy. Current government and central bank policies will fail for no other reason than they deny the validity of Say’s law.

It would be worthwhile to take your time to read this essay.