The Pandemic in Europe and America

The pandemic evolution now appears to be more worrying in Europe than in America, as illustrated by the graph below reproduced from yesterday’s Wall Street Journal (Marcus Walker, Bertrand Benoit, and Stacy Meichtry, “Europe Confronts a Covid-19 Rebound as Vaccine Hopes Recede,” March 12, 2021). In France, for example, after two very long and restrictive (even tyrannical) national lockdowns, ICUs are close to 80% capacity. The Wall Street Journal explains:

Europe’s efforts continue to suffer from the EU’s slowness in procuring and approving vaccines, production delays at vaccine makers, and bureaucratic holdups in injecting available doses.

The “production delays at vaccine makers” are most likely due to the fact that the EU government has not purchased them in time while, of course, there as in America, individuals and private organizations cannot purchase them.

Those who have read Ayn Rand’s famous novel may wonder if Atlas is shrugging more visibly in Europe than in America. As for those Europeans who put all their faith in an omniscient and all-powerful welfare state, they seem deeply disappointed (although they may be asking for more). In Germany, 30% don’t trust the competence of Angela Merkel’s center-right government and trust even less her center-left parliamentary allies.

The progression of new covid variants in Europe may be an immediate culprit, but a major reason for that is that European governments, under the punctilious EU government, have been slower than the US government in making vaccines widely available to the public.

Yet, the vaccine rollout in America has not been a marvel of federal or state planning. Four months after Pfizer announced the completion of its clinical trial, three months and a half after it started delivering doses to the United States, and three months after the vaccine was approved by the FDA, only 10% of Americans are fully vaccinated and another 10% have received a first dose (according to data from the Wall Street Journal). As far as we can see, this was, although not exactly warp speed, fast enough to prevent the variants from outrunning the building of herd immunity. This relative American success was achieved with much fewer restrictions to individual liberties than in most European countries. Federalism and popular resistance have been a big advantage.

It is notable that Pfizer and its partner BioNTech were not full-fledged participants in Operation Warp Speed. Pfizer did not accept research funding to develop its vaccine. The New York Times explained (“Was the Pfizer Vaccine Part of the Government’s Operation Warp Speed?” November 10, 2020):

In July [2020], Pfizer got a $1.95 billion deal with the government’s Operation Warp Speed, the multiagency effort to rush a vaccine to market, to deliver 100 million doses of the vaccine. The arrangement is an advance-purchase agreement, meaning that the company won’t get paid until they deliver the vaccines. Pfizer did not accept federal funding to help develop or manufacture the vaccine, unlike front-runners Moderna and AstraZeneca.

Pfizer CEO Albert Bourla made that clear (see “Leading Covid-9 Vaccine Makers Pfizer and Moderna Decline Invitations to White Summit ‘Vaccine Summit’,” Stat, December 7, 2020):

Bourla later defended the decision to decline federal research and development funding, citing a desire to “liberate our scientists from any bureaucracy” and “keep Pfizer out of politics.”

Except perhaps for that, the pandemic does not provide a strong confirmation of the benefits of American free enterprise. There may be more free enterprise in America than in Europe, but it’s a matter of degree. In America too, the distribution of the vaccines has been basically a governmental affair. And think about the “price-gouging” laws that have prevented market price adjustments in 42 states, not counting the Defense Production Act at the federal level. (See Rik Chakraborti and Gavin Roberts, “Anti-Gouging Laws, Shortages, and Covid-19,” Journal of Private Enterprise 35:4 (2020), pp. 1-20.)

Perhaps the administrative-welfare state, in both Europe and America, is not as good as we thought?

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The Invisible Order of the Black Family: Part 2

Part 2: “Swapping” as an Entrepreneurial Response to Poverty

(Read Part 1 here.)

The central response to poverty observed by Carol Stack in All Our Kin was the formation of kin networks based on de facto acts of motherhood and the willingness of fathers to take responsibility for their children, whether in or out of wedlock. These kin networks formed the basis for the use of reciprocal exchange to extend the effective size of the household in “The Flats.” An interesting exercise for EconLib readers while reading this book is to find the ways that Stack might have better understood those exchanges if she had a background in basic microeconomics.

Stack devotes an entire chapter to what she terms “swapping.” Faced with deep deprivation, nothing can go to waste or sit idly, whether a physical object or the time of residents. The solution is what Stack terms an “intricately interwoven” system of exchange through which resources, including time, are given to others in the community with the expectation that they will reciprocate at some point in the future. It is tempting to see this as mutual gifting or barter, but the swapping of The Flats is better understood as a sophisticated form of credit. If you received resources from other members of the community, the expectation was that you would reciprocate. Stack defines the swapping process as the exchange of “any object or service offered with the intent of obligating” (1974, 34). These exchanges could involve anything from household objects like a TV or coffee pot, to things like clothing or cash, but also to services such as childcare and housing. Most strikingly, children were frequently moved from house to house over the course of their childhood as it became easier for one or another relative to care for them. Note how this challenges the standard idea that a family exists within one household.

The economic function of swapping is that it became a way to reallocate resources to those who needed them most at any particular time. Stack sometimes implies that this swapping wasn’t “productive,” but from a subjectivist perspective, all of these exchanges were mutually beneficial and utility-enhancing. Economically, this sort of exchange behavior can be seen in three complementary ways. First, it is a form of credit, as Stack’s use of the phrase “with the intent of obligating” suggests. Those who have objects or time or space that is greater than their current needs can “save” by providing those resources to others with the expectation of being able to draw on that saving later in the form of resources from the recipient. Second, swapping can be seen as a way of minimizing the “idleness” of resources. A typical middle-class family might think nothing of having a closet full of clothes that are there in case we want them. In a poor community, unworn clothes would be seen as wastefully idle. They could be put to a more valuable use by being worn by other members of the community. Clothing not currently being used was fair game for swapping. One can extend this analysis to other household objects as well as household space and the time of community members. If some kin find themselves with the time to care for the child of other kin who are struggling, they will do so with the expectation of reciprocation down the road.

Finally, swapping’s main economic effect was extending the effective size of a household to the entire network of kin. What swapping does is to enable people to draw on a larger range of other people and resources as inputs into household production. Whether taking the form of financial resources, objects like a couch or clothing, or time devoted to child care, swapping enables residents of “The Flats” to not be limited to what is available within the four walls of their homes for household production. Living space, childcare, and other resources can come from anyone or anywhere within their personal kindred. The combination of large personal kindreds and swapping enabled families to have access to more resources, both human and material, than a superficial approach might suggest.

The message of All Our Kin was not that the Black family was “just fine.” Rather it was that in order to understand how social institutions actually operate, we need to be willing to challenge our pre-existing categories, and try to understand how the people themselves see their situation and what sorts of steps they are taking to ameliorate it. The synoptic, statistical data-driven perspective of governments, often combined with an uncritical acceptance of their own experiences of institutions like the family as both descriptively and prescriptively “normal,” can hide the myriad ways that entrepreneurial humans respond to the challenges of poverty. The result in the 1960s was an overstatement of the dysfunctionality of Black families, creating a problematic cultural meme that would persist and negatively affect policy making for decades.

 

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Will Walmart Save America?

My question is only partly rhetorical. Just two days after I published my post “Vaccine Adventures,” I read in the Wall Street Journal that the federal and state governments had started allocating vaccines to large pharmacy chains, including Walmart (Sharon Terlep and Jaewon Kang, “CVS and Walmart Decide Who Gets Leftover Covid-19 Vaccine Doses,” February 11). After reading this story in the wee hours of February 12, I went on Walmart’s website and, in just a few minutes, made myself an appointment for six days later. Appointments are available at 20-minute intervals during the whole day.

The efficiency of Walmart is legendary despite its being a behemoth, just as the inefficiency of the government is legendary because it is a behemoth (and other reasons explored by the economics of public choice).

Yesterday, another Wall Street Journal story described the rollout of Walmart’s Covid-19 vaccination (Sarah Nassauer, “Walmart’s Covid-19 Vaccine Rollout Heads to Small Town,” February 14). To get an idea of “what the weather [is] really like on earth” (le vrai temps qu’il fait sur la terre) to borrow an expression from Saint-Exupéry (in his novel Southern Mail or Courrier Sud), a few quotes from this Wall Street Journal story are useful:

Skowhegan, Maine—Pat and John Thomas were watching the news one night last week when they saw that Walmart in this central Maine town of 8,000 people was taking appointments for the Covid-19 vaccination. They had signed up for shots at a hospital about a month ago but still hadn’t heard back. Ms. Thomas, a 74-year-old retiree, jumped on the computer.

On Friday the couple got the Skowhegan Walmart’s first doses …

Walmart Inc., the U.S.’s largest retailer and private employer, is set to become one of the biggest distributors of the Covid-19 vaccine as the federal government enlists retail pharmacies to accelerate what has been a choppy rollout. …

Walmart is likely to benefit in other ways. Many of the people getting the vaccine at the Skowhegan store Friday didn’t previously have patient profiles in Walmart’s system, said [regional Walmart manager] Mr. Tozier. “We are making relationships with new patients,” he said.

Ann Jackson and her husband, Norman Jackson, 73 and 76 years old respectively, arrived for their vaccine appointment midmorning after waiting for weeks to get an appointment at the local hospital, said Ms. Jackson. Later, she added chips, bananas and T-shirts to her cart. “You never want to waste the trip to Walmart,” she said.

Contrary to what I implied in my previous post, there seem to be incentives enough for private pharmacies, at least those with a Walmart sort of efficient logistics, to administer Covid-19 vaccines when Big Brother releases them.

Such recourse to private enterprise could partly protect us from the central planners in DC and the state capitals. But why give the vaccines to some private organizations but not others—say, to Walmart but not to Hannaford? Is it because the central planners know better where demand is most intense or where low-cost distribution is most likely? That would possibly be a first in the history of mankind.

It would have been much more efficient, from the beginning, if the government had sold the vaccines to whoever was willing to buy them in order to make a profit and had given vouchers to whoever wanted to be vaccinated. After this redistribution of purchasing power, the market—that is, individual demands—would have decided where the vaccines should go.

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Lessons on Management and Entrepreneurship from Jeff Bezos

Jeff Bezos stepping down from being CEO of Amazon (or stepping up, as he remains President) has been the object of many articles. I have particularly enjoyed this piece from the Wall Street Journal, by Lauren Weber.

Weber highlights a few fascinating points in Bezos’ management style.

Mr. Bezos says he goes to bed early, rises early and schedules “high IQ” meetings before lunch, all in the service of making a few clear, smart decisions each day, he told an audience at the Economic Club of Washington in 2018. “If I have three good decisions a day, that’s enough,” he said. “They should just be as high quality as I can make them.”

Mr. Bezos frequently attributes Amazon’s success to the company’s obsession with giving customers what they want. From Amazon’s early days, he would place an empty chair in meetings to prod executives into thinking about how their decisions would affect customers, he recounted in the Economic Club of Washington interview. And when Mr. Bezos considered expanding the business beyond books and music, he emailed a random group of 1,000 customers, asking what they wanted to buy on the site. From their responses, he concluded he could sell just about anything on the internet—which is exactly what he’s done.

… The company abandons patent applications at a higher rate than others, a sign of its commitment to move past obsolete technology. Mr. Bezos himself is named on dozens of Amazon patents.

“If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive,” Mr. Bezos wrote to employees on Tuesday, referring to Amazon innovations such as customer reviews, Alexa and one-click shopping.

… Mr. Bezos is well-known for his insistence that meetings be productive. To facilitate that, he requires presenters to write a memo, no longer than six pages, that is circulated and silently read at the start of a meeting by everyone present. … Employees have said they spend weeks perfecting their memos, a process that sharpens ideas and improves decision-making and discussion.

This is not a comprehensive analysis of Bezos’ management genius, but these are still interesting bits that make you think. In any organization, it is very easy to become complacent and let inertia run things. Bezos knew that and confronted it, at a variety of levels. I am sure his success has been imperfect. Still, I can see his story and tips like this inspiring entrepreneurs all around the world.

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Why Is the Vaccine Distribution So Difficult?

Imagine if food were allocated and distributed by the government. Wouldn’t this prevent hunger and famines, which have certainly killed more people than epidemics in the history of mankind? Most students of economics should have a ready answer. The opposite approach—that government allocation is more efficient than the anarchy of the market—is illustrated by the story of the Russian official who, shortly after the collapse of the Soviet Union, asked British economist Paul Seabright, “Who is in charge of the supply of bread to the population of London?” (recalled by Philip Coggan in his recent book More).

There is somebody in charge of the supply of Covid-19 vaccines in the United States, and that is precisely the problem. (That both the federal government and states government are involved is not the basic problem; on the contrary, decentralization prevents the centralization of error and improves the Soviet-inspired distribution system, if only by permitting experimentation.) A Wall Street Journal story sounded the alarm (again) on the dramatic inefficiency of the current distribution system (Elizabeth Findell, Jared S. Hopkins, and Dan Frosh, “Covid-19 Vaccines Are Getting Stuck at the Last Step,” January 17, 2021):

In South Texas, a man slept in his car for two nights straight so he wouldn’t lose his place in a line of hundreds of people at a mass-vaccination event. In Western Kentucky, residents registered for vaccination slots online, only to find when they arrived that their doses had been taken by walk-ins. In New Mexico, state officials scrambled to hire more people to staff a vaccination hotline after it was overwhelmed with callers. …

“It’s crazy that people have to call around to see what different providers have the vaccine, rather than having a central place,” [Texas state REp. Vikky Goodwin Goodwin] said. “People are thinking that we had months and months to prepare for this.”

Isn’t it tragic that such things happen and the same failed government interventions are proposed (like by Ms. Goodwin above) after nearly three centuries of modern economic analysis? When prices don’t clear the market, people wait in line and those at the end of the queue don’t even know if they will get anything when their turn comes. In this respect, the United States is not worse than other regulated countries but it is often not better either.

We should not exaggerate the Sovietization of the American economy. Looking at the throve entrepreneurship deployed by American private businesses during the pandemic suggests that the economy is more resilient than many would have thought. Yet, the trend of the past few decades is unmistakable. Sometimes, it even looks like military Sovietization, from the retired army officer running Operation Warp Speed to president Biden considering deploying the National Guard to set up Covid-19 vaccination clinics.

Even if government intervention is judged necessary in a pandemic, less Sovietized and more efficient ways would be more productive. The federal government could buy enough Covid-19 vaccines from the manufacturers by bidding up prices to obtain enough for the whole population—that is, by bidding high enough to divert enough economic resources to manufacturing and shipping these vaccines. It could then offer the vaccines for free to interested health providers and pay the shipping by Fedex and UPS. Even better,  the government (at the federal or state levels) could offer vouchers to anybody who wants the vaccine and let Amazon (or any retailer) buy the vaccines and sell them in exchange for the vouchers or for ordinary cash from those who are willing to pay. With tens of thousands of intermediaries with incentives to deliver the vaccines because it pays to do so, the distribution would proceed like for food or computer equipment.

The trick is to allow the market to clear as fast as possible. Even the government’s preferred clientèles would be better served by a liberalization of entrepreneurship and a large measure of economic freedom.

It would go less smoothly in states, such as New York State, that have set up their own Soviet-style allocation of vaccines, but individuals could at least cross state lines to buy a vaccine if they want. And competition would, to a certain extent, push state governments not to hamper private distribution.

If ordinary economic markets are not allowed to clear, expect the political market to clear with the help of patronage, random access, and waste. We have seen much of that since the beginning of the pandemic. It would not be surprising if, as recently reported, a large number of vaccines are trashed because not enough government-prioritized recipients are available at any given time or place. (See also Scott Sumner, “Regulation and Vaccines: It’s Much Worse Than You Think,” Econlog, January 17, 2021, who correctly defends a free market in vaccines.)

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Putting Entrepreneurship on the Menu

Even before the arrival of COVID-19, the restaurant industry was being transformed by a variety of forces, in particular the competition for home delivery among UberEats, GrubHub, DoorDash and others. In addition, pop-ups, test kitchens, and food trucks offered unique dining opportunities at a very small scale and for short periods of time. These acts of entrepreneurship were possible because the food service industry is still largely characterized by “permissionless innovation.” The regulatory costs of entry are low, and physical and human capital are fairly mobile, all of which allows people to try out ideas and see what sticks. As COVID-19 has created new challenges for restaurants, even the innovators have to keep innovating to meet the new demands of consumers, not to mention complying with local public health regulations. Often the most valuable sorts of entrepreneurial innovations are not ones that make big headlines but ones that instead make improvements in existing products and services to better meet the needs of consumers.

Two examples of this sort of entrepreneurial innovation are taking place here in Fishers, Indiana. Although both of these innovations pre-date COVID-19, one is well-poised to take advantage of the changes the pandemic has brought, and the other has demonstrated the kind of flexibility that is often necessary for effective entrepreneurial responses to exogenous shocks like a pandemic.

The first example is a company called ClusterTruck. Based in Indianapolis, they recently opened a second kitchen here in Fishers. They are a nice example of innovating on an innovation. One of the problems with food delivery services like GrubHub is that the drivers are not employees of the restaurants, and the restaurants are dependent on the schedules of the drivers when they promise a delivery time. We’ve all had the experience of our order coming much later, or even earlier, than expected, or having food that was no longer hot. The creators of ClusterTruck were, as Israel Kirzner puts it, “alert” to the opportunity to improve that model. One of the ways they did that was by creating a restaurant that is delivery and pick-up only.

ClusterTruck has integrated the food preparation and the delivery process in two ways. First, the drivers all work for them. But they also won’t start preparing your food until they have one of the drivers committed for that delivery. This prevents food from sitting and waiting for a driver to pick up. And without seating, their whole kitchen is geared to competing and preparing delivery orders. It’s not a sideline. It’s what they do. Their app also has several nice innovations. One of those is the ability to order ahead for delivery at a specified time. With in-house drivers, Clustertruck can meet a pretty tight window that way. The other nice innovation is the ability to share a link to your order that allows other people to piggy-back on the same order but pay with their own account. So offices ordering lunch don’t have to worry about Venmo or other ways of settling up. Everyone can order and pay for their own meal but have it delivered together. And to be able to satisfy groups and families this way, their menu spans a variety of cuisines, from a few Asian and Mexican dishes to pub food and pizza.

This full integration from preparation to delivery, along with ordering ahead and the ability to easily order in groups, puts them a step ahead of the other platform-based delivery services. Nonetheless, like every other restaurant, they’ll have to provide good eats if they are going to expand the way they have planned. As the current big wave of COVID-19 will enhance the demand for home delivery of prepared food, their entrepreneurial innovations seem well-positioned to succeed.

The second example of innovation is illustrative of the flexibility that good entrepreneurship demands. COVID-19 has been devastating for local restaurants, as they operate on such thin margins that the loss of business over the last several months has been too much for them to continue. But how to keep a great menu alive in a different form that can work in the world of COVID? One answer comes from the world of test kitchens. This model, which predates the pandemic, is one in which space is created for a small number of counter-service restaurants to share, while rotating the particular cuisines that occupy the various slots. A particular idea might only be there for a few months while the owners try to discover if their model is workable, hence the “test kitchen” concept. This model allows them to share some overhead costs and work out recipes without having to worry about table service or other elements of a full-service restaurant. We have a test kitchen like this located inside a local brewery, which itself is a nice innovation given the mutual benefits involved.

One of the kitchens at our Fishers Test Kitchen is an Asian street food place called Lil Dumplings. It was opened by the chef from Rook, a very well-regarded Indianapolis restaurant, and served mostly dumplings. The full service Rook was a casualty of COVID, however, going out of business earlier this fall. But that loss also presented an entrepreneurial opportunity. The former chef recently switched the menu at his Test Kitchen location over to ramen and steamed buns, and is serving several items very similar to customer favorites from Rook. The test kitchen model gives entrepreneurs who are alert to changes elsewhere in the market the flexibility they need to quickly switch over a menu and meet that new demand. It also provides a cheap way of discovering whether Rook’s dishes are still valued by its former customers. (I can report that they most definitely are!) And doing it with counter service, carry-out, and delivery options makes the whole thing work in a pandemic.

Too often we think about entrepreneurial innovations as being big, grand things like the invention of the automobile or airplane. In fact, most of what good entrepreneurs do is to take existing products and services and find ways to improve them around the edges. Inventing the cell phone is great, but adding a camera on to it gives it an amazing new range of possibilities. Reorganizing the way in which a product or service is provided, as ClusterTruck has done, is one way to innovate, and taking advantage of a flexible production structure to recover some value from a failed business is another. Good entrepreneurs are people who are alert to these kinds of opportunities and take advantage of them to make consumers better off. Creating environments that allow for permissionless innovation of this sort is the best way for policymakers to attract that entrepreneurial energy and thereby improve their communities.

 

 

For more on competition and entrepreneurship, see Steve Horwitz’s Liberty Classic on Israel Kirzner’s classic work Competition and Entrepreneurship, new this month at Econlib.

 


*Steven Horwitz is the Distinguished Professor of Free Enterprise and Director of the Institute for the Study of Political Economy in the Department of Economics in the Miller College of Business at Ball State University in Muncie, IN. He is also an Affiliated Senior Scholar at the Mercatus Center in Arlington, VA, a Senior Fellow at the Fraser Institute of Canada, and the economics editor at the Cato Institute’s libertarianism.org. He is the author of four books, including most recently Austrian Economics: An Introduction. He is also the 2020 recipient of the Julian L. Simon Memorial Award from the Competitive Enterprise Institute.

For more articles by Steven Horwitz, see the Archive.

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Life, Liberty, and M*A*S*H: Pro-Market

This fall, LIFE magazine has published a special issue commemorating the 50th anniversary of the movie M*A*S*H. Despite the hook, the issue focuses on the ensuing TV series, which ran from 1972 to 1983. Though the show has often been characterized as being politically left-wing, it actually is heavily classically liberal, celebrating the individual, civil liberties, and the market, and harshly criticizing anti-individualism, government compulsion, and government decision-making. In a series of essays, I examine the classical liberalism of M*A*S*H. This is Part 5. Part 1 is here. Part 2 is here. Part 3 is here. Part 4 is here.

 

Conscription not only steals young men from their private lives and puts them in harm’s way; it also steals their labor. Though M*A*S*H’s draftees receive Army pay, their wages are far below what they would earn back home — let alone what they would demand for performing  medical duties in a combat zone for months on end. That stolen labor features in two episodes, “Payday” (s. 3) and “Back Pay” (s. 8), in which Hawkeye tries to get the Army to compensate him fairly for his work. The Army does no such thing, of course, but Hawkeye gets a measure of justice.

Labor is not the only good in which M*A*S*H depicts the virtues of voluntary exchange. Many episodes show Radar and Klinger making back-channel deals (often in violation of “the regulations”) to get the unit much-needed supplies and unit members much-wanted personal items. Hawkeye and others swing similar deals for items they want, even going so far as to trade on the black market.

Those voluntary exchanges are often explicitly contrasted with the bizarre — and sometimes miserable — results of the command-and-control “Army way.” For instance, in “The Incubator” (s. 2), Hawkeye and fellow surgeon “Trapper” John McIntyre (Wayne Rogers) follow procedure to order an incubator for diagnosing infections. Quartermaster rejects their request, informing them such a device would be “a luxury” — but they could have a pizza oven for unit movie nights. (“Just use the standard S-1798 and write in ‘pizza’ where it says ‘machine gun.’”) As they continue trying to work the system for the needed hardware, their experiences offers a fine example of public choice theory, the idea that government officials and employees are as self-interested as private-sector workers: Hawkeye and Trapper repeatedly encounter supply officers who want to know what they would get in exchange for the unit. As the two explain to a general who asks if they’ve followed proper procedure for their request:

TRAPPER

Sir, we started with a captain, went on to a major, then to a colonel.

HAWKEYE

On the way, we’ve encountered oral compulsiveness, raging paranoia and a colonel who’s shipping Korea to Switzerland one dollar at a time.

TRAPPER

Which makes you the next contestant, general.

HAWKEYE

[In a Groucho Marx voice] And the subject you’ve chosen is incubators.

Ultimately, Radar ignores regulation and wheels-and-deals for a unit.

There are other examples of exchange “the Army way.” In “Give ’Em Hell, Hawkeye” (s. 10), the 4077 is informed it can have a much-needed hot water heater — if its members first “beautify” the camp to impress visiting dignitaries. In “The Life You Save,” unit chaplain Fr. Francis Mulcahy (William Christopher) explains Army thinking to Hawkeye after Hawkeye takes over for Mulcahy as mess officer and discovers the unit is missing food trays for which Hawkeye is now responsible:

MULCAHY

Look, I was just as upset as you were when I took over the mess tent.

Here’s how it was explained to me.

The Army doesn’t do things the way real human beings do them.

Now, then, you’re minus 75 trays.

HAWKEYE

Yeah.

MULCAHY

But they’re not good for anything except putting under Army food. So, some mess tent somewhere is plus 75 trays.

When this war is over, a few generals will get together, and add up all the pluses and all the minuses, and it’ll all come out even.

Besides which, long before that happens, you’ll already have stuck somebody else for them.

At the end of the episode, Hawkeye indeed sticks Margaret with mess duty — and he and Klinger trick her into thinking that all trays are present and accounted for.

M*A*S*H shows considerable respect for entrepreneurship. As noted above, Radar and Klinger swing clever deals for desired goods. They both also try their hands at get-rich schemes, some of which are hare-brained, but others are clever — such as Klinger’s toying with selling early versions of the Hula-hoop and Frisbee (“Who Knew?”). Hawkeye and B.J. invent a vascular clamp and contract to have it produced (“Patent 4077,” s. 6). Koreans are portrayed as virtuous entrepreneurs, from craftsmen who sell their wares at the 4077 (“Dear Mildred” [s. 4], “Patent 4077”), to domestic workers providing laundry and housekeeping services, to the recurring character Rosie (usually played by Eileen Saki), the proprietress of the off-base saloon.

Private property is also respected. Though the series regularly promotes an ethic of sharing (and features comic retribution for those who violate the ethic), property is not commandeered by the unit’s commander. Potter relies on moral suasion to have Klinger give his dresses to a group of prostitutes in exchange for using their brothel as an operating room (“Bug Out,” s. 5). Charles agrees to share his newspapers from home with the camp — after he finishes reading them (“Communication Breakdown,” s. 10). And, of course, the most famous property on the show is the surgeons’ still — and woe comes to those who violate it. The only instance I can think of where property rights are infringed by command is when Colonel Potter orders Hawkeye and B.J. to get rid of their trouble-causing portable bathtub — and they then trade it for strawberry ice cream (“None Like It Hot,” s. 7).

It should be noted that though economic freedom is respected in the show, there is often “persuasion” — sometimes heavy-handed — against some economic activities. In “Souvenirs” (s. 5), a chopper pilot is pushed to stop buying dangerous war souvenirs from Korean children. In “Change Day” (s. 6), Hawkeye and B.J. refuse to help Charles profit from a shady arbitrage scheme when the Army changes military script. And in “Private Finance” (s. 8), Charles and B.J. use a false diagnosis to temporarily stop a patient from pressure-selling investment products to other patients. But in each of those cases, transactions are obstructed out of an ethic of caring (about children, Korean peasants, and convalescing patients) and are blocked through private arm-twisting, rather than by order.

Likewise, acts of charity are strongly encouraged, but are not ordered. For instance, in “Dear Sis” (s. 7), Charles is free to decline to donate to the unit’s Christmastime orphans fund. However, after Father Mulcahy secretly arranges for Charles’ family to send him a beloved childhood item as a comfort for homesickness, Charles has a Scrooge-like change of heart:

CHARLES

Uh, Father? Is there still time to, uh, contribute to your orphanage fund?

MULCAHY

Always.

CHARLES

Good. Here. [Hands over a wad of money.] Buy them whatever they need.

Oh. Oh. Here. [Hands over more money.] Buy them whatever they don’t need.

MULCAHY

Major? Are you all right?

CHARLES

[Laughing.] You saved me, Father. You lowered a bucket into the well of my despair, and you raised me up to the light of day. I thank you for that.

 

In this way, M*A*S*H offers a resolution to an age-old dilemma for classical liberals: how to balance an ethic of caring for others with respect for peoples’ property, values, and choices. The solution is to do so through persuasion and example, not force. For a show about a military base in a war zone during the draft era, that is a classical liberal solution.

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Wayne Rogers: Much More than M*A*S*H

I was very pleased to see Thomas Firey’s thoughtful series on the classical liberal currents in what was, arguably, the greatest television comedy ever, M*A*S*H.  The two original stars of the show were Alan Alda and the late Wayne Rogers.  What is lesser known of the latter, Wayne attended many Liberty Fund conferences between 2003 And 2015.  I had the privilege of knowing him for a number of years during his long and productive relationship with Liberty Fund.

By CBS Television – Public Domain

 

Wayne first became acquainted with Liberty Fund through a personal relationship with a member of the Liberty Fund Board of Directors. Wayne began to attend our events, and he grew to love Liberty Fund.  I still vividly remember watching Wayne on his Fox Business show “Cashing In” wearing a Liberty Fund tie early on Saturday mornings.  I first met Wayne at a conference in 2006 on biology and the origins of virtue (directed by a long time friend of EconLib, the ever humble Mike Munger).  Wayne and I hit it off immediately and over the years I had the opportunity to work with him twice as he directed Liberty Fund conferences.

 

Wayne’s involvement was not simply because of his fame as a celebrity.  He was a graduate of Princeton and was sharp as a whip.  Sure he could tell stories about his days on M*A*S*H or hanging out with Cher, but he was a voracious reader, and a tenacious advocate for positions he believed him.  Woe be the person who disagreed with him on Glass-Stegall.  Anyone who thought he was just some Hollywood figure quickly learned that Wayne was an intellectual of the first order who was prepared to push you if you couldn’t defend your position or the text didn’t support your views.

 

For a while, people used to joke that Wayne Rogers must have financially regretted leaving the cast of M*A*S*H after just two seasons because of a contract dispute.  But trust me, Wayne got the last laugh.  At the root of his departure was what he described as his attraction to puzzles, most of them involving how to make money in a wide range of businesses and endeavors.  As I recall, the first deal that Wayne told me he was involved with was river barges, and because Wayne could tell a story, he made a business story about river barges seem like a pirate’s adventure along the Mississippi.

 

He went onto to be involved in a multitude of other businesses including wine making, banks, investments for some of his acting friends, such as Peter Falk, and perhaps most famously he was co-owner of a little bridal shop in New York called Kleinfeld. You may have heard of it because Wayne produced one of the most popular reality shows ever based at the shop called “Say Yes to the Dress” as just one of the many businesses he was involved with. In short, Wayne did just fine.

 

I’ll always remember Wayne for his energy and drive, his generosity with this time, the passion with which he lived his life, and his firm and unyielding commitment to the principles of liberty.  He loved playing what he called his “one string banjo” – his tendency to emphasize a point again and again until he convinced you of his position.  He was one of a kind, and as part of a one of a kind show, Wayne fit right in at the 4077th.  And he would have loved Tom’s discussion of the show’s classical liberal themes.

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Stay Out of Holly Golightly’s Way

I recently re-watched Breakfast at Tiffany’s. It was a particular favorite of mine in college, so I’d seen it many times before. But I had never really noticed how many lessons about economic opportunity there were to find in Holly Golightly’s life experiences.

Trailer screenshot -Public Domain

[Spoiler alert, in case you’ve been busy for the past 60 years.]

In the iconic opening scene of the film, Holly Golightly (played by Audrey Hepburn) is out on an early morning walk, still fully dressed from the night before. She is wearing the outfit that is not only the most memorable of the film, but perhaps of Hepburn’s entire career. Her hair is swept up to show off a multi-strand of pearls and the low-cut back of her black Givenchy dress. With coffee and pastry in hand, she stops for some quality time with the jewelry in the windows of the Tiffany & Co. flagship store.

Some think Holly Golightly was a prostitute, but writer and director Truman Capote says he saw her not as a “callgirl” but as an “American geisha.” She doesn’t have sex for money, as far as we know. She charms. She attends parties, lights up a room, works hard to make people feel good about themselves (and about her). There’s not an invoice for her time but she often gets “fifty dollars for the powder room” from her dates, money to tide her over until she can marry a husband rich enough that she’ll never have to worry about money again. This comes to a head in a tense exchange with the film’s main love interest, the down-on-his-luck writer Paul Varjak, in the New York Public Library. Paul declares his love and Holly responds by telling him about the rich bachelor she has her eye on. When he responds with anger, Holly fires off,

“Holly: What, do you think you own me?

Paul: That’s exactly what I think.

Holly: I know, that’s what they all think. That’s what everybody always thinks, but everybody happens to be wrong!

Paul: Well I am not everybody! … Or am I? Is that what you really think? Am I no different from all your other rats and super-rats? Wait a minute. That’s it. If that’s what you think, if that’s what you really think, there’s something I want to give you.

Holly: What’s that?

Paul: Fifty dollars for the powder room.”

 

In addition to the disturbing conflation of love with ownership, this scene is where Paul’s disgust for Holly’s willingness to prioritize financial security over romance becomes painfully clear. Economist Victoria Bateman notes the divide between those who make their money with their brains and those who make their money with their bodies, and the particular contempt reserved for women who use their bodies to procure financial gain. Until this moment, Paul is absolutely enchanted with Holly. They have been tearing up New York City, having a fabulous time, staying up late talking, taking care of each other. But once Holly makes it clear that her priorities are different from his, he becomes furious.

I won’t spoil the rest of the film by telling you why Holly makes the choices she does. And it doesn’t really matter anyway. The point is that the world Holly lives in—like it or not—is one in which her choice of how to support herself works. She’s supplying something in demand, and making the most of the opportunities available to her. Life is hard, and people sometimes choose paths that don’t quite gel with other’s sensibilities. Would it be trite of me to point out in 2020 that women who engage in sex work (or even just work with a sexy presentation) have just as much right to freely choose that path as anybody else?

And, for those who are aware of the ways in which women have historically been denied economic opportunity, there’s a sinister side to the Paul Varjaks of the world finding even more ways to shut doors. Of course, Paul is just one person, and a fictional one at that. But to the extent that his attitude gets used to push through legislation that systematically denies women opportunity under the guise of protecting them and their morality, it’s downright dangerous for women and detrimental to economic growth. The economy is constituted of billions of small opportunities pursued daily that, if not interfered with, add up to the mutual satisfaction of wants that keep people fed, healthy, and able to pursue meaningful lives. This is true even when those opportunities are pursued by people whose choices we may not always agree with or understand. We still benefit from their contributions to the market, and learn from watching to see if their actions are getting them somewhere we might like to go, or somewhere we might like to avoid.

It’s easy to see the many analogies that can be drawn between Holly’s experiences and the many other forms of entrepreneurship that are looked down upon by one group or another. And, for those who wish to maximize opportunity and well-being, the response is the same. You don’t have to like what Holly does. Just stay out of her way.

 

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Concise Encyclopedia Biography of Kirzner

Steve Horwitz’s recent post, “Marginal Revolutionaries: Kirzner and the Modern Austrians,” August 19, 2020, references the bio of Israel Kirzner in The Concise Encyclopedia of Economics. I finished the bio a couple of months ago and it was posted last month. Steve’s post reminded me that I had forgotten to call attention to it.

In researching the bio, I read Kirzner’s 1973 book, Competition and Entrepreneurship much more carefully than I had in 1973 at the behest of one of my UCLA professors, Ben Klein. Ben was rare in that he came out of the University of Chicago but was his own man from the get-go. He found a lot of value in Kirzner’s book and recommended that his UCLA Ph.D. students buy it. I did so and enjoyed it, but my mind at age 69 is better at nuances than my mind at one third that age.

Here’s a highlight of the bio:

The main difference between Kirzner’s entrepreneur and Schumpeter’s is that Schumpeter’s entrepreneur upsets an existing equilibrium by introducing a new product or a new production technique, while for Kirzner, the entrepreneur “has an equilibrating influence.” Kirzner writes, “For me the important feature of entrepreneurship is not so much the ability to break away from routine as the ability to perceive new opportunities which others have not yet noticed.”

Read the whole thing.

Thanks to Richard Ebeling for reading the bio carefully and giving me suggestions, especially about  finders-keepers.

 

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