Thursday, March 26, 2015

Two Kinds of Profits

Column for week of March 16, 2015

     Many people vilify profits.  I endlessly read of those
who claim nobody should profit from providing education. 
Then many of those same people demand higher pay for
teachers.  Can you spell hypocrite?  What is evil about profits? 
The first step to understanding profits is to recognize there are
two kinds of profits.  One kind is truly evil.

     When the highwayman robs his victim, the victim
receives no benefit.  The highwayman's profit is the unwilling
victim's loss.  All profits extracted from unwilling victims are
illegitimate and evil.  Fortunately there is another way to gain
profits.

     Consider a shirt maker who makes a shirt for $15.  He
sells the shirt to a willing customer for $20.  It would have
cost the customer $30 to make his own shirt.  Is the customer a
victim because the shirt maker's efforts gained him a $5 profit? 
Or, is the shirt maker a victim because the customer gained
twice as much as did the shirt maker?

     For both the sale was voluntary.  Each expected to
benefit.  If either hadn't expected to benefit, he wouldn't have
made the exchange.  Why make or buy a shirt if you gain
nothing by doing it?  In all voluntarily, free market transactions
each party expects to gain.

     The future is never 100 percent predictable.  Thus,
sometimes the traders don't get the expected benefits.  People
learn from their errors and try to do better next time. 

     Suppose the shirt maker sells a million shirts and earns
$5 million of profits.  Are his profits ill gotten simply because
he repeated the same act a million times?   How many shirts
did he have to sell before his profits became ill gotten gain? 
Should he have stopped at 100, 1,000 or perhaps 10,000? 
Would any of the million shirt buyers have benefited more if
the shirt maker had decreased his profits by selling fewer
shirts?

     Profits earned through free market transactions are
rewards for serving others.  The greater the rewards for serving
customers, the harder producers try to serve.

     The only way businesses earn profits in free markets is
by producing value.  Our shirt maker bought supplies and labor
worth $15 and produced a shirt that was worth $30 to the
buyer.  The shirt maker got $5 of that added value as profit. 
This was a good deal for everyone involved, including the
suppliers who sold the means for making the shirt.

     Before judging the merits of profits we must determine
whether the profits were gained by the way of the highwayman
or the way of the shirt maker.   Were the profits earned in a
voluntary transaction, or was someone coerced into paying the
profits?  Profits through coercion are a form of theft.  The
person paying the profits is coerced to pay the profiteer.

     Our economy is so severely regulated by government
coercion that it is all but impossible to separate good profits
from evil ones.  The morass of laws all but eliminates
completely voluntary transactions.  Even if government
coercion doesn't dominate the chain of production, it at least
infects it.  Few business profits are paid on a 100 percent
voluntary basis.

     Confiscating all profits to eliminate illegitimate ones
would be a cure worse than the disease.  It would kill much of
the incentive for businesses in the legal economy to serve
customers.  Black markets would flourish.  I hope no one
believes that is a good solution.

     The only sane solution is to eliminate the laws
restricting freedom in the marketplace.  Producers will then be
unable to extract illegitimate profits from customers.  Then we
will have no reason to worry about illegitimate profits.

     Competition in the marketplace eats profits like foxes
eat rabbits.  The only way for free market businesses to sustain
profits is to innovate.  Without new products and better ways
to produce existing products, competition grinds profits down
to zero.  That is why established businesses endlessly turn to
government for the imposition of restrictions on competition.

aldmccallum@gmail.com
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Copyright 2015
Albert D. McCallum

Thursday, March 19, 2015

Zero Tolerance -- The New Frontier

Column for week of March 9, 2015

     For some time I have worried that the masters of zero
tolerance in schools were approaching the limits of creativity. 
How could they possibly come up with new and more
ridiculous reasons for suspending students?  A recent news
article suggests the answer.

     "A fourth grade boy in Odessa, Texas has been
suspended from school for making a terroristic threat.  He told
another boy that he had a magic ring and could make him
disappear."  That is a bit creative.  It doesn't plow new ground
though.  Another school previously suspended a boy for writing
about shooting an imaginary dinosaur with an imaginary gun.

     The suspended boy's father didn't appear to take the
"terroristic threat" quite as seriously as did the school principal. 
The father told the principal "his son lacked the magical
powers necessary to threaten his friend's existence, but even if
he had those powers, he's sure his son would bring his friend
right back."

     The principal's rational was "threats to another child's
safety would not be tolerated - whether they are magical or
not."  Perhaps the principal should be transferred to a drug free
school zone.  It sounds like she may have already ingested a
few too many magic mushrooms.  I wonder what will happen
if a student threatens to turn the principal into a toad. 

     Naturally there is more to the story.  The boy was a
chronic offender with two previous suspensions in a mere six
months.

     His first offense was calling an African-America
"black."  If the African-America was from Egypt, Algeria or
Morocco, this was probably wrong (wrong like in mistake).  If
mistakes are grounds for suspension, schools will be rather
empty, especially principals' offices.

     I am a bit puzzled by the second suspension.  The boy
brought "his favorite book to school, called 'The Big Book of
Knowledge.'  The popular children's encyclopedia had a section
on pregnancy with a pregnant woman in an illustration."  Why
this offended the principal is truly mystifying.  Considering
schools enthusiasm for sex education, Why didn't the boy get
bonus points instead of a suspension?

     None of these suspensions strain the envelope of what
schools have already done.  Obviously the principal is looking
to the future.  Why not?  The future is the only thing we have
ahead of us.  When all silly suspensions become so common
place that no one, even me, will write about them, Do you
expect school administrators to quietly fade into the
background and out of the spotlight?

     This pioneering principal has pointed the way to a new
frontier.  Principals can now focus on creating the most bizarre
and longest combinations of the old, boring suspensions.  How
about extra points for those who complete the assignment in
the shortest time?

     I have long been puzzled by schools' enthusiasm for
suspensions.  Schools send out truant officers to drag in
"students" who don't show up for school.  Sometimes the
parents of the truants are threatened with arrest.  Why then
does the school suspend the students it already has captured?

     I may have a creative solution.  Redefine truancy as self
suspension.  A student who doesn't believe he belongs in
school could suspend himself, just like an administrator with
the same belief could.  The student is a truant no more.  He is
merely serving a suspension.  Of course, students should be
entitled to as much creativity as principals when imposing
suspensions.

     The hardcore egalitarians should love this.  Students and
principals could be equal.  Notice, I only said "could be."   I
don't want to be sued for defamation by the students.

aldmccallum@gmail.com
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Copyright 2015
Albert D. McCallum

Thursday, March 12, 2015

Enforcing All the Laws

Column for week of March 2, 2015

     A number of Republicans and some Democrats
complained when the Obama administration failed to fully
enforce national marijuana laws in Colorado.  This was nothing
compared to the fire storm when the Obama administration
announced that it wouldn't enforce immigration laws against
some illegal immigrants.  How dare the president refuse to
enforce the law of the land?  How did he dare flout the law
and fail to carry out his constitutional duties?

     One could as fairly ask, How dare congress ask the
president to enforce more laws than anyone, even with all the
resources of the nation at his disposal, could begin to enforce? 
The laws enacted by congress and regulations adopted pursuant
to those laws add up to 200,000 or so pages.  It would be a
safe bet that no one has come close to even reading all of
them.

     If every law were fully enforced, everyone would be in
jail for life.  The last one convicted would have to lock his
own cell.  Someone has to decide which laws to enforce and
who to enforce them against.

     Prosecutors' discretion is nothing new.  It has been
around as long as prosecutors.

     I attended high school about 15 miles from Grand
Rapids.  Everyone in school seemed to know where the
brothels were in Grand Rapids.  They were on C Street.  I'm
not quite sure where that was.  I never doubted that if I had
asked I would have found out.  Some students admitted to
(bragged about?) being there.

     Don't even ask me to believe that the police and
prosecutors didn't know about the illegal prostitution.  I don't
know if they were compensated for their blindness.  For
whatever reason they chose not to enforce the law.  This is but
one small illustration of the ancient tradition of prosecutors'
discretion.

     We wouldn't have 11 million illegal aliens in this
country if many someones hadn't elected not to pursue them. 
When they decide not to pursue some, they also decide which
ones to pursue.

     The congress critters who are complaining about the
president haven't appropriated enough money for the president
to attempt to deport all illegal aliens.  Neither did they pass a
law telling him which ones to deport first.

     All Obama did was change how prosecutors' discretion
will be exercised.  It isn't amnesty.  Congress, or a future
president, can change the priority to whatever they wish.  All
Obama did was say to some illegal aliens, you don't have to
worry about being deported right now.

     Most of them won't ever be deported.  Sending them all
home at once would so disrupt some businesses that it would
cause a recession.  If the unemployed in this country wanted
the jobs the illegals have, they could have had them.

     The US immigration law is an unworkable mess.  Both
congress and the presidents, past and present, bear part of the
blame.  The president and congress critters are all far more
interested  in scoring points pandering to certain votes than in
enacting sensible, workable immigration laws.

     The last time congress faced up to the immigration law
problem it granted amnesty and kicked the can down the road
by continuing unrealistic, unworkable immigration laws.  Well,
we have caught up with the can.  It is time for congress and
the president to give it another kick and see how long it takes
to catch up with it again.

     Having foreign workers here legally and above ground
would, at a minimum, be far less of a problem than building an
underground culture of illegals.  Building a fence to keep them
out won't work.  For one thing, a third or so of illegals enter
legally and merely fail to leave.   The fence also works as a
check valve.  Instead of working and going home, foreigners
are more likely to stay.

     One thing is certain.  As long as voters demand
unworkable immigration laws, politicians will deliver them.

aldmccallum@gmail.com
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Copyright 2015
Albert D. McCallum

Thursday, March 5, 2015

Why Are Wages Stagnant?

Column for week of February 23, 2015

     Several recent articles lamented that wages aren't
increasing.  The authors were sure that wages needed to
increase for prosperity to return.  None of the writers showed
that they had a clue about why wages were stagnant.

     The clearest way to illustrate many economic principles
is by considering a simple barter economy.  There instead of
using money, all producers trade what they produce for what
they want.

     Money is a very useful tool for making trading easier. 
Still, money is only a tool.  The real substance of buying and
selling is that one individual trades what he produces for what
others produce.  A worker at a wheel factory trades the wheels
he makes for money.  When he spends money at the grocery
store he trades wheels for food.

     To discover where wage increases come from, consider
a wheat farmer in a barter economy.  He produces wheat and
trades it for things produced by others.

     The farmer grows 1,000 bushels of wheat.  First he
must pay for the materials, tools, land rent, etc. used to grow
the wheat.   This takes 800 bushels of wheat.  The 200
remaining bushels are the farmer's wages for growing the
wheat.

     The only way the farmer can increase his wages is to
have more wheat left after he pays his cost of production.  The
farmer could rent more land and work more hours to produce
more wheat.  This would increase his income.  It wouldn't
increase his wage rate any more than an employee working
more hours at the same pay per hour increases his wage rate.

     The farmer has two other options.   He might improve
his efficiency so that his cost of production is only 700 bushels
of wheat.  That would increase his wages by 100 bushels.

     The other option is to use the same resources but
change his method of production so that his yield increases to
1,100 bushels.  This also will give the farmer a 100 bushels
wage increase.

     The same principles apply to wage increases in our
money economy.  The only way to increase wage rates is for
workers to be more productive.  Without increased production
the wage pie remains the same size.  If some workers get
bigger pieces, others must settle for smaller ones.

     Believing that we need wage increases to increase
prosperity puts the cart before the horse.  We need increased
prosperity in the form of increased productivity to increase
wages.  The question we should ask is, Why isn't productivity
increasing?

     The avalanche of new government rules and regulations
increases the cost of production.  Far worse the threat of more
new laws and regulations discourages businesses from investing
in new more productive facilities.  Factories, mines,
warehouses, refineries, etc. don't pay for themselves until many
years in the future.  Businesses fearing that government may
pull the rug out from underneath are afraid to invest in new,
more efficient facilities.

     Much of the investment made in recent years has been
in wasteful, inefficient facilities subsidized by government,
such as ethanol, wind power, and electric vehicles.  Such
investments increase the cost of production.  Because of the
increased cost of production some workers are forced to settle
for lower wages.  The convoluted financing of such facilities
with subsidies, mandates, etc. makes it difficult to know which
workers are taking the hit.

     We may see a brief surge in wages due to the drop in
oil prices.  Don't mistake this for a return to prosperity.  It will
be at most a temporary blip.

     It will likely do more harm than good by distracting
attention from the real problem, government meddling with the
economy.  Until businesses are allowed to freely pursue
increased productivity and the profits that reward increased
productivity, wages will continue to stagnate.  And, millions
will scratch their heads and wonder why.  Meanwhile
government that caused the stagnation of wages will hurl
flaming darts at the businesses that government has denied the
means of raising wages.

aldmccallum@gmail.com
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Copyright 2015
Albert D. McCallum

Thursday, February 26, 2015

Pulling Their Triggers

Column for week of February 16, 2015

     "What is the world coming to?"  Who hasn't heard this
lament?  I find few things surprising, leave alone shocking.  
They may be disgusting, but not surprising.  The folly of our
fellow humans is, unfortunately, to be expected.

     A couple of recent news items did surprise me.  I hope
they are anomalies, rather than the beginning of a trend.

     When I attended law school at the University of
Michigan, it seemed to be an assumption that law students
should be emotionally tough.  If they couldn't handle the stress
from taking a class for a year and having their entire grade
hang on one four-hour examination, How could they stand the
stress of handling cases with lives and fortunes hanging in the
balance?

     Stress in law school was part of a lawyer's training. 
Would you want to be represented by a lawyer who becomes
non functional under stress?  Such a lawyer would be about as
helpful as an umbrella that folds when hit by a drop of rain.

     One news item reported that law students have
requested that their examinations be postponed because they
were too stressed out to take them.  What horrible personal
trauma did they experience?  Well, actually none.   The cause
of the alleged stress was hearing news from far away about
events that had no direct impact on the students.

     The traumatic events were that two grand juries didn't
indite police officers for killing unarmed black men.  The
purpose of this column isn't to dissect and judge the actions of
the grand juries.  Plenty of other writers have been more than
willing to do that.

     My concern is the catering to the whims of people who
program their emotions to detonate at the pull of a hair trigger. 
At a minimum, for their own benefits and the benefit of others,
they should be discouraged from practicing law.  By the way,
at least one law school granted the request.  Perhaps before
hiring a lawyer you should give him an emotional trigger test. 
See if a few well chosen words cause him to melt down into a
quivering blob.

     If someone has a weak leg, it isn't particularly helpful
to aid them in avoiding using the leg and learning to live with
the weakness.   The individual would benefit far more from
encouragement to use and strengthen the leg.  The emotionally
fragile need the same kind of help.

     I did mention that there were two articles.  The second
is perhaps worse than the first.  Law students are objecting to
professors teaching about the law of rape.   Certain "trigger"
words may be disturbing to some students.  One trigger word
mentioned by a professor was "violate" as in  "Does this
conduct violate the law?"

     If law schools can't teach the law of rape, Should courts
be allowed to try rape cases?  If no one is allowed to teach
about the law of rape, Will there be any lawyers and judges
qualified to handle such cases?

     Are there any words that can't pull someone's trigger?  I
have previously written about the man who became so upset
about the possibility of his girl friend saying "New Jersey" to
him that he pulled a real trigger on her three times.  She
survived to testify against him.  Other horrible words, including
"snickers" and "Wisconsin" also could pull his trigger.

     The one way saying New Jersey might pull my trigger
is someone saying "You have to move to New Jersey."  That
would be something to get upset about.  Still, even that might
not justify shooting someone three times.  Would once be too
many?

     Instead of catering to and encouraging infantile
behavior, we should condemn such behavior and encourage
those with a trigger problem to quit blaming others and fix
their own triggers.  The last thing we should do is make it
easier for those emotional china dolls to become fragile
lawyers.

aldmccallum@gmail.com
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Copyright 2015
Albert D. McCallum

Thursday, February 19, 2015

Zero Tolerance for What?

Column for week of February 9, 2015

     Reason.com published its list of the top 10 worst
incidents of zero tolerance in schools during 2014.  Needless to
say (but I'm saying it anyway) some very worthy candidates
didn't make the cut.  Certainly there are enough left to make up
a very competitive second team.

     One incident did deserve points for creativity.  The zero
toleration for weapons, pictures of weapons, gestures with
fingers, and thoughts about imaginary weapons are growing
dull and tiresome.  A school in Minnesota spiced things up a
bit with a new wrinkle.  It tried to freeze a nearly naked, wet
student to death, all in accordance with the holy writ of policy.

     When the fire alarm rang a 14 years old girl was in the
swimming pool.  She ended up outdoors wearing only a wet
swimsuit.  There she remained for 15 minutes.  Did I forget to
mention that the temperature was minus 5 degrees?

     So, what does this have to do with policy?  The
teachers had cars parked in the area.  They could have let the
freezing, wet girl get in a car.  Unfortunately the school policy
had zero tolerance for students in teachers' cars.  Still, I'll give
someone half a point.  After 15 minutes the wet girl was
allowed to get in a car, after she got frostbitten feet.

     It is impossible to cover zero tolerance without circling
back to weapons, real or imagined.  A teacher was suspended
for demonstrating shop tools that, horror of all horrors,
included the dreaded killer screwdriver.  Of course,
screwdrivers can be used as weapons.  The more relevant
question is, What can't be used as a weapon?

     Years ago I represented a client serving 15 to 30 years
for armed robbery.  His weapon was a chair thoughtfully
provided by the bar he robbed.  Do schools have zero tolerance
for chairs?

     What about belts, scarves and just about any article of
clothing?  Can you name any article of clothing that couldn't
be used to beat, choke, strangle or smother someone?  Those
computers many schools now provide could be used to beat
someone to death.

     The zero tolerance for weapons problem came up years
ago at insane asylums.  They addressed the problem by
confining individual inmates naked in padded cells.  Even this
extreme had its flaws.

     As martial arts enthusiasts well know, hands, feet and
other body parts can be used as weapons.  I read of a woman
who allegedly used her boobs to smother her boy friend to
death.  The article was a bit unclear as to weather the
smothering was an accident.   Weapons are still weapons even
if used accidentally.  A gun doesn't cease to be a weapon when
fired accidentally.

     The asylums refined their solution by adding
straitjackets.  The jackets didn't take away the weapons. 
They did render those weapons less effective.

     If schools are truly serious about banning all weapons
they have only one option, confine each student and each
teacher naked in individual padded cells.  I'll leave it up to the
schools to figure out how to deal with the keys to the cells.

     Would anyone be so rash as to call the collection of
cells and inmates a school?  Alas, there is the answer.  School
administrators have been plunging down the wrong road. 
There is more than one way to forever achieve zero weapons in
schools.  The simplest and only way to have zero weapons in
schools is to eliminate schools.

     Some will complain about undesirable side effects.  If
the most important thing is to achieve zero tolerance for
weapons, every side effect is less important.  So, forget about
them.

     If schools should focus on quality education rather than
obsessing about weapons, real or imagined, then fire the
administrators that are chasing the wrong goal.  The first step
toward quality education is to bury blind obsessions and go in
the right direction.

aldmccallum@gmail.com
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Copyright 2015
Albert D. McCallum

Thursday, February 12, 2015

Secure Borders?

Column for week of February 2, 2015

     Many people are concerned the U.S. borders are not
secure.  Some demand that the borders be secure before even
considering reform of immigration laws.  What is a secure
border?  How can a border be secured?

     Is a border secure only if it can't be crossed?  Does
secure only mean that people and goods must have permission
to cross?  Perhaps secure means something else.

     The biggest concerns about border crossings seem to be
terrorists, certain mind altering substances, general immigration,
and foreign made goods.  Most probably agree that keeping out
terrorists is a good idea.  Not many are likely to be too upset
about keeping out various mind altering substances.

     Opinions differ widely on immigrants and importing of
goods.  Some want to keep them all out,  Others would let
them all in.  What people want and what they can do are often
two different things.

     At the moment focus is on the border with Mexico. 
That is only a small part of the U.S. border.  There are also the
borders with Canada, two oceans, and the Gulf of Mexico. 
These make thousands of miles of borders to secure.  Decades
of effort and hundreds of millions of dollars spent have failed
to secure these borders sufficiency to create a shortage of
imported illegal drugs in this country.

     Also, there are supposedly  million foreigners in this
country illegally.  I find it interesting that the branch of
government that counts them can find them but the branch that
deports them can't.

     Supposedly one third of those illegal immigrants came
in with permission but "forgot" to go home.  Securing the
borders won't stop that.  Should we ban everyone to keep out
those who won't voluntarily go home?  Should we build and
maintain a concrete wall on the entire border to keep out the
rest?

     Should we also ban swimming and boating off the
coast?  Foreigners might mix in and come ashore.  I suppose
we could build that wall along the shore and require swimmers
and boaters to show their passports when coming ashore.

     That security will need to apply to the Great Lakes too. 
I have some experience with that one.  My first illegal border
crossing was into Canada by canoe.  My second was when I
paddled back.

     Using border security to keep out terrorists is a lost
cause.  Anyone with some resources and determination has a
good shot at making it in, even with a wall.  Forged and stolen
documents still work.  Catching 50 percent would only increase
the cost of terrorism.  Determined terrorists will spend
whatever it takes.

     Current border security is less than a bad joke.  A man
in Maine regularly went to Sunday mass in Canada.  The U.S.
then "closed" the border crossing on weekends.  The man drove
around the gate, went to mass, and drove around the gate on
his way home.  He was arrested the next day for the illegal
entry.  If he had been a terrorist, What are the chances anyone
could have found him to arrest him the next day?

     Getting even close to controlling all border crossings is
as much a fantasy as eradication of cold viruses and
mosquitoes.  Rather than throwing resources at the impossible
dream, we will be far better off if we use those resources
wisely in a realistic way.

     If we allow people who want to come and work to do
it, we would have more resources left to spend solving real
problems.  This could also eliminate another serious problem,
the creation of a gray zone culture of illegal immigrants.  We
already have those 11 million illegal immigrants.  The political
and economic realities are that most of them aren't going back,
no matter how much some may wish.

     Immigrants who work also consume.  They don't reduce
the number of jobs available for citizens.  Someone has to
produce what immigrants consume.  Government, not
immigrants, reduces the number of productive jobs.  That is
one thing government is good at.

aldmccallum@gmail.com
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Copyright 2015
Albert D. McCallum