December 13, 2011

Holiday Butter Shortages

In a recent article by David Charter a crisis in Norway was
discussed. They ran out of butter.
analysts say that the root of the problem is the near-monopoly held by the
giant domestic company Tine, which controls 90 per cent of the butter supply in
a country protected by trade barriers from European Union imports.” Norway,
which is one of the richest countries in Europe has an outdated state monopoly
system. This was created to keep prices high and protect local farmers.
From an
Austrian perspective this all rings true. Monopolies are unable to detect
changes in consumer demand because the price they set is the price consumers
must pay. Monopolies are possible only through state mandates. Otherwise,
butter competitors would have pushed Tine out of the competition or forced it
to lower its price.
Even more
exciting to see, however, from the perspective of a student fresh with Austrian
ideas is that exchange finds a way. The market finds a way.
“A man in
Lillehammer who advertised half a kilo of butter for sale received bids of up
to 3000 kronor ($A500), making it almost as expensive as silver at around $A30
an ounce. A Russian man was caught trying to smuggle 90kg over the border from
Sweden last week.”
Traeland Rostoel, 20, a student at Oxford, said he was taking a few slabs home
in his suitcase for Christmas.”
You cannot
suppress the world of human action.

December 11, 2011

But that isn't fair!

Especially with the 2012 elections coming up and the Occupy movement, there is a lot of talk about taxes, mostly about taxing the rich more, as it always is. CNN reports "To Obama, the fact that the wealthy can so whittle down their tax burden is 'the height of unfairness.'" This is silly, for two main reasons. First off, if the rich can whittle down their tax benefits, congradulations to them, I see this no differently than I see the company that can produce their product at a lesser costs and enjoy more profits (which we have already discussed on many occasions why companies that can do this should not be punished because they made 'too much profit"). Second off, there's that word fair again. We constantly discuss in class what are we striving for? Fair is arbitrary because the question fair to who? cannot be answered (in a non-sarcastic way). I cannot help but think about to Mises (I believe) who explained that people wanted socialism not because they thought it was a better theory, but simply so that those that were more well off than they were could suffer the same as them. Also, I think about how at a certain tax level people either begin working less so they don't reach that tax level and can keep more of their earnings or they simply begin working out of sight of the government so they are not taxed. Either way, it is possible to be a greater loss in tax revenue then if they had not raised the tax rates. Also, Hayek is absolutely correct when he tells us that there is no way to keep these arbitrary taxes from getting out of hand, "But is there any principle which we can hope will be adopted and which will prevent that the opportunity thus opened will be abused? It is hardly to be expected that an attempt to limit the scale of progression to some particular maximum figure would, in this respect, be effective. Such a percentage figure would be as arbitrary as the principle of progression itself and would be as readily changed when there was need for additional revenue." (pg 283) If only people would rethink their desire for 'fairness' and 'efficiency' then perhaps we could start replacing the bad ideas with good ideas as Mises suggests we should do.