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Archive - November 2005

Lumps of Coal for Christmas

Housing Despots

Dripping Springs @ Grand Canyon

Tax "Vigilantes" meet for Lunch

Republicans Running on Empty

Blog Roundup - 11/14/05

Wal-Mart Bashing

Bush, Iraq & Korea

Brown v. Foster

2 Cheers for the Daily Sun

East Meets Grand Canyon

Thursday, November 3, 2005

     Lumps of Coal for Christmas - Peabody's Black Mesa mine, some hundred miles, or so, northeast of Flagstaff, near the city of Kayenta, is set to close down within the next couple of months.  Hundreds of workers, most of whom are Navajos, will lose their jobs.  Peabody is the largest employer on the reservation and generates hundreds of millions of dollars of wealth to an otherwise destitute area.  And, who is responsible for all this?  As it turns out, it is our friends and neighbors at the Flagstaff-based Grand Canyon Trust You see, the Black Mesa mine has only one buyer of its coal - Southern California Edison's Mohave Power Plant, in Laughlin, Nevada.  Some years ago, the Grand Canyon Trust, with others, filed a lawsuit against SoCal Edison, to force them to install expensive pollution reducing equipment.  The lawsuit was based on the rather murky notion that the Mohave plant was responsible for worsening visibility at the Grand Canyon.  Of course, that's not true, and you can read more about this topic in the Grand Canyon Visibility Transport Commission Study.

     As the deadline for compliance has neared, the owners of the power plant have decided that it makes more sense to just close it down for good.  They may yet decided to install the necessary equipment and reopen in a couple of years, but the good money is on a permanent closure.  And, what, exactly, will this accomplish?  Nothing of course - well, nothing insofar as the visibility at Grand Canyon is concerned.  Nothing insofar as providing cheap electricity is concerned.  And, nothing insofar as providing excellent jobs in a place that desperately needs even modest jobs.  We can all thank goodness that the elite snobs that help fund and propagate the Grand Canyon Trust, many of whom probably get some of their power from the Mohave station, can sleep better at night knowing that they have done humanity this vital service.  Or, at least they can sleep well laboring under this delusion.

In the Daily Sun, this past Tuesday's editorial laments the economic disruption that is going to result from this mini-Kyoto arrangement, but won't "point fingers" as it "doesn't seem very productive."  Oh, far from it!  We should be pointing fingers - otherwise how will we be able to stop this in the future?  The Grand Canyon Trust has also targeted the Navajo power plant in Page, Arizona, as well as urging non-economic criteria for operating the hydroelectric power plant at nearby Glen Canyon Dam.  They likely won't be fully satisfied until the high plateaus of northern Arizona become economic wastelands, depopulated and more closely resembling the world of Mad Max.

Photo:  The sun sets behind the Peabody coal silo near Kayenta.  The silo holds coal destined for the Navajo Generating Station in Page, AZ, and is located alongside U.S. 160.  Photo taken by Eric Dhooge.

Click on the picture to see a larger image.

Saturday, November 5, 2005

     Housing Despots - This past Tuesday I participated in the annual Economic Outlook Conference, sponsored by Northern Arizona University and Bank One.  My task was to comment on the macroeconomy and to forecast interest rates and inflation (rising, but slowly).  Economist, and colleague, Ron Gunderson, noted that Flagstaff's current housing price index sits at 126 - meaning that homes here of comparable quality with homes around the country, cost 26% more than the average price.  Of course, this isn't surprising.  One would hardly expect the price of all homes, of equal quality, to command the same price everywhere.  In Phoenix, by way of comparison, this index is at about 97.

     Another of our presenters was Steve Pritulsky, a vice president of Pulte Homes, Arizona's, and the nation's, largest home builder.  Quite naturally, he focused his attention on the housing market and had some well-articulated comments about the situation in Flagstaff.  He noted that it is difficult for Flagstaff to expand in that we are surrounded by land whose use is restricted (National Forests, National Monuments, wilderness lands, State Trust lands, et al.).  Looking out across the attendees, which included the city's mayor and two, or three, city council members, city staff as well as county government representatives, Pritulsky argued that, to slow down the acceleration in housing prices,  there was no substitute for increasing the supply.  Requiring home builders to allocate a portion to "affordable" units is not going to "solve" this problem and, if anything, it is likely to exacerbate the situation. 

     It would have been nice if the representatives of our city government had heard this message as loudly and clearly as I did.  That very night, at the weekly City Council meeting, a final plat for a 46 unit Pine Canyon development was turned down, because it did not include unfettered public access on the privately-maintained roads in the complex.  And, on Wednesday, the developer filed a $52 million lawsuit against the city, arguing that the access issue is separate from the final plat, and that it should be properly litigated in other venues.  This dispute goes back two years, and the developers have ceded much during that time in order to get the city's approval.

     Clearly, our city government is full of people who really don't care about the cost of housing, but, instead, are more concerned with using the power of government to preserve their quality of life.  While the old west may be a thing of the past, tin-plated despots continue to push their agendas, to the detriment of the health and well-being of the average citizen.

Sunday, November 6, 2005

     Dripping Springs @ Grand Canyon - A couple of weekends ago I went with a group of colleagues, friends and family to the Grand Canyon for a hike down the Hermit trail to Dripping Springs.  It was a great day, although I have previously blogged on the pitiful transit system that we had to use to get to Hermit's Rest (West Rim Shuffle).  It was a long day, and I wish it had been a Saturday instead - that way, we can recoup on Sunday!  Still, it was great weather and we all had a great time.  We stopped to visit the dinosaur tracks in the Coconino sandstone, and, on our return, we poked around at the abandoned Sweetheart Spring.

To see many more photos and read about the trek that day, follow this link to Grand Canyon's Dripping Springs Trail.

The Dripping Springs basin
from Hermit's Rest. 
The trail junction sign about a half mile from Dripping Springs.  Dinosaur tracks (yes, they are small) from millions of years ago. 
Click on any picture to see a larger image.

Tuesday, November 8, 2005

     Tax "Vigilantes" meet for Lunch - "The price of liberty is eternal vigilance," said Tom Patterson, Chairman of the Goldwater Institute, at last Saturday's Arizona Federation of Taxpayers' annual awards luncheon.  "That must make you vigilantes," he continued, to the hearty chuckles from the assembled crowd.  It was a dose of reality to be mingling with folks that share a common vision of limited government, economic freedom and individual liberty.  The onslaught from the news media and popular culture can be quite depressing.  How, for example, can the French government be so clueless as to let rioters burn many thousands of vehicles as they rampage through the streets of suburban Paris?  It represents an abject failure of the proper role of government - the failure to protect individual liberties.  Wouldn't the world be a better place if government officials worked hard to promote liberty rather than figure out new and exciting ways to tax citizens and redistribute their income to special interests?  In a word, "Yes."  As Patterson also noted in his comments, we are not against poor people, we are for liberty.  I would take that one step further - by promoting liberty, we do more for poor people than any government program can accomplish.

     Chad Kirkpatrick and Tom Jenney, leaders of the AFT, are to be commended for pushing their agenda of lower taxes and their unceasing vigilance in pursuit of responsible government, as difficult a task as that certainly is!  They gave out awards to honor legislators that strove to challenge the beast that is leviathan.  The two top honors went to state senator Dean Martin (the Desert Tiger Award) and state senator Ron Gould (the Barry M. Goldwater Legislative Leadership Award).  Martin won for sponsoring a bill to reduce business property taxes from 25% to 20% - sometimes victories are won in mighty small increments!  Gould won for having the best score on the AFT's 21st Annual Legislative Scorecard, with a total of 89%.  Our own District 2 legislators scored in the 20%-29% category (Big Government Friend), even below the score given to Governor Napolitano!  The lowest scoring legislator, Kyrsten Sinema, got only 14% and was awarded the V. I. Lenin Award - graciously, she attended the luncheon to accept this dubious honor.  Maybe that means she can be turned from the Dark Side??  My favorite was the Desert Mirage Award, for the "silliest legislation" which went to the newly approved movie tax credit, whereby movie companies can write off a big chunk of their taxes for expenses incurred in the state.  As my spouse would say, OMG!

     The keynote speaker for the luncheon was Senator John Kyl (pictured to the right).  He talked about the "inside baseball" aspects of some of his initiatives to reduce government spending and taxes.  He related that, to end the death/inheritance tax, he needs 60 votes.  He told us that he had 62 for a bill that would have eliminated much of this tax, but that was just before Hurricane Katrina hit, and many of these supporters now have cold feet.  Kyl hopes to revisit this issue in the spring and hopes that he will be able to, once again, fashion a 60-vote majority and get that tax reduced.  He needs 60 votes because it involves changing the law.  However, to temporarily suspend this tax, only 51 votes are needed.  Currently, this tax is being phased out and will be eliminated by 2010.  But, in 2011 it will be fully restored unless it can be, once again, temporarily suspended, or permanently changed.  That process, he argued, is why President Bush has been working hard to "make the tax cuts permanent."  Otherwise, we find that these advances will dissipate over time.

Friday, November 11, 2005

     Republicans Running on Empty - Oil companies are making huge profits.  Hooray for them!  It demonstrates how markets work, it illustrates the gains to cartelization and how difficult they are to sustain, and it reveals how strong and deep is the popular sentiment for socialism and collectivization, and how difficult it is to adhere to the principles of liberty.

     The most egregious example of the latter point is the behavior of some Republican Senators in the "oil hearings" this week - Grassley (IA) urges oil companies to donate a portion of their profits to the poor, Gregg (NH) proposes a windfall profits tax on oil, and Frist (TN) says oil companies need to explain their profits.  Others have been making equally inane comments, that must be pure politics, since it represents a complete repudiation of principles that I associate with the Republican party.

     How Markets Work.  Oil is a product for which the demand is rather unresponsive, in the short run, to price changes.  Anyone who has ever considered this issue knows that.  It is more like the demand for insulin than it is the demand for apples.  That is, when the price of oil goes up, people cut back some, but not a lot - conversely, when the price of apples go up, people buy bananas and oranges and pears, cutting back quite a bit on their purchases of apples.  So, the hurricanes wrecked some infrastructure, which makes it difficult to get oil through the pipeline and to refineries and to service stations to sell as gas.  Consequently, the price rises.  Well, that's exactly what we want to have happen (see, also, No Shortage of Fuelish Politicians).  We need to reallocate these supplies, so the price goes up to insure that oil/gas flows to it highest valued use.

     Why the "Windfall Profits Tax" is a Misnomer.  Our standards of living grow over time only because of investment spending.  Investment represents a deferral of consumption and is funded by saving.  Households don't save.  Businesses save.  Virtually every penny of investment comes from business saving.  You probably call it profit.  Many seem to think it is evil.  The headline in the Arizona Republic on 11/9/2005 reads "High profits draw scrutiny."  Tax them away?  Sure, and that means less investment, less growth, sliding standards of living.  Yes, that is exactly what anticapitalists want, but that doesn't mean we should help them!

     What Cartel Lessons can we Learn?  A cartel arises when dominant firms in an industry get together and act like a single seller (i.e., a monopoly).  To be successful in raising their profits, they must reduce production.  The hurricanes illustrate this outcome very well.  It - Katrina - forced a lower supply on the industry, and prices and profits went up, just as if they were a cartel.  Of course, it shows us that this industry is not a cartel, otherwise they would have done this earlier, and they wouldn't allow the price to fall now.  Even with OPEC striving to make this industry a cartel, they have not succeeded - there is still too much competition to keep the players in line.  Now, if only the cowardly Republicans in the House would revisit the ANWR decision, we might see even further evidence of this competition at work, to the benefit of us all.

     Defending Liberty.  It should be the basic right of every person to use and develop their private property without the intervention of the state, as long as transactions are voluntary and one's actions doesn't harm the property rights of another.  That is the basis for liberty.  Yet, there seems to be a widespread willingness to penalize this behavior in the criticism of the profits being earned by oil companies.  That is unfair and it is untenable.  Complain and grumble all you want about the high price of gas, but using the power of government to thwart capitalistic impulses that generate short-term gains will do much more long-term harm than should be accepted.  [By the way, how come there isn't a outcry against these short-term policies, and an appeal to take the longer-term view?]

Monday, November 14, 2005

     Blog Roundup - 11/14/05 - Here are some excellent essays/blogs that have popped up recently:

"Enjoy!" from Jackalope is on a topic near and dear to my heart - the problems with mass transit.  They are almost too numerous to list.  Clump them all together and file under:  frustrating and exasperating; at times even horrifying.  His excellent deconstruction of the "ideal" ride on the Phoenix light rail system (still a few years away), as written up in the Arizona Republic, is bound to have staying power in the annals of transit critiques.  I did a blog back in September on the general topic, as applied to our nearby "crown jewel" in Grand Canyon: Access Challenged.

"Who is Lying about Iraq?" by Norman Podhoretz, courtesy of Commentary Magazine, has been getting a lot of coverage in the sector of the blogosphere that I visit.  On Veteran's Day, President Bush decried the war critics for rewriting history.  If you didn't know what he was talking about, read Podhoretz's essay.  You'll get the full skinny on how these critics (e.g., Senators Rockefeller, Levin, Clinton, Kerry, Kennedy, et al.) sang a different tune just a few years ago.  Quite frankly, I don't understand the Dems here.  I would think that they would be better off standing shoulder to shoulder with Bush, insofar as Iraq goes, and make the war a non-issue.  Sure, they have radical elements in their base that will go ballistic over this, but so what?  These folks don't really have a viable alternative, even if Ralph Nader does run again.  I blogged about the dishonesty of some of these war critics earlier in Deconstructing Liberal Nonsense.

"Republicans vs. Oil" by Jerry Taylor at National Review Online, does a great job of taking to task the Republicans in the Senate that have been critical of oil companies as of late.  Taylor does a fine job bringing in many facts and details to enhance his argument.  His characterization of the Republican party going into an "intellectual meltdown" echoes many of the comments I made in Republicans Running on Empty.

"Cosby was Correct" by Tyler Cowden at Marginal Revolution, does a little digging and finds that Bill Cosby's remark about black parents buying $500 sneakers for their kids was far closer to the mark than you might have thought!  The politically correct among us would have us believe otherwise.

Tuesday, November 15, 2005

     Wal-Mart Bashing - Last night, at the Orpheum Theater, in downtown Flagstaff, local activist groups sponsored a free screening of the new movie, The High Cost of Low Price, a Wal-Mart bashing tirade that is short on meaningful evidence and long on stories of individual "suffering," although that point can stand further analysis.  Certainly, this film will not be nominated for an Academy Award, unless a new category called "Best attempt to mimic a documentary" is created.

     The movie opens with many vignettes about closing businesses and soon-to-be out-of-work employees that are either hunters, conservatives, Republicans, or all three.  The intention here is to show that Wal-Mart must be bad if Republicans can bad-mouth them!  I am not sure that this fine point played well with the Flagstaff audience - social activists and left-over hippies.  I am sure that they felt quite conflicted about cheering on an opponent of Wal-Mart who drove around in a pick-up truck with a Bush sticker on the bumper!  [I'll bet that the crowd was equally conflicted when the film compared, favorably, the charitable giving of Bill Gates with that of the miserly Walton family!]

     The Ken Burns-ian touch of a mournful harmonica as a backdrop to the story of an IGA store closing down plays as just plain sappy without a poignant storyline.  So what if an IGA store closes down?  That is the nature of competition.  And, by the way, IGA is a huge company, with over 4,000 stores generating some $20 billion in annual sales all around the world - including in China!  That is especially ironic, since the filmmakers strove to cast Wal-Mart's association with Chinese producers as some kind of evil partnership - if so, then why should the viewer care if an IGA store closes down?

     The movie is amazing for its weak content.  Much of the film "bashes" Wal-Mart for relentlessly grinding down costs.  Of course, that allows it to offer lower prices and is (part of) the key to their success.  Consumers like low prices, and this movie doesn't conduct a meaningful interview with any consumer.  I don't shop at Wal-Mart very often.  One reason is that it is usually quite crowded and the parking is tight, which means that many consumers like to shop there.  And, my spouse prefers to shop at Target, although she does go to Wal-Mart to buy ammunition for her many guns, but that's another story.  Still, when I do go into my local Wal-Mart I notice a high proportion of Native Americans - mostly Navajos and Hopis.  Why is that?  To me, it makes perfect sense - as the poorest ethnic group in the country, Native Americans are likely to look quite closely for ways to stretch their incomes*.  I have seen data from the Hopi reservation that show most residents make major shopping trips to Flagstaff.  By shopping at Wal-Mart they not only take advantage of lower prices, but also get access to a wide variety of products, lessening the time they must devote to additional travel around town.

     The opponents of Wal-Mart (e.g., FAN and FFF) would use the power of the government to keep this retailer out of town, and, they hope, out of the region.  They still pine for that outcome.  Since this would mostly hurt lower-income consumers, that makes these opponents snobs, at best, and elitists, at worst.  Since this would also adversely affect Native American consumers, there are unmistakable overtones of some sort of "soft racism" here as well.  I wouldn't go so far as to claim that these activists are racist in the fashion of the KKK, but the result of what they are tying to do has definitive racial consequences, none of which I have ever seen explicitly addressed by these groups.  In fact, this issue of "soft racism" may also extend to their condemnation of Wal-Mart's use of Chinese labor - of course, this argument is also jingoistic in the worst possible way.  And, when last I checked, China was, like Cuba, a "worker's paradise."  Yeah, the kind of worker's paradise that these activists would have us become!

     The movie condemns Wal-Mart for seeking, and getting, special tax breaks and helping to enroll some of its employees into social welfare programs.  In other words, Wal-Mart is acting like a government social counseling agency.  And, that's a bad thing???  It shows far more concern for their workers than I bet any other company does.  After all, if a worker is eligible for state benefits, why is Wal-Mart evil for helping them to access these benefits?  Instead, why aren't other companies condemned for failing to help their workers in this way?  Of course, the critics of Wal-Mart want to use this example to protest the wages they pay.  Nonsense.  If this "problem" bothers you, then stand with me to oppose these wasteful and counter-productive social welfare programs.  And, furthermore, stand with me to oppose local government special tax breaks for any company (which happens often even in blue-Flagstaff).

     There is more here, and it is equally specious - blaming Wal-Mart for crimes committed in their parking lots for example, or how a frustrated wilderness activist went to their local TV station to complain about poorly maintained bags of fertilizer stacked outside their Wal-Mart.  Amazing - you can protest on TV and the executives at Wal-Mart will react to clean up their act!  Who would have thought it?  Well, anyone with half a brain would have - no firm can stay in business for long if it's reputation can't be sustained.  And, nothing in this movie makes me think any differently with regard to Wal-Mart's reputation.  Indeed, during the segment decrying Wal-Mart's environmental record, I was looking for someone from the Grand Canyon Trust to stand up and support the retail giant, which has just forked over a significant chunk of change to help the Trust buy and maintain the Kane Ranch, north of the Grand Canyon.  You won't find any mention of Wal-Mart at the Grand Canyon Trust's site, but you will at the Wal-Mart site!  I guess that makes the folks over at the GCT either parasites or hypocrites, or both.

     Wal-Mart started with one store in 1962, and pioneered a business model that has competed successfully against a myriad of other retail firms.  They now have over 5,000 stores and employ some 1.6 million people.  How hard is it to find disgruntled employees?  Or, disgruntled former employees?  Or, former managers?  It can't be hard - not with a firm that is so huge.  Are there problems?  Of course there are.  Nothing is perfect.  Do some managers engage in illegal activity?  Sure they do - and let's hope they get caught and pay the price.  But, do you condemn an entire business because of the actions of a few?  Why, that sounds like profiling!  Add that to the list of what's wrong with these anticapitalist crybabies.

     So, let's give three cheers for Wal-Mart.  I doubt that they will be able to sustain themselves for another generation, but I could be wrong.  They boost the purchasing power of their consumers and show us the benefits of a robust capitalist economy, even if some blowhards despise their success and want to curtail our economic liberties.  So, see the movie if you have some free time, although even if it's free, you're still probably getting ripped off.  Or, if you have thirteen bucks you want to get rid of, you can buy the DVD at the website linked above  - interestingly, it looks to me like they are pricing it below the typical price for a new release at Wal-Mart!  Savvy!

Coming soon - "Why Wal-Mart Works", a different take on the retail giant.  This film, done by independent filmmaker Ron Galloway, is due to be released ... sometime soon.  Do you think that FFF will sponsor a showing of it at the Orpheum?  Yeah, neither do I.

Also coming soon - I will be participating in a radio talk show "discussion" of Wal-Mart on Sunday, November 20 from 7 pm to 9 pm, MST, at K-JACK, the local on-campus radio station at Northern Arizona University.  Although they have the power of a fading light bulb, you can catch their programming on the web, available world wide, at this link.


* From a report issued by the state of Utah in 2003, the median family income on the Navajo reservation, in 1999, was about $15,300.  Compare that to a median income for all U.S. households, in 2003, of about $44,500.

Friday, November 18, 2005

     Bush, Iraq & Korea - Yesterday, President Bush was in Korea and, at a press briefing, the topic of Iraq came up, as you would expect.  He reiterated his condemnation of those spineless and pathetic members of Congress that seem to believe that they can "rewrite history," as the President put it, and pretend that they didn't say all the things that we know they did say.  The fundamental question of whether it is worthwhile to be in Iraq could not have found a more fitting locale for Bush's response than in South Korea.  I just wish he had taken the opportunity to draw out the analogy here.

     Consider what the critics would have us do as regards Iraq - withdraw our troops and probably plunge that country into a prolonged and bloody conflict.  It is even possible, given the not-so-secret involvement of Iran in fueling the current conflict, that a war between those two countries could be re-ignited.  How will that make us any better off, much less safer?  The Bush plan - to carve out a free and democratic state in the Arab world - would pay us such enormous dividends in promoting peace and stability in such a chaotic region, that I have come to believe that the members of the anti-war lobby are just insane for rejecting this.  Some get up on their high horse and proudly thump on their chests that they are just as much a patriot as the next fellow, but we all know that isn't so - these people aren't patriots, they're parasites.  They are entitled to their opinions, but they're still parasites.

     Now, back to South Korea.  There was a war that probably few people really know about, beyond whatever they learned about it watching M*A*S*H, which ran for many more years than the war lasted.  It was brutal.  It was intense.  It was a close call in terms of the outcome and in terms of whether it would escalate into a nuclear war.  Nearly as many Americans lost their lives in that brief war (1950-1953) as did in Vietnam - more than 50,000.  We may still argue the academic points of our involvement, but that is a moot debate.  Instead, lets ask the question that is currently being asked of Iraq - Is/Was it worth it?  Of course, with regard to Iraq, we won't know the answer for many years.  But, the Korean War has been over for more than 50 years now, and there are lessons to learn.

     There are many possible scenarios that we can speculate on if we had lost that conflict.  Perhaps the Chinese would have been emboldened to take over Taiwan.  Perhaps an armed conflict could have erupted with Japan.  But, let's pass on those and consider the one thing we know with certainty - the people of South Korea (some 50 million today) would have been subjected to the abysmal conditions that have racked the people of North Korea (including famine in a land of plenty) for the last half century, which will continue for who-know-how-many-more-years.  Following the war, in 1953, South Korea didn't immediately transform itself into a fully functioning democracy - it took time.  A long time.  But, its citizens had rising standards of living and the political process did evolve, and improve, over time.  South Korea is a success story in humanity.  Knowing what we know, today, would anyone be willing to stand up and say that we were wrong to get involved in that war, and that the sacrifices made were made in vain?  And, so why are there so many, especially in the Congress of the United States, so willing to stand up and make those statements about Iraq?

Click on the photo, above, to visit the Korean War Veterans Memorial website.

Monday, November 21, 2005

     Brown v. Foster - Last night, colleague and friend, Doug Brown, and I were on the NAU campus radio station K-Jack.  Ostensibly, we were to debate the issue of Wal-Mart, as related to the recent film, The High Cost of Low Price.  It turned into a more far-reaching debate about capitalism, society, social justice and humanity.  Not a bad night's work, but I don't suppose we'll ever be asked back, since we have talked about everything!

     Hosts (and students) Jason and Linda Marie were well-informed, well-prepared and well-spoken.  They have been on the air only three weeks, but have a good on-air rapport with one another and I hope they stick with this endeavor (called "American Ignorance" and airing Sunday evenings from 7 pm to 9 pm - click on the K-Jack logo to go to the station's web site).

     While Doug and I parried back and forth on the topics of capitalism (me - capitalism is good; Doug - capitalism is bad) and on Wal-Mart (me - Wal-Mart is good; Doug - Wal-Mart is bad) and on the power of authoritarian control (both - authoritarian control bad) and while the discussion did get a bit heated from time to time (Doug - capitalism is founded on genocide; me - then, why didn't that work for Stalin?) we left still friends; Doug pedaling his way (he absolutely bikes everywhere, in all possible weather conditions) to a local pizza place and me, hopping in my imported Japanese pickup, heading to the office to upload some files for class.

     I would write more on the content of the debate, but it would take a long time to put into a coherent form suitable for blog reading.  So, instead, just re-read my blog on Wal-Mart Bashing!  In the photo, that is Doug on the left and me on the correct right side.

Update:  I had forgotten about the hilarious JibJab "Big Box Mart" video (linked on their home page).  It has a similar story line as "The High Cost of Low Price" but isn't as pretentious.  But it is pretentious nonetheless.  The economics is flawed, but it is funny.

Thursday, November 24, 2005

     2 Cheers for the Daily Sun -  Last Sunday, the editorial in the local paper, the Arizona Daily Sun, concerned the issue of "turkeys [and] subdivisions" in the small burg of Dewey, some 75 miles south and west of Flagstaff.  A local mainstay is Young's Farm, which is soon to go out of business in this location.  They won't be going out of business entirely, as they plan to relocate to Colorado.  As you may infer, the area is being transformed from agricultural use to residential use.

     The editorial wasn't really just about Young's Farm; instead it was about development, the role of government and capitalism.  I am not usually too impressed with the editorials in the paper, as I just can't fathom how they fail to draw broad-based lessons from their own market experience.  But, this editorial did a lot to restore my faith that they can, and do, get the essentials - well, at least some of them.  Before turning to what they got wrong, here are some selected quotes that cause me to offer my qualified salute:

Competition would set the price of any given commodity, whether it's turkeys or houses.

[T]he U.S. economy is dedicated to growth and the material benefits it brings:  better jobs, higher incomes, a higher standard of living.

[C]apitalism also supports democracy, a tolerance of diversity, social mobility, and a neutral and fair judicial system ... None of those was possible under socialist dictatorships.

     That's pretty good stuff.  Still, they they haven't totally turned away from the Dark Side.  Some issues that they need to reconsider:

1. Some commodities, like water, "are so valuable that they are held in common." - Ouch!  The problem with commonly held property is that, because nobody owns it, there is only a very weak incentive to preserve it.  It is called the "tragedy of the commons" in economics.  It is the reason that the Pilgrims were starving for years - the popular notion of the Pilgrims feasting and celebrating Thanksgiving is really just a celebration of their ability to throw off the shackles of common property and adopt an economic arrangement of private property.  Water could be allocated in a market process, and we'd be better off if it was.

2.  "Capitalism ... depends on constant growth to survive."  Double ouch!  I have never seen any such tenet applied to capitalism.  Indeed, most of our study of economics is done in the framework called "comparative statics" whereby we look at the allocation process, based on private property (i.e., capitalism), when the resource base is fixed (i.e., not growing).  Even in a pure exchange economy (where there is neither growth nor production; e.g. German POW camps during WWII) markets provide a superior allocative function than any alternative.  I would argue an opposing view - we need capitalism if we are to reap the full benefits of growth.

Sunday, November 27, 2005

     East Meets Grand Canyon -  During the current semester, Northern Arizona University is hosting some thirty young students and professors from the Fujian Normal University in China.  They are studying American-style university education.  Three of the professors are sitting in on College of Business classes, including one of mine.  I invited all three to go hiking in the Grand Canyon and they enthusiastically accepted.  One had to bow out due to a sore knee that has been bothering him since a hike up Mt. Humphreys a week ago.  But, Yu Shan, Zhang Huarong and I headed up to the South Rim early Saturday morning, leaving town at about 6:30 a.m.  We were on the Bright Angel Trail at 8:10, about fifteen minutes ahead of the first mule train.  It is always good to be in front of the mules.  They travel at a fairly good pace, so it isn't really a problem of speed; rather it is what they leave on the trail that I would prefer to avoid.  And, being in front of them means we can avoid those . . . qualities of the Grand Canyon experience.

     The day was cold to start with, and windy.  We also had a bit of high cloudiness that made things grayish for most of the morning.  Occasionally the sun would poke through and light up the plateau below us, or the cliffs of the north rim.  The chill, and the wind, left us quickly, although it was cool all the way (6 miles) to Plateau Point, a wonderful viewpoint in the canyon, overlooking the Colorado River, and with a sweeping panorama of the north and south rims of the canyon.

     We ate lunch at this viewpoint and I learned something new I need to add to my pre-hike planning procedures.  I did check to see that my companions had warm clothing and water and took it on faith that they did bring a lunch to eat.  While Yu Shan brought along a rice dish, and other items to snack on, Zhang Huarong brought along a box of brownies.  Not a box of prepared brownies - he brought along a box of brownie mix.  I told him he needed to bake them first and pointed to the directions on the box.  He opened the package up and, while rubbing the mix between his fingers, said, "Powder."  It was quite a hoot, but he did have plenty of other things to eat.

     The trip back up went very well.  The skies opened up and we had much better views.  We left Indian Garden (4.5 miles from the top and the only spot with water and restroom facilities) between two mule trains and actually caught up to and passed the lead mule train.  That seems unusual to me, but the wrangler leading that group was stopping quite frequently to rest the animals.  We covered the 4.5 miles, and 3,120 feet in elevation, from Indian Garden in just two hours and ten minutes.  Excellent pacing.  We had spent some seven hours on our 12 mile hiking trip.  Afterwards, we ate in the Bright Angel Coffee Shop and did a little shopping before returning to Flagstaff.  When we got into town, at 6:30 p.m., it was dark and we were getting the beginning of a very light dusting of snow.

Click on any picture to see a larger image.

Late afternoon view of Plateau Pt.

Dennis, Yu Shan and Zhang Huarong.

Colorado River from Plateau Point.

"Mile and a Half" rest house sits below the Coconino sandstone. Mules at Plateau Point. Orphan Mine tower can be seen on the South Rim. Along the trail in the Redwall section, just below the Three Mile rest house.

The Kaibab Journal