The other day, I made a Twitter pronouncement that market forces should be embraced where 1) consumers have good access to information; 2) there is legitimate choice; and 3) the costs of production are not externalized on to people who are not parties to the transaction. (I like my blanket decrees to be in lists of three – e.g., profit should reward 1) labor; 2) creativity; or 3) risk; and government should be 1) of the people; 2) by the people; and 3) for the people.)

The process of fracking to extract oil strikes me as a market activity that doesn’t meet items #1 or #3 (of the first list). We don’t know what chemicals are in the solvent the frackers are pumping into the rock; and the frackers aren’t acknowledging, let alone paying for, the damage that is caused to those who come into contact with the waste from the process.

[Hydraulic fracturing] is the process of initiating and subsequently propagating a fracture in a rock layer, by means of a pressurized fluid, in order to release petroleum, natural gas, coal seam gas, or other substances for extraction. The fracturing, known colloquially as a frack job (or frac job), is done from a wellbore drilled into reservoir rock formations. The energy from the injection of a highly pressurized fluid, such as water, creates new channels in the rock which can increase the extraction rates and ultimate recovery of fossil fuels.

The EPA is signalling that it is getting into the business of regulating fracking. The usual suspects – industry and anti-government lawmakers – are criticizing the EPA for getting involved. But the market alone can’t keep fracking companies honest. We don’t know what, exactly, they are pumping into our streams and groundwater. We can’t honestly expect them to freely admit that they are contaminating the water that others drink or rely on for other purposes. And, the price of their product does not reflect the damage caused by such contamination.

Where the price doesn’t reflect externalized costs, the market is not efficient in allocating resources. Externalized costs are an involuntary subsidy that distorts the signals sent to the market place.

Regulation certainly has it’s problems, but I don’t think – by and large – libertarians, market enthusiasts, or anti-government ideologues are advancing effective responses to this sort of situation that do not involve a good deal of government regulation.

Cory Doctorow has an interesting item at BoingBoing. (h/t Zach Wendling).

Apparently the Indiana Election Division “sends its notices out with a small styrofoam cube in the envelope; the cube increases the envelope’s thickness to 3/4″, so it qualifies for discounted parcel-rate shipping.”

One can certainly argue that the regulations of the USPS are nonsense if they require this additional step to receive reduced pricing; but I think some kudos are in order to the Indiana Election Division for recognizing and taking advantage of an angle for saving money.

I’ve seen a fair amount of commentary about common ground between the Occupy Wall Street movement and the Tea Party. I don’t think it exists, because I find the Tea Party’s grievances largely pretextual. Debt and government spending was only a problem when a Democrat took office. Much like infidelity and lying about infidelity was an impeachable offense only when a Democrat was in the White House. For a certain group of hard core partisans, a Democratic Presidency is more or less by definition, illegitimate. That has seemed to be the beating heart of the Tea Party. The rest is mostly just dressing.

But, with that theme of common ground on my mind, I read Tipsy’s remarks on Mark Cuban’s advice to OWS. Says Tipsy:

A lot of reckless crap went on at least because the risk of loss was so minimal compared to the chance of gain. This is the whole point of Corporations and LLC’s: to limit risk of loss to one’s investment – and not one cent more than one’s investment.

It’s always seemed to me that the corporate form should be anathema to Libertarians. It’s a government construct that exists for the purpose of evading personal responsibility. And, as Tipsy points out, a lot of our recent economic problems were helped along by the actions of people who stood to lose no more than their investment, even if the damage caused by their actions or those of their agents was far greater.

For this reason, it seems like the Occupy Wall Street crowd and the Libertarians should be able to find some common ground in tinkering with the corporate form. (Particularly in the wake of the Supreme Court’s Citizen’s United decision which expanded the rights of corporate personhood in the world of political campaign finance.)

I don’t know what that corporate tinkering would look like, necessarily. Cuban suggests turning “too big to fail” banks into partnerships:

We should make all investment banks become reporting partnerships (meaning they still have the same reporting requirements they have today ). I would have no problem with our government loaning money to the partners of Goldman Sachs and Morgan Stanley and other Too Big To Fail Institutions so that they can buy back all public shares of their stock. Of course all those partners would become personally liable for repaying that money back to the government. It would probably be about 120B dollars in total to take these 2 companies private. That is far, far less than a possible bailout would cost.

Those personal guarantees would change EVERYTHING in the banking industry. It would change the decision making process across the board. There would be a moral hazard to every decision. Today , a wrong decision and they vacation on their yacht. As a partner, the wrong decision and they are protesting right next to the OWS crowd as a 99pct er. It would be the definition of having “skin in the game”

A Palladium-Item article with no by-line that I could see reported on an event with the six candidates for the three at-large Richmond Council seats. I was interested to note that I am acquainted with two of the candidates: Chris Hardie and Misty Hollis.

If I still lived in Richmond and had a vote to give, Chris would easily get my vote. He’s the kind of fresh energy that Richmond needs. The city needs something. In the 20 years since I moved away, the city feels like it’s gotten tired. Things have an air of “deferred maintenance” about them. Chris is a small business man with a strong sense of civic involvement. I’ve gotten to know him through his online activity and then in person at a conference or two.

Anyway, enough of the campaign plug. (But, since I mentioned her, my contacts with Misty suggest that she’s diligent, smart, pleasant and would make a dedicated public servant — I just know more about Chris and his ideas.)

The article spends a lot of time talking about the idea of payment in lieu of taxes for some or all non-profits. My knowledge of the issue is cursory – but, generally speaking, when the IRS designates an entity as a non-profit, this not only hurts the federal government’s revenues, it also deprives local government of property tax revenues (assuming, of course, the property would be used productively in the absence of the tax exemption.)

The problem, I think, is that some non-profits are engaged in activities that look fairly lucrative — universities and hospitals come to mind. But, others would simply go under if they had to pay property taxes: a lot of do gooder agencies are pretty much held together by spit and bailing wire. And, even if government officials think maybe they’re losing money by not getting the property taxes; they’d probably lose more if they had to perform the services of those do-gooder agencies directly. (Although there is a political subtext that some lawmakers would be just as happy if some of these services to the poor were not provided at all.)

The article concludes with a couple of “yes/no” questions that don’t serve the reader or potential voter too well. “Will you comply with open records and open meeting laws?” Not surprisingly, everyone said, “yes.” Even if a candidate intended to flout those laws in some fashion, which one is going to be stupid enough to say “no?”

(Rehashing a post I wrote in 2009):

517 519 years ago, Christopher Columbus washed up on the shores of the New World. This was bad news for the indigenous people, no doubt. But, I still don’t mind commemorating the day — as a white male of European descent, I’m a direct beneficiary, so I guess I don’t have a lot of credibility here.

The event was important. Not entirely good, of course; but not unmitigated evil, either. Columbus was a product of his time and place, with all of the arrogance and cruelty that entails. But, he also did something pretty bold. He sailed off the map, and the world hasn’t been the same since. Sure, Leif Erikson did it before Columbus. But, the fact is, his society was not ready to do anything about Erikson’s discovery. The Europe from which Columbus set sail was ready to start moving.

I’m biased by more than being of white, European descent. I’m a history buff, and the Age of Exploration is probably my favorite era. The idea of being able to hop on a boat and find places and civilizations you had not expected really captures my imagination. For me, it’s not just Columbus.

It’s Prince Henry the Navigator pouring resources into Portuguese expeditions south along the western African shore until Dias rounded the Cape of Good Hope. It’s Da Gama reaching India. Columbus and the New World. Magellan sailing around the world. James Cook sailing everywhere. They were motivated by greed, religion, dreams of power, and a thirst for knowledge. (One of my favorite themes for this period was the Quest for Prester John, a mythical Christian ruler with great riches — this quest combined a number of the motivating forces.) Regardless of motivations and even brutal consequences, they went into the unknown as few others had been willing or able to do before them and, more importantly, they reported back in such a way as to firmly link the world together.

For me, Columbus Day isn’t the celebration of a virtuous man who brought light to a benighted world. I don’t think Columbus was that or did that. Rather, it’s commemoration of the linking together of the planet, for all the good and bad that has done.

Seems to me there is a lot of overlap between proponents of “right to work” and opponents of smoking bans. I’m not exactly sure how you reconcile those two positions. Both, are impairments of an employer’s right to contract and right to impose conditions of employment on prospective employees.

“Right to work” isn’t a law that allows an employer to have a union free workplace. That’s already legal. It also isn’t a law that allows an employer to have union workers at a business that also has non-union workers. That’s legal as well. What it does is make it illegal for an employer to contract with a union to impose union membership as a condition of employment on other employees.

Smoking bans, obviously, prohibit a business owner from allowing patrons to smoke in their establishment. But, they are often sold as an employee safety issue — you can’t make employees work in a smoke-filled environment as a condition of employment. “Go work somewhere else,” is often the response of smoking ban opponents.

So, it’s interesting to see folks who would say “go work somewhere else” when it’s a smoke filled environment somehow don’t say “go work somewhere else” when it’s a union filled environment.

Unions: more dangerous than cancer!

I’ve been over this a lot, but with Richard Mourdock challenging Richard Lugar, I keep seeing references to Mourdock’s quixotic decision to challenge the Chrysler bankruptcy decision as something other than ill-conceived, so I’ll mention the central point once again. There was no path to Mourdock’s challenge that resulted in Indiana getting more money.

As we might recall, Chrysler was dying on the vine. There was nobody willing to step in and pay much money for the company, so they filed bankruptcy. As part of the bankruptcy, a third-party was willing to step in and pay more money for the company than it would get through liquidation. That third-party in this case was the United States of America.

What really seemed to piss off Mourdock and his supporters is that the third party was willing to give the unions something. But, let me repeat, secured creditors got more under this deal than they would have under any other offer on the table or liquidation. Seems that, what Mourdock’s complaint boiled down to in essence, is that he wished the third-party’s offer gave secured creditors more. But there was never any showing that an outside purchaser had any obligation to pay secured creditors more than they would get from liquidation. If some other third-party wanted to offer them a better deal, they could do so, but there wasn’t any such entity.

That’s getting at the substance of Mourdock’s complaint; pretending that he had any right to drive this particular litigation. Procedurally, he was out of line. Indiana’s share of the debt was tiny, and it had agreed to let the majority holders of secured debt run the show. In that sense, it was doomed bringing the litigation in the first place, even if the state had had a plausible claim.

Then there is the fact that Mourdock had purchased Chrysler shares at distressed prices in the first place; those discounted prices reflected the risk inherent in the transaction.

And, there is the impact on Indiana’s manufacturing sector. The U.S. participation in Chrysler’s restructuring allowed Hoosiers to keep their jobs instead of suffering the fall out from liquidation.

And, I’ve been hearing that Gov. Daniels is spouting some nonsense about how Mourdock’s Chrysler litigation produced some kind of momentous Supreme Court decision. It wasn’t momentous, but a fairly routine Munsingwear order.

Interesting discussion about recognizing one of our economic problems as being the incentive for wealth to be invested instead of merely loaned. Apparently this means limiting its liquidity and creating incentives for wealth to be locked up in productive activity rather than just loaned out in liquid fashion to profit on interest.

This discussion – to the extent I understand it; and I confess I’m no expert – ties in with some of the themes of Wealth and Democracy by Kevin Phillips and what he calls “financialization.” He looked at previous empires in decline and found that a lot of their economic activity got tied up in, basically, moving paper around instead of actually producing anything terribly useful and that this precipitated their decline.

An AP story that showed up in the Lafayette Journal & Courier with a contribution from Max Showalter suggests that self-serve grocery lanes might be diminishing.

The articles says that studies are showing that most people prefer checking out with a live cashier and, therefore, some chains are phasing out the self-serve lines.

Market studies cited by the Arlington, Va.-based Food Marketing Institute found only 16 percent of supermarket transactions in 2010 were done at self-checkout lanes in stores that provided the option. That’s down from a high of 22 percent three years ago.

Overall, people reported being much more satisfied with their supermarket experience when they used traditional cashier-staffed lanes.

I’m definitely with the folks in the story who prefer the self-serve checkout lanes. It’s quick, easy, and I don’t have to deal with people.

Update Patton Oswalt has a bit:

Came across this language in an old Indiana Supreme Court case, Kelso v. Cook, 110 N.E. 987, 992-993 (Ind. 1916) and thought it was worth sharing:

But vastly more important, if [Art 2, sec. 2 of the Indiana Constitution] controls, any election of the precinct, though avowedly an adherent of no party, may participate on equal terms with party adherents in selecting its candidates, and the adherent of one party, with only single candidates for nominations, might, with safety to his own party, go into the camp of his political adversary and maliciously vote for its most unworthy candidates with the deliberate purpose of wrecking it. No political party ever held a voluntary primary open to others than its adherents, and it may be safely assented that no sane organization, political, religious, or otherwise, will ever voluntarily countenance such folly as permitting the selection of its officers by nonadherents. To assume that because of said constitutional provision non-Republicans may select the officers and candidates of that party, is as devoid of reason as the assumption that agnostics be permitted to elect the trustees of a church. To assert that Democratic or Progressive candidates may be selected by Republicans, Socialists, and adherents of no party, is as fatuous as the idea that a military strategist ought to submit his plans for his country’s defense to the commanding general of the enemy.