Reviving The RCYB

When I was a student at the Ohio State University in the late ’70s, one of the many political groups on campus was the Revolutionary Communist Youth Brigade.  You would see them out on the Oval, advocating for their communist causes and trying to recruit new members.  There weren’t many takers for what they were selling.

Apparently that view has changed.

According to a recent survey, millennials — defined as those between ages 23 and 38 — look far more favorably on communism and socialism than older generations.  The results of the poll indicate that an astonishing 36 percent of millennials approve of communism, and 70 percent responded that they are extremely likely or somewhat likely to vote for a socialist in the upcoming election.  In addition, about half of millennials and members of Generation Z — those between ages 16 and 22 — have a somewhat unfavorable or very unfavorable view of capitalism.  It’s not surprising, then, that 22 percent of millennials believe “society would be better if all private property was abolished,” and that 45 percent of Generation Z members and millennials believe that “all higher education should be free.”

The results of the poll, which was conducted by YouGov and released by the Victims of Communism Memorial Foundation, are pretty amazing — until you consider the life experiences of the various generations.  When I was in college the Cold War was in full swing, the Soviet Union had just invaded Afghanistan, Aleksandr Solzhenitsyn was exposing the horrors of the gulags, and the world was only a decade away from the death of countless people in China’s “Cultural Revolution.”  It wasn’t difficult to form a negative view of communism.  Millennials and Generation Zers, on the other hand, grew up in a post-Soviet world where China is largely viewed as a producer of electronic gear and its repressive tendencies, whether in Hong Kong or in its treatment of ethnic minorities, are often ignored or overlooked.  How much have millennials and Generation Z been taught about the true nature of communism and its bloody history?

What will this embrace of communist and socialist ideology among young people mean for the upcoming Democratic primaries, where some candidates are advocating for policies that are openly described as socialist?  It all depends on whether those millennials and Generation Zers who want free college will register and cast their vote in a free and open election — which, incidentally, doesn’t happen in communist countries.  But then, millennials and Generation Zers may not be aware of that.

Evening Entrepreneurs

If you’re worried about whether there is any entrepreneurial spirit left in America, relax!  Last night we paid a visit to the Moonlight Market on Gay Street in downtown Columbus, and we can faithfully report that the entrepreneurial spirit in Cbus is alive and most definitely kicking.

The Moonlight Market is held once a month on the two blocks of Gay Street between High Street and Fourth.  Vendors set up tents on each side of the street — including on the sidewalk directly in front of the firm — and sell all manner of products, from artwork to baked goods and other foods to used books to plants to clothing to massages.  Unlike some street markets, all of the participants in the Moonlight Market seem to be individuals who are pursuing their passions through their small businesses and trying to make a few bucks in the process.  Without exception, the vendors are friendly, outgoing, and excited about what they are selling, and their enthusiasm is infectious.  You can’t help but pull for these people, and also support them with your wallets.  We bought some colorful artwork and some tasty baked goods from some very appreciative sellers.

Capitalism has its good points and its bad points, and some of the good points were on display last night on Gay Street.  Dozens of people were out in their tents on a very warm Saturday evening hoping to sell their handmade or hand-raised goods — even crocheted scarves and clothing that wasn’t exactly suited to the weather.  They all have stories to tell, like the young woman nicknamed Suga Pie who has a talent for cupcakes and has been working on selling them for eight years.  She’s recently created her own website and is working on her brand.  Her pineapple upside-down cupcakes are delicious, by the way.

Go get ’em, Suga Pie, and the rest of the Moonlight Market crew!  You are what makes our economy tick.  And if you want to see a little small business entrepreneurialism in the flesh, you can catch the next Moonlight Market on August 10.

The New Space Race

The old Space Race, between the United States and the Soviet Union during the height of the Cold War, is on full display in the excellent film First Man.  The new space race doesn’t have the same ideological, future of civilization elements as the old one, and is a lot more multi-faceted, but it’s just as important to our long-term future in space.

And right now, the United States is winning.

The new space race focuses on commercial spaceflight and launching vehicles into space.  For years, the United States was playing catch-up to the Europeans, and trailing badly.  The Euros were launching the majority of satellites and vehicles into space, using their Ariane rocket, while the United States was retiring its primary launch vehicle, the space shuttle, without having any back-up in place.  In 2011, when the shuttle was retired, there were no commercial satellite launches from any American spaceports, and for the next few years the launch industry was dominated by the Europeans, the Russians, and the Chinese, launching from government-backed providers.

But now the tide has turned.  America led the way in commercial launches in 2016 and 2017, and 2018 is shaping up to be even better.  The trend is so pronounced that European advocates are afraid that they are falling behind and won’t catch up.

The reason for trend is that the United States has made room for commercial entities, like SpaceX, to enter the launching game.  While the United States government still is a major player in space, SpaceX’s focus on innovation and cost control, through use of reusable rockets, have made it extremely competitive in bidding for launch jobs, whether it is commercial satellites being placed into orbit or missions to the international space station.  And new entrants to the competition, like Blue Origin, are set to participate — which is likely to make the American lead even more pronounced.  The article linked above notes:  “the uniquely American approach of government support and investment in private space is paying dividends, creating an industry that could swallow the comparatively moribund European effort.”

It’s nice to know that American capitalism, and good old-fashioned competition, can still produce innovation and leadership — and now in space.

Not Exactly Cutthroat Capitalism

There’s a deliberate pace to life on Deer Isle that’s just different from what you see in cities. This disclosure of hours of operation on the door of a shop in the Village of Deer Isle — a shop that happened to be closed, by the way — captured the prevailing spirit perfectly.

Not open today? No problem! Just drop by tomorrow. We’ll probably be here.

At one store we visited, the proprietor was perched behind the cash register working on some acoustic guitar riffs. Chords took priority over capitalism.

Profiting From Others’ Misfortune

I’m a big fan of capitalism.  it’s by far the best, fairest, most rational, most efficient economic system — in normal times.  But when disaster strikes, and the “Invisible Hand” and the law of supply and demand entice some businesses to engage in rampant price-gouging, it makes capitalism look bad.

That’s what’s happening in Texas right now.  Hurricane Harvey has proven so devastating, and the likelihood of continuing devastation and economic disruption is so great, that supply and demand, which together are supposed to regulate pricing, are completely out of whack.  As a result, some people in Texas are charging the people trapped in the hurricane zone outrageous, grossly inflated prices — like $99 for a case of bottled water, gas for sale at $10 per gallon, which is about three times as much as it sold for prior to the hurricane, and marginal hotel rooms rented at Ritz-quality rates.

Texas, like other states, has laws against price-gouging in times of emergency or natural disaster, but it’s hard for the price police to keep up with the businessmen who see a catastrophe as a way to make an easy buck and pad their profits.  For every gouger who is caught, there undoubtedly are many others who make a lot of money selling at exorbitant prices to people who don’t know enough to raise an issue about it.  It’s an old, time-honored story, because price-gouging is as old as economic activity itself.

Natural disasters like hurricanes often bring out the best in people.  We’re seeing a lot of that in Texas, with people selflessly heading out to try to rescue those who are stranded, or opening their homes and their wallets to help those who have suffered terrible losses.  It just makes you sick to your stomach that, mixed in with the many Good Samaritans, are greedy people who take advantage of the unfortunate and put money ahead of simple human kindness and decency.  How do the gougers sleep at night, knowing that they are profiting from the misery of others?

On The Squirrel Superhighway

The bird feeder in our backyard broke, sending birdseed falling to the ground — and in the process turning our back fence into the German Village Squirrel Superhighway.  As I write this, no fewer than four squirrels are racing over the fence lines, romping through the backyard, twitching their tails, eating as much birdseed as they can stuff into their gluttonous buck-toothed mouths, and then skittering back up the trees that serve as the squirrel superhighway on and off ramps.

Squirrels are basically rats with tails, but they are industrious little buggers and fun to watch.  Hard-working and personally greedy, they are the prototypical capitalists of the animal kingdom.  When an opportunity presents itself, they are highly motivated to get their share and will do what they can to maximize their personal gain.

Now that I think of it, I’m surprised somebody hasn’t tried to tax them.

Fast Failure

Richard had a story recently about the unexpectedly rapid demise of a Jacksonville-based company called Body Central, which sold clothing to teenage girls and 20-somethings in the “fast fashion” industry segment.  After years of strong growth and expansion of its outlets into new malls, Body Central suddenly hit the wall and closed its doors.  Richard’s story is an interesting treatment of the arc of a company’s existence in modern America.

What happened?  Basically, capitalism.  Body Central, and other stores catering to the same market segment, kept expanding to new locations and storefronts and expected the demand for clothing from teenage girls and young women prowling the malls to continue to grow indefinitely.  But the tastes and buying habits of Body Central’s target audience changed.  They decided that going to malls wasn’t necessarily the bees’ knees and started looking for more clothing on-line.  In the meantime, Body Central had growth-related problems, like managing distribution centers.  Revenues shrank, efforts to redesign stores to reattract customers failed, and ultimately the enterprise crashed.

Capitalism has a long and proven track record for incentivizing production, creating wealth, and enhancing efficiencies — but it’s a messy process.  Businesses begin, occasionally thrive, and often fail.  Sometimes the failures are of mom-and-pop shops, but sometimes they are of companies that experienced some success but just couldn’t move to the next level, and sometimes the failures are of mega-corporations like Blockbuster that are killed by new technologies, changing consumer tastes and buying habits, and competitors who develop a better product or service.  It happens, but it doesn’t make the situation any more enjoyable for employees who are out of a job when the company hits the wall.

Goodbye, Body Central!  You’re just the latest in a long line — and you won’t be the last.

Off To Big D

This morning it’s off to Dallas for the National Championship Game.  For me, and for many others, it will be a circuitous journey.

Not surprisingly, flights from Columbus, Ohio to Dallas, Texas became a hot commodity as of about 1 a.m. on January 2, 2015.  By the time I secured a ticket to the National Championship Game to root on the Buckeyes, reservations for flights to Dallas prior to the game fell into two categories:  already sold out or outrageously overpriced.  As is their right in a capitalistic economy, airlines followed the law of supply and demand and jacked up their prices for flights.  As is our right, prudent members of Buckeye Nation explored their ability to secure other, more reasonably priced methods of getting to the game.

So, today I’m flying to Oklahoma City via Atlanta. Then I will rent a car and then drive about 200 miles south to Dallas.  This is similar to the fun trip Russell and I had to the Ohio State-Miami National Championship Game, when we flew to San Diego and then drove through the desert to Tempe, Arizona.  And I’m not alone in choosing an indirect route.  Others are flying to Houston and then taking to the highways, and still others are already on a 1,000-mile road trip to Dallas, hoping that they don’t get sidetracked by a winter storm.

The main thing is to get there and cheer on the Buckeyes.  If the journey becomes an adventure, so much the better.  Go Bucks!

When Entrepreneurialism Falters

A new study by the Brookings Institution suggests that there is a disturbing trend in the U.S. economy — one that involves less entrepreneurial spirit, less risk-taking, and the declining creation of new businesses.

The study looked at the rates of business creation and destruction in the U.S. from 1978 to 2011.  It shows a persistent national decline in the percentage of new businesses in the economy.  Moreover, during the 2008-2011 time period the percentage of failing businesses exceeded the number of new businesses being created for the first time.

These findings help to explain the poor employment statistics in America in recent years.  The number of people aren’t even trying to find work has grown to more than 92 million Americans, and job growth isn’t keeping pace with population growth.  A decline in entrepreneurialism would help to explain these very troubling trends.  New businesses not only create new jobs, the creation of new businesses often follows a recession, as some Americans who have lost their jobs look at their options and decide to go into business for themselves. They employ themselves, and in the process they employ others, too.  That apparently isn’t  happening as frequently now.  Why not?

The Brookings Institution study says the reasons for the decline in new business creation are “unknown.”  We can draw inferences about the causes, however, by looking at the common characteristics of entrepreneurs.  They tend to be dreamers and risk-takers.  They are willing to work hard and to put their own money into their new ventures.  They believe in themselves, in their products and services, and in their ability to succeed in our capitalist economy.  Scratch an entrepreneur, and you’ll likely find an optimist.

From this armchair analysis, I’d speculate that the decline in new business creation means that fewer people are optimistic about the future, or that fewer people have confidence in themselves and their ability to succeed on their own, or that more people are comfortable with their current circumstances and are more interested in holding on to what they’ve already got than in risking it on a new business that will involve hard work and potential failure — or a combination of those factors.  If any of these potential causes turns out to be the truth, it doesn’t paint an encouraging picture of our future.

Argentina Follows The Familiar Downward Spiral

George Santayana famously observed: “Those who cannot remember the past are condemned to repeat it.” We’re seeing that wisdom play out, again, in Argentina.

Argentina is an economic basket case. Under the government of its leader, Cristina Fernández de Kirchner, Argentina has spent lavishly on social programs and nationalized some industries. Argentina doesn’t have access to global credit markets since it defaulted on its debt obligations in 2001 and 2002. So the government is spending its dwindling reserves and seeking to devalue its currency — and in the meantime the Argentine peso is plummeting in value against the dollar and inflation is raging. The peso lost 19 percent of its value in January alone and inflation is somewhere above 25 percent.

Rather than learning the obvious lesson and ending the policies that are preventing free markets from operating, Argentina has gone in the opposite direction. The government blames supermarkets and oil companies for the inflation, and it placed caps on the prices of certain common goods sold at stores. Not surprisingly, those stores promptly began reporting shortages of the price-controlled items, because manufacturers and other suppliers obviously aren’t going to be pumping out goods that they can’t sell at a profit. Why would any business ship its goods to be sold in a price-controlled hyperinflation zone when it could just as easily send those goods to be sold in countries with rational economic policies? In Argentina, however, the government responded by fining the retailers and blaming their executives for raising prices.

We’ve seen this story again and again, in Latin America, in the Soviet Union, and in every other country that has adopted economic policies that interfere with the law of supply and demand and hinder the operation of free markets. Argentina will eventually experience a crash, as inflation spirals out of control and shortages become even more acute. But will it actually learn and take to heart the lesson it should have learned before?

The “New Space” Race

Yesterday, the Indian mission to Mars, called Mangalyaan, fired rockets that caused it to leave Earth orbit and begin a voyage that will see it rendezvous with Mars in September, 2014.  This morning China launched its first moon rover, with a rocket carrying the “Jade Rabbit” on a mission to explore the lunar surface.

India and China are competitors in a new space race.  They are vying to join the United States, Russia, and Europe in showing the scientific and engineering capability to conduct complicated space missions and enhance their international prestige as a result.

In the meantime, the focus of American space efforts have changed.  Although NASA continues to produce amazing unmanned space exploration missions, with the end of the shuttle program the United States government is temporarily out of the business of launching humans into space.  As the Washington Post has recently reported, the torch of manned space flight is being picked up by a number of private companies that are taking a different, more entrepreneurial approach.  Many of the companies are located in the Mojave desert — a location familiar to anyone who has read The Right Stuff and knows the history of the Mercury space program.  The companies feature imaginative business models that forecast how space flight and exploration can become a profitable venture.

As the Indian and Chinese missions show, there will always be a role for government in space.  Many of us regret that the federal government didn’t ignore the naysayers and move much more aggressively into space after the triumphs of the Apollo program with the building of a large, functioning space station, lunar bases, and other efforts.  But the government didn’t do so.  Now those of us who dream of space exploration should be pleased that private enterprise sees opportunities in the heavens.  The history of America has shown that capitalism can work wonders, and competition among companies can spur extraordinary technological advances.  If the same visionary leadership and engineering savvy that produced our personal computer and smartphone revolution can be brought to bear on the commercial development of space, who can say what opportunities might be realized?

Keep your eye on the high desert.  When we start reading more about readily available “space tourism” flights or mining efforts in the asteroid belt, we’ll know that the future envisioned in countless science fiction novels has moved a little bit closer.

Is Everything For Sale, And If So, Why?

Is everything for sale in America?  Have we reached the point where the pursuit of the Almighty Dollar has become too all-consuming?

An article in MarketWatch, published by The Wall Street Journal, discusses the teaching of Harvard philosopher Michael Sandel, author of the recent book What Money Can’t Buy:  The Moral Limits of Markets.  Sandel posits that at some point over the past 30 years America crossed the line from a market economy to a “market society” in which virtually everything, such as naming rights to public buildings, ad space in school cafeterias, and carbon offsets, is for sale to the highest bidder.  A market economy is a tool for organizing activity in the most productive way, but a market society is one in which market values — rather than morals, ethics, religion, or other non-money-oriented concepts or belief systems — intrudes upon and governs our relationships and our behavior generally.

I’m a big fan of capitalism as an economic system.  Human history has proven that it is the most fair and effective way of allowing people to control their own destinies and create wealth, and no other system even comes close.  But Sandel has a point — there are some lines that shouldn’t be crossed.  When capitalism crosses those lines, the effect is corrupting and defeating of any selfless impulses that motivated the activity in the first place.  When public money is used to erect a public building and the structure is named after whichever large corporation or wealthy individual ponies up the most money for the naming rights, it detracts from the important public, communal element of the endeavor.  When a couple decides to have a child but pays a hefty price to a clinic to try to genetically engineer the perfect offspring, what are they really trying to accomplish?

I disagree with Sandel on one fundamental point.  He is quoted in the article as saying:  “We did not arrive at this condition through any deliberate choice. It is almost as if it came upon us.”  I don’t buy that — no pun intended.  I think part of the witches’ brew of developments that is leading us down the road to perdition is the notion that the public is never to blame for anything, that we are trapped and buffeted by forces beyond our control.  I think people can make a difference and can act morally and ethically; the thousands of acts of kindness and human decency that occurred after the Boston Marathon bombing, where strangers acted purely out of concern for their fellow man rather than concern for the bottom line, prove it.  Our challenge is to bring more, much more, of that same sense of ethical behavior to the public arena and to our everyday lives.

In Appreciation Of An Airblade

Recently I was in a public restroom that featured a Dyson Airblade hand dryer, and it made me happy to be in America.

My thinking went like this.  When I was a little kid, there were two kinds of public restroom hand-drying options:  paper towels and a large cloth towel on a roller.  Both worked, after a fashion; you could dry your hands adequately, most of the time.  But both had their flaws.  The paper towels often came out in clumps and gave rise to serious bathroom litter issues.  The cloth roller, in contrast, avoided the litter problem, but often jammed, and it wasn’t uncommon to find a hopelessly disgusting, saturated, and soiled towel — which caused most guys to just wipe their hands on their shirts or pants.

In many countries, though, these two options would have been just fine.  Why waste money and the spirit of invention on a public bathroom?  Who cares if they are vile places?  But America is different, isn’t it?  Here, gas stations may actually advertise that they have clean bathrooms.  So some enterprising soul decided to use a hot air blower as a hand dryer.  It was better than the cloth towel roller or the paper towels — and certainly cheaper for the proprietor — but it wasn’t perfect.  You had to push a button, which had to be cleaned, and water dripped from your hands onto the floor as the blow-drying occurred, and the air often became uncomfortably hot and dried your hands unevenly.  Still, the initial generation of blow dryers would be plenty good enough for most places.

But not in America.  Now, we go into bathrooms with Dyson Airblades.  No button to push, no dirty cloth towel to yank, no mountain of paper towels overflowing from a trash can.  Just a sleek little device where you insert your wet hands to start the process and then withdraw them quickly, clean and dry.  Not bad!

It’s just another reason why capitalism is great.

A Consumer’s Responsibility In A Capitalist Society

On a couple of occasions recently, I’ve been with a group of people doing what consumers commonly do:  bitching about the companies that sell them a product or service.  It might be a bogus new monthly charge from their bank, gouging fees by their cell phone provider, jacked-up rates from their property insurance company, or crappy, insolent customer service from just about anywhere.

When these conversations occur, I always ask:  well, what have you done about it?  Have you actually shopped around for a new bank, or cell phone provider, or insurer?  There are lots of them around, and they are supposed to be competing for your business.  When a customer service rep treats you like a bothersome fly, have you taken your purchasing power elsewhere and let the company that employed the jerk know why?  If you haven’t done any of these things — and most people sheepishly admit they haven’t — you really don’t have much of a basis for complaint.

The theory of capitalism presupposes that consumers won’t mindlessly consume whatever is offered to them.  Instead, they will make thoughtful decisions about what to buy, based on a comparison of the cost, quality, and other benefits of the products offered by competing businesses.  Through that careful decision-making process, responsive companies that provide quality at a competitive price will be rewarded, and their overpriced competitors that peddle shoddy goods and services will wither and die.  If the consumers don’t make educated decisions, therefore, they aren’t fulfilling their rightful role — and their inattentiveness is promoting bad practices and allowing bad companies to stay in business.

Don’t look to government to fill the educated consumer’s role, either.  Government regulation is always after the fact, and often is ineffective.  It will never replace the consumer who zealously guards her pocketbook, reads her bills, questions fees and charges, and is willing to shop around for a better deal.

Wasting Tax Dollars — High-Speed Edition

They’re talking about building a high-speed rail connection between Las Vegas and Victorville, California.  Of course, they’ve been talking about that idea for years.  The difference now is that our government is seriously considering making a $4.9 billion loan — that’s billion — to help finance the project.

Amazing, isn’t it, that after the disastrous failure of Solyndra the federal government would still consider making any loans to private firms, much less loans of billions of dollars?  That’s not the only amazing thing about this proposal, however.

For those who aren’t familiar with California geography, Victorville is 68 miles from Los Angeles.  The concept for the “DesertXpress” train thus envisions L.A. residents bound for Vegas white-knuckling their way through the appalling southern California traffic and then, just as they reach the wide open spaces of the High Desert, getting off the road and waiting for a train!  If they want to play golf in Vegas, they’ll wrestle their clubs onto the train, too!  And then, after a ride that is only about an hour shorter than driving, the train will deposit them at a station in some remote part of Vegas, so they can catch a cab to get to the Strip!  And they’ll happily pay at least $50 one-way (or more than they would pay for gas, even at today’s high prices) for this privilege!

Nothing wrong with that well-conceived concept, eh?  Skeptics might contend that our leaders should follow a simple rule:  if a business plan is so fantastic that even venture capitalists won’t buy in, the federal government shouldn’t, either.  If DesertXpress can’t convince capitalists to invest, taxpayers shouldn’t be asked to fill the void — no matter what kind of phony feasibility studies or rosy projections of increased employment might be cited in support of the project.

Remember, too, that the United States doesn’t have money on hand right now.  If we loan money to DesertXpress, we’ll first have to borrow it from other sources and pay interest.  And when the DesertXpress goes toes up, as common sense dictates it must, our loan won’t be repaid, and we’ll have to dig even deeper into our own pockets to pay off what we borrowed.  Can our government seriously be considering putting us in such a position?  Seriously?