Category Archives: Business, The Economy and The Markets

Pretty self-explanatory, isn’t it?

Crowd Psychology

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Imagine this:

It’s the middle of June, 1940. Germany has just conquered all of Europe. The British have just withdrawn their army from the continent, in a miraculous evacuation that was the only redeeming note in a catastrophic defeat.

The army had left virtually all of its equipment – just about everything heavier than a rifle – in France; it would pretty much have to be re-equipped from scratch. The Royal Navy had been badly bloodied. The Royal Air Force, likewise, leaving itself under strength to face the German Air Force in the upcoming campaign to try to bomb the UK either to the negotiating table or into a state ready to be invaded. German U-boats were ravaging the merchant shipping on which Britain depended for not only all of its industrial raw materials and oil, but virtually all of its food.

Prime Minister Winston Churchill went on the radio and gave a speech after the last of the British Expeditionary Force arrived home.

What speech did he give?

He could’ve given a realistic speech – pointing out the sobering facts of the situation, and readying the British people for what was likely going to be at best a disheartening and economy-gutting armistice that left them sitting alone on their island, and at worst complete conquest in the face of an invasion that would certainly follow, if the Navy and Air Force failed.

But no.

Churchill gave a speech that was, if all you cared about was the facts on the ground, utterly unrealistic; he told Britain, and the world, that the United Kingdom would fight to the last inch of ground, and if Britain fell the Commonwealth would carry on the fight forever, until Europe was free again.

It was a little like that poster of a mouse holding up a middle finger at a diving eagle; “the last great act of defiance“ was the caption.

And it was one of the greatest bits oratory in the history of the English language.

And it was completely unrealistic.

But it was leadership.

In 1987, Ronald Reagan had already proved he was the best president of my adult lifetime. His leadership had brought America back from the worst case of emotional depression it had ever suffered, and from an economic downturn every bit as nasty as 2008, but much more short-lived. And after running for office on a stridently anti-Communist message, he had already sent the message that Soviet expansionism was off the agenda, and made it stick.

He was scheduled to give a speech at the Brandenburg Gate – the very symbol of divided Germany, and the high watermark of communism in the west.. It was a time when most political and academic “experts“ in the west expected the Soviet union – the “second world“ – was here to stay; well five years later everyone said the USSR was eventually going to collapse, nobody that anybody was paying attention to was saying it in 1987. They had the worlds largest military, the worlds largest nuclear arsenal, and they controlled a good chunk of Europe and Asia.

Reagan’s advisers urged him to take a moderate, conciliatory tone toward the east Germans, the Soviets, their new (or at least newish) leader Mikhail Gorbachev, and the wall he was standing in front of.

To give a “realistic” speech.

 instead, he gave a speech that electrified the resistance in Eastern Europe, that galvanized support for democracy among the downtrodden, and did its part, along with much of the rest of Reagan’s policy, in the downfall of the Soviet union that had a thousand fathers by 1995, but was very nearly an orphan before Ronald Reagan was elected.

It wasn’t “realistic“ to the conventional wisdom of the day. It was leadership.

Donald Trump is no Winston Churchill, and he’s no Ronald Reagan.

This week, he said that he wants America to be “back to work“ by the Easter weekend.

Is this realistic? Maybe not. The experts say it’s unlikely. The legions of not very funny late night comics and blue-checked droogs say the idea itself is risible.. And the whole business of declaring America open or closed is mostly the responsibility of the state governments, and the free market itself. I, myself, plan on working from home (although I am working, knock wood).

But America is a restless, endlessly creative, impatient nation, overstocked with people who are not going to sit on their hands and wait for things to get better; it’s a nation full of people who are descended from people who came from all over the world, uprooting everything they knew, to make things better.

Trump could have echoed the words of the scientists and experts gathered around him. He could’ve lectured the nation like a hectoring schoolmarm, or like Barack Obama. But he’s got a stage full of experts, including his vice president, and more importantly 50 state governors, already doing exactly that.

Trump urging America to “go back to work“ Easter weekend is not the Dunkirk speech, and it’s not the Brandenburg gate speech.

It’s not eloquent, and it’s not going to go down in history.

But it’s leadership..

The economy runs as much on psychology as it does on money, analysis and marketing. It’s trends depend as much on how people are feeling as objective fact. Don’t believe it? Have you checked the toilet paper aisle lately?

The nation’s psyche needs a boost. Trump is setting a tone; the United States is not going to be on sick leave forever. He’s telling a nation with cabin fever that there is a light at the end of the tunnel. When? Maybe Easter, maybe memorial day, but it’s coming.

It was brilliant. It wasn’t scientific. It may not of even been all that well advised.

But it’s what America wants to think, and wants to hear. We’re not stupid, we’ll hash out the details later..

Their Progressive Majesties Demand

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Joe Doakes from Como Park emails:

Minnesota’s Democrat congressional delegation sent a letter to Vice President Pence telling him it was unacceptable that doctors in our state didn’t have enough complete Corona virus test kits. Apparently, the test kits ship without an essential chemical and world-wide demand has been so high, there’s a shortage of the chemical.
The law of supply and demand is unacceptable!
Yeah? So roll up your sleeves and get to work, ladies. Start producing the chemical. Do something useful.

Or Shut The Hell Up and let the adults get back to work, dealing with the crisis as best they can with the tools at hand.

Joe Doakes

I’m wondering if episodes like this mean that Smith, Klobuchar, Craig, Phillips, McCollum, Omar and Peterson genuinely think the economy runs by command? (Don’t bet against that with Smith, McCollum and Omar). Or is it just election-year posturing?

Deflated

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Joe Doakes from Como Park emails:

Gas on Sunday at Sam’s Club was $1.98 per gallon. That’s the lowest I’ve seen in a long time.

Sure, it puts a couple extra bucks in my pocket. It also makes it possible for people to drive more, which creates global warming gases to kill the planet. 

I’m saving money and have more freedom. That’s a bad thing.

 I blame Trump

Joe Doakes 

This, and especially the ongoing slashers in regulation, certainly have their upsides.

It’s a shame it takes an international crisis to discover it.

The Mother Of Invention

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First prediction: there will be a Coronavirus vaccine.

It may arrive sooner, it may arrive later. Probably somewhere in between. I have no idea.

But it’ll come rom a country with a relatively free market for healthcare. The US? Norway? Germany? I don’t know – but it’ll be someplace that hasn’t nationalized healthcare.

Feel free to mark my words on this.

Beyond that ?

Last week on Twitter, Scott “Dilbert” Adams wrote:

The shortage of ventilators is the thing that’s terrifying people. The stories from Italy about doctors choosing who lives and who dies are pretty mortifying, especially if you have older relatives and family with lung conditions.

So people are innovating:

The doctor stresses this is a last ditch measure – to be used in cases where doctors are making life or death choices among 2-4 people at a time.

But it’s a start.

The MNDFL: Literally The Nanny State

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Congratulations.

Clearly, you’ve solved all the real problems:

A group of Minnesota House Democrats introduced a bill this week that would require restaurants to serve certain drinks as the “default beverage” for children’s meals.
The bill was introduced Tuesday by Reps. Jeff Brand (DFL-St. Peter), Samantha Vang (DFL-Brooklyn Center), and Rob Ecklund (DFL-International Falls).
Under the bill, all Minnesota restaurants would be required to make the “default beverage” included with children’s meals either water or sparkling water, unflavored milk, or a nondairy milk alternative that contains “no more than 130 calories” per serving.

Look – as I’ve noted, I’m all for cutting. It’s cut my obesity rate pretty sharply.

But it’s not like Minnesota DFLersl aren’t making it hard enough to run a business of any kind, much less a restaurant.

The real question: when do we find out about the kickbacks from Big Water and Big MilK?

The Steady Drip Drip Drip

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Downtown Minneapolis mainstay Ike’s is shutting its doors.

The owner doesn’t chalk it up to any single cause. Rather, it’s the slow drip drip drip of urban decay:

According to Winstead, the negotiations were meant to “address restaurant and market conditions” impacting Ike’s bottom line, including “labor costs, operational costs, maintenance costs and taxes.”
“There are so many issues, not any one of them a restaurant killer on its own, but taken altogether it adds up,” [owner Gene] Winstead said. 

And, naturally, the elephant in the room, the bit of blight whose name Minneapolis DFLers dare not speak:

Winstead “also cited a perception of downtown Minneapolis as unsafe for evening diners. ‘There is a little truth to it, but it’s mostly perception,’ he said.”

And it is – there are a lot of suburbans, by no means all conservatives much less Trump voters, who get hysterical about downtown crime.

But it’s not all hype. Unlike Saint Paul, which has its own perception problems, violent crime in general was up sharply in Minneapolis last year, along with a hike in homicide that is lower than Saint Paul’s, but started from a 2018 figure that was already higher.

But let’s back up to economics. When you point out that establishments in MInneapolis and Saint Paul are closing, they’ll respond “There’s always attrition in the hospitality industry”.

It’s not inaccurate.

It’s just that Ike’s other locations are booming right along.

As are suburban branches of other establishments that’ve packed it in in Minneapolis and Saint Paul.

Slipping

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Joe Doakes from Como Park emails:

I got Amazon Prime for free 2-day delivery.  Lately, it seems as if they’ve been missing a lot of deadlines.
It’s usually not a big deal, nothing I order on-line is critical.  But a Christmas gift came late, and now a book is delayed another week.  December 28th to January 14th?  Seems like a long time. I could have the book from Barnes & Noble at Har Mar today, if I had known it would take so long.  The extra five bucks would have been worth it.
When part of your sales pitch is prompt delivery, customers expect prompt delivery.  When the merchandise doesn’t arrive as promised, you first lose credibility, then sales.  This is not a good look for you, Amazon.
Joe Doakes

This is how companies that are “too big to fail”, faill

Open Letter To FedEx’s Fred Smith

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To: Fred Smith, CEO, FedEx
From: Mitch Berg, Crabby Peasant
Re: Debating Big Left

Mr. Smith,

I applaud your challenge to the NYTimes’ publisher, Arthur Sulzberger, to a debate between him, his business editor, your tax executive and yourself over your enterprises’ relative tax burdens and financial contributions.

I also note that progs – whether in government or the media – never deign to debate.

In case you didn’t know that, I mean.

If so, carry on.

That is all.

Re-Education Needed

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Joe Doakes from Como Park emails:

Target claims it is a corporate leader for social responsibility, even going so far as to have transgender bathrooms, but they pay their workers a pittance.

Evil selfish bastards. Fight for 15!

In 2010, Target found on the hard way that there is no “progressive enough” when dealing with the Big Left’s mob; that a decade and a half of prostrating themselves to the howling mob didn’t protect them when the howling mob needed a kick toy.

Will they need to be educated again?

Know How You Can Tell The Economy Is Doing Well Under A Republican President?

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The media are devoting lavish coverage to homelessness, that’s why.

And, somehow, less to this sort of thing.

Look – not only is a recession going to happen one of these days, a recession [1] is a necessary part of the business cycle. But the contortions Big Left and Big Media [2] are going through to downplay the currently good economic news are downright unseemly.

[1] In a normal, healthy economy with sound fundamentals, of course. Which we have. Of course, that’s true only if the recession kills of bad ideas and unsound enterprises, and frees up labor and capital for good ideas and sound investments – which the Fed hasn’t really allowed a recession to do since 1993.

[2] Pardon, as always, the redundancy.

Making Housing Affordable By Making It Unattainable

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Minneapolis passed a “renter protection” ordinance last week that’ll hamstring landlords trying to do even the most basic due diligence about potential tenants:

The renter’s protection ordinance prevents landlords from using old criminal or housing records to deny applicants. Specifically, an applicant cannot be denied if they have a misdemeanor conviction older than three years, a felony record dating back seven years, and more serious offenses that occurred 10-plus years ago. Landlords also lose the use of a credit score during the screening process and there is a new cap on security deposits at one month’s rent.

I can see giving people a break on criminal records after a long-enough time keeping one’s nose clean.

On the other hand, I don’t think the City of Minneapolis is the one to plop an arbitrary figure on how long it takes a criminal to be a safe risk…

…for someone else’s investment.

Previously, property owners could look at someone’s criminal and credit history before renting to them, sometimes going back a decade. Renters said mistakes of the past should not affect their future, especially something from 10 or 20 years ago. 

In the 1960s, New York City instituted “Renter Protections” – rent control, making evictions for cause nearly impossible, onerous regulations on landlords – that caused the stock of “affordable housing” to become unsustainable; as landlords abandoned or sold out cheaper properties, housing either became unlivably awful and abandone, or sustainable but only affordable by the wealthy.

San Francisco followed suit; there is little between great wealth and grinding poverty.

Sounds like a fine plan, Minneapolis. You’re in good hands.

What Do You Call Unintended Consequences That Are Utterly Intentional?

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The California State Assembly – font of most stupid at the state level in the US, these days, at least in significant states (shaddap, Connecticut) has passed, and seems ready for a signature by Governor Newsom (who is to governors what the State Assembly is – see above) a bill re-classifying independent contractors into employees.

Y’know. So they have to give them benefits.

This should work about as well as forcing up minimum wages.

Look – the “gig economy” looks like a terrible place to have to make one’s living. And it’s a shame we have a huge population of terribly educated 20-somethings who seem to have given themselves no choices but to live in it, writing listicles and proofreading resumes and sharing rides.

But the only thing worse than a crummy, exploitive job is no job at all.

Which is what a lot of Uber and Lyft drivers in California are about to have.

Every Argument About “Economics” With “Progressives”

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MITCH: “Trump’s tariffs…”

AVERY LIBRELLE: “Will be passed on to American consumers. It’s economics 101”.

Pete: “Very good. That is actually correct, one way or the other; all changes in price driving by anything other than market demand will be either paid by consumers, or not purchased at all. You’re coming along, Avery! So – artificially raising the minimum wage to $15 an hour…”

AVERY LIBRELLE: “…will never get passed on to consumers!”

Pete: “OK. Why?”

AVERY LIBRELLE: “Because shut up”.

And SCENE

Economic Pauline Kael Syndrome

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News Report:   BMW dealers in Hollywood report that import car tariffs aren’t affecting sales to their multimillionaire clients at all.  

Not a big shock, right?  The more money people have, the less price points matter to them.  

It’s Economics 101.  

Which is why “journalists” and progressives (ptr) never, ever get it. 

Remember Obama’s 2014 State of the Union?  When he praised Saint Paul’s “Punch Pizza” for paying its employees well above the minimum wage?    Of course, as I pointed out at the time, Punch is a high-end pizzeria in a posh neighborhood that aims toward a high-value clientele on Grand Avenue in Saint Paul; I wouldn’t doubt that in a neighborhood full of “living wage” activists, starting people at $10 an hour at above the minimum wage is good marketing.  But Punch Pizza is no Taco Bell; its dozen or so outlets are located in upscale areas, where people think nothing for dropping $20 for lunch  and a lot more for dinner and drinks.  It’s a tony niche retailer that gives a robust markup for an uptown dining experience.   And I’m gonna guess they an pick and choose their hires, even now, unlike the McDonalds and White Castles they’re not actually in competition with. 

I thought about that in reading this piece, claiming NYC’s $15 minimum wage is a net gain…

…in the Manhattan restaurant scene:

As New York raised the minimum wage to $15 this year from $7.25 in 2013, its restaurant industry outperformed the rest of the US in job growth and expansion, a new study found.

The study, by researchers from the New School and the New York think tank National Employment Law Project, found no negative employment effects of the city increasing its minimum wage to $15.

Restaurant workers in the city saw a pay increase of 20% to 28%, representing the largest hike “for a big group of low-wage workers since the 1960s,” James Parrott, a director of economic and fiscal policies at the New School and an author of the study, told Gothamist.

While the city’s restaurant growth is likely a result of the city’s overall strong economy, the report’s findings might suggest that paying workers more won’t immediately lead to job loss or other negative business consequences as previously thought.

And when the current boom in people with disposable income tails off, the artisanal chicken will come home to their $5K a month walkups to roost.

Gerbils For Freedom

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Joe Doakes from Como Park emails:

My granddaughter is on vacation this week in Wisconsin Dells, so Grandma and I are gerbil-sitting. I remember gerbils from the olden days, they were just rats that lived in a big cage and made noise all night. Nowadays, they have a space-age plastic entertainment complex, with a menu of carefully selected natural foods and colorful blocks of wood, scientifically selected from the best species to promote rodent tooth health and avoid chemicals that may be hazardous.
That stupid rat lives better than I do, and vastly better than people in Venezuela, not to mention the free-range rats living in my attic. When did pets become bling?
I suppose I shouldn’t complain. At least she hasn’t declared it to be her emotional support animal, so I can prohibit her from bringing it in the car.
Joe Doakes

When you think about it? Gerbils have gotta be thankful for the blessings of the free market. Not only do they live better than “citizens” (subjects) in Venezuela, but in fact they’re pretty much food down there these days.

Misdiagnosed

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Interesting article in the WaPo on San Francisco; its title suggests its current situation
“breaks America’s heart”, which is a fine play on Tony Bennett, but doesn’t really reflect the contempt most Americans outside the tech industry and politics have for the place.

The city is in the midst of collapsing, not so much from wealth, or even the “prog” boogeyman “income disparity” or even the lack of a middle class, but from the complete unaffordability by anyone who isn’t either wealthy or heavily subsidized by the wealthy.

And of course, San Franciscans -the people who voted for the government that led them here – are the last to understand why:

“This is unregulated capitalism, unbridled capitalism, capitalism run amok. There are no guardrails,” says Salesforce founder and chairman Marc Benioff, a fourth-generation San Franciscan who in a TV interview branded his city “a train wreck.”

First – and something of a tangent – Salesforce sucks.

More on-point? “Capitalism” only “runs amok” when it’s got government paving its way – with zoning, taxes and social policies designed to promote some groups over others, to bring “the right people” and promote “the right kind…” of society, life, politics. It is leading the way – but hardly alone – in proving Joel Kotkin’s point from ten years ago; cities are becoming donuts, with a core of immense wealthy surrounded by immense poverty, largely via government policy.

Unbridled capitalism gave us…Williston.

Shot In The Dark – Today’s News, Five Months Ago

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We noted earlier this year that Philadelphia’s tax on pop was taking down soft drink sales, and jobs and stores with it.

And it turns out that that’s true – pop sales are down by half in Philly.

But people are healthier – right?

Er…right?

While researchers found that sales of sugary beverages fell in Philadelphia after the tax, beverage sales in nearby towns and counties without the tax went up. That suggests people may have been traveling to get their soda at a reduced price.

But…but…Revenue! Right?

Jazz Shaw did the math that I thought about, but didn’t, since Jazz did it…:

So, let’s look at this assuming one million ounces of soda was sold anually before the tax went into effect. If sales had remained the same, the city would have realized $62,400.00 in revenue instead of $54,300.00. But with the volume cut in half, they managed to slash their revenue to $31,200.00. (I was told there would be no math. Apparently City Hall in Philadelphia was operating on the same assumption.) Great job, guys. You gutted your revenue stream, caused layoffs in the beverage industry and depressed sales in the city’s retail outlets, likely impacting entry level jobs.

Of course, this is “unexpected” only if you haven’t followed similar stories from coast to coast, including here in Minnesota, where the rapacious and punitive increases to the cigarette tax enriched a lot of North Dakota, South Dakota and Wisconsin convenience stores a few years back.

Unintended But Delicious Consequences

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Remember during the Cold War, when the running joke was that the best way for a small, poor country to get ahead was to go to war with the US, for all the rebuilding assistance they’d get afterward?

The modern corollary may be “the best way for a business to succeed is to become the target of liberal PC virtue-signaling and boycotts”.

Chik-Fil-A is now Ameirca’s #3 fast food joint.

Chick-fil-A, which has been the target of a left-wing boycott campaign due to the problematic socially conservative views of its founder, has absolutely dominated the chicken market over the past decade. The chain’s sale have tripled, and its U.S. market share among chicken-centric restaurants has increased from 18 percent in 2009 to 33 percent, while its chief competitor, Kentucky Fried Chicken, has seen its market share fall from 29 percent to 15 percent over the same period. That’s what winning looks like. Congrats on the boycott, libs!

And by the way – has anyone checked in on Hobby Lobby lately?

Oh.

Unexpectedly

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Rising tides, it turns out, do actually lift boats:

In April, the unemployment rate for Americans with a high school degree fell to the lowest rates since before the Great Recession. Unemployment for workers with disabilities fell from eight percent to 6.3 percent over the last 12 months, the lowest level since the measure began in 2008.
Hispanic unemployment is the lowest it has been since 1973 (also when the measure began). Black unemployment remains close to historic lows, climbing slightly since the end of 2018.
One could hardly wish for a better trend. This economy is working for every class of American.

I think if the Democrats started devoting every scrap of their energy to pushing for impeachment, taking their (what else?) collective hive mind off of policy for the next year or so, it’d be the best thing that could possibly happen to this nation’s poor.

Stop Spending Money You Don’t Have, Dummy

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That should be the title of this superb Kevin Williamson piece at National Review about the subject, of, well, not spending money you don’t have, and how Donald Trump, whatever his other found virtues, is really really bad at not doing that.

So many pull quotes – and all have a theme:

Stop spending money you don’t have, dummy.

The last time we had a surplus, tax revenue was 18.8 percent of GDP and spending was 17.6 percent of GDP. That was 2001. Taxes were even higher as a share of GDP in the two years before that: 19.2 percent of GDP in 1999 and 20 percent in 2000. I prefer low taxes, but I don’t remember the tail end of the 1990s as an Orwellian dystopia. If the estimates hold, this year, revenues will be about 16.3 percent of GDP and spending will be 21 percent — with deficits forecast as far as forecasters can see. And that’s while the economy is doing well. Either that tax number moves or that spending number moves — or we have deficits forever, until the creditors call us on our bullsh**.

At which point we will have no choice but to:

Stop spending money you don’t have, dummy.

And when they blow that?  Well, Williamson’s on that subject, too.

Creative Destruction

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I never, ever thought I’d write this.

Blockbuster – a video chain that spawned a few billionaires, a corporation that was once listed in the same breath with the likes of Microsoft as being “maybe too big”…

…is down to one store.

Just one.

At its prime in the early 2000s, Blockbuster boasted more than 9,000 stores across the nation.
Popular among movie watchers and video game renters, people flocked to Blockbuster to find flicks or games to unwind with. But the company’s business model soon became stale when Netflix and Redbox started providing on-demand digital services.
In 2010, Blockbuster declared bankruptcy and was bought by Dish Network. Soon after, Blockbuster began closing its doors, though some franchise locations tried to stick it out.
By April 2017, only 10 Blockbuster stores remained in the US.

Against all odds, the location in the small town of Bend has persevered.
“We’re proud to still be open,” Harding said.

Via CNN

Free markets have a way of dealing with companies that are “too big”. And I suspect the Blockbuster in Bend will do a booming business being…it.