mailbag

On universal basic income.

The first mailbag post in a while– first of any type of post in a while– is brought to us from “F.A.”, who writes:

Hey Mr. V, I don’t know if you’ve been following the Democratic party and all that jazz at all but since you have a background in economics, I wanted to hear your take on Andrew Yang’s platform, namely his policies and ideas on universal basic income? I’m doing some research and listening to a lot of what he has to say and it sounds great on the surface level but I wonder if its actually a good idea from an economist’s perspective.

I’m opposed. I am against any proposal that creates any new tax without eliminating old taxes. I am also against any proposal that creates new social programs without eliminating old social programs. Yang’s proposal creates new taxes (e.g, the VAT) and a new type of social program (the Freedom Dividend) without eliminating anything, so I am opposed.

Reducing some taxes and social programs while consolidating others isn’t good enough. Nothing in Yang’s proposal would actually keep the old taxes low or restrain spending on the old social programs. And those old taxes would eventually go back up, guaranteed, and the spending on the old social programs would eventually go back up, guaranteed. And then we’d be stuck with higher taxes and higher spending on social programs.

My position on this matter is supported by the entire history of federal taxation and spending. Every major social program in American history has cost more than originally projected. And every tax aimed at funding those programs is higher than originally promised. The same would be true of Yang’s proposal. There is absolutely no reason not to believe this.

Look back at this poorly written post from ten years ago to get a sense of a UBI plan that I might sorta kinda be willing to support. Seriously, read it. I’ll wait here.

Back? Good. Today I’d probably oppose even Murray’s plan because I have virtually no faith that the costs would be controllable, but set that aside for now. The reason I might sorta kinda be willing to support it is that it would replace every form of federal social spending without raising taxes. But that’s assuming projections go to plan, and that’s assuming the pressure to raise the payout is somehow structurally and constitutionally contained, and that’s assuming we ratify a constitutional amendment restricting federal social spending to this one program.

I won’t belabor that point anymore. I have other concerns.

I don’t think automation will be as dangerous or disruptive as Yang and others do. I think interfering with market processes will be more dangerous than Yang and others do. The more they tinker, the faster labor is replaced by capital. I’m too tired to explain that right now, and I’m trying to watch the Patriots-Steelers game. I actually like Belichick a lot due to his background in Economics.

I think it is socially and psychologically dangerous to give people something for nothing. Workfare programs have the virtue of giving a dollar to someone who’s earned it, and thus are relatively popular in the US. But giving UBI to a bunch of no-good soy-latte-sipping cravat-wearing goateed neo-Gramscian beatniks who vape fair trade vegan CBD oil in their rent-controlled solar safe space hippy communes and snap their soft fingers to laments about the evils of earning money? That wouldn’t play in Peoria. Neither would giving UBI to a bunch of lazy Nazis. If someone can work, you really shouldn’t incentivize them not to work.

In short, Yang’s take on UBI looks nice on paper but would be very, very bad.

I appreciate your question, because I’ve been far too slack with the blog for far too long.

On Wal-Mart’s higher wages.

From the mailbag:

(Blonde) directed my attention to a Gray Lady article that asks “How Did Walmart Get Cleaner Stores and Higher Sales?” and then answers “It Paid Its People More” and then asks “Can the answer to what ails the global economy be found in the people in blue vests at your neighborhood Walmart?” Click here to read it yourself.

Long story short: in 2015, Wal-Mart’s revenues dropped for the first time since God was a child, customer satisfaction was down, and so they decided to pay their employees more. Their revenues went back up while the rest of the retail market was down, and customer satisfaction improved. However, the stock price underperformed and profits dropped a bit.

So is attracting better workers via higher wages the “answer to what ails the global economy”? As any well-trained economist proficient in hedging his bets would tell you, it depends. I suppose that sometimes it is, and sometimes it isn’t.

Maybe Wal-Mart’s experience validates the concept of the efficiency wage. Or, since their profits are down, I should say “may soon validate” the concept. Maybe higher profits are right around the corner. Maybe profits will continue to lag and then there’ll be a hiring freeze, or a wage freeze until inflation eats away the value of the wage. After all, the stockholders are trying to make money, too– maybe for raw profit, maybe for retirement, maybe for a health savings account, who knows why?

I’m not surprised that offering a higher wage brought in better workers, though I would like more elaboration on this little nugget:

But at the store level, managers describe a big shift in the kind of workers they can bring in by offering $10 an hour with a solid path to $15 an hour. “We’re attracting a different type of associate,” said Tina Budnaitis, the manager of Walmart No. 5260 in Rogers. “We get more people coming in who want a career instead of a job.”

If I were a cosmic justice warrior, I might take that bit about “a different type of associate” and play the “what’s that supposed to mean?” game. But I’m not, so instead I’m going to play the “what happens to the original, ‘pre-different’ type of associate?” game. Here I go:

What happens to the original, “pre-different” type of associate? If that person’s out of a job, then all else being equal might there be no net gain in employment? And if profits are still down, or stay down after hiring the “different type,” then what was gained on net by hiring the “different type”?

Anyway. Maybe it’ll work, maybe not. It makes perfect sense that if you want more productive workers, maybe you should up the bid for those workers by offering higher wages. Those workers can increase profits, but it’s also possible that the revenue gains won’t offset the higher labor costs.

Those’re just a couple of ramblings, I haven’t done much blogging in a while. Just been feeling kind of off, and I guess I’m not as– wait. Wait a minute. I just noticed some minimum wage stuff in this article. Hold on.

Forgive me for being presumptuous, forgive me for impugning your motives, maybe I’m wrong, but is this story supposed to boost support for a higher minimum wage? To chip away at my opposition to minimum wage laws and living wage laws? Is that why you sent it? “Pay people more; we’ll finally have cleaner Wal-Marts that actually have more than two lines open?”

Well, first, we already have cleaner Wal-Marts that actually have more than two lines open. They’re called Targets.

Second, as I’ve said before, minimum wage is a restriction on the worker as much as it is a restriction on the employer. Say we raise the minimum wage to whatever New, Improved Wal-Mart is paying. Remember the original workers? Not the new “different type,” I mean the original workers they had before their profits started dropping off? Some of them just got put out of work, or didn’t get hired, because they’re not the right type of different. And as I’ve said in past posts, you’ve made it harder for them to get hired, to gain experience, to make contacts, and so on.

Third, minimum wage isn’t just an economic issue. It’s a matter of rights, specifically the freedom to make contracts. This often invites a comeback along the lines of “yeah, the right to get exploited” or “yeah, the right to get paid less,” to which I respond “I’d prefer to be exploited for not-enough-money than not exploited for zero money.” And I prefer it because I’ve been there.

Let’s pretend for a moment that this’ll work out as hoped for Wal-Mart: higher revenues, more customer satisfaction, cleaner stores, shorter lines, higher profits. If paying higher wages works out for Wal-Mart, does that justify forcing other businesses to pay higher wages, too?

So, again, if it works out for Wal-Mart, great. Let others voluntarily follow their path. If it doesn’t, oh well. Hopefully others learn from it.

I need to get back to blogging more.

On the 2016 field, so far.

Rogue Economist asked recently, i.e., three months ago, “Any commentary on the presidential race thus far?”

I apologize for taking my sweet time to respond, but I will do so now that the field’s a little smaller. My commentary is mostly negative. I’ll keep it brief and proceed in alphabetical order. Here goes.

Jeb Bush: Saturday’s debate was his best, and may have given him a lifeline, but… I can’t really think of much to say about him one way or the other. Just sorta meh. His problem isn’t that he’s a Bush, his problem is that he’s less like W or Barbara (i.e., cutthroat when necessary) and more like his dad (coasted into the Presidency in Reagan’s wake) or his brother Neil (never even ran for governor; black sheep of the family). Nothing radical about him; wouldn’t rock the boat too much as President. He just has to start winning sometime soon.

Ben Carson: He’s the wrong kind of nice for the White House. His affect is a bit off; he does not come across as authoritative or commanding in any field outside medicine and morality. After he drops out of the race, he should run for the House of Representatives from a conservative district, where he can fill in that public morality niche.

Chris Christie: Our times are such that appearance, sadly, matters too much compared to substance. So that doesn’t help Christie unless he wins the nomination— Bernie and Hillary are no prizes at their advanced ages. He has two problems. First is that he’s pissed off way too many Republicans over the years to have a good shot at winning the nomination. Second is that Trump has already staked out the brash, loudmouthed, New York/New Jersey straight-talk territory. There’s no room for Christie.

Hillary Clinton: In the most recent Democratic debate, Hillary claimed that she— former First Lady, former Senator, former Secretary of State, would’ve been President except she screwed up the 2008 primaries, frontrunner in the current campaign with tons of cash on hand— is not part of the Democratic establishment. If you need evidence that she’s establishment, here it is: the fact that the DNC didn’t dump a candidate who they have to hide from the general public as much as possible because they dislike her the more they see her, combined with the fact that the DNC didn’t dump the only candidate in the race who is teetering on the verge of federal indictment, combined with the fact that the DNC couldn’t find anyone willing to run against her, clearly demonstrate the Democratic establishment’s preference for Hillary. That she could be that brazen in making such a patently absurd statement is truly Clintonesque. Bill would be proud.

Seriously, though, I don’t like her. She is the single most corrupt person in this campaign.

Ted Cruz: Probably the sharpest thinker and campaigner in this whole mess, and of those left he probably cares the most about the Constitution, and he somehow won Iowa despite his opposition to ethanol subsidies. However, he looks like he’s wearing a Ted Cruz mask most of the time and his cadence is a little weird. Plus, the Canada thing could conceivably come back to bite him in las nalgas.

Carly Fiorina: At this stage she has no shot at the nomination, which is a shame, because she comes across as authoritative, collected, and prepared. Plus, she got most of these questions correct. Any GOP nominee would be damned foolish not to put her at the top of the VP list. I think she’ll stick around a while longer as a sort of tryout for Veep.

John Kasich: I’m sure he has some good ideas but good Lord, he just drones on and on about… about… I’m not even sure what about. He seems like he’s running for Mayor of Sleepy Midwestern Town or Dogcatcher or Step-Dad or something. He should’ve run back in 2000, when he— oh. Never mind.

Marco Rubio: He had one big problem, now he has two. The first big problem was amnesty. The second big problem was his response to Christie’s challenge in the most recent debate. Rubio’s a nice guy, and may represent the bright future of the party. But the second big problem was his response to Christie’s challenge in the most recent debate. He was an effective Speaker of the House here in Florida, and as Senator he struck the biggest legislative blow against ObamaCare so far. And the second big problem was his response to Christie’s challenge in the most recent debate. As an aside, I know Rubio’s older brother, and it was neat to hear Marco talk a bit about Mario in the most recent debate. The second big problem was his response to Christie’s challenge in the most recent debate.

Bernie Sanders: Two old Cold War phrases come to mind: “useful idiot” (полезные дураки) and “fellow traveller” (попутчик). But the galling thing about Bernie isn’t his economic illiteracy, it’s the fact that he could do the world a favor by tearing Hillary to shreds in the debates and he simply won’t do it. So much for speaking truth to power.

Donald Trump: First, I would like to apologize on behalf of my birth state, the glorious State of New Hampshire, if they go ahead and give Donald Trump his first primary victory tomorrow. In lieu of offering detailed analysis of the man and his campaign, allow me to me offer a transcript of some online back-and-forth with the esteemed Dr. Hmnahmna during last Monday’s Iowa caucuses, edited for dramatic effect:

VDV: People in Iowa are actually voting for Trump– NOW is it the end of the world?



DR. HMNAHMNA: Yes. I recommend you start drinking heavily.



VDV: Hosted a party last weekend. Let’s see what’s left.


VDV: Cheap red wine



VDV: Whiskey



VDV: Arsenic



VDV: Battery acid



VDV: O Great Cruz. Please save us from Donald. [Moderator notes: If it turns out Iowa was the beginning of Trump’s downfall, Cruz deserves a medal.]

DR. HMNAHMNA: Bloomberg will save us all.



VDV: Thank God. Here I was thinking my cup can fit a little too much soda in it, but BAM– Bloomberg to the rescue.



VDV: You know, just six months ago I was thinking, this might be the best group of GOP candidates we’ve seen in a while. Solid governors, up-and-coming senators, good representation of different wings of the party… and now I’m sitting here offering livestock to Ba’al in hopes of stopping Trump.



I think Cruz (or maybe Rubio) and Sanders represent the ideological wings in the race. I mean that descriptively, not perjoratively. I think that if you could install Bush, Christie, Clinton, or Kasich (or maybe Rubio) as President, you wouldn’t see a whole lot of boat-rocking, just some drift off to the left or right. I’d throw Trump in with that group if anyone could just him up, tape his mouth shut, and put him in one of those YES/NO wheelchairs like Captain Pike.

That said, last week I was presented with a scenario in which I could see myself voting for Trump. Here goes:

Obama strings along the feds’ investigation into Hillary Clinton to weaken her as much as feasibly possible. When it becomes apparent that she’s going to beat Sanders, Obama springs the trap. Hillary gets indicted and has to drop out. The DNC simply won’t let Sanders be the candidate, and so they throw Joe Biden’s hat in the ring. Uncle Joe will “reluctantly” take on the burden of being handed the nomination, campaign on taking up the Obama mantle, brag about forcing Obama’s hand on gay marriage, and remind us of his family tragedy at every possible opportunity, germane or not.

If that happens, then I swear to you and God Almighty that I will do whatever I must to make Trump the Republican nominee, thereby ensuring the best damn Presidential debates ever. Those two hair-plugged, brain-addled gasbags bloviating at each other would make for the most glorious spectacle in televised political history.

“Its color, its brilliance, its divine heaviness.”

Noutheo writes:

I’ve been reading a lot of works by the late economist Murray Rothbard, and he’s turned me into a proponent of money backed by commodities. “What Has Government Done To Our Money” was especially interesting as he explored the history of money and the gold in the USA. So I was wondering what your thoughts were on the gold standard and whether or not we should return to it (or some other commodity).

First, allow me to explain in simple terms what a commodity standard is. Simply put, it means that the value of money is legally based on the value of a particular good or set of goods. Therefore, a gold standard mandates that the value of money is linked to the value of gold. A commodity standard is distinct from a fiat standard. A fiat standard means that money’s value is not linked to the value of any particular good or set of goods. Fiat money is backed by government mandate; it is valuable because the government says so. The US dollar has been pure fiat currency since 1971.

This is a topic that used to be quite near and dear to my heart. My college honors thesis dealt with the gold standard, and at least one of my college profs was a gold bug.

I haven’t read Rothbard’s writings about gold in a long time, so I can’t comment directly on him. Send me some links to the particular articles you’re reading because I’d like to look at them.

I’ve spent several days trying to figure out a clear way to respond, but haven’t had much success. So allow me to ramble via bullet point a bit before answering your question directly.

1. I don’t believe that inflation is inherently worse than deflation, or that inflation of X% over a given timeframe is inherently worse than deflation of X% over an equal period.

2. That doesn’t mean that using gold, which is usually deflationary, is as good or as bad as using fiat paper, which is usually inflationary.

3. I’m not convinced that a gold standard would bring discipline to monetary or fiscal policy. Governments find workarounds, whatever standard you’re on. In my opinion, our currency standard is pretty low on the list of problems with our government that need to be fixed ASAP.

4. You do not have the right to have the monetary value of your stuff remain constant relative to other stuff. In other words, you are not entitled to have your stuff’s monetary value increase via deflation or decrease via inflation.

So, should we return to a gold standard or some other commodity standard? If you’re interested in reversing inflation and tending towards deflation, then yes, using a gold standard would accomplish that, though it would not be a panacea.

But if you’re interested in optimizing human liberty, and given your email I assume you are, then no, we shouldn’t have a gold standard, or a commodity standard, or a fiat standard. We should have a free market in money.

If you accept money backed by gold, or silver, or land, or oil, or any other commodity, and other people will accept it in trade, good for you. If you accept money that I just drew on a piece of paper, and other people will accept it in trade, awesome. If the government prints money backed by nothing but faith in the US government, and you accept it, and others accept it in trade, great. If Bitcoin works out in the long run, then yippee! And if Gene Roddenberry’s vision comes true and we just plain stop using money (never mind all the different types of money that get mentioned all the time in Star Trek) and people are happy with it, then so be it.

I don’t think anyone should be punished for using anything as money, so long as buyer and seller agree to the exchange freely, without fraud or force. So, in the interest of advancing liberty, we shouldn’t have any official monetary standard.

P.S. A cobalt-iodine dirty bomb would not render gold radioactive for anything close to 58 years, so don’t get any ideas.

5304.

An anonymous reader sent the following:

A friend of mine recently posted this link on SharePoint. I thought you may enjoy interacting with the ideas presented.
http://www.businessinsider.com/companies-need-to-pay-people-more-2014-3

In short, Blodget argues that employers don’t pay employees enough,  thus the economy’s in trouble. To support his assertions he shows four charts, all of which depict data from 1940 to the present:

  • Chart one shows corporate profits as a percentage of GDP. They are higher than ever.
  • Chart two shows wages as a percentage of GDP. They are lower than ever.
  • Chart three shows civilian employment as a percentage of the population. It is lower than it has been in decades.
  • Chart four is, for all intents and purposes, a repeat of the second graph, though meant to seem scarier.

Because my brain hurts and I want to go to sleep, I won’t criticize the article, aside from asking a few questions and letting all y’all fill in the rest.

1. Where’s the chart that shows non-wage benefit compensation to workers, and how dramatically said compensation has grown over the last 30 years?

2. Where’s the chart that shows retirement funds, stock portfolios, bond portfolios, mutual funds, real estate holdings, etc., and how dramatically the value of such has grown over the last 30 years?

3. Where’s the chart that shows total compensation to workers?

4. If you are going to complain about the last 30 years (1984-2014), shouldn’t you at least mention that in the 30 years before that (1954-1984, when, apparently, everything was fine), there were more recessions and more time was spent in recession?

5. What are the ideal values of the ratios of corporate profits to GDP, wages to GDP, and civilian employment to population?

6. How do or can you know the answer to #5?

7. Can you think of any plausible explanation for the fact that the ratio of civilian employment to population has shown no real sign of recovery since bottoming out in mid-2009?

Old Tip’s house.

An anonymous reader anonymously writes:

“I JUST TOURED WILLIAM HENRY HARRISONS HOUSE IN INDIANA AND NOBODY
APPRECIATES MY EXCITEMENT SO HERE IT IS THANK YOU”

I hereby appreciate your excitement, though I imagine the house consisted merely of a portico, a gift shop, and an egress.

A brief grumbling about the NSA.

Anonymous asks: “Off topic: What do you think of the ruling of the court case over the NSA data-collection-whatever?”

I haven’t studied the case or ruling beyond what was in the headlines and a few articles. However, I think it’s safe to say that capturing virtually all internet traffic is unreasonable and unwarranted (and I have a pretty broad definition of “reasonable”), thus violating the Fourth Amendment.

I think I could tolerate the NSA capturing all internet traffic if it were reasonable. But is there any evidence to show that it’s reasonable? Has there been any effort made to demonstrate that it’s reasonable?

I’d like to be able to defend the NSA here. After all, the world is a scary place, national security is an increasingly complex matter, and the bad guys use the internet, so why not monitor and use the internet to catch them?

More specifically, I’d like to be able to defend the NSA by saying something along these lines: “Because the world is a scary place, national security is an increasingly complex matter, and the bad guys use the internet, the NSA needs to be able to do A, B, and C. But doing D, or anything beyond that, would clearly be going too far, so it can’t and doesn’t do D.”

But over the last few years, we’ve learned that the NSA does do D. And E. And F. Come to think of it, when’s the last time you saw a story confirming that the NSA does not have a particular ability or capacity? That there’s some limit to its data collection or intelligence gathering or spying? Hasn’t literally every NSA story been about how it has more power than we knew?

I’m sure that the Obama folks would simply say, just like the Bush folks did, “At some point, you have to trust us.” But if the left didn’t trust Bush with this sort of power, and the right doesn’t trust Obama with this power, and the middle doesn’t trust anybody with this power, then… we have a problem. Go after the bad guys, sure, but… Jeez.

I already assume the President won’t do anything to reign in the NSA; it’s not in the nature of the office or the office-holder, regardless of party. We’ve seen a federal court show that it’s willing to do something; hopefully other courts and the Congress will follow suit.

Another point, that might’ve been worth considering, say, 14 or 15 months ago: Will anyone ever again believe that a President doesn’t spy on his campaign opponents? Or can we safely assume that every President from here on out is a Lyndon Edgar Nixon?

On the possibility of default.

An anonymous reader asked in an earlier comment thread, “Could you explain what would happen if the Oct. 17 deadline isn’t met?”

October 17th is the day that the federal government expects to hit its debt ceiling. In other words, on that day, the federal government will max out its credit card and it won’t be allowed to borrow any more money until it pays off some of its old debts.

That doesn’t mean the federal government will cease all operations, or stop collecting taxes, or stop spending money. It can keep operating, collecting taxes, and spending money. It just won’t be allowed to borrow any additional money until (A) the debt ceiling is increased, or (B) enough old debt is retired to make some room underneath the debt ceiling.

The big fear now is that if the debt limit is not increased by Thursday, the federal government will default— that is, if the government owes you money on Friday, it won’t be able to pay you. That would be bad because an IOU from the federal government is supposed to be one of the most (or the most) safe and secure financial investments on Earth. And suddenly a lot of people, businesses, and other governments who’ve lent money to the federal government in good faith will realize that they may not get their money back in full. And that causes worldwide economic turmoil unless and until the federal government gets its act back together, but even then investors may no longer view it as trustworthy. And then people/businesses/governments are less willing to lend money to the federal government, which suddenly has great difficulty funding its daily operations, and has to either cut spending, increase tax revenues, or inflate the currency.

Default is the big fear. But default doesn’t have to happen, even if the debt ceiling doesn’t get raised by October 17th. The federal government can cut spending or it can raise taxes. Neither’s a pleasant option, but default would be far worse. And perhaps because default would be far worse, default is legally and constitutionally the last resort. The feds have to pay off their IOUs before they spend a dime on any other function of the government. That’s not just my opinion, that’s not just how I read the Constitution, that’s the last few centuries of financial and legal precedent. Bondholders– the “U” in “IOU”– get paid first. Not our military. Not Social Security or Medicare recipients. Not Congresscritters or other federal employees. Bondholders. And every day, the feds bring in several times the amount of cash necessary to pay off the bonds that come due every day.

So if October 17th comes and the debt limit hasn’t been raised, expect more parts of the government to shut down because of spending cuts. It won’t be pretty, but default will still be a long ways off– unless the President unilaterally decides to shaft the bondholders, which I’m sure would never ever happen in a million years.

On groceries.

An anonymous reader emails:

I have an economics-related question that stemmed from a pretty interesting article I just read on the cost of living in NYC.

My question is this: On page one of the article, the author quotes some research stating, “…for households earning above $100,000, grocery costs are 20 percent lower in cities with a high per-capita income (like New York) than in cities with a low per-capita income (like New Orleans).”

But then on page two of the same article, the author quotes different data from the same study, “…a household earning $15,000 a year faces approximately 20 percent higher grocery costs in cities with relatively high per-capita income.”

I don’t understand how grocery costs can be higher or lower for one socioeconomic group than another. If Person A making $100,000 a year and Person B making $15,000 a year both shop at the same store, would the prices not be the same for each person? I know obviously Person A is more likely to shop at an upscale/ more expensive store than Person B, especially in a city like New York, but there are only so many grocery chains to choose from, and I’ve found from working in grocery stores that I daily come across an equal number of people from both ends of the spectrum that shop at the same chain with the same prices. I’m sure I’m missing something obvious, but I don’t see how these two statistics can coexist simultaneously. Thoughts? [Emphasis added by VDV.]

Let’s address the first statistic first. Remember that this statistic compares rich people in rich cities (such as NYC) to rich people in poor cities (such as New Orleans). Because NYC is such a rich city, a lot of fancy grocery stores open and compete for rich customers. The competition is intense enough that it puts significant downward pressure on the price of expensive groceries. On the other hand, New Orleans is a comparatively poor city, so you’ll see proportionately fewer fancy grocery stores open. They don’t have to compete as hard for rich customers, so that downward pressure on prices isn’t as great as it would be in NYC. Thus, rich New Yorkers have a lower grocery bill than rich New Orleanians. This is the explanation offered by the author and researcher on page one of the article.

Now on to the second statistic: “a household earning $15,000 a year faces approximately 20 percent higher grocery costs in cities with relatively high per-capita income.” I assume that this is in comparison to poor households in relatively poor cities (the author doesn’t go into as much detail with this statistic, which is a bit disappointing). There are several possible explanations for this, but let me give you the simplest one I can think of– which is essentially the same as the explanation for the first statistic. Watch this:

Because New Orleans is such a poor city, a lot of inexpensive grocery stores open and compete for poor customers. The competition is intense enough that it puts significant downward pressure on the price of inexpensive groceries. On the other hand, NYC is a comparatively rich city, so you’ll see proportionately fewer inexpensive grocery stores open. They don’t have to compete as hard for poor customers, so that downward pressure on prices isn’t as great as it would be in New Orleans. Thus, poor New Orleanians have a lower grocery bill than poor New Yorkers.

Now go back to the boldfaced part of your email. You didn’t miss the “something obvious” that helps explain it– rather, you typed the “something obvious” and then ignored it. On average, the rich and the poor buy different groceries (you acknowledged this at first) and on average, they go to different stores. That plus understanding competition plus understanding that different income groups are different sizes in different cities equals a plausible explanation for the simultaneous coexistence of these statistics.

You said “there are only so many grocery chains to choose from”. [Note my use of logical quotation.] This is true, but remember, “only so many” is relative. In NYC, there are relatively many rich groceries to choose from. That’s good for the rich consumer. In New Orleans, there are relatively few rich groceries to choose from. That’s bad for the rich consumer. That explains the cost disparity facing rich folks.

On the flip side, in NYC, there are relatively few inexpensive groceries to choose from. That’s bad for the poor consumer. In New Orleans, there are relatively many inexpensive groceries to choose from. That’s good for the poor consumer. That explains the cost disparity facing poor folks.

I hope this helps.

Catsup.

Here are some brief responses to recent questions from anonymous readers. I may expand my responses one day.

1. “Personal Question! What meaning does your religion (or philosophy) hold for you and how does it impact how you live day to day?”

It generally keeps me from having other gods, making graven images, taking the Lord’s name in vain, forgetting the Sabbath, dishonoring my parents, committing murder, committing adultery, stealing, bearing false witness, and coveting my neighbor’s stuff. Generally.

I abide by the Golden Rule as much as possible. I figure since, in some form or other, it shows up in virtually every religion and philosophy and in game theory (read The Evolution of Cooperation), it’s pretty solid.

As an aside, the book of The Good Book that has most influenced me is Job. Here’s the short version: God can do whatever He wants, whenever He wants, to whomever He wants, and doesn’t have to answer to anyone… because He’s God. You don’t get to argue about things like goodness, justice, mercy, or fairness with the guy who invented them. Don’t like it? Tough noogie. If God exists, then this is incontrovertible.

For similar reasons, I also like the parable of the laborers in the vineyard (Matthew 20), but probably more for its commentary on property and exchange than its commentary on getting into Heaven.

We are owed nothing by God, by God. You can substitute “the universe” or “fate” for God if you’d like, but it still holds. If you happen to get good stuff thrown at you, just be grateful.

2. “…[I] was wondering what your opinion is on the legalization/decriminalization of Marijuana; the Constitution and the Amendments to the Constitution, as well as the founding father’s views on Cannabis, seem to point to the states being allowed to legalize/ decriminalize marijuana, but the presidents over the last few decades have been heavily against marijuana (The War on Drugs).”

I think that the federal prohibition of marijuana should end, and that the states should legalize, criminalize, and/or regulate it as they see fit. If a constitutional amendment was necessary to prohibit the manufacture, sale, and transportation of alcohol throughout the entire country, then it seems to follow that a constitutional amendment would be necessary to similarly restrict any other ingestible substance throughout the entire country.

That said, I have little patience for stoners. They deserve to be eaten.

3. “Would you rather fight 100 duck sized horses, or one horse sized duck and why? This question should be on one of your questionnaires.”

This is a stupid question.

4. “You should write a blog post about gay marriage. The issue has been slowly shifting in favor of gay marriage. How long do you think it will be before it is legal in all states?”

Eight hundred years, tops.

5. “On January 15th, in a post named ‘On Austrian Economics’ you said, ‘A more interesting question (not that Austria vs. Keynes is uninteresting) would have been whether I favor the Austrian/Vienna school or the Chicago school. I’d need time to ponder that one, preferably whilst eating a Chicago-style Vienna Beef hot dog. I just discovered Let’s Nosh down on San Jose this weekend, so my mind’s wandering thataway right now.’ I was curious as to whether your pondering has led you to a preference yet.”

It has. The Chicago-style dogs and Italian roast beef sandwiches at Let’s Nosh are far superior to those at Carmine’s. The key is that Nosh has the right ingredients: the right brands of beef (Vienna), the right toppings, the right type of bread, and so on. Carmine’s (in Riverside) definitely has the best Chicago-style pizza in the city, but their beef sandwiches are mediocre. Not enough beef, the bread’s wrong, they can’t pronounce giardiniera, the gravy isn’t right… I don’t want to think about it anymore.