Cuba Cracking Down on Entrepreneurs

I continue to believe that the best way to take down this regime is ending the embargo and flooding Cuba with the most basic goods of civilization:

President Raul Castro issued a stern warning to entrepreneurs pushing the boundaries of Cuba’s economic reform, telling parliament on Saturday that “those pressuring us to move faster are moving us toward failure.”

Castro has legalized small-scale private business in nearly 200 fields since 2010 but has issued tighter regulations on businesses seeing as going too far or competing excessively with state enterprises. In recent months the government has banned the resale of imported hardware and clothes and cracked down on unlicensed private video game and movie salons.

I once had high hopes that this Castro would be better than the last. Remains to be seen, I suppose.

Smart Meters and Consumer Choices

The drive to let consumer-level electricity prices float as prices do in innumerable other markets has been stunted by complaints about so-called “smart meters” that would give consumers the ability to respond to fluctuations in the realtime price of electricity.

When the California Energy Commission attempted to put these kinds of meters into new buildings, the knee-jerk reaction consisted largely of complaints about the government “taking over” consumers’ electricity consumption in the case of a looming blackout. For more on why these concerns lacked some essential context, listen to the podcast with Peter Van Doren on the case of the CEC.

As I discussed with economist Lynne Kiesling at Cato University, consumer-side responses to varying electricity prices could take many forms, from smarter appliances plugged into the same pricing information to battery technology to take advantage of times of low electricity demand. What’s more, dynamic pricing could someday let consumers turn the product of electricity into the service of electricity by allowing consumers to pay a premium for costlier but “greener” methods of electricity generation.

Here’s more from Kiesling on smart meters.

The Day My Friend Aaron Got Trapped in His Model

Yeah, I remember that day. Aaron started on about the frictionless movements of goods and services instantly from one place to another. Then it was that markets instantly take full account of all available information. He said that entrepreneurs could somehow costlessly enter and exit markets hundreds of times a day. And it was “widget this” and “widget that” for the rest of the time. I knew it was bad when I told him about a $20 bill I’d found. Get this. He called me a liar, arguing that “if it had really been there, someone else would have gotten to it first.” By then he was rocking back and forth.

What’s that? No, I don’t visit him in the hospital, but not a day goes by that I don’t miss him. He was a good friend.

Just Heard on NPR …

Teasing an upcoming story …

“Is the Internet harming the economy?”

I think that’s how it was phrased, anyway.

Imagine a tool that makes you better at hundreds of tasks right now and many tasks you cannot yet imagine. Without it, the following tasks would be more costly: banking services, research, keeping in touch with friends and family, finding a job, professional development, writing, art, music, shopping, consuming news, doing business locally and doing business around the world.

Now imagine someone told you the tool, which dramatically lowers the cost of doing everyday tasks for everyone, is harming the economy because it eliminates jobs. What on earth could be their solution to correct the apparent problem? Would you even want to contemplate it? And aren’t there other innovations that have the same kind of impact on some kinds of employment? Refrigerators, automobiles, pharmaceuticals, preservatives, plastics and cellphones come to mind.

Update: My eye rolling was not rewarded with a somber discussion of how the Internet breaks down society. The “expert” featured on the program said that the Internet is a net plus. Thank heaven! What a great use of airtime!

Quote of the Day

“It’s very important to have a theory of public choice which consists of more than simply criticizing the politicians, parties, and voters you do not agree with.” – Tyler Cowen

Think Like an Economist

My doctor recently said my ideal weight is about 15 pounds lighter. She did not have an answer when I responded, “OK, so then what’s my optimal weight?”


“We are storytellers, operating much of the time in worlds of make believe. We do not find that the realm of imagination and ideas is an alternative to, or a retreat from, practical reality. On the contrary, it is the only way we have found to think seriously about reality.” – Robert E. Lucas, Jr.

The Price of a Shaving

The distorting effects of subsidies don’t get much more clear than this:

It sounded like a good idea: Provide a little government money to convert wood shavings and plant waste into renewable energy.

But as laudable as that goal sounds, it could end up causing more economic damage than good — driving up the price of raw timber, undermining an industry that has long used sawdust and wood shavings to make affordable cabinetry, and highlighting the many challenges involved in decreasing the nation’s dependence on oil by using organic materials to create biofuels.

In a matter of months, the Biomass Crop Assistance Program — a small provision tucked into the 2008 farm bill — has mushroomed into a half-a-billion dollar subsidy that is funneling taxpayer dollars to sawmills and lumber wholesalers, encouraging them to sell their waste to be converted into high-tech biofuels. In doing so, it is shutting off the supply of cheap timber byproducts to the nation’s composite wood manufacturers, who make panels for home entertainment centers and kitchen cabinets.

In the article, I didn’t find much handwringing on behalf of people who buy cabinets, especially low-income people who tend toward buying lower-quality cabinets made out of wood shavings. The concerns instead were from people like Senator Tom Harkin on behalf of the biomass industry:

“My bottom line is we have to examine those rules and make sure the payments incentivize the use of new, additional biomass for energy,” Harkin said, “which is the objective Congress intends and wrote in the law.”

It’s not quite “Let them eat cake.” It’s more like, “Let them use cinderblocks and two-by-fours.”