CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Friday, August 06, 2010
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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60 Comments:
Wasn't this from some Ayn Rand novel? Is the end near? Definitely a "Wonko the Sane" type moment.
"crushing your little ambitions, one child at a time."
Let's see: $120 for the license to sell lemonade at $0.50/glass. Assuming a 50% margin, she would need to sell 480 glasses of lemonade to break even on this "temporary license." For a one day event, she would need to sell 1 glass every minute for 8 straight hours to keep from losing money.
Three thoughts:
1) I'm sure glad government regulation doesn't discourage the start-up of new business.
2) How does the payment of the $120 license fee do anything to stop the spread of illness?
3) Since she had a job and now lost it, does she qualify for unemployment?
Well this is hardly a suprise that its happening in a state that the citizens thought it was a good idea to soak the rich...
Junkyard hawg says: "3) Since she had a job and now lost it, does she qualify for unemployment?"...
99 weeks worth?...:-)
most states don't allow the self employed to collect unemployment, do they?
this is certainly another regulatory bias against starting a business, no? if may not add to the cost, but it certainly adds to the risk if you fail, particularly as starting your own business is usually funded by your savings.
Her sign should be in Braille, too. And how about the 8-year-old -boy down the road who bought a license, EEOC anyone? Just kidding.
Don't forget a food handler card: $10
Business registration, State: $100
Business registration, City: $50
Liability insurance: $$$?
Minimum Oregon income tax for business, profitable or not: $150
Temporary sign permit: $30
And, don't forget the new Oregon program that allows the unemployed to continue to receive benefits and start-up assistance so that they can open a new business that competes with their former employer.
All this subsidized competition does is further weaken an employer that has taken steps to strengthen itself.
Oh, and don't forget, the former employer gets slammed with higher unemployment taxes.
Actually Walt G (government red tape) and Junyard Hawg (health department interference) have both touched on something with their comments, something that is angering others...
Consider the following blog posting: The Right To Earn an Honest Living and That Little Girl Who Was Not Allowed to Sell Lemonade
Blackman says: "Most Americans recognize the meaning of the right to earn a living, but only get upset about it when a cute little girl can’t sell lemonade. I hope this story makes people open their eyes and look around them. What about all of the unseen costs, to paraphrase Bastiat. What about all of the businesses that never go into existence out of fear of excessive fines? What about all of the lost labor and capital never spent?"...
(emphasis is mine)
All it takes is one little boy peeing into a jug of lemonade and getting caught selling it to get someone outraged and say "there should be a law against that."
For everyone who thinks a law is stupid, there is another one who thinks we need more laws. Which one will LAWmakers listen to?
"All it takes is one little boy peeing into a jug of lemonade and getting caught selling it to get someone outraged and say "there should be a law against that.""...
Well Walt G I would venture to guess that there already laws against someone urinating into a food product...
None the less you do bring up a good point...
Regarding your question: "Which one will LAWmakers listen to?"...
Follow The Money...
Walt, your last comment really hit the point. A stable society has some undesirables to it. In this case, it could be a little urine in the lemonade. In a broader sense, it could also mean higher unemployment, some unhappy disabled people, etc. The more lawmakers try to eliminate the fringe unhappiness of everyday life, the more unhappy we seem to become.
Bottom line: The people's attempt to legislate complete order creates unpredictable chaos.
I heard the IRS is checking if she filed a proper 1099 for the income earned from her lemonade stand.
Dear Comrade County Manager General, may I please to have permit to sell lemonade at community event?
No, activity undermines peoples lemonade sales through local commissariat. Also, not member of Party. We are keeping an eye on you, comrade. Please to see your papers.
She may be eligible for unemployment benefits based on the amount of her employer's contributions.
""Her sign should be in Braille, too."
I suspect that her tiny voice hawking her wares would provide an adequate 'alternative experience' to those with low vision, but I could be mistaken. She is, after all, within the jurisdiction of the 9th Circuit Court of Appeals.
I am always curious as to the mentality of the person that takes this bureaucratic job and actually enforces these rules to such a ridiculous degree. Who are these people?
Same near Boston -- this time forced by an angered competitor...
http://www.business-opportunities.biz/2005/08/03/police-shutdown-boys-lemonade-stand/
Anonymous Bosh said...
"Same near Boston -- this time forced by an angered competitor..."
Those two boys have learned a valuable lesson. The best way to beat your competition is to enlist the force of government.
"All it takes is one little boy peeing into a jug of lemonade and getting caught selling it to get someone outraged and say "there should be a law against that.""
Walt,
The boy can pee in the lemonade whether he has a permit or not. The act of peeing in lemonade is what there should be a law against, not the act of selling lemonade.
"Well Walt G I would venture to guess that there already laws against someone urinating into a food product..."
Besides, no amount of regulation or licensing can prevent it. What WILL prevent the little boy from peeing in his products in the future is the fact that his customers, not liking the taste, will angrily demand their money back, word will quickly spread, and he will soon be out of business.
THAT is what keeps businesses from harming their customers, not any army of health inspectors.
The permit brings in the revenue for the pee inspector, and there has to be a law against peeing in the lemonade in the first place. You can't stop someone from doing something, even something stupid or that does not make sense, unless it is illegal.
I think the little girl should get with the other children selling lemonade, form a union to have more clout, and campaign for a representative who will support their right to sell lemonade without a license :)
Ron H.
What if it tastes better?
hawg-
that's exactly right. when someone gets stabbed, you don't ban knives.
this notion that everything needs to be licensed and regulated and mandated to prevent bad outcomes often does more harm than good.
even seemingly innocuous stuff like say, laws mandating motorcycle helmets can be the thin end of a wedge for the "nanny state". you find something that most people agree is a good idea (like helmets) and mandate it. then, using the precedent, you ban trans fats, then maybe sugary drinks, then who knows.
business and guild registrations work much the same way. licencure requirements are always protection for incumbents.
the protection provided by licensing a lemonade stand is illusory. as you say, he can still pee in it and that would be illegal licensed or no. all it does is keep lemonadecorp's profits high by preventing small competition.
with luck, the silver lining in this story is that our young entrepreneur is now going to be a lifelong libertarian.
Morganovich,
Why do most people think mandatory motorcycle helmet laws are a good idea?
Oh boy. You want libertarianism?
It would be interesting to see legalized, Constitutionally protected sidewalk vending in America.
I bet all of you talk-toughers would turn into a bunch of little girls when faced with true libertarianism.
I prefer it--in Thailand, sidewalk and street-vending is practically legal. You can buy great food, clothes etc, anything that fits on a pushcart.
Okay, suppose these sidewalk vendors set up camp in front of your house? Oh, that's different. What if they are selling pornography? Recreational drugs? Garlicky food?
Oh! Now everybody starts talking about how "local regulations" are okay. Somehow if the local sheriff strips you of your rights, then it is okay.
So, are you dudes up for legalized wide-open sidewalk vending? Why or why not.
I don't see any real libertarians in the house?
Weenies!
Me? I see go for it, along with drilling for oil off the coast of Newport Beach CA and Palm Beach FL.
The absolute best thing to come from our heavy government is seeing the public rise against it.
Please, give us more.
It's the best marketing campaign for the real change and hope that will be voted in on November 2, 2010.
walt-
my point was that most people think that wearing a helmet while riding a motorcycle is a good idea. therefore, when you try to make it into a law, few oppose you. (like seat belts) personally, i wear a helmet, but think the law requiring me to do so is stupid and harmful. thinking something is a good idea and thinking it should be legally mandated are completely different.
but this is every bit as arbitrary an intrusion into our private lives as say, passing a law banning using a fork to fish stuff out of the toaster. we all know it's a bad idea, but do we really need a law? it's akin to saying that you can be fined for not washing your hands after going to the bathroom. it's a good idea, but if such a law were passed for all citizens (not just food preparers) it would seem outrageous, no? but how is it really an different than a helmet law?
benny-
i love street carts. i'm all for allowing them. sure, some will have low standards, but word about things like that tends to get around pretty quickly. reputation/brand management takes out the guys selling trichinosis riddled rat sausage pretty quickly.
i have no problem with public health inspectors and an approval process. i just think it should be voluntary, like a good housekeeping seal. consumers can look for the license if it's important to them, or take their chances if it's not and businesses can likewise make their own choices.
"Ron H.
What if it tastes better?"
Well in that case, Walt G., his business will thrive, and every lemonade vendor will have to pee in their lemonade to compete successfully.
Large scale operations will have to hire pee-ers to meet demand. This means *jobs*, and a drastic reduction in unemployment, as few would be unqualified for these new high paying careers.
All this, without government interference, or more correctly DESPITE government interference.
Ain't free enterprise great?
And, I haven't checked, but I don't believe there are any ADA guidelines addressing concerns of the taste impaired.
"Okay, suppose these sidewalk vendors set up camp in front of your house?"
Benji, it should be obvious even to you that you are creating a straw man here. You assume that people wouldn't like it. I for one, would welcome it, as I wouldn't have so far to go to do my shopping. Shopping would come to me.
The sad truth is that it's not likely to happen in my neighborhood, as there is little traffic here. Business would be poor for street vendors.
Benji,
"I bet all of you talk-toughers would turn into a bunch of little girls when faced with true libertarianism."
Only Benji the True Economic Conservative is a True Libertarian. Remember that next time he supports the minimum wage, protectionism,money mischief from the Fed, and votes for socialist community organizers.
morganovich said...
"that's exactly right. when someone gets stabbed, you don't ban knives."
Perfectly sensible. However when someone gets shot, the wailing begins that we should ban guns. Go figure.
"my point was that most people think that wearing a helmet while riding a motorcycle is a good idea. therefore, when you try to make it into a law, few oppose you."
I seem to remember quite a lot of opposition from motorcycle riders when the helmet law was first proposed in CA. The argument was the same as yours - and mine - government intrusion in a matter of personal choice. Those arguing FOR the law claimed they didn't want to pay medical bills forced on them by irresponsible bike riders. In my opinion, their efforts were misdirected. Instead of trying to force helmets on all bike riders, they should have been trying to yank the Welfare State's hand out of their pockets.
Paul said...
"Only Benji the True Economic Conservative is a True Libertarian. Remember that next time he supports the minimum wage, protectionism,money mischief from the Fed, and votes for socialist community organizers."
You mean like the constant whining that the fed should take strong action with QE?
"run those printing presses 'til they smoke"
ron-
the problem is that motorcycle riders are always going to be a small subset of the population. thus, even if they all oppose the law, they still get out voted.
your construction of the issue around healthcare costs is precisely correct. once you have state sponsored healthcare, suddenly, all youR personal decisions (helemts, diet, BMI, smoking, contact sports) become matters for public policy.
i'd be willing to wager that that costs of football injuries far exceed those of motorcycle accidents caused by the lack of a helmet. so shall we ban that next to save costs?
(i even wonder if requiring helmets doesn't increase health costs around motorcycles. dead riders are much cheaper than hurt ones)
public health costs get used as the hammer behind the wedge of the nanny state. once you permit the justification of "it lowers public health costs" to drive one set of legislation, more inevitably follows.
"i even wonder if requiring helmets doesn't increase health costs around motorcycles. dead riders are much cheaper than hurt ones)"
I'm not sure there is any empirical evidence that helmets have saved on healthcare costs. There are arguments that a helmet reduces a rider's awareness of their surroundings, that helmets may result in increased numbers of neck injuries while reducing head injuries, and that a perception of increased safety may encourage riders to take more risks.
"I am always curious as to the mentality of the person that takes this bureaucratic job and actually enforces these rules to such a ridiculous degree. Who are these people?"
Ask Walt G., he deals with them constantly & teaches compliance. If anyone has any insight, he would be the one.
Stories like this one only show how far Oregon has followed California down the Road to Serfdom. Is it just the proximity, or is it because so many Californians have emigrated to Oregon and taken such idiocy with them?
Thankfully, it's human nature to want to excel. To expand the boundaries. To control all aspects of a given situation or task.
It's what drives society forward. It's why we have Apple, Intel, Toyota, for example.
Asking a bureaucrat (or bureaucracy) to behave any differently is next to impossible.
"Why do most people think mandatory motorcycle helmet laws are a good idea?"...
Well Walt G, its one thing for people to think about it, its quite another when said thinkers try to impose that belief on others...
Personally I think its a great idea to wear a helmet with a face shield while riding...
Nothing like getting hit in the face with a june bug at 60+ mph to make one a believer...
Yet the idea of trying to impose the results of my experiences on others seems to me to be asinine in the extreme...
I feel sorry for what the little girl went through, but how about this headline: “Six children die from tainted lemonade sold at unlicensed roadside stand”? A lot of the laws/regulations we think are stupid start out from a tragedy like that.
You should see what we have to go through for our water safety after legionnaire’s disease and mesothelioma from asbestos. Safety accident investigation forms start out with a question checkbox if a safety policy is in place for what happened and asks for a check “Yes” or “No.” The next check box will say if checked “Yes,” is there clear evidence the policy was followed check “Yes” or “No.” Most of our reports have the first box checked “Yes” and the second box checked “No.” So let’s use some common sense that we like to boast about here, how do you stop the accident from happening next time?
The inspector took a lot of heat over this incident because it was a cute little girl and a touching story for the media. But ask yourself how he would have felt as a licensed professional or if you were one of the parents of a kid that died from drinking the tainted lemonade. We had a supervisor who was discharged for letting a new employee knowingly perform a job unsafely just a couple weeks ago. He was a really nice guy with a wife and two kids to support. Should he have been fired since no one got hurt? Should the lemonade-stand inspector have been fired? We can figure that out before an accident or during an accident investigation I guess.
Heartless? Maybe. But you don’t know how many accidents are avoided by just doing what you are supposed to be doing in the first place. I’ve been at the scene of three gruesome industrial deaths and a few amputations, so don’t tell me it can’t happen. Murphy’s law is just waiting to bite you in the ass.
Juandos,
No one took my bait about the helmets. I can show statistically from the Michigan State Police crash database that more head injuries could probably be avoided if car drivers wore helmets instead of motorcyclists (that's a cool database!). The special interest group of car drivers would never stand for that though.
“Six children die from tainted lemonade sold at unlicensed roadside stand”? A lot of the laws/regulations we think are stupid start out from a tragedy like that."
Walt G., what is your point? What example of a law/reg do you think might come out of that tragedy? Licensing is already required, and the operator didn't have one.
What if the stand WAS licensed? Did reliance on a license allow carelessness? Tainted lemonade can't be eliminated by regulating against it.
Have you read the many other comments on this thread where it was pointed out to you that all the rules in the world can't prevent this headline?
"The inspector took a lot of heat over this incident..."
I guess that's what you have to expect if you are an inspector in that position. As you might say, "That's one of the costs of doing business." The inspector did part of his job, and I haven't seen anyone here blame him. If he had done his job correctly, he would have written the little girl a $500 citation.
"I’ve been at the scene of three gruesome industrial deaths and a few amputations, so don’t tell me it can’t happen."
That sounds like a pretty dangerous environment! Why aren't there more safety rules in place to prevent these tragedies?
BTW Walt G., that little girl will be just fine. As morganovich said, she will likely be a lifelong libertarian.
That inspector did her a favor. She's lucky to get such a good education so young.
"Why aren't there more safety rules in place to prevent these tragedies?" The rules are almost always there. Most of the time the rules are not followed for what seems like a very good reason at the time. That's my point.
Gotta admit she's a cutie pie. Would the rule be applied differently for an old wino homeless guy with no teeth smoking a cigarette selling the lemonade? Would you be any more dead from the same tainted lemonade?
I just realized --Ron and Paul--equals Ron Paul!!!
Actually, my favorite office holder!
Okay Ron Paul, why are not more Republicans like Ron Paul. The we could vote R-Party and not hold our noses.
Ron Paul is different--I am sure he is not a feckless poltroon, nor a lowlife grifter.
I am glad you both support free and wide-open push cart vending. You know why you will never get it? Established businesses hate it. That's right--businesses crush them every time. We have food trucks here in Los Angeles, and the restaurants are trying to kill them off. And food trucks are capital-intensive compared to the push-cart people.
It really is a shame. A motorcycle-push cart could be many a small biz guys entre in the food business. ha-ha entre, get it?
On QE--that has nothing to do with libertarianism.
And, no licensing would not stop tainted lemonade, but the knowledge obtained from the required food handler's card to get the license might. Ignorance can be helped, but stupidity can't.
"Ron Paul is different--I am sure he is not a feckless poltroon, nor a lowlife grifter."
No, he just stuffs appropriations bills full of pork for his district, then votes against the final bill out of "principle."
"Most of the time the rules are not followed for what seems like a very good reason at the time. That's my point."
Exactly. And that's My point, that apparently people don't always agree with the rules, and therefore they're not effective. You also need to be able to enforce the rules consistently, or people will have no respect for them. As in the pee in the lemonade example. People have to believe it is wrong, or no number of rules about it will matter, as they can't be enforced.
"On QE--that has nothing to do with libertarianism."
Au contraire. You are a LINO. If you were really a libertarian as your favorite officeholder is, you would be calling for the elimination of the Federal Reserve, so no QE.
Well this is hardly a suprise that its happening in a state that the citizens thought it was a good idea to soak the rich
Except said "rich" just want to starve people by holding out until their politician stays bought.
"Except said "rich" just want to starve people by holding out until their politician stays bought"...
Just curious sethstorm on what planet and in what solar system does a poor person offer jobs and paychecks and isn't an overpaid parasitic, government bureaucratic hack?
I thought the post was about a little girl's lemonade stand?
Was it Ron Paul's grand-daughter?
"Except said "rich" just want to starve people by holding out until their politician stays bought."
You know, these politicians are just getting too damn expensive! I have to keep buying them over & over. I think I'll start hiring a bunch of unemployed people instead. It may be cheaper.
Don Culo-
It is about libertarianism and lemonade, which leads up to Ron Paul.
I am sorry to hear that even Ron Paul, my last favorite pol, is another feckless poltroon. Soon, his son will be too, when his son figures out that Kentucky gets back net $4000 per capita from the federal government every year.
Really, it is time for a third party, free enterprise and small military oriented.
Ron Paul- Yeah, maybe we should get rid of the FDIC, the SEC and the Federal Reserve Board.
We might end up with no stock market, no banks. A bit of a gamble.
Since no other Western nation has tried wide-open free enterprise with financial markets, and since bank runs do happen, and since people can barely trust anything Wall Street mints these days anyway, I am not sure I want to go whole hog right now.
For now, I would be happy if we could just nationally legalize sidewalk vending. Better food, lower costs, and more self-employment opps.
In the land of the free--except don't push that cart and try to make a living.
Benji, if you had ever studied history you would know that there were stock markets and banks long before there were central banks and regulators. They worked pretty well. How can you trust government bureaucracies more than private business? They have proven themselves incompetent.
How is it that otherwise well informed people consistently confuse libertarianism or free markets with anarchy? You need a lot of well functioning legal system to maintain a free market. You don't need a nanny state inspecting your lemonade to have a free market. Any law that doesn't make the market more free is tyrannical.
Well! This lemonade story isn't done twisting yet. There's more to it.
It seems Multnomah County Chairman Jeff Cogen has decided that unlicensed lemonade stands in the county which includes Portland are now OK, and has instructed health inspectors to use "professional discretion" in doing their jobs. In other words, don't bust kid's for lack of a license.
He has apologized to 7 year old Julie Murphy and her mother, apparently for enforcing the law, and says it won't happen again.
This is just plain wrong.
I can only believe that he is running for reelection.
He has also admitted to engaging in criminal activity himself, and has ratted out his children:
"My kids sell lemonade, and I sold lemonade as a kid,” Mr. Cogen said in an interview.
Apparently there is no longer any health threats from lemonade stands according to Mr. Cogen, as he substitutes his own judgment for that of the health department.
"there’s a reason those laws exist,” but “a 7-year-old selling lemonade isn’t the same as a grown-up selling burritos out of a cart.”
I fail to see the distinction. Why would an adult made burrito be any more of a threat to health than a child's lemonade? Surely both vendors have the same incentives to protect their customer's health.
Now what will happen when 6 kids die from drinking tainted lemonade?
Help us, Walt G., what are we to think? Are there rules or not? Do they matter, or not? This has become a real quagmire.
BTW Julie Murphy has learned yet another valuable lesson: If you raise enough of a ruckus, authority may cave, and you will get your way.
I think all restaurants or places that sell food should be unlicensed. Let the people who buy the lemonade wonder if the little girl was born knowing you need to disinfect the lemonade containers with a bleach solution after they sat in the garage the last five years with bugs crawling around in them.
We don't need to worry that more people probably died yesterday from unclean water and poor sanitary condtions in the world than in any war. In the good ole U.S. those types of problems automatically take care of themsevles without any type of interference.
So much for a nation of laws not men.
Well Walt G, what's wrong with letting the market decide which places stay open and which don't...
Its not like state and federal governments have a sterling track record in keeping people safe from the vagaries of the world...
I mean look at your auto industry and how the federal government has saddled it with these asinine CAFE standards...
How many people are still dying on the roads and highways today versus forty years ago after one takes into account all the extra added expenses?
ron-
what's wrong with those charged with upholding the law using discretion and common sense in its application?
that's a good thing, not a bad thing.
do you want police to ticket every jaywalker? give speeding tickets for 2 mph over the limit? hell, oral sex is still illegal in a number of new england states. the law is so old that i suspect that the punishment is a week in the stocks on the public green, but shall we crack down on that as well?
the whole point to having people in the loop of enforcement decisions is to allow common sense to prevail over the letter of the law in certain situations. discretion and judgment are a key aspect of enforcement.
take those out, and we are really in trouble.
morganovich said...
"what's wrong with those charged with upholding the law using discretion and common sense in its application?
that's a good thing, not a bad thing."
I totally agree. I was being somewhat facetious in my comment. Whether or not these inspectors had authority to use common sense is something we don't know.
My main complaint is with the obviously political county chairman publicly scolding his own employees for something they may have no discretion in deciding.
My impression is that he wanted to paint himself as a benevolent common sense guy even at the expense of embarrassing his own people.
Should he clarify to his inspectors what discretion they have and what's expected of them?
Absolutely.
Should he publicly apologize for his people's actions when they do their jobs, and in so doing humiliate them and diminish public respect for them?
Absolutely not.
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