John Deere workers need to be careful to stay competitive.

The striking workers at John Deere just rejected the second contract proposal offered by the company. The workers need to be careful to not put John Deere in the position of being not competitive in world markets.

About 40% of John Deere’s revenues come from outside the U.S.  If the company is not competitive internationally it will see a dramatic decline in revenues, profits… and jobs.  Many people today push us to “buy American”.   That sounds good and patriotic, but if other countries do the same we will all be poorer.

International free trade, just like free trade among the states in the U.S., has two sides:  In the long run, it makes everyone better off, but in the short run disrupts the lives of many.  The best policy is to have a safety net that helps those who lose their jobs transition to new jobs, while allowing free trade to help improve the income and wealth of people around the world.

“Bending the curve” may only lengthen the time we are suffering.

I don’t doubt the good intentions of our government leaders, including elected officials and public health regulators, as they tighten restrictions on our freedom of movement..  We are “bending the curve” and easing the pressure on our health care system.  But unless an effective anti-virus drug is found and administered to everyone very quickly, bending the curve will only delay the time before most of us will become infected, and will lengthen the time that we all suffer emotionally and economically.

Why is our response to this situation so dramatically different than our response to the flu or automobile accidents?  Both the flu and auto accidents kill tens of thousands of Americans each year and are preventable.  We could dramatically reduce those deaths if we used the same extreme measures that we are using against COVID-19.  But what is the point of living if we have to stay away from our family and friends?  For a few weeks, fine.  For several months or more, not acceptable.  Life has risks.  We need to balance the costs and the benefits of our efforts.  Soon, we need to once again let people decide for themselves how much risk they are willing to take.

Patents should be more restricted, not liberalized.

I disagree with Paul Michel and Matthew Dowd, (Wall Street Journal, 1/24/2020, link below), that our patent laws do not give adequate and clear protection to inventions.  Conversely, we have become too liberal in both what is allowed to be patented and the length of time that patents are granted.

They urge the reversal by Congress of the Supreme Court of rulings that prohibit the granting of patents for “abstract ideas” and “natural phenomena”.  Abstract ideas, like mathematical formulas, computer code, or simple ideas drawn on paper, and natural phenomena, like the discovery of particular DNA or naturally occurring chemical compounds, should not be patentable.

Originally, U.S. patents had a maximum life of 14 years, then 17 years, and then 20 years.  Companies that earn billions of dollars in profits every year on their patents are very willing to spend many millions of dollars to lobby congress to extend their monopolies.  Who spends money lobbying to reduce the term of patents?  Shouldn’t the term of monopoly protection granted depend in part on how much it costs to meet government regulations related to the invention?  For example, prescription drugs may deserve a long patent term because of the cost to meet government regulations.  But there is no logical reason why all patents should be granted for the same length of time.  (Design patents are granted for shorter periods, but why should they be granted at all?)

The concept of “intellectual property” is man-made.  Since time immemorial, humans have copied one another.  For millennia legally protected private property was limited to physical property which could only be possessed by one person at a time.  Ideas can be possessed by many people at the same time without infringing on the physical property of others and without the use of force.  Monopolies, including the exclusive use of inventions, were originally granted by Kings to favored subjects through the use of force.  Our government protects patents through the use of force.  Contrary to the Founder’s intent, some patents appear to slow innovation rather than encourage it.  The case can be made that no patents should be granted.  In this case, Congress should expand patent protection.

Link to Wall Street Journal opinion:

https://www.wsj.com/articles/americas-innovators-need-clear-patent-laws-11579824646

Price gouging can be a good thing.

Sometimes, price gouging can be a good thing.  If there is a sudden surge in demand for something, say face masks or hand sanitizer, is it better to keep prices low and encourage hoarding that can result in complete outages, or is it better to let prices go up as the market demand allows to discourage hoarding and encourage rapid increases in production?  Why would businesses pay for overtime, or expedited shipping, or other higher costs to quickly increase supplies if they are not allowed to increase prices?  There are certainly extreme situations where price gouging would be considered by most people to be immoral.  (For example, it would clearly be immoral to charge $1,000 for a glass of water to a person dying of thirst when you have plenty of it.)  But there are many other situations where allowing prices to go up significantly and quickly helps to make vital products available for important purposes to more people more quickly.  Private efforts to keep prices low and to prevent hoarding in an emergency are to be commended, but be careful before you call for laws or regulations to prevent price gouging.

Bootleggers and Baptists – strange bedfellows.

During the time of alcohol prohibition, bootleggers and baptists were both opposed to repeal of the Eighteenth Amendment.  It’s an example of how, “politics makes strange bedfellows.”  Even though the two groups seemed to have completely opposite views about drinking alcohol, they both opposed the repeal of prohibition: The baptists for moral reasons, the bootleggers for financial reasons.

I read the report in The Des Moines Register about how scared the Iowa medical marijuana dispensaries are about losing money once the legalization of recreational marijuana in Illinois begins next January 1st.  (see link below)  It makes me wonder if Iowa might face a similar situation in the future. The governor and many other politicians oppose efforts to legalize the recreational use of marijuana for moral reasons.  I wonder if Iowa’s legal medical marijuana producers and sellers will oppose efforts to legalize recreational marijuana for financial reasons?

Link to Register report:   https://www.desmoinesregister.com/story/news/2019/07/09/marijuana-illinois-law-recreational-use-iowa-cannabis-department-of-public-safety-division-narcotics/1573867001/

Big marijuana bust in Iowa – Mayor found growing pot!

As the Des Moines Register reported yesterday, the Mayor of Jamaica, Iowa and her husband were busted two days earlier at about 4:20 p.m. (no joke) for growing 18 marijuana plants inside their home.   The various related charges include a Class “D” Felony for the manufacture and possession with intent to deliver less than 50 kilograms of marijuana.

It’s a shame that our laws in Iowa still make it a crime to do something that is peaceful, voluntary, and uses no force or fraud against others. Marijuana prohibition laws do little to make our state safer, and yet do great harm to people who are victimized by them.  In this case, if these two people are found guilty of the felony, they could be sentenced for up to 5 years in prison, be required to pay up to $7,500, lose their voting rights, be disqualified for military service or student loans, and more.  Compare that to the fact that nothing happens to a person in her home who is found to be brewing 5 gallons of beer – a standard home-brew batch – and possessing, say, 10 to 20 more gallons that were brewed earlier.

Marijuana is no more dangerous than alcohol, and yet today we see the same unintended consequences resulting from drug prohibition that we saw from alcohol prohibition in the 1920s and early 1930s: violence, deaths from impure products, and the arrest and punishment of people who are otherwise honest and peaceful.  Make no mistake, the violence associated with the illegal drug trade is caused by prohibition laws.  If Walgreens moves into a community, CVS doesn’t send out a gang to kill them.  When drugs are delivered to a pharmacy, both parties don’t carry weapons to protect themselves.  Instead, they call the police if someone uses violence against them.  But you can’t can’t call the police for help if you’re dealing in illegal drugs.

We need to follow the trend in other states and around the world:  Legalize recreational marijuana and treat addiction using a medical model, just like alcohol.  Let your elected representatives know your feelings.  That is the way to get these unjust laws changed.

Link to Register article: https://www.desmoinesregister.com/story/news/crime-and-courts/2019/01/17/jamaica-mayor-ladonna-kennedy-pot-weed-gurthrie-county-crime-marijuana-search-ames-shooting-suspect/2606455002/

Iowa Public Employees’ Retirement System needs to be changed to a defined contribution plan.

Recently, candidates for office in Iowa have been asked to promise future Iowa public employees that they will make no changes to the Iowa Public Employment Retirement System (IPERS) retirement plan.  Instead, politicians need to state clearly that they make no promises to future employees about their retirement benefits.  The fact that IPERS is currently underfunded by about $7 billion shows clearly that we already have over-promised benefits when compared to what we expected taxpayers and public employees to pay.

(When government has a defined benefit plan, the participants seem to think that any over-funding is their asset, but any under-funding is a liability of the taxpayers.  In the past, when IPERS was over-funded, benefits were increased!)

The way to make sure that we don’t make retirement benefit promises that turn out to be more expensive than we expect to pay is to put new government employees on a defined contribution retirement plan – just like most employees in the private sector.  This will cause the unfunded liability to come due over the next 50+ years, but at least it won’t get worse.

 

 

Be careful about providing charity to the developing world.

It is true that in many cases, our providing of charity to the developing world undercuts the development of local providers. When we provide food, it undercuts local farmers. When we provide shoes, it undercuts local shoe sellers. When we provide eye glasses, it under cuts local eye glass sellers. We must be very mindful about the unintended consequences of our charity. Yes, we need to provide temporary, life-saving disaster help, but we must be very careful about what we provide beyond that.

Related Register article:

http://www.desmoinesregister.com/story/opinion/readers/2017/07/24/doctor-should-shift-model-charity-health-care-development/492348001/