When wealth in the form of goods, such as clothing, appliances, or furniture, is obtained basically for free, because it has been deemed useless by a previous owner, I call that “Arbitrash.” It may be trashy, but it sure can be profitable in the form of physical wealth obtained for little or no money. Examples of arbitrash include thrift stores (whose primary merchandise consists of old clothes that people wanted to throw away), money paid for cans at a recycling plant, getting furniture or scrap metal out of the trash (or next to the trash), Dumpster diving, and hand-me-down clothes.

Especially when many people are worrying about their financial futures, arbitrage begins to look better and better, because it entails being resourceful and paying attention to sources of wealth that are being ignored. In the days of the Great Depression, people were forced to adopt this mindset, and they summarized it with a popular saying: “Use it up, wear it out, make it do, or do without.” I have to admit that I love this little poem, because it makes me feel like I can go shopping for free! You may have surmised from this point that I am quite a tightwad. As a youth, I loved reading the The Tightwad Gazette, a newsletter published by Amy Dacyczyn, the Frugal Zealot. Amy’s creative, miserly wisdom is just the thing to help folks with recently shaky finances make the most of their resources — and, more importantly, to prepare for a future of miserly, financially responsible spending.

As an example of how Americans might be more open to accepting the idea of arbitrage, the online marketplace Etsy sells handmade items, many of which are clearly made from trash (and don’t try to hide it). They even have a word for this: “upcycled.” The term implies that what was once just trash becomes something better and useful, or beautiful. In other words, wealth created from waste. This listing even advertises:

Be prepared for the uncertain future while keeping waste out of our landfills! This item is 100% made in the USA.

This listing says it more concisely:

Sustainable is the new classy!

Some of the worst items marketed on Etsy are recycled as digital arbitrash in the form of Regretsy, a blog highlighting hilarious handmade products. The blog not only entertains readers and pays the bills for April Winchell, its author, but it also raises money to fight childhood cancer, and increases Etsy’s web traffic by way of many links to items for sale. In fact, many Etsy crafts featured on Regretsy sell for high prices, because so many people want to own the item, sometimes made out of trash, that was mocked by Winchell. Regretsy aside, I’m not making fun of the Etsy sellers for making stuff out of trash; instead, I am applauding the wealth creation that occurs when people are allowed to dream up their own market niches.

The wonderful thing about arbitrage is that it takes waste and transforms it into wealth. For example, from The Myth of the Robber Barons, the Show-Me Institute’s book club learned that when Benjamin Silliman, Jr., refined crude oil into kerosene as a substitute for the whale oil commonly used to light lamps, he also created paraffin and gasoline as by-products. I guess he wasn’t such a SillyMan after all.

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Frédéric Bastiat, a French economist and legislator who fought for free trade rights in the 1840s, warned his contemporaries of this threat that law can pose, and he also pointed out how easy it is for law to become a powerful weapon against any who disagree with the legislators.

The Show-Me Institute book club, which meets every other Wednesday night at 7:00 (join us at our next meeting on December 1!), discussed Bastiat’s Selected Essays on Political Economy last year. The first essay, “What Is Seen and What Is Not Seen,” outlines a vital concept of economics — and, indeed, of life in general. Bastiat explains that actions have consequences in both the short term and the long term, both seen and unseen, and that often the unseen consequences are far-reaching in their scope. The unseen consequences of new laws can be disastrous when circumstances change. Moreover, a lawmaker may not be in a position to understand the practical consequences for all the people who will be affected by a law. In this way, a law which is intended solely to help people may end up hurting many, for a long time to come.

The Springfield News-Leader ran an article this week in which the author, Dr. John Lilly, explains how Bastiat’s ideas continue to be relevant 150 years after they were written. Lilly examines the origin and purpose of law, explaining that when one person takes another’s property by force, this is the definition of “plunder.” From the article:

Life, liberty and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty and property existed beforehand that caused men to make laws in the first place.

[…] Legal plunder occurs when the law takes from one person, and gives it to another person. Legal plunder benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Lilly asserts that law exists in order to serve people and protect their rights, but that law can also be twisted to sanction and enforce plunder. He illustrates this with a quote:

Bastiat stated, “And, in all sincerity, can anything more than the absence of plunder be required of the law? Can the law — which necessarily requires the use of force — rationally be used for anything except protecting the rights of everyone? I defy anyone to extend it beyond this purpose without perverting it and, consequently, turning might against right.”

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In a letter to the editor of the Sedalia Democrat, John S. Johnston, president of the Missouri Bar, offers voters a tool to make an informed decision regarding the selection and retention of nonpartisan judges. The Missouri Bar website features a section called “Judging the Judges,” which presents the findings of Judicial Performance Evaluation Committees — nonpartisan committees made up of both lawyers and non-lawyers. According to Johnston:

The committees have a completely non-partisan agenda: to provide voters with the unbiased information they need to cast an informed ballot.

The committees have published their evaluations along with surveys of lawyers’ ratings, jurors’ ratings and samples of appellate judge’s written opinions.

You can investigate your local judges by checking out “Judging the Judges” and clicking on the area where you live.

In addition to selecting specific judges, citizens also have the power to vote to retain or kick out judges after they have served for one year, thanks to the Missouri Plan, adopted in 1940. The Springfield News-Leader also explains how, since 2008, residents of Greene County try to keep politics out of judicial processes, by voting each term whether to retain or get rid of each judge, based on a system of merits.

Online tools like “Judging the Judges” are great, because they educate voters about judicial candidates, and also because they present new ways for the populace to become involved in the process, helping put power back into the hands of the voters.

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What many people do not realize is that every time a food recall is issued, it is done voluntarily by the food manufacturer. This makes sense, because a food brand or restaurant that gives food poisoning to its customers will face legal and financial consequences, not to mention gaining a nasty reputation. How many people still carry negative brand associations from the E. coli outbreaks of 1993? If a food manufacturer has reason to suspect that a shipment of food may be contaminated, it is very much in their best interests to make sure that not one bite of that food is ever eaten.

Food companies sometimes even pay organizations such as Rapid Recall Exchange to give them advance warning of any possible need for a recall. Restaurants and grocery stores don’t want to get sued for making a customer ill, but, more importantly, they do not want to become famous as the business that sells contaminated food.

It is terrible and frightening that Americans were exposed to salmonella poisoning, but this means that egg producers are being subjected to increased scrutiny from all around, so that this is unlikely to happen again soon. Increased FDA oversight would make it harder for food producers to get food to the consumers, which would raise the cost of food, not to mention requiring more tax dollars to run the investigations.

Charlie Arnot, CEO of the Center for Food Integrity, points out in his letter to the editor of the Kansas City Star that:

Americans have the right to expect farmers, food processors, restaurants and grocery stores to act responsibly. But placing restrictions on the food system and limiting the nation’s ability to produce food will decrease the availability of food choices for all of us […]

The proposed Food Safety Modernization Act raises another question: how often would the government officials have to check the food to be effective? Every day? At every source? Food contamination can also come from fast food workers, waiters, flies in the kitchen, or even a family member cooking for you — not just from the farm or factory. There is no possible way to ensure completely that food is safe to eat and not poisoned, no matter what level of regulation the government enacts. Fortunately, the manufacturers of food want to keep us healthy enough to keep buying their products.

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A: Whoever causes an accident.

This is a trick question, designed to make you think about which driving distractions are actually dangerous. Some people get in collisions when there is no identifiable distraction, but the list of possible distractions is endless, including a blinding glare from the sun, kids in the back seat, and hilarious bumper stickers on other cars. One important aspect of driving, or just being on the road, is safely negotiating the hazards that come one’s way.

In the Springfield News-Leader, Timothy Cloninger postulates that texting is no more dangerous than other driving distractions, and requests that both drivers and lawmakers exercise common sense in assessing the danger (emphasis mine):

Distracted driving is the problem, not texting. Existing laws already cover this, including careless driving, driving without due care and attention and reckless driving.

Cloninger also points out that legislation against texting while driving could simply encourage violators to pay more attention to hiding their behavior:

Even if you believe it should be illegal, a law that specifically calls out texting is impossible for police to proactively enforce: One, it’s too easy to avoid detection: simply hold your phone in a lower, more dangerous position.

Show-Me Institute research assistant John Payne stated on this blog that “a newly released study by the auto insurance industry found no decrease in auto crashes in states that enacted laws banning texting or talking on a hand-held cellphone while driving.”

While creating more legislation may seem like a proactive way to protect us from one another, this is not necessary if there are already laws that prohibit dangerous driving. Most people want to drive safely and will go to great lengths to avoid a collision. I personally wish that drivers would not text or play with Foursquare while operating a vehicle. Yet I respect their rights to make their own decisions, and I evaluate their driving safety based on how many accidents they are involved in, rather than on what they were doing at the time.

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Stokes links to several insightful articles demonstrating that “the way it has always been done” is not always the best way. Not only does competition among companies help develop less expensive technology and more efficient methods, but it also allows for creating different solutions to serve different people’s diverse needs. In this Reason Foundation article (which was linked by Stokes), Geoffrey Segal discusses some of the benefits and goals of using competition to encourage creative solutions:

But cost savings aren’t the only benefit. A review of state practices around the country found that a need for greater flexibility, access to skills not available in-house, and private sector innovation are all important factors in a state government’s decision to outsource or institute competitive sourcing of services. […]

Regardless, competition is about finding new ways of doing business and buying something different from what you already have.

When a number of parties compete for people’s business, a variety of services become available, better satisfying the many different consumers who are looking for different products. A competitive market allows smaller companies to cater to the specific preferences of consumers who are in the minority, without forcing these less-popular solutions on the majority.

Not only that, but when one company does invent a new product, other companies compete by imitating the new product, creating less-expensive knockoffs and making products more affordable. In his 1991 article “Innovation, Imitation, and Economic Growth,” published in the Journal of Political Economy, economist Paul S. Segerstrom pointed out that “the benefits to society from an innovation last forever,” while the benefit to the developer of the new product only lasts until a competitor can produce a cheaper imitation. In order for producers to keep making money in a competitive atmosphere, they must constantly develop newer and better products, or else make someone else’s ideas more affordable. Either way, the general public benefits from better, less expensive products.

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In Saint Louis, 21 schools will receive funds, with the requirement that they undergo drastic changes of administration, such as replacing half of the teaching staff. These funds, not to mention the thoughtful revamping of educational systems that are clearly not working, represent the possibility for positive change in the worst schools — but is it really likely to improve education? From the article:

But state education officials in Illinois warned districts that the more academically troubled schools would have a better shot at getting the grants. They plan to help schools work on reform plans to prepare for the 2012 grant competition.

That’s right, there will be ongoing competition to prove which school is the least competent, and hence the most deserving of improvement grants. It doesn’t take a high-quality education to see that this will provide an incentive for low-quality schools to encourage their students to languish until their test scores approach the fifth percentile.

This reminds me of a one of Lawrence Reed’s Seven Principles of Sound Public Policy: If you encourage something, you get more of it; if you discourage something, you get less of it. (Here’s a video of Reed delivering this as a speech at a Show-Me Institute event in 2006.)

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One group that is fighting to close down Lure is the Partnership for Downtown St. Louis, headed by Maggie Campbell. According to downtown Saint Louis business owner Bob Ray in his letter to the editor printed in the St. Louis Post-Dispatch, the Partnership for Downtown St. Louis is trying to overstep its rightful authority as a civilian group. From his letter:

The Partnership for Downtown St. Louis is seeking to participate in the approval and revocation of liquor licenses downtown.
[…]
I am shocked by the subjective nature of the Partnership’s process. The Partnership does not have an official policy detailing the criteria or evidence required to trigger the revocation process. When asked whether a nongovernmental membership organization with no public accountability should have the right to oversee the revocation and issuance of liquor licenses, Ms. Campbell said that the Partnership considers closing down a business to be its right under the First Amendment.

David Stokes has discussed in this blog the unlawfulness of revoking liquor licenses as punishment for unrelated infractions, such as customers smoking cigarettes in areas where they are banned. The Partnership for Downtown St. Louis seeks to take this a step further, by placing the power to grant or revoke a license into the hands of one group of civilians. There is already an established legal process for dealing with dangerous businesses or persons who disturb the peace. If a particular business makes it through this process with its liquor license intact, it is not the job of the Partnership for Downtown St. Louis to take that license away.

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Not only is barring felons from professions such as hairdressing or real estate bad economic policy, it is also unjust in that it extends a criminal’s punishment beyond the confines of prison, to the rest of his or her life. When a person is found guilty of a crime, a judge decides on a sentence, which is sometimes modified by a parole board. This sentence is intended to make up for the crime. However, according to Human Rights Watch:

Offenders may lose the right to vote, to serve on a jury, or to hold public office, among other “civil disabilities” that may continue long after a criminal sentence has been served.

Some would go so far as to label continuing disenfranchisement of ex-felons, such as being barred from voting or working in certain professions, as a form of double jeopardy, which is prohibited by the Fifth Amendment.

According to Associate Circuit Judge Christine Carpenter in this article in the Columbia Daily Tribune, inability to find a job is the biggest obstacle for prisoners attempting to rejoin society. Carpenter, who presides over attempts to reintegrate prisoners into the community, praised a program that uses federal subsidies to employ newly released prisoners in part-time community service jobs. Such programs could make a huge difference to ex-cons who are barred from so many professional licenses. If such barriers were dissolved, on the other hand, then the government wouldn’t need to waste money on subsidies that pay people to hire ex-cons.

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The controversy surrounding this act raises two questions. First, how can we create more reliable sources for medical supplies that are difficult to produce? Both economic theory and our own history of imports and exports make it obvious that tariffs and bans on trade disproportionately harm the country that refuses to trade with others. Domestic production of medical isotopes would require massive government subsidies in order to upgrade nuclear reactors, such as the one owned by the University of Missouri for research purposes. Cutting off outside supplies of the isotopes, which is the intended purpose of the act, would drastically reduce efficiency in the production of medical isotopes and decrease the welfare of patients who need regular treatments with them. Although other countries are capable of making this product at present, and we are not, supporters of the act suggest that closing our doors to our current suppliers of medical isotopes would result in a more reliable supply.

The second question raised by the Isotope Production Act is more emotionally charged. What if terrorists get hold of the HEU and use it to construct bombs? Often, when fear is highlighted in a policy issue, it is used to distract voters from facts. Whether dealing with phone calls, airport security, or ingredients that could potentially be used to create weapons, it is important not to become so carried away by suspicion that we sabotage ourselves in other ways. Cancer and terrorism are both scary, but isotope technology can do something about cancer. Restricting it so severely, on the other hand, won’t put a dent in the many readily available materials that can be used to hurt people. The real market for medicines is too important to allow paranoia to dictate supply and demand.

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The article features a photograph of Rachel Kelly, a server who is happy to work in one of Kirkwood’s restaurants where smoking is banned. She also avoids patronizing restaurants that allow smoking, and says that she will leave a restaurant if patrons are smoking cigarettes.

This is a common story in arguments favoring smoking bans, but some parts of the story are being left out. Kelly is protected from secondhand smoke in her work environment, but how can restaurant owners who do allow smoking protect their nonsmoking customers from secondhand smoke? One answer is that the customers can protect themselves by not eating there, which is exactly the strategy employed by Kelly. We’ve discussed many times the fact that no one is forcing customers to eat surrounded by smoke, but should smokers be forced to eat in clean, smoke-free air?

As the article points out, Missouri has a smoking rate of 23.1 percent, which is above the national average of 20 percent. What this tells us is that more than one Missourian out of every five likes to smoke, despite the well-publicized risks of smoking, and despite the rising cost of cigarettes due to increased taxation of tobacco products. If these people continue smoking even in the face of such obstacles, presumably they must derive great enjoyment or utility from it. These citizens are willing to pay large amounts of money for the opportunity to smoke, and presumably, many of them would also pay to engage in various leisure activities while smoking. In his testimony before the City Council of Clayton, David Stokes pointed out that different businesses cater to the unique preferences of their customers, creating a varied marketplace that can satisfy the needs of many. Smokers (and the entrepreneurs who cater to them) may be in the minority, but they have the same rights as other citizens.

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