… villages in the lower Yangtze became congested hives of small … factories, attracting workers from other parts of China and spewing (wintercow: nice choice of words, huh) out goods at frightening (wintercow: nice choice of words, huh) volume. Yuengang merchants sold this (stuff) … making profits of 30 to 40 percent.

…

(other) merchants doubled, tripled or even quadrupled the price and still sold their goods in America for a third the cost of European (products). Incredibly, they sold manufactured goods from China – that had crossed two oceans – in Europe for less than it cost to produce it in Europe. So much raw material poured into Mexico (a way station from China to Europe) that a secondary industry sprang up there, with thousands of weavers and dressmakers making clothes from Chinese fabrics and exporting them throughout the Americas and across the Atlantic.

…

Alarmed Europeans saw their textile (and other) mills threatened — and fought a covert regulatory war against Chinese competition. They importuned the government to restrict fabric imports to bolts of fabric rather than finished clothing. They insisted that they block direct travel between the exporting cities and any place in the world except CITY (the way station in the trades) so that Chinese imports could be monitored. They demanded that the government set import quotas by restricting incoming fabric to a given number of containers of a specified size. Chinese merchants evaded every trade barrier, often aided by Europeans. They built special containers with false bottoms and sides to conceal pre-made clothing. They sent agents to CITY to facilitate smuggling on the CITY side of the trade. They designed special presses to mash huge quantities of fabric into the containers, packing them so tightly that according to Li, … “a single container could not be picked up by a simple machine.”

Read the US trade rules and you can see very similar responses, right down to the finest details, or how some items may be exchanged today. Of course, the passage above is a modified version of Charles Mann’s account of the 16th century Chinese silk trade between the Phillipines and Spain, with a stop in Acapulco along the way. The more things change …

Or how’s this story, about 100-pages later in the book:

In 1635 the city’s Spanish barbers petitioned the municipal council to stop the chinos’ “excesses” and “inconveniences.” The complaint was artfully worded, but one detects the real cause of grievance: the Chinese were willing to pay higher rents for space in the center of town, even at the risk of lowering their profits, because that brought them closer to their customers. And they spent long hours on the job, forcing European barbers to work equally hard to compete. To Spaniards, the solution was obvious: expel the Chinese from the city center and restrict hair-cutting hours so that they wouldn’t have to work so hard and accept such low profits. Six months later the viceroy banned Asian barbers from the Plaza Mayor. Twisting the knife, he restricted the number of razors they could possess, thus ensuring that their shops couldn’t grow too large.

Despite the ban, the government kept approving applications for chino barbershops in the Playa Mayor – perhaps, one is tempted to speculate, because influential customers didn’t want to have to travel long distances to have their hair cut and teeth cleaned. European businesses again complained about the competition. In 1650 the government created a barbershop czar, empowered to extract hefty fines from bootleg hair salons. The post was ineffective: Chinese barbers proliferated by the score.

That was Mexico City which had the first Chinatown in the Americas. Maybe this Spanish mindset can help us understand a little better why their unemployment rate stands at 20% today.

Whether one or both cases is a concern depends on the relative ease with which good substitutes are created. In the case of elementary and secondary schools, it is plausible that the expansion of spaces of similar quality to the ones being replaced in public schools would be relatively easy to do as private demand increases. In other words, it is plausible to imagine that the supply of seats in K12 education is fairly elastic. Even if it is not, the K12 voucher movement has something going for it. If the supply is not elastic, it is likely to be the same in both sectors – so by pulling demand out of the public sector and putting into the private sector, we should see public sector costs fall even if private sector costs rise, and this is plausible since K12 education is largely universal. I.E. the voucher system is not augmenting the overall demand for K12 education, just changing its composition.

Two things are not different in college education. Each are equally important in my view. First, the supply of quality higher education seats is far more inelastic than you might think. You can’t just replicate the University of Rochester overnight. Even if I persuaded each of my colleagues to move down the street with me, and I rebuilt every new building on my campus to resemble the ones here at U of R, we have both an accreditation problem (our competitors decide what we ought to be doing and whether it is legitimate) and we have a reputation problem. This, in essence, coupled with the fact that the supply of talented and engaging teachers, researchers and institutional officers is not completely abundant, and you have a recipe for a very inelastic supply of quality higher education seats. The second issue is that when we provide subsidies and vouchers for students to attend universities, we are quite plausibly adding to the demand for that service. Whereas in the case of K12 education educational subsidies do not much alter the underlying demand (I argue it still does, albeit on a different dimension) the same is not true in higher education. More people are drawn to college. More two year students are drawn to 4 year careers. More BA students are drawn to Masters programs and beyond.

Therefore, in the presence of both a fairly responsive demand curve for higher education and a relatively inelastic supply curve it is certainly plausible to theorize the subsidies to higher education do not translate into better educational access, but largely the benefits accrue to the fixed factors of production – especially professors and other providers/owners of the fixed factors related to providing a college education.

There is a larger lesson here. I have argued before that while I am a strong supporter of a more consumer driven health care system, the medical supply side is completely unable to handle that kind of a world right now. Therefore if thoughtful advocates of markets recommend that we move in this direction, it could very well make the medical system more dysfunctional than it already is. I fear the same thing can be learned in the push for more vouchers in the health sector. If the entire medical field is not deregulated and better able to adapt to increases in demand and changes in demand for the way service is delivered, then providing vouchers to patients may end up driving up costs in the long run. Then we’d have the awkward position of having to defend markets after having witnessed another cost increase when the world was moved to a market direction. But medical regulations virtually assure that the supply of medical services will not respond much to changing medical demands. Are there prospects for admitting more highly qualified foreign doctors? Are there prospects for a finer division of labor within the medical profession? Are there prospects for expanding medical schools and the other allied health professions? Are there provisions to allow more retail medicine? And so on. I doubt we’ll see any move toward deregulation and so long as we don’t I do not think it is helpful to advocate for more market based medicine at all. I feel the same way about energy policy. So long as environmental regulatory policy is such a tangled mess, pushing green energy programs will only increase costs. Yay.

Now, that may be a good thing from a particular environmental perspective – by raising the regulatory costs of building forest roads to access lots and lots of trees it may make timber harvesting less profitable. (kudos to students who look up to see how profitable it really is anyway – you’ll be floored to find out that the forest service has managed to lose money on timber sales in the past). Sure. But remember that the Forest Service serves many masters. And even if this ruling ends up cleaning up fishing streams a little bit by limiting rainwater runoff, it is very possible that the environment will suffer. Why? Maybe forest managers will allow more oil and gas exploration on these lands now that timber harvesting is off limits? Why wouldn’t they? It very likely requires fewer roads to do this, and the potential revenues would seem to be larger.

I’ve followed this story for a little while and I am not sure I am right about these possible consequences. In fact, I am quite sure I am not right. But what I am quite certain of is that there will be some consequence of this ruling beyond the employment damage and timber industry damage – and I’ve not seen a single proponent of the restrictions come out and recognize that we want to be careful what we wish for. Is it too much to ask for these days? Or do we just have to parade around in the emperor’s clothes of certainty all day long?

The family’s grocery bills are higher, but Hester, a freelance writer, says she and her husband, a security officer, have decided it’s worth spending more on food and forgoing things like a new car, for their kids’ health

I am glad the family got to make the choice themselves – the parents of children in the associated school district do not seem to have that option. In any case, is it obvious to you that their decision is a “smart one?”  And for the record, yes, I do find that article creepy.

However, now that same-sex marriages have been legalized in New York, the U of R has now been forced to drop this option for couples. In an attempt to create a situation where traditional couples and same sex couples were treated equally, the U of R now only extends health and other benefits to partners that are married. What this means of course is that same-sex couples who had not married, nor ever intended to marry, find themselves in a worse position today than before the marriage legislation was passed.

I am sure that was not the intention of the advocates of the law.