Episode #189: Free-rider Friday - April 2018

Ed’s Topics

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North Korea

Beginning of peace, or false hopes?

Amazonlandia

By Ryan A. Ferguson. Amazon employs 500,000 people, making it the 171st largest country by population. Could Amazon start its own country, with its own digital currency?

Does coffee cause cancer?

California court ruled it does. See “Why California’s Lawsuit Industry Wants You to Think Coffee Causes Cancer,” Walter Olson, FEE, April 1, 2018

A Los Angeles judge ruled coffee shops face potential massive liability due to Acrylamide—a natural substance formed when food is browned or subject to high heat, such as grilled burgers, fried chicken, bread, almonds, potato chips—causes cancer in animals, in high dosages.

We can’t blame the judge, but rather Proposition 65 passed in 1986.

The Council for Education and Research on Toxics brought the lawsuit, asking for fines of up to $2,500 for everyone exposed to Acrylamide, since 2002.

Walter Olson, at CATO Institute, and also Overlawyered.com, has been covering Prop 65’s mandated warnings on scented candles, matches, brass knobs, light bulbs, playground sand, billiard cue chalk.

Why the Girl Scouts Are Marketing Geniuses,” Brittany Hunter, FEE, March 22, 2018

It creates the dominance hierarchy of cookies, what we refer to as offering options. It creates an artificial scarcity (you can’t get them online, you have to interact face-to-face). Pricing: they are expensive cookies.

Juxtapose the Girl Scouts with Elon Musk, in an article from Inc. magazine. Tesla can’t keep up with the demand for its cars. Why doesn’t he raise the price of his cars to lessen the waiting list? Does Elon’s pricing suck?

Which State Will Be the First to Suffer Fiscal Collapse?, Dan Mitchell, CATO Institute poll

 Ron’s Topics

“The End Justifies the Obscene,” Happy Warrior, Kyle Smith, National Review, March 5, 2018

The Haiti earthquake in 2010 for Oxfam meant party time! Oxfam set up brothels in Port-au-Prince, called “pink apartments.” There was a big expose in the British paper the Times.

Oxfam was throwing big parties, with girls wearing Oxfam T-shirts, running around half naked. Oxfam executives concealed details from regulators and the public, while the UK government contributed some $40 million to Oxfam last year.

International-development secretary Penny Mordaunt said on the BBC that Oxfam had denied to her department any misbehavior. When the reporter asked her, “Was this a lie?” she replied: “Well, quite.”

Oxfam was also accused of employing locals as prostitutes in 2006 in Chad, while it was supposedly helping refugees from the civil war in Sudan.

A 15-year Oxfam employee said: “There is a fear that if we tell the truth, the reputational damage to the agencies will benefit the sections of the press and politicians who want to reform the sector.”

Reform? We can’t have that!

 “The old one-two,” The Economist, March 24, 2018

Forget taxing profits, the EU is proposing a 3% tax on locally generated gross revenue.

Pierre Moscovici of the EU said this was an “interim fix.” He denied that USA firms are targets, even though of the projected 120-150 companies that will be affected, one-half of them are American (Apple, Google, FB, etc.), and they will pay up quite a bit.

The tax will apply to companies with global revenues more than $920 million, and EU revenues more than $61 million. Digital firms pay an effective tax rate of 9.5% in the EU, compared to 23.3% for brick-and-mortar firms.

The tax could raise as much as $6.1 billion.

France president Emmanuel Macron pushed hardest for this tax and France, Germany, Italy, and Spain welcomed it, while smaller EU countries will oppose. Steve Mnuchin, treasury secretary of the US, said a gross tax is “not fair.”

Any tax changes in the EU require unanimity among the members. This proposal could be being made to make look more appealing another plan to tax digital profits for those with “digital presence,” defined as: Gross revenue exceeding 7 million Euros, or 100,000 customers, or more than 3,000 business contracts in a given country.

Brexit 2.0, anyone?

Finland to end its universal basic income program by year’s end,” Edmund DeMarche,” April 25, 2018, Foxnews.com

Finland’s experiments gave a $685 monthly check, to 2,000 randomly selected jobless people, ages 25-58.

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It’s implementing new measures to cut benefits for those who don’t actively seek employment, pursuing conditionality in public support, not unconditionality.

Proponents argue that Finland’s experiment was not comprehensive to gauge the merits of the idea, while critics complain that a full-scale UBI would require a 30% tax increase to fund.

See our Episode #95: A Check for Everyone? The Basic Income Idea.

“The last of Vaudeville,” The Economist, March 24, 2018

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Sir Ken Dodd, comedian, died on March 11, age 90.

He holds the world record for most gags (think rapid one liners from the likes of Rodney Dangerfield, Henny Youngman, Phyllis Diller).

Dodd told 1,500 gags in 3 hours and 7 minutes (8 per minute).

“An official told my big aunt Nellie to come off the beach, because the tide was waiting to come in.”

Mother-in-laws: “I haven’t spoken to mine for 18 months. I don’t like to interrupt her.”

In 1989, the Inland Revenue found £336,000 in cash he hadn’t declared, and even more in shoe-boxes under the bed. “I told the Inland Revenue I didn’t owe them a penny, because I lived by the seaside.”

“Against a Weed Industry,” Jonathan Caulkins, National Review, April 2, 2018

Capitalism unleashes productive forces, lowers prices. But we don’t allow markets everywhere, such as selling organs, steroids, etc.

Caulkins argues since no modern nation has ever allowed large-scale commercial production—though Canada will be the first, on July 1, 2018—that we should restrict production to nonprofit organizations.

For example, in the Netherlands, only retail sales are legal, and elsewhere rights inure to individuals, not corporations.

Nonprofits with boards to protect public health could be established, and tasked with undercutting black markets but not promote greater consumption. A second idea is for co-ops that would supply their own members.

Self-Report usage of marijuana grew from 0.9 million in 1992 to 7.9 million in 2016. Approximately 60% of users have a high school education or less, which would be highly sensitive to falling prices.

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He points out prices in Washington between 2014-2017 dropped from $23.50 per gram to $7.25. The THC content digested went from 0.032 grams per week to 1.3 grams per day, a 60 times increase.

Comment

Ed Kless

Ed Kless joined Sage in July of 2003 and is currently the senior director of partner development and strategy. He develops and delivers curriculum for Sage business partners on the art and practice of small business consulting. Courses include: Sage Consulting Academy, Business Strategy and Customer Experience Workshops. Ed is the author of The Soul of Enterprise: Dialogues on Business in the Knowledge Economy, a compendium of a few of the episodes of his VoiceAmerica talk-show The Soul of Enterprise: Business in the Knowledge Economy with Ron Baker, founder of the VeraSage Institute where Ed is also a senior fellow.