Part 1: Economics 101: Supply and Demand are Essential

I talk about politics and history on my blog quite a bit. These are my absolute favorite topics. I have in past posts talked about economics but it tends to be boring. One of my goals when starting this blog was to educate. So in this post, I intend to educate about some economic policies that relatively misunderstood by the general population. I won’t jump into the hardest concept first because in economics similar to math and science you have to understand the basics. First I want to talk about supply and demand. I know that I have talked about it before. Then I want to move into monetary policy. I might even touch on tariffs which I explained here. It occurred to me that President Trump’s recent tariffs have confused many people. You may or may not realize that tariffs can have very serious effects on our economy. They can also affect how other countries treat us. More on these topics later.

Supply and Demand: How it works?

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You might be familiar with a chart that looks like this. (Above) The way to read the chart is simple. First, you have to recognize a basic principle in economics that I call “push and pull”. Its very similar to Issac Newton’s “For every action there is a reaction” because for each transaction or movement of money or just action there is a reaction that also involves a transaction or movement of money.  Therefore if we look at the orange line labeled as supply and the purple line labeled as demand, you can see horizontal axis is labeled Quantity (increasing from left to right). The vertical axis is labeled Price which is increasing from up to down.

To put it simply:

As the supply goes up, the demand goes down. (Price and Quantity go up as well)

As the demand goes up, the supply goes down. (Price and Quantity go down as well)

This chart is the basis for literally everything in economics. Nearly everything can be put into terms of supply and demand. I will give a simple example of how supply and demand works:

Let’s say you own a winery in Napa Valley, California. Let’s say you have two main competitors that are approximately the same size winery as you. All three wineries make similar profits, have similar expenses and locations.

The going-market value for a 750ml bottle of wine is 25 dollars.

Your company price: 27 dollars, Competitor A: 27 dollars, Competitor B: 27 dollars

So right now every company is above value meaning that supply is meeting demand. Every company is able to charge more because of a high demand. Now Let’s say there is a massive drought. Shortage of grapes. Now you and your competitors can’t make as much wine. What do you think happens to the price?

Your company price: 30 dollars, Competitor A: 31 dollars, Competitor B: 32.

If you said that the price will increase because the supply has been depressed while the demand remained the same then you would be correct. Now let’s say the drought is over but a study comes out that says wine is bad for mental health. Suddenly everyone stops buying wine. What happens to your prices?

Your company price: 23 dollars, Competitor A: 20, Competitor B: 23 dollars.

If you said prices will decrease because of the drop in demand and the excess supply of wine then you would be correct. This is a very simplistic example and obviously running a winery is more complicated than I presented. I think that the concept is clear. For every action there is a reaction. For every push there is a pull.

I hope you got supply and demand down pat, because we are going to use it to help explain why President Trump’s tariffs are not as great as they sound. If you want to check out my post on tariffs then click here. In this next section, I will be focusing specifically on the economics.

The “Dead-weight” Tariffs– Tariffs in the context of supply and demand.

If you went to read my tariff post then you’ll have some idea what I’m about to explain here. For the purpose of this section, I’m going to assume you just learned about supply and demand. Let me explain that tariffs are a tax on an import or export (In this case President Trump is putting tariffs on imports) Tariffs actually used to be the US government’s biggest source of income up until the turn of the 20th century. The US approved an (16th) amendment to constitution that made income tax the primary source of government income. Now a days, tariffs only make up about 1-2 percent of income for the government.

An import is a good or product that is shipped or brought into the country. An export is a good or product that is shipped out or sold outside of the country. It’s good to know these terms. Let’s take a look at another chart, this represents tariffs on the supply and demand curve:

taxes

It may look confusing but it’s actually really simple. Keep in mind that as the supply goes up, the demand goes down. (Price and Quantity go up as well) Also as the demand goes up, the supply goes down. (Price and Quantity go down as well) Now if we at look chart let’s take the green line into account first. The green line is labeled “Supplier’s share of tax”. In order to explain the green line, I will give a brief example:

So let’s say there is a Steel Maker company and a Railroad Tie company. The Steel Company makes the steel that is needed for the Railroad Tie company. There is also a third foreign steel company located in China. So pre-tariff on the import of steel, the cost of steel for the Railroad company is .50 cents per pound from the foreign steel company. The Steel Maker company located in America has a price of .60 cents per pound. The green line represents that .50 cents that the Railroad company currently buys it steel at.

Now lets look at the red line labeled Customer’s share of tax. Back to our example: President Trump has imposed a 15 cent per pound tariff on imported Steel from China. (Not real, just made it up)  How does this affect our three companies? First let me give one key detail: Railroad company sells rail ties for 25 dollars per tie. So here is the breakdown of before and after the tariff

Company:                    Pre-Tariff Price              Post Tariff Price              Net Change

Railroad company Ties      25 dollars                       30 dollars                   5 dollars

USA Steel Company:           .60 cents                         .60 cents                      No change

China Foreign Steel Co.     .50 cents                          .65 cents                     15 cents

What happened? Well the Railroad company rose it price by 5 dollars. They also switch suppliers since they don’t want to pay more than they have to for steel.  Now refer back to the chart. The distance from the green to red line is known as “dead-weight”. In the chart, the blue triangle in the middle represents the dead-weight. Remember that “customer value” represents the demand side. Also that the green and red lines both represent supply both before and after the tariff is applied. The term dead weight refers the money lost due to the tariff. The Railroad company had to pass its extra cost of 10 cents to its customers. The reason?  The tariff made the foreign steel more expensive, however the American made steel did not get any cheaper so therefore the Railroad company had to pass that 10 cent per pound difference to the customer.  Of course, depending on the well-being of the company it could have also led to job-cuts or reduction assets.

Conclusion:

To recap: Tariffs create dead-weight whereby the tax increases the cheaper foreign competitor above the already more expensive domestic price. The unnatural increase creates a dead-weight because instead of natural competition, the tariff forces  a company to spend more without getting any benefits.

I’m end it here because they will be a part 2. In Part 2 we will finish up with a discussion of President Trump’s policies and the impact it will have with China. Then I will continue to explain some monetary economics that are important to understand.

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NYC MTA: Transportation Off the Rails

New York City is home to nearly 8.6 million people. The largest city in the United States. If you have ever been to NYC then maybe you have experience the wonder that is the subway. As a lifetime New Yorker, I can say that the subways are horrendous. Its dirty, slow, frustrating, stressful, and many more colorful words. I’ve only been living in NYC for 3 years, my experience has been that subways are getting worse. I’ve talked to other people who have lived here for longer and say that in the past 4 or 5 years they have seen a dramatic drop-off in subway service. I want to say that I’m no expert in transportation or subway systems. However, the problems with MTA start with the management and go all way down to the actual rails themselves.

In this post, I will offer up a solution to the problems occurring with the subway system. I will also offer a possible solution to the management of the MTA, particularly its budgeting and structure. I don’t have a fancy name for my plan or anything. I’ve also never put into words on a screen or paper. So here goes nothing:

For reference, I will be using the MTA’s own budget calculations. (Click here) These the official numbers of the operational budget. Other than that, I have to assume a few things because its hard to know without a survey of actual repairs how much its going to cost. I want to start with the physical repairs that I would have done.

The replacement of all lines with brand new track:

The most obvious change I would make is the replacement of all current track with a new modern track system. Now I have no idea of the costs or even the type of system best suited. However, I believe that updating the tracks that were technologically superior in the year 1900 is an important step to improvement. I also realize that this is the most costly and ambitious portion of my plan.

The new tracks would eliminate the delays cause by signal failures, derailments, and power losses. It is purely an infrastructure project because it keeps the mechanical malfunctions to a minimum.  As for a time frame, my thinking takes into consideration the impact of taking subways off-line, the budget restrictions, and the ability to get it done within the time constraints. There are 25 subway lines. I would take two lines that would cause the least stress on the system if taken offline. Imagine 2 lines go offline, the company or companies putting in the track would have a maximum of 2 years to get the job done. Now I could be wrong about the time frame to get it done however, adjustments can be made. In my theoretical situation, it would be a 13 year project approximately. I’ll be honest, they can take off my 5 line first, no problem with me.

This leads to a problem, of course. The problem being how will the people that get stranded by their subway line being re-done get around? Its not simple but the city recently bought new buses. So those older buses will be pressed into service to replace the subway line. I would have the buses follow the schedule and locations as the subway did. The times would have to be adjusted for travel distance. Its only temporary and its better than nothing.

Budgeting the Repairs: 

We have to assume that the repairs and track replacement is going to be very expensive. I want to say its probably going to cost over a billion dollars. However, I think there is some reasonable ways to raise that money without bankrupting: New York State, New York City, Citizens.  The MTA had a total operating revenue of 8,608 million dollars in 2016. The MTA had total operating expenses of 9,238 million dollars in 2016. If you do some quick maths that means a deficit of 630 million dollars. Obviously, its going to be impossible to completely fund this ambitious plan without creating more debt. But consider that by 2021, the MTA will have 1,955 million dollars of deficit by 2021. (Page 16) The MTA is already going under. Here are 4 steps to help fix some of problems.

Replacement Funds/Repairs: “Adopt a Subway”

The MTA currently spends 1,618 million dollars on the repairs, maintenance and related supplies. (Page 16) We have to assume that a new track replacement will add double or triple the amount. So we have options. We could raise taxes or steal money from other programs. But I feel that the best solution is a combination of charity and advertisement. Lets begin with advertisement. My idea is that each of the 25 lines of subways would auctioned off for baseline amount. Ideally the total amount would equal the approximate cost of the replacement. Let’s say that for a company OR person to adopt a subway, they have to donate a minimum of 20 million dollars. What do they get for that 20 million? They would get exclusive advertisements in subway cars. Exclusive meaning that no other company would be allow to advertise unless they allow it. They would get naming rights. They would get corporate perks for employees who ride the subway. For example, if let’s say Citi Bank wanted to adopt the 7 line, they might bid 40 million because of other bidders. The 7 line would be re-named The Citi Bank 7 Line.

I said that people could also adopt a subway line. That is called charity because they willingly giving their money for the improvement of society. It would work differently in that advertisements would be sold traditionally by MTA standards. However, that person would have the subway line named after them. It would work the same way in an auction, with a minimum donation. I believe this is the most viable and least intrusive form of raising money to pay for my expensive track replacement.

One last thing to note would be that the company or person would have the option to either re-up each year or opt-out. Now if they opt-out then it would be put up for auction again.

Transition from Public to Half Public/Private MTA

The MTA has been a victim, similar to social security of being stolen from by government. The MTA is a New York State owned, federally funded operation. The Governor has more say than the Mayor of NYC. Which leads to a lot of political infighting, given that both are democrats. One of my solutions involves changing the structure of the MTA. The budget problems will be somewhat alleviated with the continuation of the “adopt a subway” initiative. However, we have to go further. On page 16, the total labor expenses for 2018 was 9,238 million dollars. This means that employees are costing MTA a lot of money. In any business, the employees will be the costliest item. However, we don’t want cut employees just make them more productive.

The MTA has a board of trustees which has a CEO. I would take this board of trustees and make it a non-profit government contractor. The mid level management and lower level employees would remain public. Eventually, the new profits from a more efficient and cost effective subway system would help create a trust that would pay the board. The trust would essentially invest the money to the point where it could maintain itself. Once the trust can payout the salaries and benefits to the board, it would be cut off from the MTA profits.

As for the public employees, I wouldn’t change too much. The only change that might occur would be less need for maintenance because the system won’t need as intense care. This could mean a switch from full time maintenance into temporary. However, heavy use will mean the need for maintenance will still be quite strong.

Metrocard Fares

Depending on the “adopt a subway” success, the fares would stay at the $2.75 mark until significant progress is made. I would say that its fair to increase prices. In my personal view if a train typically takes an hour to get from point A to point B for 2.75, then if that same train took 30 minutes, I would be more than okay with an increase. The fare revenue for 2016 was 6,050 million dollars. I think the first increase would come in about year 7 of the project. Here is a chart of the increases and the revenue gained:

Year:   Fare:   Increase:   Revenue added:

7           4.25       1.50        263,550 million dollars

10         5.00        0.75       131,775 million dollars

13          8.00      3.00       527,100 million dollars

*All figures are in dollars and cents, its a 13 year project*

These figures are based numbers of ridership (1.757 billion) from 2016 and a fare of 2.75 at the base. The fares would increase by an overall of 5.25 dollars. I think this is more than fair given that a new modern track subway would increase efficiency and effectiveness. I think that benefits to businesses would be substantial. The amount of tardiness due to bad transit is ridiculous. I can’t tell you how many times I’ve been late due to a subway problem. I’m sure other New Yorkers have similar horror stories.

“Adopt A Station” – Give back to your community!

To piggy back on my previous idea of “adopt a subway”, I would also install the same thing for subway stations. Again if you have ever experienced a subway station, you know its just rats, homeless people and piss. Its horrible. Now stations would relatively cheaper. The money would be split into two purposes, paying the workers who clean and operate the booth. The second portion would go towards the MTA’s overall budget. If a company adopts a station, they would get exclusive advertisement rights, naming rights and some input on renovation design (If work is needed to be done). Of course, this is all optional and some MTA advertising money would be used to push a “give back to your community” twist.

Conclusion: 

I believe that my 13 year track replacement in combination with my “adopt a subway” and “adopt a station” initiatives would revitalize the MTA and the subway system. It would forever change how the subway is run. I think that separating the management (Board) from the public sector would help because politics gets very messy. I think the increase profits from the investment in the new track could actually make the MTA break even. With some help from companies and generous individuals it might even have surplus. The surplus (if it happens) would be used to improve the train cars, upgrade them.

I think that most New Yorkers are tired of the politics that keep the MTA from doing its job in running an effective and efficient subway system is the driving force behind my idea. You would have to be delusional to not see the problems with the current system. If you like my plan or if you have improvements I could make then feel free to let me know. If enough people get behind it, I would think sharing with the necessary people to start getting into action.

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Gulag Archipelago: Perception is Everything

Read the title again. If you aren’t thinking what the hell?!? Then you should probably check your pulse next. I have a little background story to explain where I’m taking Gulag Archipelago: Perception is Everything.

The other day I was waiting at Barnes and Noble. I typically go Barnes and Noble to either waste time or go to the bathroom. (Don’t tell anyone!) Anyway, in this particular situation I was waiting in there because I was going to see Waitress, the Broadway show. By the way, its amazing and you should go see it. I was browsing my favorite sections: History, Politics and Current Events. No surprise there! I came across few books I liked. But then, near the end of my wait I see this book called Gulag Archipelago by  Aleksandr Solzhenitsyn. I immediately pick it up because I’m intrigued by the title.

I read the first few pages. I decided that I didn’t want to buy it yet. (I almost never buy anything myself, usually I ask for books for my birthday) Later that night, I’m laying in bed with my wife. We were about to go to sleep. I mention that I found an interesting book at Barnes and Noble. I tell her the name. Then the conversation gets really interesting:

Me: Gulag Archipelago is a really interesting concept because you don’t usually think of Siberia as an archipelago.

Wife: Thats true. 

Me: The Philippines (My wife is originally from there) is an archipelago.

Wife: No its not.

Me: Yes it is, its a group of islands. (I looked up on my phone after I said it.) 

I can’t remember what she said after this but I remember following it up with:

Me: Its interesting that you perceived the Philippines not to be an archipelago.  The concept of gulags in Siberia is also an interesting concept. I wonder if he meant something by it.

Later the next day, we exchange texts about the same topic which is basically the premise of this post. In those texts which aren’t anything special but I put into words what I find so interesting: Gulag Archipelago tests your perception of geography and history. I like the term Geo-Historical because it describes topic without having to say geography and history.

To be fair, I didn’t read Solzhenitsyn’s book but I read summaries. Apparently he takes firsthand testimony from actual prisoners plus his own personal experience as a prisoner and puts it together into a fiction character. He also explains how the gulag system works and how it functioned. Obviously eventually I will read this book. Solzhenitsyn may or may not explain his title in the book. I don’t want to comment on the content of book nor do I want give a history of gulags. I want talk about the perception.

Perception is one of the most important elements when considering what kinds of sources you use in an academic paper. In history, you have to consider that the author has a bias or a point of view that comes from a unique experience. Just like any source for any kind of research you have to be acutely aware of perception. Let’s start by breaking down each word in the title to see what they mean. We have to wonder if the meanings could have something to do with how its perceived.

Gulag: a prison labor camp in Russia dating from early 1930s to the 1950s, usually located in Siberia (Russia).

Archipelago: A group of Islands.

galapagos-islands-ecuador-lg

(Pictured above: Galapagos Archipelago, Credit: Galapagos Guide)

Simple enough right? What pops out to me right away is the contrast that each definition has. The contrast is particular to geography. Do you know where Siberia is? Do you know what the climate is? Let me give you a hint: its freezing cold and its located in western (from Moscow) part of Russia, to west of Alaska. Can you name an famous archipelago? Charles Darwin based his theory of Darwinism off this archipelago. Survival of fittest, evolution ring any bells? Galapagos Archipelago off the coast of Ecuador. To me these locations could not be more different!

map-articleLarge

(Pictured Above: Map of Russia, Siberia, Credit: New York Times)

For starters, Siberia contains no islands! Its a solid chunk of land with nothing on it. The Galapagos is full of life and hot on the equator. Siberia has limited wildlife and its freezing cold most of the time. So geographically speaking, gulags weren’t located on islands. I think what  Solzhenitsyn is trying to symbolize is that gulags were prison labor camps spread out in vast, freezing Siberia. Gulags themselves are the islands on a freezing cold wasteland.

It makes a lot of sense. I think part of the problem with his title, at least for people today is that archipelago is not a commonly used term. I remember hearing it in highschool during Earth Science. My wife is pretty smart and she either didn’t know or forgot what it meant. She knows that the Philippines is a group of islands, more than 7000 of them in fact. Her perception of an archipelago wasn’t the same as mine. I knew it was a group of islands.

I think that part of the reason this interest me so much is because the uncommon term makes it seem exotic and kind of unreal. It throws people off. It makes you think about it. Once you get the past the archipelago definition, then you start to see his symbolism. I can tell you from reading on my own and researching that gulags were worse than concentration camps set up by the Nazis. Russia killed more than 50 million of its own citizens from the early 1930s to the time of Stalin’s death in 1953.

I think the important lesson in perceptions is that words can paint a very different picture than reality. However, sometimes that picture can be useful for describing how something occurred and why it occurred. In this case, Solzhenitsyn is chronicling how the gulags were run and the life inside them. More importantly, he was dissenting against the tyrannical, communist government of Russia. He saw firsthand how brutal the gulags were.  Solzhenitsyn wrote many books but this is the one that survived. Originally it was written in Russian but eventually translated and widely read.

I want to come back to this book and this topic. I’ll read the book and write another post about its content. In the next post I will try to tie his content into the title to truly get his perception of the “Gulag Archipelago”.

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Lesson on Economics: Protectionist vs. Free Trade

I know. I know. I know what your probably saying to yourself. “Not another economics lesson, you nerd!” “Haven’t you already covered everything economics?” Thank you, I am a nerd and also yes I’m thorough in my coverage of topics. I promise I’ll try to not to drone on for 2000 words this time. I need to explain something that President Trump has recently brought up as a potential policy. I don’t think people really understand how import and export tariffs work.

On the surface, in simplest terms a tariff doesn’t sound like a bad thing. A tariff is a tax on a imported or exported good. A tariff can increase of the price of a foreign good to make the domestic goods more “competitive”. Now I put that quotes because the reality is quite different. I think most people would say that there seems to be nothing wrong that. History would even agree that tariffs are a commonly used tool by governments to help guide trading between nations. Here is the problem.

Tariffs are antiquated. The US government used tariffs from its inception thanks to Alexander Hamilton’s brilliant mind to about 1913. After 1913 and in the 105 years since tariffs have fallen out of favor as economic tool. This isn’t to say that no country uses them but the US government only takes about 1-2 percent of its income from tariffs today. Before 1913, the tariff brought in nearly 90 percent of the governments income at its peak.

Economists agree that tariffs hurt an economy. I’ll get to why after I explain that globalization and free trade have changed the world economy. Globalization is the free movement of people, cultural and products. The world is more accessible than ever, with cheap flights to almost anywhere in the world. The internet has an untold wealth of information that was never available til about 25 years ago. We live in a world where everyone is connected. There are multiple free trade agreements between countries that allow a flow of goods and services between them. Free Trade encourages competition in the market. It allows every participant country’s economy to benefit.

Meanwhile, Protectionist economies or countries that use tariffs extensively are actually hinder. The simple explanation through some graphs and pictures. E-tariffntrade2

This graph is basically a supply and demand curve with some with other lines. (Charts reads likes this: As supply goes up, Demand goes down OR As demand goes up, supply goes down). The bold line is the price of goods before the tariff on imports, its label WS. The line above that labeled WS+ Tariff is price of imports after the tariff.  The implication is obvious: A tariff will increase price of an imported good. Here is another chart to show the impact of this:

taxes

This particular chart shows the “Dead weight” or loss of value. This chart reads like this: As quantity goes up, the price goes down.  You can see the supplier has to pay the tariff and therefore it increase the cost to the customer. The loss of value is where the maker increases the price of their product to cover the cost of the tariff. The money is lost because the supplier has to either stick with that supplier or go to another one which obvious wasn’t cheaper before the tariff.

Here’s an example:

Before Tariff:

Company A: Product cost: 25 dollars

Foreign Supplier 1: Material cost: 5 dollars

Domestic Supplier 2 Material cost: 13 dollars

After Tariff:

Company A: Product cost: $25+ $10 tariff = $35

Foreign Supplier 1: Material Cost: $5 + $10 tariff = 15 dollars

Domestic Supplier 2: Material Cost: 13 dollars (No added Tariff)

You can see the dead weight  or loss value. The tariff raises the price of the foreign competitor’s material cost artificially. The extra 10 dollars that it cost to buy from that foreign supplier is lost. This is because the domestic supplier’s cost is 13 dollars compared to the foreign supplier’s 5 dollars before tax. The loss of value is 8 dollars. Therefore the Company A has to raise it prices because its cost have increased.

I’ll put a picture in the preview that help explain even more. (Credit to marketbusinessnews.com)

My conclusion is basically that protectionist policies don’t benefit an economy in the long run. The government is once again interfering in the market where it doesn’t need to be. As usual, the best solution to fix the problem with tariffs is to not have any. We have to take the government out of the market that includes all varies regulations that just raise prices and don’t involve health and safety.

President Trump should tread carefully because the long term implications will be worse than the short term benefits. I think that because of globalization, free trade is the new way to do business. Although the US has historically been a protectionist country, the future is going the exact opposite way. The world economy has undergone globalization and free trade is the new normal.

Thanks for reading, if you are still awake feel free to check out:

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Relevant articles on Tariffs,  Historical Tariffs, Economics Part 1, Part 2, Part 3

Guns: A Guide for Dummies

I am so tired of hearing the racket that is the gun control debate. Nothing could be such a echo chamber as people who probably haven’t shot a gun trying to elaborate policies that honest to god won’t work. Recent events like the Parkland Shooting and many others keep bringing gun control to forefront of national news. I’m not at all interested in going into every detail about what happened or didn’t happen. I want to talk about guns and the people that shoot them. You may not know it or like it but I’ve shot guns and I thoroughly enjoy guns of all types. I own a small set of Nerf guns proudly. More to the point though, I have shot two real guns in my life.

I definitely want to go shooting again but opportunities are rare especially in a city of 8.6 million people. I experienced my shooting at a Boy Scout camp. I shot a 12 gauge shotgun which was such a thrill. I also shot a little .22 rifle. It was your typical pigeon shot. As turns out I was a good shot. My love for guns began way before I shot them at 15 years old. If you didn’t know I received my bachelors degree in history. One of my favorite topics to study is war. One of the first guns to ever come to American soil was a flintlock. Flintlock rifles are ancient but are some of the coolest replicas you will see. To shoot a flintlock, first you load the lead ball with rod down the barrel similar to a musket. You have to cock the hammer an then you put the gunpowder on the pan.  Now you are ready to fire. When you fire, the hammer strikes the flint which creates a spark in turn igniting the gunpowder and propelling the bullet.

I always found the weapons of each decade of war to be interesting. Weapons have a tendency to evolve. Weapon development has contributed to many of today’s inventions for civilian life (a whole other post). Yet, here we are in 2018 with seeming rampage of school shootings. Many people believe that its because of the technologically advanced rifles and ease of access for buying them. To some degree, I will agree that access to buying them is a little bit looser than it should be. However, the simple fix is psychological evaluations along with background checks. As a rule someone who is on psychotropic drugs shouldn’t be allowed to own a gun. The problem that I see is not guns or the background checks or lack thereof.  Gun. Free. Zones.

The stupidest three words ever to put in a sequence. Gun Free Zones– there I fixed it. I have noticed a pattern that all the schools, colleges and places that tend to get shot up are in fact: Gun Free Zones. This is the one common denominator aside from guns in all shootings. Listen, guns are merely a tool like a hammer, knife, truck, or crowbar, these are objects that don’t commit any crime. Honestly, its the gun free zone is that the real killer. For a second just imagine you are a disturbed school shooter. You bought your guns illegal on the black market. Now you need a place to carry out the dirty deed. What place is going to let you spill the most blood without much resistance? Honestly if school or college isn’t in your top 3 then you might be a bad criminal. Needless to say, imagine that same scenario but all the schools have at least 20 people packing heat. If I’m the criminal I’d think twice.

Moving away from being demented human being lets consider my point about other tools that could be used a killing weapons. Gun Free Zone doesn’t cover them. So if you can honestly tell me that you would rather be unarmed than armed to defend yourself and others then wow you are brave. Congratulations. Guns are like nuclear weapons. There is a reason why Trump and Kim Jong Un haven’t already started the nuclear holocaust. Nash Equilibrium. I like to call it: game of outcomes.  The basic principle is that most of the time the best strategy is not to shoot until its absolutely necessary. Kim Jong Un understands that if he nukes the US, we will hit back 1000 fold. The game of outcomes can be used to understand why arming everyone that is not a psychopath would actually be effective in preventing shootings.

Just tell me what the chances that you would shoot between the following options:

  1. 100 people, unarmed
  2. 100 people, 50 armed, 50 unarmed

My guess is that you wouldn’t shoot in option number 2. Unless you had a death wish. Once again its a game of outcomes.

In summation, the point of my guide is rally against Gun Free Zones which are ridiculous. If you think a criminal would follow the rules than why does everyone speed or not turn on their blinker? Both laws and yet nobody seems to mind when they break them. Its not that crazy or insane to think that Gun Free Zones are the problem. Just please stop this insanity. Please!!!!

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Tragedy of the Commons: Problem with Collective Policies

Have you ever heard of Tragedy of the Commons? Sound familiar? Tragedy of commons is typically associated with fishing. If fisherman go out to a popular fishing spot and catch fish at a rate that is more than fish reproduce, then that would be a tragedy of commons. Garrett Hardin came up with theory originally and applied it to biology or nature. There are many examples, but the basic principle is that demand overwhelms supply.  Just in case you fell asleep in Economics 101 or you happen to be Bernie Sanders then here is a little reminder of how supply and demand work:

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I want to talk about tragedy of the commons in the terms of political policies and platforms. It’s a topic that is hotly contested among Libertarians and conservatives. On the other hand, Liberals tend to completely ignore it. Its this ignorance of the tragedy of commons that might explain why collectivist policies that liberals tend to advocate are just really bad. Liberals and even Conservatives both tend to argue for MORE government regulation in the face of a tragedy of the commons issue. (I’ll try to keep it relatively brief, one or two examples, I have a lot to say)

Let’s take on healthcare for example, is a tragedy of the commons. Liberals advocate for a universal healthcare system. This system would in theory depend on the taxpayer (theft) money to help cover the costs of healthcare. However, this policy would extremely expensive due to the increased costs to private health providers. Also the service given by providers would be slower due to a heavy volume and probably less staff. Healthcare is a complex issue but a tragedy of commons exists in both the taxation for it and the availability of quick medical care by providers. For example, in Canada, they have universal healthcare and experience longer wait times, sometimes for very important life saving procedures. In some cases they come to the US for faster care.

In short, universal healthcare is a collectivist policy pushed by liberals that creates many tragedy of the commons. Unfortunately the conservatives are not much better backing single payer with a government agency running the show. Less tragedy of the commons here, but still not the best option. The solution for a tragedy of the commons is deregulation in most cases, concerning government policies. In nature, like the fishing spot, the solution would be to have fisherman stop fishing in that particular spot until there were sufficient fish. I want to clarify what I mean by collectivist. Collectivist is a term usually meaning something is done in or by a group.

My second example is one of the hottest issues because of a vote coming up, Net Neutrality. Naturally my position is repeal because Net Neutrality isn’t consumer protections, its just dealing with bandwidth and if companies can block or censor stuff. From what I’ve read the new rules after repeal will be that the companies will have to report whatever they throttle, block, censor to the FCC who will make it public. I also see no problem with Netflix and Amazon and Hulu having to pay more for bandwidth. They use a lot of it, its only fair. Naturally that will be passed to the customer. However, the good news of repeal is that companies will offer different packages specifically geared toward streaming services. Unlike now, where you get all one price and it might be good or bad.

The tragedy of the commons in Net Neutrality stems from the issue of bandwidth. There is only so much bandwidth that these companies can generate without losing money. Its interesting because if you look at bandwidth in a vacuum, it really highlights the problem. Watch: Let’s say Comcast and Verizon both offer 300 mbps of bandwidth under current Net Neutrality for an average price of 150 dollars. (Making up random numbers here). Let’s repeal those rules and see how prices and amount of bandwidth change. Under Net Neutrality, both companies would have similar prices and the max amount of bandwidth would be at 300, but of course you can pay less to get less. The problem with this is that the companies aren’t really competing. There’s very little variation because the going rate for bandwidth is 150 dollars for 300 mpbs. Everyone can gets to use that bandwidth to watch Netflix and play fortnite as much as they want. The companies might be struggling to keep all this bandwidth up with only 150 dollars per customer because their own business costs are going up.

If we repeal Net Neutrality, now Comcast charges $100 for 200 mpbs,  $200 for 300 mpbs and lets say $300 for 400 mpbs. Unheard of right? Well, Verizon charges $75 for 150 mpbs, $150 for 250 mpbs, $275 for 300 mpbs, $350 for 420 mpbs. Now you can see the competition as each company tries attract more customers. They may even offer a lower bandwidth but you get extreme streaming capabilities for an extra 100 bucks. Either way, the competition will naturally drive down prices. When supply goes up, demand goes down. In order to create demand you need to supply, but you also need to create an interest in your product and attractiveness or marketing.

The solution to the tragedy of the commons for nearly every aspect of Net Neutrality is deregulation. Let the consumers decide which companies will succeed and fail. Another positive aspect of net neutrality being repealed is that it will allow startups and other smaller companies to get into the market of internet.

I believe that through my two examples I have shown why some collectivists policies are broken due to the tragedy of the commons. I believe that the solution to tragedy of the commons is deregulation which means getting government out of our lives. This solution is the basis for the whole libertarian philosophy. If society is a tragedy of the commons then as libertarians we are for the deregulation and privatization of pretty much everything. Everything is harder in a large group. Its similar to when you ask your friends where they want to eat. Everyone has different opinion. Or when you ask your friends when they want to go out. Everyone is busy and has no time. Collectivism requires group-think and group decision making. Its not the most effective. Tragedy of the commons also tends to tread on the rights of the individual.

The rights of individual are the most important aspect in a free society. As Thomas Jefferson once wrote:

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness”

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What do you mean no Helicopters and McNukes?

In usual fashion I have come across some inspiring material to write my own article on. I’ve been thinking recently about what the ends of a libertarian party or movement would or should be. In this blog I consider the means of getting there. I’m always pushing steps toward a libertarian society. These steps seem to never make any progress. I have always viewed the libertarian society as an idealist notion. I think to some degree its true. On the other hand, I feel like its entirely possible that a libertarian society is achievable. The problems are numerous and the solutions are few. One main problem and probably the biggest one is the lack of education of outsiders on the libertarian values and beliefs. People tend to misinterpret or misunderstand what libertarians stand for and what we want to achieve.

I’ve recently said on social media that I believe I’m in the minority of libertarians that believe that achieving the ultimate goal of a libertarian society will come instantly once it happens. I feel that many libertarians, anarchists, anarcho-capitalists think that once we overthrow the current government then we can just easily transition to that libertarian society that we all agree is the goal. I don’t believe its so easy or fast. I think there is a number of factors to consider about means and ends of libertarianism.

The first and foremost is that the way to change the government is to vote for politicians who hold the same beliefs, values and morals as libertarians.  We can all agree politicians of this caliber don’t exist right now with the exception of Rand Paul, maybe. After voting for Gary Johnson in two consecutive elections I have realized that we are going too big. (Nothing wrong with him, just a walking meme.) We need to find libertarian congresspeople. I know of 3 libertarian leaning congresspeople, Rand Paul, Thomas Massie, and Justin Amash. Once we can turn the Congress into a majority of libertarians then we can work on the white house.

The second factor is education like I mentioned before. A lot of people have misconceptions of libertarians. Even I used to subscribe to these common myths. For example: Libertarians are both Republican and Democrat because they support a little of each. It might be true that we hold similar positions but we are actually against both parties. The two main parties are a snake with two heads. They don’t care about you. They care about their interests and their money! We need to educate the masses on libertarianism. The essential thing is liberty and freedom. The government shouldn’t play much if any role in our everyday lives. The government doesn’t need to over regulate and get involved in everything we do. The government doesn’t need to tax our hard earned income. For over 100 years, the US government collected no income tax. Who will build the roads? Private corporations that need to ship things by truck. Businesses that need to drive around. My point is that if we can educate people then eventually will lead to more people accepting and more importantly voting for libertarians.

The third factor of the means is simply cohesive-ness among libertarians. We have to unify our ideas. I know we all agree on certain things. But we have to compromise on other things. Example: Abortion. One of the hottest button issues because there is no stasis for argument. Pro Life or Pro Choice? For me, I’m torn between both because choice is guaranteed by the 14th amendment. Yet I’m also catholic so I can’t possibly support the killing of something that is alive. My position is Pro-Adoption. It gives a choice and saves the life of the baby. Also there are many parents out there who can’t have kids. My point here is that a compromise takes a little bit from each side and makes palatable to everyone. Compromise is something that our country was founded on. I strongly believe we should get back to that.

The forth factor is concerning the ends. I find it hilarious but helicopters and McNukes are a standard must have in any libertarian society. But lets all be honest its a little far fetched. I do believe that no taxes, open carry (guns), NAP and very small government are possible to have. I think we all have to be realistic about the ends. The ultimate goal is for everybody to live their life without the interference from government. But I think we miss the point that libertarian is also one of the most charitable types of societies. Its not fake charity like socialism and communism. In a libertarian society, you would give to the poor, give to the sick and give to government if you felt like it was worth it. Thats the wonderful thing about it, its your choice to give your money or not. Government is ineffective at helping people. But there is a million examples of where everyday people throw their support at something and get it done without government.

My conclusion is that we need to educate, vote, come together and be realistic about our ultimate goal of a libertarian society.  We can do it all once too. My inspiration was an article that basically said no more Libertarian party but we need a movement. In order to achieve a movement, we have to educate people on the benefits of joining this movement. We have to vote in politicians who reflect our positions. Its not going to be easy. The steps towards a libertarian society will be methodical. All I hope is that I see this libertarian society come to fruition before my time is up. I’m still young so I got hope.

Just remember kids, Taxation is Theft.

Thanks For Reading!