Editor’s Note: In a provocative recent book “The Great Rebalancing,” economist Michael Pettis writes “thanks to the internet, much of the best writing and debate has taken place in the modern equivalent of the nineteenth century’s pamphlets, broadsheets, and coffeehouse discussions – economic blogs. For many years the development and understanding of economic theory was blighted, if that’s not too strong a word, by the domination of specialized academic journals that evaded the big, interesting questions in order to focus on topics that were too often either trivial or irrelevant.” The post below comes from Michael Shedlock’s blog, “Global Economic Analysis,” which attracts over 1.0 million visitors each month and clearly does not “evade the big, interesting questions.” Shedlock’s many posts on unions and competition, and the anti-competitive alliance between crony capitalists and public sector unions, have been welcome additions to our material on UnionWatch. Another excellent economics blog, recommended to us by Shedlock, is “Debtwatch,” written by Australian economist Steve Keen, that explores ways to facilitate global debt reduction while avoiding catastrophic economic disruptions. Both Shedlock and Keen have influenced UnionWatch editorials, to the extent they delve into the underlying economic challenges that impact the proper role of unions in a free market economy, as exemplified in our posts “Bipartisan Solutions for California,” and “The Persistent Pension Fund Doublethink Behind the 7.0% Per Year Projection.”
I find it increasingly difficult to keep up with economically illiterate proposals. Commenting on central bank foolishness is a full time job in and of itself. Factor in unions, Keynesian and Monetarist clowns, and I hardly get any sleep. Economic nonsense in France, Spain, and elsewhere in Europe sends the situation over the top.
For example, as I previously commented on a recent post “Housing Construction in France Lowest in 50 Years; Hollande Responds With Measures to Support Building ‘For the Public Good'”
Housing starts in France will fall to 280,000-300,000 in 2013, the lowest level in 50 years according to developer Nexity. The government wants 500,000 units per year.
Housing Starts Insanity
Reader Tim Wallace helps put that insanity into perspective. Wallace writes …
I was astounded to see that France wants 500,000 units of housing starts. According to the World Bank in 2011 France had a population of 65.5 million people. This compares to the USA population of 311.6 million from the same source. Therefore France is approximately 21% the size of the USA. For the USA to have an equivalent number of housing starts to population (the people who would get the units) we would need to have 2,380,952 starts!
We know how that would end.
Indeed, we do know how this would end.
The US is currently running about 890,000 housing starts annually, on a seasonally adjusted basis. And Hollande wants an equivalent 2,380,952 starts “for the public good“.
US housing is distressed. However, France is in the midst of a bubble now burst, and it is beyond stupid to keep building anywhere in the face of falling demand.
Next Case (Also From France)
Via Google translate, please consider France to investigate Skype for failing to register as a telecommunications operator.
After successfully extorting Google, the Government of Francois Hollande has its eye on Microsoft and Skype service.
The French telecoms regulator ARCEP has asked prosecutors to investigate the VoIP service owned by Microsoft, Skype, for failing to register as a telecommunications operator, according to the agency said in a statement. Skype’s sin would have been to several requests obey not the regulator to register as an “operator of electronic communications.”
French law requires all operators to allow emergency calls and free legal interception of calls. The excuse they are using the French to consider Skype as a telecommunications operator is that it allows voice calls to landlines and mobiles in France and worldwide. However, the laws of the European Union do not consider that neither Skype or similar services are telecommunications companies.
So, the real reasons behind this decision could be two. First would be the complaints of local operators. Stéphane Richard, CEO of France Telecom, had protested what it considers unfair competition from services such as Skype. His company, in a statement, praised what he considers “a positive first step towards a more balanced regulatory environment.”
But more likely is the fact that as the French telecommunications operator Microsoft would have to pay taxes in France for all income achieved Skype on the French market.
Reflections on “Unfair Competition”
Corporations always consider it “unfair” when any other company can do things faster, smarter, or cheaper than they can. The buggy whip industry once protested cars.
Today, land-line telecom companies have to compete with wireless and they don’t like it. Now, we see protests about VOIP (voice over internet protocol).
Technology marches on. But France does not like it. The French solution is to tax Skype because it has an “unfair advantage“.
This is an age-old unwinnable argument.
Petition of the Candle Makers
The ultimate irony is France’s preposterous “unfair advantage” argument was lampooned by French economist Frederic Bastiat back in 1845 when he penned ‘Petition of the Candle Makers‘.
In his article, candle makers were incensed that the light of the sun could be had for free. The sun’s unfair trade advantage was to the “to the detriment of fair industries” who could not compete against the sun’s price.
Something had to be done to “shut off as much as possible, all access to natural light, and thereby create a need for artificial light” so that “industry in France will encouraged”.
How and Why We Forget the Obvious
It is a simple statement of fact that the more goods and services we receive for our money, the better off we all are. The cheaper, the better!
Time and time again we forget free trade and lower prices are a benefit!
We forget because unions, socialists, and corporations forced to compete against the sun (or Skype), scream “unfair advantage” at the top of their lungs, via political contributions to politicians willing to “tax the sun” to be reelected.
About the author: Mike “Mish” Shedlock is a registered investment advisor representative for Sitka Pacific Capital Management. His top-rated global economics blog Mish’s Global Economic Trend Analysis offers insightful commentary every day of the week. He is also a contributing “professor” on Minyanville, a community site focused on economic and financial education. Every Thursday he does a podcast on HoweStreet and on an ad hoc basis he contributes to many other websites, including UnionWatch.