mgroves

So maybe you’ve heard that Mexican Coke is made with “real” sugar (i.e. cane sugar), unlike Coke from the USA, which is made with evil, corporate sugar (i.e. corn syrup).  Mexicans who drink USA Coke often claim that it’s not as good as Mexican Coke, and older people from the US claim that Mexican Coke is the Coke that “they remember” from the pre-government-meddling-in-sugar era.  Go check out Snopes or Google for more background about the whole ridiculous controversy.

I’m not interested in any of the political nonsense (though I am against corn subsidies and sugar tariffs/quotas) as much as I’m interested in Coke itself: I drink a lot of Coke.  A lot.  Just ask anyone I know, and the first thing they’ll mention about me is their concern for the abusive amounts of Coke that I drink.  Between this word and the last period, I just drank some.  It’s a relatively large part of my dietary life, so naturally, I’m interested in all kinds of Coke lore, and even the promise of a better Coke from below the border.

One day, bottles of Mexican Coke showed up in the convenience store in the lobby of the office where I work.  In the interest of science, I bought 6 of them.  I drank a few, and put a few in the fridge for later testing.  I wanted to do a taste test to see if I could tell the difference, and which I preferred.  Here is the science:

Question: What’s the big deal about Mexican Coke and real sugar?

Background Research: See above.  Additionally, I have tried some other drinks (namely Hank’s Root Beer) made with cane sugar, and found them to be very tasty.

Hypothesis: Despite all the context I’ve mentioned, I was skeptical that I could tell the difference.

Experiment:  I purchased glass bottles of Mexican Coke and put them in the fridge to chill.  To isolate the variable (sugar/corn syrup) as much as possible, I also purchased glass bottles of US Coke and put them in the fridge to chill.  When the bottles were chilled enough, I asked my wife to pour three shot glasses of Coke: 2 of them with one type, and 1 of them with the other type.  It was up to her what to pour in what, as long as both flavors are in there at least once.  She hid the bottles from me.  I drank each shot glass and drank water between each glass.

Results: The first glass was really good.  The second glass seemed…wrong.  Not terrible, but wrong.  I was excited that I already had a result!  The third glass also seemed wrong.  I guessed that the first glass was US Coke and the second two were Mexican.  I was exactly right!

Conclusion:  There is a difference in taste!  Even Coke maintains that there is no taste difference, but that clearly is not the case.  However, as much as I tried to isolate the variables, there are still many differences that I can’t account for: water differences, carbonation amounts, the effect of transport, etc.  If I were in Mexico, I would not hesitate to drink their Coke—it’s very good.  But, given the choice, I’ll stick to good old US Coke.

Which is better, 1) a factory that employs 1000 people and produces 50000 widgets a year, or 2) a factory that employs 100 people and produces 100000 widgets a year?

If you answered "1", congratulations! You are qualified to be a politician! (Bonus points if you asked "union or non-union?" before answering). If you answered "2", then you make too much sense to be an elected official.

I've touched on "make work bias" before, but Walter E. William wrote a fine column. "Trade versus Protectionism", so I'd thought I'd link to it.

Cathering Vogt noticed that Obama was very popular among her 8th-grade colleagues.

So, she tried an experiment. She wore a homemade t-shirt with "McCain Girl" written on it to school one day just to see how tolerant Obama's supporters were.

Here are some responses:

• Classmate(s) suggested that she be be "burned with her shirt on" for "being a filthy-rich Republican."
• One person told her to "go die".
• Some people were "calling me very stupid"
• And finally, one person said that "she will not judge me for my choice, but that she was surprised that I supported McCain". Her teacher.

She wore an "Obama Girl" shirt the next day and got less flak.

Not all that suprising: these are 8th graders who are bombarded with The Daily Show and Green Day and the agenda of the NEA and what not every day.

But the most bothersome quote to me was that she was a "filthy-rich Republican". There is clearly a populist perception that Republicans are all greedy and rich, and got that way by "exploiting the common working family" or some such tired rhetoric. This is a very dangerous thing, because it leads to very stupid laws that are meant to "reduce economic inequality". And they will reduce economic inequality: they will make us equally miserable.

The way to improve economic conditions is not to make conditions worse for the rich--it's to improve conditions for everyone. It's not by envy and soaking-the-rich, but by reduction in government interference: subsidies, price controls, taxes, bureaucracy, tariffs, bailouts, entitlements, protectivist trade, and monopolies (government and private). Let's be very skeptical about central planning and err in the favor of markets.

I supposed I should weigh in on the impending bailout.

Short version: bad

Long version:

Once again I find myself parroting Arnold Kling at EconLog, since I'm short on macroeconomic qualifications, and that really is the crux of the problem: so are most politicians. The current "economic crisis" is not a crisis. Don't get me wrong, it's not a great situation, but the actual economic situation doesn't match the dirge that politicians are crooning. Kling:

"Acting historic emergency legislation now is like doing a heart transplant on a patient with a head cold..."

The real root of the problem with this government action is the same root as most all problems with government action: the false pretense that government must do "something". One of the main causes of this "crisis" was government meddling with mortgage markets. Why is it assumed that more meddling is the answer?

Unfortunately, I don't see either candidate really taking the position of "less economic meddling". McCain has made subtle overtures at opposing the bailout, but I suspect in the end he'll vote for it (or some version of it). Fred Thompson is, of course, right on the money, so to speak, but continues to endorse McCain. Oh, politics, you are a wicked mistress indeed.

What's this, an actual post? I can't help myself. Here's something Joe Biden said:

"Everybody likes him, they get out there and they look and they go, 'I like him a lot, but is this guy a Muslim? Does he go to a madrassa?'" Biden said. "People like him, but they want to be reassured [that] some of the malarkey, the negative stuff they hear about him, is just not true."

First, 10 points to Joe for using the word "malarkey". It is one of my favorite words, and I just don't get to see it in the press that often. So, kudos.

But minus several thousand for everything else. Let's have a look at what he said again:

"Everybody likes him, they get out there and they look and they go, 'I like him a lot, but is this guy a Muslim? Does he go to a madrassa?'" Biden said. "People like him, but they want to be reassured [that] some of the malarkey, the negative stuff they hear about him, is just not true."

Yes, we already know Barack isn't a Muslim, and prays to Jesus every night. But, apparently, being a Muslim is "negative stuff". You hear that, Muslim voters? Joe Biden hates Islam! He probably flushes the Quran every night WHILE EATING PORK AND SHAVING.

Oh, Joe Biden, you crack me up! Try "misinformation" next time, instead of "negative stuff", you wordsmith, you.

I'm pretty apathetic about the presidential race this year, mainly because neither candidated really appeals to me.

Arnold Kling is on the same wavelength as me, and has put together a list of 7 things that will not happen, no matter who is elected. And I agree with them.

Speedlinking is yet another tool of the lazy blogger. Basically I smash together a bunch of interesting links that I collect every so often, and write a sentence or two about them.

This week's Speedlinking is being brought to you courtesy of the useful Instapaper website, which I've been using to temporarily bookmark the below links.

• Hitchens, whom I sometimes find abhorrent, but always find intelligent and interesting writes what I think is the definitive article on waterboarding.
• Offshoring: relax! It's good!
• I gave up on Seth's Godin blog (I just didn't find it generally interesting), but he relates a great story about a t-shirt order.
• *cough* Aggreget *cough*
• Raising taxes in a down economy? Not so smart.
• Great article about global warming, which really looks at the big picture.

Ah, that pesky, meddlesome government is at it again!

A recent law was passed in Ohio that all but makes payday lending illegal.

In case you aren't familiar with them, payday loans are short-term (15 days) loans. The way it works is that you go to one of the payday loan stores with a post-dated check for the amount you want plus a fee (around $10-$15 per $100 you want to borrow). They check your ID, ask for paycheck stubs to demonstrate that you are gainfully employed, and maybe some other things to verify your checking account and current address and such. They don't check your credit. They then give you the amount you want in cash. If you don't pay it back in 15 days, they will cash your check.

So what's the big deal? Critics (or as I like to call them: meddlers) say that these loans are irresponsible and predatory. The fees amount to 391% APR and many loans result in a downward spiral of borrowing to pay off borrowing.

Wow, that sounds horrible, doesn't it? Those poor, defenseless, stupid poor people who can't make good decisions and pay 300% on their loans! We know what's best for them! The government should do something! There oughta be a law! Yeah, that's the ticket!

But wait. There's already a law: it's illegal to pay off a payday loan with another payday loan. Makes sense, doesn't it? As so often is the case, why make new laws when you can just enforce the existing ones. But I digress...

Now we have a new law that restricts payday lending to 30% APR. Which means they can charge like $1.08 per $100. Which means they can't stay in business, and they have to fire 6000 people, and 1600 landlords have to find new tenants (and that's just one company).

Meanwhile, the banks can charge $30 for an overdraft fee, plus another amount every day the account is overdrawn, none of which is disclosed as "APR". Credit card companies charge 30% APR, fine, but these helpless, mouthbreathing poor people who can't be trusted to make their own decisions will, of course, only pay the minimum. On a $500 balance, they will pay $294 in interest over 3 years(*).

That's assuming they can even get a credit card in the first place. If they are going to Checksmart, they probably don't have very good credit.

So what are they supposed to do when it's time to take their kid to the doctor or get their car fixed? I guess they could just pay a late fee on their bills instead (also not disclosed as APR, oddly enough), go to a pawn shop, steal the money, suffer the embarrassment and relational strain of borrowing from friends and family, go on a welfare program, or just skip the doctor's appointment. Fantastic alternatives all.

Ohio politicians (both parties, now, this had very broad support) claim to want to bring jobs to Ohio and make it friendlier to business. So far, that's only been lip service. Color me shocked.

This is just a quickie.

I though Kling made a good point in one of his posts today.

High gas prices have had the following effects via the market:

• End of free pizza delivery in many places
• Drop in SUV sales
• Drop in price of houses that are far from jobs or mass transit

Meanwhile, during 2004 when regulators first started worrying about subprime mortgages, HUD stuck with their policy allowing Freddie Mac and Fannie Mae to dish out ARM loans to low income and minority families as a being "good for the community".

I think this is a good demonstration of how markets generally function well and how government usually just exacerbates problems. No the market isn't perfect, but government intervention rarely helps.

Do you have health insurance, or do you have health insulation?

What's the difference?

Insurance protects against risk, it isn't meant to insulate against costs. Kling (above link), advocates that instead of the current health "insurance" that most people have, Americans should use tax exempt HSAs in combination with cheap, high deductible insurance for catastrophic/unforseen health issues.

In this way, you would pay (entirely) for your own routine/chronic health expenses (flu, cough, cold, checkups, etc). If you get cancer, or lose a limb, or even get pregnant (anything uncommon), you pay a high deductible to cover it with insurance.

Compare that to the current system, which is "insurance" for everything. What ends up happening is a version of the agency problem with misaligned incentives. If a patient has insurance, the doctor could recommend whatever they want, since they know it will be paid for largely by the insurance company. The patient has no incentive not to do what the doctor recommends, since they are far insulated from the real cost.

The end result is stifling of efficiency, waste of resources and perhaps even worse.

"For health care providers, insulation is a bonanza. Because consumers are not spending their own money, they accept doctors' recommendations for services without questioning them and without concern for cost."

From an anecdotal perspective, I can see this happening to me everytime I go to the doctor. Hundreds and thousands are being spent on services, but I only care about the $20 deductible. You might ask, why wouldn't you do what a doctor recommends? This isn't an economic problem, but an educational one. Consumers need better information and more openness from health care providers to make better decisions about what is necessary and what isn't.