Family and Entrepreneurship

This brief essay points out the vital role of the family in transmitting business skills to the next generation. When entrepreneurs work in a family business before starting their own business, these new businesses are 10 to 40 percent more successful than they would otherwise be (that is one heck of a range, but that's beside the point). So it appears that much entrepreneurial skill is transmitted outside of a classroom; no big shock there. This is the primary reason I have very little good to say about child labor laws.

The most troubling aspect comes in when considering the weak family bonds many possess. For instance, the black rate of business ownership is below that of whites. How much of this is due to a distressingly low number of black children having the opportunity to work in family businesses? This creates a self perpetuating cycle. The current generation has a low rate of business ownership and thus the next generation has a lower rate of business ownership and thus fewer opportunities in life.

Post Office in Trouble

The U.S. Postal Service lost $2.8 billion last year and will be in trouble this year if Congress doesn't step in. How about opening up first class mail to competition? FedEx, DHL, UPS, and however many other package delivery companies there are do a fine job. How about letting them, or anyone else, take a crack at first class mail? The Internet has taken a huge cut out of the Post Office's business and as people become ever more Internet savvy and postage increases, it will continue to decline.

Now granted, other first class mail delivery services wouldn't be as entertaining since I think UPS frowns upon its employees carrying weapons, but I'm sure we can find plenty of entertainment elsewhere.

Externalities in the Air

I was on a flight Saturday. The man in front of me reclined his seat back to an extent that it slightly restricted my leg room. This seemed like an externality. The actions of this man reduced one of the goods, comfort, in my utility function.

It would have been very easy for me to attempt to remedy this situation. I could have politely asked the man to lean his seat forward a bit. If that failed, I could have called the flight attendant over to force him to lean his seat forward. I found that option a bit extravagant given the circumstances so we're left with the two of us bargaining over his optimal seat position should I raise a fuss. This man obviously valued having his seat reclined in order to increase his comfort, or possibly annoy me (probably not the latter, but it is a possibility). I valued having as much leg room as possible, but maximizing that would result in the cost of bargaining with the man. I did not bargain with him, his seat remained reclined for the remainder of the flight, and I continued to work.

Given that my net benefits of increased leg room (additional leg room minus the cost of bargaining) was obviously less than the value this man placed on reclining in his seat, social value was maximized. What appeared to be an externality was willingly accepted by me because the cost of remedying the situation was higher than the additional leg room I would obtain.

Now, the 12 year old boy sitting between myself and the attractive young lady in the next seat was an externality that should have been remedied immediately! I'm sure a meager cash payment would have eliminated that externality and added to both our utilities. However, she might have incurred an externality and then the whole process would start over.

The EU and the Economic Crises

The differing impacts the economic crises is having across the European Union is causing some splits in the EU. Some members of the Central and Eastern bloc are doing well given the circumstances (Poland, the Czech Republic) while others in the bloc are in dire straits (Hungary, Romania). There are differences across the Western countries, with Ireland, Italy, Spain, and Greece being hit harder than the rest. Since these nations are prohibited from taking substantial unilateral action to stimulate their economies, the EU is facing its first major challenge.

A professor of mine about 6 years ago speculated that the euro zone would be fragmented when some of the member countries had especially bad economic circumstances and the EU wouldn't act as aggressively as they hoped. Could they be facing that situation?

The Right to Earn a Living

Here is a great article from The Freeman on how existing economic interests team up with state and local governments to restrict the entry of new competitors. An interesting side note is that veterinarians are some of the worst offenders. The article profiles one woman in Maryland who was prohibited under penalty of criminal prosecution from massaging horses. Another example happened in Texas 3 or 4 years ago when the vets sought to prohibit non vets from floating horse teeth. The vets succeeded in 2007 and the battle continues.

Rainforests and Health Care

• The rain forests are expanding as farmers move from the countryside to the cities in search of better opportunities. Their farmers are reverting back to rain forest. From the article: "By one estimate, for every acre of rain forest cut down each year, more than 50 acres of new forest are growing in the tropics on land that was once farmed, logged, or ravaged by natural disaster." So native peoples win by gaining better employment opportunities, the animals win by getting increased habitat and environmentalists/conservationists get more rain forest. Three cheers for a win, win, win situation!
• Here are two divergent, in both underlying perspective and solutions, views on health care reform: Paul Krugman takes the government provided universal health care line and Donald Condit takes the more market oriented line with a healthy dose of Christian ethics thrown in.

Now the Economy is Going to Tank!

Expect the unemployment rate for January to rise significantly. No, not because we now have President Obama. Because the Professional Bush protesters are now unemployed.

As a side note, Christmas break is now long gone and I will attempt to blog somewhat regularly.