Booze and The Law of Diminishing Marginal Utility

beer cheers

A few months ago, in my microeconomics class, my professor was re-explaining the law of diminishing marginal utility to everyone just before class ended. One student proclaimed, “This doesn’t apply to alcohol though right? If my goal is to get tipsy or drunk, then the last beer that gets me to the state of drunkenness has more utility”.  The professor simply stated, “Yes the law still does apply”, and the class was dismissed without a proper rebuttal.

Of course, no matter what good or service we’re talking about the law still stands.  That first beer has the greatest utility because it is where you cross the threshold of being stone-cold sober to being, to whatever extent depending on the individual, intoxicated.  In other words, without alcohol in your system you can’t even be on your way to inebriation. This is what makes the first beer most valuable or why it has the most utility. The marginal utility of the following beers will diminish since it takes fewer and fewer beers to reach intoxication.  Once said individual has guzzled enough brews to reach his drunken objective, then total utility is maximized.

Of course, there are only so many sips of liquid courage one can have before they spiral downwards into a world of vomit and terrible decisions.  The moral of the story is only to drink enough to maximize your total utility, which is where marginal utility equals zero. Otherwise, you could find yourself in the dark world of negative marginal utility thereby decreasing your total utility :(

Peter The Tyrant

peter king

Much to my delight, Rep. Peter King is pissed. He believes fringes like Rand Paul, with their “isolationist ideas” are destroying the party. The Political Class, as sophists and rarely anything else, take all that is true and good, and flip it on its head. Of course, supporting more invasions of privacy, where the State could easily use all of its data to imprison and murder anyone for its own sake, supporting the slaughter of millions across the Middle East are pragmatic and reasonable positions within the political paradigm.

The laughably dishonest King goes onto state that it was the antiwar “isolationism” that hurt the Democratic Party during the 1970’s and 80’s. However, he either intentionally fails or is completely ignorant of what that Nixon and even George W. Gush was elected on the peace platform. Ron Paul has highlighted these facts on numerous occasions.

King believes if Republicans just reach out to the union members, who according to him are socially conservative, then they’ll have more political power. In other words, if Republicans just act like prudish Democrats then it’s onto a New Republican Order forever and ever. Once again, King is dead wrong when Right to Work laws, supported by many Republicans in state offices, have been enacted in nearly half of the states. Furthermore, issues like gay marriage and pot legislation which are the antithesis of social conservatism.  Psychopaths like King just can’t handle power slipping out of their hands which is proven when he proclaims his lust for being the “standard bearer of the party”.  I hope to witness the day when the entire political class is tossed into the dustbin of history.

H/T Judy Morris @ for bring my attention to this article.

Author’s Note: It’s great to be back from a much needed vacation with the family. I’ll post something on my brief visit south of the border in a future blog post.

They Finally Did It!

They Finally Did It!

Capitalism+Bacon+Jerky= Maximum Happiness

Parasites Feed Their Friends Too

ABC News reports that “the House spent $2 million” on coffee, pastries, and expensive catering last year. Of course, the biggest spender was a Republican, you know the champions of fiscal responsibility.   No.3 Republican, Kevin McCarthy spent almost $100,000 on feeding his friends with the fruits of other Americans’ labor. Its sad to think that this money could’ve been elsewhere which raises a much larger question. How much better off would humanity if nothing was stolen from them? Where would humanity be if resources were directed to their preferred uses through voluntary transactions?

Let’s Starve The Workers

Tom Hayden, from USA Today, is highly critical of capitalism in light of the Bangladesh factory collapse that killed over a thousand women.  Hayden believes Ricardo’s Law of Comparative Advantage “encourages” Western corporations to move from China to Bangladesh; since Bangladesh touts itself as having few regulations. Hayden also believes Bangladesh workers are being exploited by Western corporations like Gap and Wal-Mart since they are being paid so-little.  “Only the threat of corporations” leaving to go elsewhere, like Disney, will get policy-makers to act, says Hayden.  Hayden makes a comparison to a factory fire in the U.S., the Triangle Shirtwaist fire of 1911,which was used as reasoning for (horrific) New Deal labor reforms.

Hayden may be correct when he speaks of how Comparative Advantage works, but his policy prescription is downright horrible.  First, however, let me say that it obviously terrible that anyone would die in a factory fire.  Hayden writes as if, it is in a businesses’ interest to have a factory burn to the ground with all of the workers in it. Even if a firm doesn’t give a damn about its workers  this is still a net loss for company. If they are truly interested in only profits, as Hayden implies, then they will make the necessary adjustments to ensure that an incident as such does not happen again.  Forcing the government to regulate this industry by imposing and impose will only increase the suffering of Bangladeshi workers. While we westerners believe that these working conditions are abhorrent, they are better than the previous conditions of Bangladeshi workers who were either working in small-scale farming or scavenging just to survive.  Working in a factory gives them the chance to make a higher wage and put more food on the table for them and their families. Industrialization is a process, and inevitably as more companies move into the Bangladesh, there will be more competition for laborers which lead to better working conditions.   Hayden’s quest to implement New Deal labor policies, like minimum wage and  labor regulations will only increase the business costs which will lead to more unemployment and starvation for Bangladeshis.    

Killer Cops in Bakersfield

Uniformed gang members, aka the Kern County Sherriff’s Department, brutally murdered David Sal Silva, a father of four, in Bakersfield, California this past Wednesday.  The tax-feeders were apparently responding the non-crime of public intoxication somewhere near city hospital when they confronted the victim. While nine of these so-called “public servants” were bashing his skull in, witnesses stated that he was crying out for help and begging the officers to stop while he was choking on his own blood.  

What’s more, witnesses also recorded the incident via their cell phones, but had them confiscated by deputies. More specifically and outrageously, these deputies held these witnesses hostage until they gave up and handed over their phones.  The deputies, who like any gang members are simply protecting their own, stated that the videos are being used as part of an internal investigation.  

This Bakersfield Californian article also describes three other excessive force incidents over the past couple years.  Of course, these are the incidents we are aware of.  Furthermore, William Grigg, at, also reported this story a year and a half ago where a Kern County deputy ran over a girl while he was joy-riding through an intersection.  These are the heroes, remember?  Like everyone else wearing a government issued uniform. There are at least four children out there who beg to differ. 

I know this is true in most major cities, but in Bakersfield, where I currently reside, I’ll be even more mindful of these killer cops.   

Then They Came Your Coffee

The internet media is buzzing today with reports of the FDA’s announcing it will investigate caffeinated products. Of course, government agencies need to contrive some threat to society in order to justify their existence.  Like the need for new gun laws, the regulation of caffeine would be “for the children”.  Still, what’s most hilarious about the FDA’s Consumer Health Information Report, where the FDA made this absurd declaration, is that the “announcement comes just as Wrigley is promoting a new pack of gum, with eight pieces each containing as much caffeine as half a cup of coffee”.  So caffeine gum is health hazard, but the cancer causing aspartame which is in almost every piece of gum is safe for consumption? 

They Still Want to Raise The Minimum Wage

Dave Johnson, a fellow at Campaign for America’s Future, believes raising the minimum wage is necessary to fix our economy.  He presents productivity and wage charts which show productivity and wages consistently rising until the 1970’s, where wages stagnated as productivity continued rising. He believes if wages were to continuously rise with productivity then minimum wage should be around 16.50 hour “which is what more than 40% of Americans make” today.  The author emphasizes the importance equality of wages by citing economist Joseph Stiglitz arguments.  According to Stiglitz, if consumers had higher wages this would stimulate consumer spending thereby fueling overall economic growth. From here, Mr. Johnson jumps to the conclusion; if the government raises the price floor on wages then this will somehow stimulate the economy and lead to an economic recovery.  The author concludes his article by advocating the minimum wage be raised from higher corporate tax rates, better government-provided job training programs.  Of course, all of his solutions are just plain bad but  raising the minimum wage is the most obviously terrible one.

Raising the minimum wage comes with a few serious unintended consequences.  First, a minimum wage is a price floor where prices may not fall below a certain rate.  When prices are not allowed to fall in a market this will cause a surplus or in this case, a surplus of labor.  Raising this price floor only causes the surplus to grow labor which for the layman means higher unemployment.  What’s more, a minimum wage increase would hurt the least skilled workers, the people who need the job the most, since they would not be worth keeping at the government imposed rate.  Lastly, a minimum wage increase will hurt the smaller businesses that have lower profit margins than the big box stores like Wal-Mart or Target.  In fact, Wal-Mart loves the minimum wage because it hurts their smaller competitors.  Many small business owners will have to choose between, cutting hours, firing employees, and raising the price of their goods or services, or a combination of these decisions. Either way, they are looking at even smaller profit margins in the long run.  So, Mr. Johnson’s, and many of our fearless leaders’ plan would actually harm not help “We the People”. 



3d Printers Making Greater Advances

This article at the Huffington Post describes how advanced manufacturing is taking Chicago by storm. Advanced manufacturing, at this point, basically uses the 3d printer for producing goods.  More specifically, the article describes how the “retail location” Innovation Factory is printing shoes and showcasing them at a 3d Fashion Show in Chicago on April 24th. This technology is truly and will continue to revolution manufacturing in the years to come.  

First, when this technology becomes cheap enough, the average consumer will have the power to become their own manufacturer of goods that once were produced in factories.  In the future, policy makers in the U.S. may not have to worry about creating better conditions to bring manufacturing jobs back to America.  In other words, it seems as if the market found a way around government erected barriers, such as regulations and taxes, on manufacturing businesses. We’ll just have to be watchful when they find a way to tax and regulate these wonderful machines.  

Similar to what the Huff Post article described, consumers in the future will simply be able to choose the design of a good, like shoes, from a retailer on a Web site then hit the print button at home.  The consumer’s shoes are then produced by the 3d printer of the consumer in his or her home.  Of course, there are still resource costs to consider so not everyone will be able to produce shoes at home.  This still leads one to believe that the job of the factory worker will be less prevalent in the years to come with the 3d printer having a greater presence in the market. 

The 3d printer has the potential to make many goods, virtually anything, cheaper in the future once they become more efficient.  Labor costs will slide closer to zero in 3d printer dominated markets while investment costs will decrease as the 3d printer itself is more easily produced. 

Price Control Frenzy in Latin America

I don’t know what is with Latin American governments these days. It seems like many of their fearless leaders  failed Economics 101. The Cato-At-Liberty blog cites the troubling trend of price ceilings being enforced in Venezuela,Argentina, and Ecuador to battle inflation.   Yes, they still think the price controls will create conditions where everyone gets what they want. Of course, price ceilings typically lead to a shortage of goods demanded by the populace.  Oh well, at least a few people can make some extra cash selling these items at higher prices on the black market.


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