The government toolkit is a child’s toy

In this post on Cafe Hayek blog, Don Boudreaux takes down the idea some solutions are best suited for markets and some are best suited for government.

In this case, Dani Rodrick makes the argument in his book, Economic Rules, presenting it as if this is what smart people do, drawing on the analogy of finding the right tool for the job. Here’s Rodrick:

It is dogmatic and dangerous to assume that one solution or one approach is the answer to every problem.  Some problems call for the use of screwdrivers, others call for the use of hammers.  Only a benighted fool insists on using a screwdriver to hammer in nails and on using a hammer to insert screws.  The wise, non-ideological, enlightened, open-minded, reasonable, and scientifically aware person sometimes uses a screwdriver and other times uses a hammer.  What could be more reasonable?!

Yep, that sounds reasonable. But, consider Boudreaux’s reponse:

The error in this formulation is that markets are many tools.  Markets are a toolkit with far more tools in it than government has access to.  While government has only a few tools – mostly hammers (some sledge), saws, and clamps – the market is filled with many, almost countless, tools.  And the market’s tools are much more varied, nuanced, specialized, and creative than are the government’s simple set of tools.

That’s correct.

Government’s toolkit:

Government toolkit

The market’s toolkit:

Market's toolkit

 

Ordering at Chipotle

Here’s a way to increase the ordering line throughput at Chipotle y 10-20%: educate customers how to order.

Nobody seems to know how to say their order in way that doesn’t cause confusion and slow down the ordering process.

For example, if you order, “A chicken burrito with white rice and black beans,”you will likely need to confirm that you ordered a burrito and be asked again what kind of rice, beans and meat you would like.

Long ago, McDonald’s discovered that they could make food faster than customers could order from an ala carte menu.

A smart franchisee looking for a way to get more cars through his drive-thru lane at lunch innovated a simple tool to fix the problem: Value Meals.

Most people intuitively think Value Meals was a bundling to save customer’s some money and maybe get more people to order fries. It may have had those benefits, but its main purpose was to get more cars through the drive thru.

It’s quicker to say, “#1 with Diet Coke and a #2 with iced tea,” than to order each sandwich, fries and drink separately. Multiply that over a few hundred transactions per restaurant per day and thousands of restaurants and you get a lot more dollars in the register.

From what I gather at Chipotle, the process is set up to order one ingredient at a time. Though that isn’t intuitive to customers.

So, instead of saying, “Chicken burrito with white rice and black beans.” Say, “Burrito”. Then wait to be prompted for type of rice, beans and meat.

A good designer could build that process into Chipotle’s menu board to encourage that ordering process.

Here are a couple other tips for Chipotle.

Another issue seems to be how many orders a single person has. The de facto assumption by the burrito makers is that they are ordering one plate. So, they often go to the next person in line after you have ordered one thing, then you have to tell them that you aren’t done.

Perhaps, the burrito maker can ask you, how many meals are you ordering?

One last thing, when one person is ordering multiple meals,  it might be helpful for the burrito assembly line to put a marker at the start and end of an order, like the little rubber markers that go on the checkout belt in grocery stores.

Without those, each person in the assembly line is left to figure out where an order starts and stops, which takes up more time and causes more confusion. More than a few times, I’ve seen it where a plate had to be remade because inattentive customers and burrito makers put the stuff on the wrong plate.

This is what we get when you don’t vote for third parties

In 2011, I wrote Why I may “throw away my vote”.  

This election is good example of what I predicted might happen if we followed the conventional logic that voting for a third party candidate is like throwing your vote away because that’s one less vote for the lesser of two evils.

Under that voting logic, candidate choices drift further from what we want since candidates have less incentive to be what you want if you are going to vote for them anyway.

In the post from 2011, I gave the example of how the fiscal responsibility message of third party candidate Ross Perot garnered enough popular votes in the 1992 presidential election to get the attention of both major political parties and shift their platforms in that direction to attract those voters.

Now, here we are with the candidates for the two major parties seeming to be not what anyone wants. Perhaps it’s time to consider casting votes for third party candidates to send messages to the two major parties about what we want.

Edifice Complex in Soccer

Dear US Soccer:

More of this:

steet soccer Brazil

Less of that:

US Soccer

The story is here.

Of course, I could be wrong. Maybe opulent facilities to train coaches in is just the thing. Or, maybe you could use the Internet, like these guys?

When I started coaching rec soccer, I was shocked at how little useful information was out there to help someone like me who knew little about soccer. I wasn’t the only one.

There were many like us who simply put the fastest guys up the middle chasing rec trophies and not teaching them proper technique.

I was shocked that there wasn’t something like the F license online course (which is good, btw) out there for FREE for all.

 

Inequality can be good for us

I enjoyed this Econtalk podcast with Richard Epstein, discussing the pros and cons of different ways cruise ships offer luxury packages.

One cruise ship operator offers a ‘ship-within-a-ship’ luxury experience, where the luxury passengers are separated from the other passengers.

Another operator embellishes its standard package to help set it apart, like putting a bottle of champagne in the luxury cabin.

The parts of the podcast I enjoyed the most was Epstein’s defense of inequality, which I agree with.

First, for those of us who feel unworthy because we may never enjoy a billionaire lifestyle, it’s helpful to remind ourselves that we live better than the elites of even 2-3 generations ago. Would you rather be a commoner today or a wealthy elite in 1900?

If given a true picture of what the life of the elite were in 1800, most people would pick being a commoner today. And, maybe they’d appreciate more of what they have.

Second, and probably more important, is Epstein’s counter to the belief that the wealthy and elite are just lucky. He says, shortly after the 25 minute mark:

There is no question that with respect to any particular venture that any person undertakes that luck will have a lot to say about whether this one works or doesn’t work. But it would be a mistake to assume that life is just one venture which either succeeds or it doesn’t succeed. It turns out that people try many different things in all sorts of different ways; and what you can say is that as you increase the number of plays that you take, the persons which perseverance, imagination, determination, and grit and so forth are the ones who will succeed; and the people who tend to be more lackadaisical and indifferent are the ones who will fail. So, when you look at the end of this particular game, what you are doing is, the people who see at age 50 or 60 turn out to be highly successful; and then you go back and you track how much risk they took, how much discipline they showed, how much hours they put into their job and so forth, I think that you will find that there’s a pretty good correlation between the efforts that people put in and the natural abilities that they have, and the outcomes that they received.

I’d add that it’s just not those who are lackadaisical and indifferent, but it’s those who view failure like the DJ sidekick in this post, while comedian Leslie Jones had a much different view.

Later in the podcast, Epstein discusses Warren Buffett’s view that he doesn’t pay enough in taxes. I’d like to make one point on that.

When evaluating whether to invest in a company, Buffett views what would be his share of the company’s earnings as his own, which is true. As an owner, those are his earnings, even though tax regs do not require that your report those as your own (since those company pays your share of its taxes for you).

But, Buffett is inconsistent when considering his own tax bill. He ignores the taxes paid on his behalf by the companies he owns, which is a considerable amount and would likely increase his average tax rate from what Buffett normally writes about. In fact, this income statement shows his company, Berkshire Hathaway, paid about 30% in taxes in 2015.

In this sense, Buffett like to have his cake and eat it, too.

Exhibit #2: Why U.S. Men’s Soccer lags

Typical soccer court in Brazil:

steet soccer Brazil

Typical soccer field in the U.S.:

Soccer fields US

Notice some differences:

  1. The soccer courts in Brazil are convenient to where the kids live, fostering lots of unorganized play. If there are homes near the U.S. soccer fields, they are distant. U.S. soccer fields are too often built on land far enough away from where kids live, that it’s only convenient to play through organized play when their parents can drive them.
  2. The Brazilian soccer court is small, this fosters development of ball control in tight space. The U.S. soccer field is large. This fosters kicking the ball into space and running to it, especially at youth levels when all too often the fields are much too large for the number and age of players on the field. These large fields favor future track stars and do little for developing soccer skills that will help on the world stage.
  3. The Brazilian soccer court has kids playing on it. The U.S. soccer field does not. Sure, U.S. soccer fields are burgeoning on weekends, but the rest of the week they’re empty, while the Brazilian soccer courts are busy all week long. Even on the weekends, when U.S. soccer fields are busy, each team only gets so much play time, so play time still pales in comparison to kids in Brazil playing several times a week at their local court.
  4. The Brazilian soccer court is concrete. The U.S. soccer field is grass. Not only does the concrete help the Brazilian kids develop their ball control skills, but it’s also playable more of the time. Games and practices on grass fields get canceled due to rain and have seasons where the groundskeepers rest the fields so the grass can grow back. All,the while the Brazilian (and other countries where soccer courts are common), are playing. Plus, someone has to maintain it.

I don’t believe just building soccer courts is the answer. The soccer courts in Brazil exist because the kids were playing in the streets because they love soccer, so their local parks department built the courts to serve an activity that was already prevalent.

If you just build soccer courts in areas where people aren’t already playing street ball, then my guess is those courts will go unused.

So, the courts are really just a marker for soccer culture, rather than a cause.

But, I don’t think building a few courts and fostering more small-side, unorganized play would hurt. More on that in a future post.