Jim Ulvog

Huge fines are a tax on illegal behavior

Several weeks ago I listened to a continuing education class presented by Sam Antar, current felon and formerly CFO of Crazy Eddie.

In the session, he made two comments that caught my ear. First, the fines we read about as a result of various financial scandals are just a tax on illegal behavior. Second, those fiascos are, he said, a cancer destroying capitalism.

After the session, I had opportunity to interview him by phone and follow-up on both of those ideas.

(This discussion is cross-posted from my other blog, Attestation Update, because this is not capitalism and I don’t think the underlying issue furthers freedom.)

Fines are a tax on illegal behavior

He indicated that essentially no one has been implicated in any of the disasters we’ve read about, which I have discussed extensively on my blog.

He said corporations don’t commit crimes. People commit crimes.

And the people who committed crimes aren’t going to jail.

(more…)

By Jim Ulvog, ago

Quick recap of damage from the New Deal

Lack of jobs for a decade and a half in the Great Depression. What could have slowed the economic recovery that started to appear a few times?

Amity Schlaes provides a quick summary in her Forbes column, Roosevelts versus Plutocrats, in which she also describes the slant and bias in the new PBS series on the Roosevelts.

After the turn of the century, Teddy Roosevelt started his war on big business by going after railroads and coal. The railroad industry was already weak and the litigation toppled a tottering industry. The far less regulated trucking industry made sure rails never recovered.

(more…)

By Jim Ulvog, ago

Puritans started with socialism and price controls before they jumped to capitalism

There is a concept loose in the U.S. and emphasized in our educational system that the Puritans arrived in the U.S. believing in capitalism and went straight to economic prosperity.

Well, capitalism will definitely do that, but the Puritans made a few stops before getting to prosperity. Those included socialism, price controls, and severe caps on finance & trade under the guise of opposing usury. All of those policies will suppress economic development.

Jerry Bowyer explores this journey through false ideas is a series of articles, which summarize his interview with Mark Valeri, author of Heavenly Merchandize.

To encourage you to check out the full articles, I’ll try to summarize some key ideas.

7/30 – Forbes – Jerry Bowyer – Puritans vs. Capitalism: How A Theological Error Led To Financial Stagnation – In the 17th century, pastors and religious leaders were opposed to usury which included even discounting letters of credit more than a small amount. If you can’t use paper (bills of credit) to facilitate long-distance trading, there won’t be much trading.

(more…)

By Jim Ulvog, ago

At its core, capitalism is moral

At the most foundational level, capitalism is moral.

The only way to succeed in the long-term is to treat customers well and honestly. That will provide money to the company to continue paying staff and vendors as well as leaving a profit for owners.

If a company does not deliver a quality product or service that customers value with higher utility to them than the cost to provide by the company, then the company won’t be around long.

At the core level, it is moral to satisfy your customers with profit left over.

CPA Ron Baker makes this point more eloquently than me in his LinkedIn article, Are Corporations Socially Responsible?

By the way, the answer is yes.

(Cross-posted from my other blog, Attestation Update.)

If a corporation provides value to customers, both the company and customer will be better off after the transaction than before. That is a positive social value.

Doing so, within the framework of the law (as Milton Freidman points out) is the duty of a business and it is also highly socially responsible.

(more…)

By Jim Ulvog, ago

Your thinking experiment for the day: What economic and political system exists in one country with expanding oil production and another country with collapsing production?

Consider the following two stories.

One country with rapidly expanding oil production with no end of the increase in sight. The other country is a member of OPEC and will start importing light crude.

I’ll ask two questions after mentioning the articles, which are reposted from my other blog, Outrun Change. (more…)

By Jim Ulvog, ago

If you want to increase the number of large animals like elephants and rhinos, allow them to be privately owned and hunted

Kenya and South Africa have taken dramatically different approaches in how to protect large animals.

May not make sense, but I have a plan for you if you want to protect big critters, like rhinos, lions, leopards, elephants, and buffalos (the big 5) along with antelopes and zebras.

What to do? Take South Africa’s approach and allow private ownership of the animals and allow other people to pay the owners of the animals to hunt them.

Like I said, it doesn’t make sense, but incentives matter. And if you want to protect big animals, give individuals incentives to do so.

Kenya and South Africa provide a natural experiment to see which approach works best.

(This article was originally posted at my other blog, Outrun Change. Why cross-post it here? Because I believe this story shows that the approach resembling free enterprise produces a result with a higher level of morality than the alternatives. Private ownership of property produces the moral outcome.  I cannot quite see how it is moral to take actions which cause most of the big animals to die off.)

The following information is from two articles:

Kenya

Kenya bans private ownership of large animals and bans hunting. The country focuses on conservation with funding provided by eco-tourism.

How has that worked?

(more…)

By Jim Ulvog, ago

Congressional Medal of Honor approved and soon to be awarded for three amazing heroes

Because freedom is watered by the blood of those willing to defend it, the following article is cross-posted from Outrun Change.

Congress has waived the time limit to award the Medal of Honor for another three heroes. The President will soon issue the Medals, each for amazing and tremendous service far above and way beyond the call of duty.

Here is my feeble tribute to these incredible men.

1st Lt. Alonzo H. Cushing

Lt Cushing, West Point class of 1961, stood his ground at the battle of Gettysburg. (more…)

By Jim Ulvog, ago

Illustration of creative destruction: lots of Fortune 500 companies disappeared over the last 60 years

What sets apart each of these groups of companies?

Group A: American Motors, Brown Shoe, Studebaker, Collins Radio, Detroit Steel, Zenith Electronics, and National Sugar Refining.

Group B: Boeing, Campbell Soup, General Motors, Kellogg, Proctor and Gamble, Deere, IBM and Whirlpool.

Group C: Facebook, eBay, Home Depot, Microsoft, Office Depot and Target.

Mark Perry, writing at Carpe Diem, explains: Fortune 500 firms in 1955 vs. 2014; 89% are gone, and we’re all better off because of that dynamic ‘creative destruction’.

(This article is cross-posted from my other blog, Outrun Change. You will see why momentarily.)

(more…)

By Jim Ulvog, ago