The power of persuasion

When I was younger, I used to find myself debating people more often than I do now. As I’ve gotten older the more I realize that it’s extraordinarily difficult to change people’s minds. I’ve found that the best form of persuasion is leading by example.

When I’m in the ideological minority of a group, I’ve learned to hold back my thoughts, but if someone asks my opinion on an issue, I’ll provide an honest answer.

I have particularly strong convictions on economics. I see laissez-faire voluntaryism as immutably the optimal system for the allocation of scarce resources, which means to stay that just as the church should be separated from the state, the economy should be separated from the state. The government should have no business in interfering with agreements and exchange between individuals.

When I lived in New Jersey, I got in a debate about minimum wage with a housemate that I did not particularly like. This individual was a body piercing technician (?). He would commute two hours each way every day from Princeton to Brooklyn, made very poor financial decisions, and managed to total two brand-new Honda Civics in the 9 months he lived with me. I still use his Hulu account, ha! (The worst housemate, however, was an unemployed middle-aged carpet salesman that had two strokes on the floor and was an absolute jerk).

Long story short, he could not get over the fact that I believe that minimum wage laws cause more suffering for the poor than if we did not have them. This is also happens to be the prevailing view of most mainstream economists. I found out months later that my housemate was so upset after talking with me that he cried over it. It’s amazing to me that politicos have much of society lead to believe that the government has the power to bend gravity and that a planned economy produces better outcomes. Hint, hint: time and time again, price controls are proven to create more suffering. I respect people that disagree with me, but often they are woefully off-base.

Twice in the past week the topic of rent-control has come up among friends since it might be an upcoming ballot measure in Massachusetts. The principle remains the same: price controls directly cause more human suffering than without. Rent control causes developers to flee, thereby reducing the supply of housing, and greatly increasing prices to renters looking to enter the market. For people who already have housing, rent control discourages landlords from making vital investments in their properties thereby leaving apartments in states of disrepair. More suffering! Just because a supposedly altruistic policy like rent control or minimum wage sounds wonderful, does not mean it comes without horrendous ramifications for the human condition.

John Stossel does an excellent job explaining rent control in this video:

Rent control ruins cities

(Not so) E-Zpass

I had the pleasure of driving to Sunapee on Friday afternoon last week amongst the onslaught of northbound weekend traffic. The Everett Turnpike in New Hampshire has two express lanes for E-Zpass vehicles to bypass the traditional toll booths. The irony was that the normal toll booth lanes had little to no traffic, while the express lane was a parking lot. Being the clever person that I am, I went thru the old toll booth, which still accepted my E-Zpass, and I went about my merry way with little to no traffic.

This got me thinking. The express lane system that was designed with the intent to relieve traffic had completely failed. The majority of the vehicles on the road at that time had E-Zpass.

Wouldn’t there be a better way to allocate the scarce resource that is road capacity? Turns out there is a very old fashioned solution: market-based pricing. Be it tulips in 17th century Netherlands or airline tickets, they all have something in common, pricing based on the supply and demand. When market-based pricing is applied to roads, it means that as traffic demand increases, so do the tolls to keep traffic at an equilibrium.

A reasonable example of congestion-based pricing of roads is around Denver, Colorado, where instead of carpool/HOV lanes, there are toll lanes with variable pricing. The standard lanes are still free at the point of use. I propose taking this model a step further. All lanes should be tolled and dynamically priced, however the left lanes should be slightly more expensive, allowing vehicles that want to travel faster to be able to do so without more congestion. At the same time, this system would also encourage drivers to stick to the right-most lane as possible to avoid higher tolls. I hate getting stuck behind a slow, clueless driver in the left lane. Under my system, these clueless drivers would be dinged with higher tolls.

Lastly, there should be significant weight surcharges for heavier vehicles. Roads in the United States are heavily (intended) over-engineered for trucks, which put at least 6-8 times more wear on the road than a standard vehicle. We spend hundreds of billions of dollars subsidizing government roads for the benefit of long-distance trucking, which in many cases would be more efficiently served with private trains.

Movie Recommendation: Tetris

Highly recommend watching the movie Tetris that was just released last week on Apple+. I deeply enjoy movies about late-stage communism in the 1980s and Tetris unexpectedly falls well within that genre. Other great movies/series that I like in this category are: The Lives of Others, Chernobyl, Mr Jones, and Deutschland 1983.

The movie Tetris got me thinking about contract law and the power of the state, as it artfully tied the decay of Soviet communism to the video game Tetris. A contract is only as powerful as the goons willing to recognize it. As the Iron Curtain and the legitimacy of the Soviet state began to fall, the legal power of the Western world usurped that of the Soviets.