The Daily Reckoning November 16th
In this clip from RT’s Capital Account, Lauren Lyster asks Bart Chilton about the absence of charges brought against Jon Corzine and whether that signifies a lack of confidence in market regulators.
In this clip from RT’s Capital Account, Lauren Lyster talks with CFTC Commissioner Bart Chilton about manipulation in the price of silver.
“Our Constitution, which was intended to limit government power and abuse, has failed,” declared Rep. Ron Paul.
The good doctor delivered his valedictory speech on the floor of the House Wednesday afternoon. At first, the Republican House leadership — in a final, spiteful attempt to shut him up — could not find room in the schedule.
Then President Obama decided to hold his first press conference in God-knows-when… and the powers-that-be decided it was safe to let Dr. Paul speak at the same time. He’d only be on C-SPAN. The cable news channels wouldn’t “dip into” his speech as a “Developing Story” and expose his message to the masses.
Of course, in the Internet age, the message got out anyway. Right-wingers like Drudge and lefty sites like Raw Story both thought it newsworthy.
“One needn’t agree,” wrote Conor Friedersdorf at The Atlantic, “with the premise of every question [that he posed] to conclude that the United States — and especially its most unjustly treated citizens — would be better off if more legislators were grappling with them.”
After the speech, Dr. Paul repaired to his office… and a meeting with Addison.
Ron Paul is retiring from Congress… but not from the public eye. He will deliver lectures on college campuses. And he’s talking with Addison about how to creatively counter Federal Reserve propaganda.
“Next year marks the centennial anniversary of the Federal Reserve Act,” Addison reminds us. Expect a barrage of messages to the effect that were it not for the brilliance and munificence of the Fed, we’d still be communicating in Morse code, getting from place to place on horseback and transacting business with a gold-backed currency. Perish the thought.
“To this day,” Addison says, “most people don’t know anything about the Fed, how it was created or what it does, if they are aware of its existence at all.” There’s a cottage industry of Fed criticism… but it’s overwhelmed with economic crankery – e.g., films like Zeitgeist.
With that in mind, Addison met with Dr. Paul Wednesday afternoon to kick around a few ideas about how to raise awareness. Joining them were a few other folks in our circle, including Laissez Faire Books’ Jeffrey Tucker – who conducted a brief interview
“I think interest rates will go up,” Dr. Paul told Jeffrey, “but it won’t be because Bernanke decided they’ll go up. They’ll go up because the market has decided we need a little inflation protection… or foreigners won’t buy as much debt.”
The interview also touches on the feds’ growing and ominous “war on cash”. Click on the image below to watch the whole thing…
Who knows what these musings might lead to? But whatever it is, we’ll keep you posted as the Fed centenary infects the public consciousness over the next 12 months.
I was out shopping for a new winter coat, hopping from store to store looking for a good deal. To my astonishment, it was almost impossible not to find a good deal. Coats of a quality that once cost hundreds of dollars were everywhere, with prices ranging from $65-150. I’m sure I could have found some at three and four times as much, but I would have had to make a special trip to a specialty shop like Burberry and pay a high price for status shopping.
In times when most everything has gone up in price and down in quality, clothing seems like an outlier.
It made me curious about what’s happened in the world of clothing over the last 25 years or so. In this time, we’ve seen several major trends happen. Anytime between the Great Depression and the end of the Reagan years, the clothing you bought mostly came from the local department store. Or you could order through a gigantic catalog delivered to your home. That was about it.
Today, discount and secondhand stores are everywhere. You can get designer labels at prices that are surprisingly low. Or you can head to the local big box and pick up just about any sports clothes for a song. Or you can decide to shop online, where you can get anything from sports clothes for next to nothing to high-end suits and shirts for $100 or so. If you know what you are doing, you can dress like Savile Row on a pauper’s budget.
This is a dramatic change. The digital age has opened up options for people who once had very few. In addition, billions of people are in the market as producers who were once not part of it. China was closed in the old days. So were Eastern Europe, India, and Russia. Today, they are all part of the mix. This led to screams of outrage on the part of American textile manufacturers. The end of the world was coming, they said. Except that it didn’t come. All that happened was that clothing became cheaper for American consumers.
Check out this 25-year chart of apparel prices versus the consumer price index generally:
This confirms my intuition. What’s more, I don’t think this picture fully explains what has happened. Clothing is no longer a problem for humanity. It is abundant, just like food and technology. The market has triumphed despite every attempt by government to hobble and wreck it. The long-run trends show that the opening up of the world, competition in the industry, and the advance of technology have made clothing more available than ever before at ever cheaper prices.
Matthew 5:40 instructs believers with what once must have been a very hard teaching: “And if anyone wants to sue you and take your shirt, hand over your coat as well.” Today, people might think: Oh, that’s no problem at all. I’ll just snag another one at T.J. Maxx. If that’s all it takes to avoid a lawsuit, I’m in!
And recall too in the story recounted in Genesis, what a gigantic fuss was created over Joseph’s “coat of many colors.” His brothers were so jealous that they plotted his death. When they failed, they stole it and sold their brother into slavery. Then they took the coat back to their father to prove his death, presuming that no one would part with such a thing absent death. These days, Joseph’s brothers would find much more peaceful ways to overcome their jealousy by shopping on eBay.
These instructions are hardly surprising. The struggle to finding clothing to wear was one of the great time- and resource-consuming undertakings of mankind, coming in right after the struggle for shelter and food. It has defined the course of history.
From the beginning of time until 1,000 years ago, clothing consisted of hot and heavy animal skins, horribly scratchy wool, and linen, or so reports William J. Bernstein in A Splendid Exchange. Cotton was relatively rare, and silk even more so (many fleets of ships and thousands of lives were lost in making silk a universal fabric). The synthetic fabrics that are part of everyone’s daily wardrobe were unknown.
Now we take their availability for granted. Only a generation ago, everyone patched jeans to make them last as long as possible. Now people buy jeans that are deliberately scruffy, torn, and patched just to get the look of old clothing, since hardly anything is actually old. (That people buy these things at all is, to me, the ultimate proof of the subjective theory of economic value!)
To be sure, people complain about quality. Nothing lasts like it used to! But that’s actually not true. If you spent today what people commonly spent on a pair of pants in 1980, which was probably about $30, you would spend $85. But mostly, people don’t spend that. If they did, they could obtain some pretty impressive trousers. Instead, people buy cheaper clothing so that they can replace it more often to keep up with fashions. You can always pay more for clothes that will last, but this is not where the consumer preferences currently are.
There is another factor that has made the clothing market more dynamic, progressive, changing, and profitable. Clothing is not encumbered by the problem that afflicts so many other sectors of life, namely the imposition of copyright and patent. There are trademarks, but these have done little to stop “piracy” around the world. A world traveler will find so-called fakes freely sold in every country.
What most people do not know is that copyrights and patents are not part of the fashion market. The absence of copyrights and patents has made the clothing sector supercompetitive. What’s on the runway today is freely knocked off and on sale at a fraction of the designer price in big-box stores only a few months later. By this time, the original manufacturer has moved on to making more unique products in the hope of being first to market.
All this explosive creation and copying has made fashion and clothing superdynamic. This means that manufacturers aren’t having to constantly watch their back for fear of being sued or otherwise getting in trouble with the law. This creates one of the freest sectors of trade in the world today.
It is hardly surprising that one of the freest sectors also happens to one in which prices are constantly falling in service of the consumer, with ever more options for regular people. Clothing is an example of mass manufacturing in service of the masses, and the data reveal just this.
There are lessons here. The freer the sector of economic life, the more it serves society. It illustrates the resilience of the market even in the face of every government attempt to hobble industry and keep economic activity stagnant and predictable. If we applied the same institutional arrangements to health care, education, energy, and transportation, we would see similar progress in these fields, rather than the same old archaic patterns generation after generation.
Further, a look at the clothing industry illustrates that the market is always full of profit opportunities and surprises for those look for them. No one would have predicted that we would today live in a world flooded with clothes, and that even the rarest of things such as coats would be available at low prices to even the poorest in the developing world.
Who is giving the institution of the market economy credit for such wonderful achievements? To understand the cause and effect is to see a path forward for every sector, including health care, education, and even law and justice. Falling prices and rising consumer service are the marks of economic health, and the reverse is the sign that the hand of government is in control.
The Laissez Faire Club
P.S. As I wrote in “Kids Are Smarter Than Adults” it is a proven fact that designer labels actually have value in the marketplace. Fortunately, places like Overstock.com and eBay allow you to get them at extremely low prices. We are living in an age of hyperabundance of clothing. We are crazy not to take advantage of it.
P.P.S. I’ve interview the author of today’s book release, The Concise Guide to Economics.
Original article posted on Laissez-Faire Today
Clothing for All: The Slow, but Relentless Revolution appeared in the Daily Reckoning. Subscribe to The Daily Reckoning by visiting signup for an Agora Financial newsletter.