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An economic lesson in trophy hunting, property rights, the importance of incentives, and unintended consequences
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The New York Times featured an article a few days ago (“A Hunting Ban Saps a Village’s Livelihood“) that provides some important economic lessons in property rights, the importance of incentives, and the law of unintended consequences, here are some excerpts:
SANKUYO, Botswana — Lions have been coming out of the surrounding bush, prowling around homes and a small health clinic, to snatch goats and donkeys from the heart of this village on the edge of one of Africa’s great inland deltas. Elephants, too, are becoming frequent, unwelcome visitors, gobbling up the beans, maize and watermelons that took farmers months to grow.
Since Botswana banned trophy hunting two years ago, remote communities like Sankuyo have been at the mercy of growing numbers of wild animals that are hurting livelihoods and driving terrified villagers into their homes at dusk. The hunting ban has also meant a precipitous drop in income. Over the years, villagers had used money from trophy hunters, mostly Americans, to install toilets and water pipes, build houses for the poorest, and give scholarships to the young and pensions to the old.
Calls to curb trophy hunting across Africa have risen since a lion in Zimbabwe, named Cecil by researchers tracking it, was killed in July by an American dentist. Several airlines have stopped transporting trophies from hunts, and lawmakers in New Jersey have introduced legislation that would further restrict their import into the United States.
But in Sankuyo and other rural communities living near the wild animals, many are calling for a return to hunting. African governments have also condemned, some with increasing anger, Western moves to ban trophy hunting.
“Before, when there was hunting, we wanted to protect those animals because we knew we earned something out of them,” said Jimmy Baitsholedi Ntema, a villager in his 60s. “Now we don’t benefit at all from the animals. The elephants and buffaloes leave after destroying our plowing fields during the day. Then, at night, the lions come into our kraals.”
In early 2014, this sparsely populated nation became one of a few African countries with abundant wildlife to put an end to trophy hunting, the practice at the core of conservation efforts in southern Africa. President Seretse Khama Ian Khama of Botswana, a staunch defender of animal rights, stated that hunting was no longer compatible with wildlife conservation and urged communities like Sankuyo to switch to photographic tourism. The decision was cheered by animal welfare groups in the West.
In 2010, Sankuyo earned nearly $600,000 from the 120 animals — including 22 elephants, 55 impalas and nine buffaloes — that it was allowed to offer to trophy hunters that year, said Brian Child, an associate professor at the University of Florida, who is leading a study on the impact of the ban. Botswana’s wildlife officials, who set the annual quotas, last allowed a lion to be hunted in Sankuyo in 2006.
Among the benefits to the community, 20 households chosen by lottery received outdoor toilets, all painted in pastel colors that stand out in a village turned brown in the dry season. Standpipes were installed in courtyards, connecting 40 families to running water. “That’s what made people appreciate conservation,” said Gokgathang Timex Moalosi, 55, Sankuyo’s chief. “We told them, ‘That lion or elephant has paid for your toilet or your standpipe.’
Where trophy hunting benefits communities, locals are more motivated to protect wild animals as a source of revenue, experts say. But in most places without trophy hunting, they are simply considered a nuisance or danger, and locals are more likely to hunt them for food or to kill them to defend their homes and crops.
Galeyo Kobamelo, 37, said he had lost all 30 goats in the kraal just outside his family compound to lions and hyenas since the hunting ban. Elephants had destroyed his fields of sorghum and maize. With the hunting ban, his family no longer receives the free meat that hunters left behind. His mother, Gomolemo Semalomba, 58, no longer receives a pension, about $100 twice a year.
MP: As the principles of economics would predict: a) when there are no well defined property rights for wildlife in Botswana, b) when there are no economic incentives for local villagers to protect wildlife and participate in the revenue and profits those animals generate from trophy hunting, c) when animals like elephants compete for scarce food resources with African villagers, d) when animals like lions kill the villagers’ domesticated farm animals like goats, then it’s no surprise that the wild animals will be understandably considered by the local villagers as a nuisance and danger with no economic benefits. As stated in the NY Times article, because of the trophy hunting ban in Botswana, the villagers of Sankuyo have “gone back to hating animals.”
In Steven E. Landsburg’s More Sex is Safer Sex he points out that “Closing sweatshops and forcing Western labor and environmental standards down poor people’s throats in the third world does nothing to elevate them out of poverty.” Let me revise that statement slightly and point out that “Ending trophy hunting in Africa and forcing misguided Western standards of wildlife conservation down villagers’ throats in Africa does nothing to elevate them out of poverty, and in fact does a lot to make them much, much poorer.”
Professor Landsburg also commented insightfully in The Armchair Economist that: “Most of economics can be summarized in four words: ‘People respond to incentives.’ The rest is commentary.” The case of the trophy hunting ban in Botswana provides some powerful and important economic commentary about those four words.
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Due to trade protectionism for relatively inefficient domestic sugar producers, American consumers and domestic sugar-using industries have been forced to pay twice the world price of sugar for many generations. The chart above shows that the average wholesale price of domestically-produced sugar in the US (29.23 cents per pound) is more than twice the average world price of sugar (14.87 cents per pound) since 1982, according to USDA data available here. For the latest month available (August), the US sugar price of 33.13 cents per pound was more than double the world price of 15.57 cents. Most of the time, the cost to consumers of trade protectionism (aka crony capitalism) is hidden and difficult to calculate. But with sugar protection, we get a monthly estimate of exactly how much money per pound domestic sugar producers are being allowed to legally pick from the pockets of millions of American consumers and thousands of sugar using-companies. Annually, the federal sugar program that subsidizes and protects Big Sugar from competition through import restrictions, price supports and loan guarantees, artificially raises US sugar prices to twice the world price and costs American consumers somewhere between $1.9 billion (according to a GAO estimate in 2000) and $3 billion (my more recent estimate for 2012 here).
I was reminded of the sugar racket and Big Sugar’s protection from more efficient foreign competition by David Henderson’s recent comment on the EconLog blog (emphasis added):
I don’t think Trump understands that when we open trade to other countries, we gain not just as exporters but as consumers. But then, what U.S. politician running for president does? Marco Rubio? Rubio argued a few years ago that he would favor getting rid of quotas on sugar imports if we got something in return. But we do get something in return: it’s called cheaper sugar. And getting cheaper sugar, by the way, might have caused LifeSavers not to move from Michigan to Quebec.
To which John Cochrane added on his Grumpy Economist blog:
We also get more exports automatically without political deals. When other countries sell us sugar, they get dollars, of every single one ends up buying US exports or invested in the US.
Nothing new. It’s in Adam Smith. But nicely expressed. Economics needs good stories.
Related: See John Tamny’s recent Forbes article “Marco Rubio’s Big Sugar Embrace Flunks Basic Economics.”
Bottom Line: As I concluded in a 2013 blog post, the cost of most trade protection is largely invisible and hard to calculate, but the cost of sugar protection is directly visible and measurable, since wholesale prices for both high-cost domestic sugar and low-cost world sugar are reported regularly by the USDA and other sources (futures markets). Like all protection, sugar tariffs exist to protect an inefficient domestic industry (sugar beet farmers) from more efficient foreign producers (cane sugar farmers), and come at the expense of the US consumers and the American companies using sugar as an input, and make our country worse off, on net. Like John Cochrane says, that’s nothing new, it’s in Adam Smith.
For example, here’s how Larry Graham, President of the National Confectioners Association, explains the adverse effects and job losses for his industry as result of US sugar policy:
The [US sugar] program creates a competitive advantage for foreign confectioners who pay a significantly lower world price for sugar and import their products into the US market. The tight market generated by these policies threatens the overall supply, jeopardizing smaller US companies and putting jobs at risk. Over the last 10 years the sugar program has eliminated more than 14,000 confectionery jobs and more than 75,000 food manufacturing jobs.
It’s a perfect time to invoke French economist Frederic Bastiat who wrote in 1850 that we should “Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race.” US sugar policy has a long history, going back to 1789 when the First Congress of the United States imposed a tariff upon foreign sugar, and is a perfect illustration of trade protection that ignores the viewpoint of disorganized, dispersed consumers in favor of the concentrated, well-organized interests of domestic producers. US sugar policy clearly violates the best interests of consumers, and by doing so, violates the interests of the human race, in favor of a politically favored special interest group – “Big Sugar.”
We could also invoke Bastiat’s test for “legal plunder” and apply it to the case of sugar protection:
How is legal plunder identified? See if the law [US sugar policy] takes from some persons what belongs to them [American consumers and sugar-using industries], and gives it to other persons to whom it does not belong [domestic sugar producers]. See if the law benefits one citizen [sugar beet farmers in Minnesota] at the expense of another [American consumers] by doing what the citizen himself cannot do without committing a crime [picking the pockets of American consumers].
There’s probably no better example in US history of a case of both legal plunder and crony capitalism that has been tolerated for so many years, and that has picked more money from the pockets of Americans, than the centuries-old “sugar racket.”
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Is there really a ‘war on cops’? The data show that 2015 will likely be one of the safest years in history for police
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Is there a “war on police” in America today? Most Americans think so, and that’s understandable given all of the media coverage of that topic. A Google news search finds 32,000 results for the phrase “war on cops” and another 12,100 results for “war on police,” with sensational headlines like “America’s War on Cops Intensifies” and [NYPD Commissioner] “Bratton Warns of Tough Times Ahead Due to ‘War on Cops’.” A recent Rasmussen poll found that 58% of likely US voters answered “Yes” to the question “Is there a war on police in America today?” and only 27% disagreed. But data on police shootings in America that were reported last week by The Guardian (“2015 May Be One of the Safest Years for Law Enforcement in a Quarter Century“) tell a much different story of increasing police safety.
According to data available from the “Officer Down Memorial Page” on the annual number of non-accidental, firearm-related police fatalities, 2015 is on track to be the safest year for law enforcement in the US since 1887 (except for a slightly safer year in 2013), more than 125 years ago (see top chart above). And adjusted for the country’s growing population, the years 2013 and 2015 will be the two safest years for police in US history (see bottom chart above), measured by the annual number of firearm-related police fatalities per 1 million people.
The two charts above reveal a picture of increasing police safety in the US that is much different than the narrative we hear all the time in the media about a “war on cops” and increasing risks of death for America’s law enforcement. From a peak of more than 100 police shootings in every year between 1969 to 1980 (except for 1977 when there were 97 deaths), firearm-related police fatalities have been on a downward trend for the last 35 years, falling to only 31 in 2013 and now on track to reach 35 by the end of this year (based on 24 police deaths during the first 251 days of 2015). We can see the same downward trend in annual firearm-related police deaths adjusted for the size of the US population (bottom chart), which will make 2013 and 2015 the two safest years for law enforcement in US history.
Here’s an excerpt from The Guardian article:
Despite urgent warnings from police and others about a “war on cops” allegedly linked to the Black Lives Matter protest movement, statistics show 2015 is in fact shaping up to be one of the safest years for law enforcement in a generation.
According to the Officer Down Memorial Page (ODMP), which keeps data on officer deaths going back over 100 years, 24 officers have been shot and killed by suspects this year. This puts the US on pace for 36 non-accidental, firearm-related police fatalities in 2015 [I calculate 35 deaths in 2015 based on 24 during the first 251 days this year]. Each one of such deaths is a tragedy for the officers killed, their families and the communities they serve, but this would be the lowest total in 25 years [ more than 125 years according to the ODMP website] aside from 2013 which saw 31 such deaths.
According to a recent Rasmussen poll, 58% of likely voters believe there is a “war on police” in America today. The same poll found that 60% believe “comments critical of the police by some politicians make it more dangerous for police officers to do their jobs.” But misinformation also abounds.
In response to the recent Fox Lake [Illinois] shooting, state representative Barbara Wheeler, whose district includes the small Illinois town, issued a statement that said: “Eleven police officers have needlessly lost their lives since August 20 alone in America because of shootings.” The statistic, which was then quoted by several media outlets, appears to be untrue. According to ODMP, that number is actually four.
A few observations:
1. The possibly exaggerated narrative of increasing risk for US law enforcement has been one of the justifications used for the increasing militarization of America’s law enforcement, as documented in Radley Balko’s 2014 book Rise of the Warrior Cop: The Militarization of America’s Police Forces (see also the Wikipedia entry “Militarization of Police“). Of course, supporters of the militarization of law enforcement could point to the downward trend in gun-related police deaths as evidence that it is the increasing use of paramilitary tactics that have contributed to the reduction in police deaths, and they would possibly have a point. But the downward trend in the annual number of firearm-related police fatalities for more than a quarter century does seem to run counter to the perceptions of the public and media that it’s more dangerous today for American’s police officers than ever before.
Update: See Daniel Bier’s related article “Overkill: Militarizing America: Why are police arming for war in a time of relative safety?”
2. The data for police deaths in the charts above also reveal that the most dangerous period in American history, by far, for law enforcement was during America’s “War on Alcohol” (aka Prohibition) from 1920-1933, when more than 2,500 police officers were killed by firearms. And it’s possible that the current War on Drugs that was declared in 1971 by President Nixon when he named drug abuse as “public enemy number one in the United States” may have contributed to the increase in police deaths during the following decade when more than 1,300 police officers were shot and killed. And to the extent that there is a “war on cops” today, that war could be significantly reduced by ending America’s longest, deadliest, most senseless and most expensive war – the “War on
Drugs Otherwise Peaceful Americans Who Choose to Ingest Plants, Weeds and Intoxicants Currently Proscribed Arbitrarily by the US Government.”
3. Most importantly, despite all of the sensational (but exaggerated) media hype, and despite the overwhelming (but false) public opinion, there really is no “war on cops” in America today (see Nick Gillespie’s recent, related and excellent article (“There is no ‘War on Cops'”; There is a Long-Overdue Conversation About Police Brutality“). As the data in the charts above show, there’s never been a time in US history when it’s been safer to be a US police officer than it is today.
Over last 20 years, annual fires in the US declined by about 50% while career firefighters increased more than 50%?
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The chart above shows two interesting trends — while the annual number of fires in the US declined by 47% between 1983 and 2013 (from more than 2.3 million to 1.24 million), the number of paid career firefighters increased by 56.5% (from 226,600 to 354,600), according to data from the National Fire Protection Association here and here. In 1983 there were more than 10 fires in the US per career firefighter, but by 2013 there were fewer than 3.50 fires per paid career firefighter. What could explain these trends? Could it maybe be because public sector firefighter unions are involved?
That seems to be the conclusion of University of Miami professor of law and economics Fred S. McChesney, writing in the Washington Post last Friday (“Fewer fires, so why are there far more firefighters?“), here’s an excerpt:
Being a firefighter these days doesn’t involve a lot of fighting fire. Rapid improvements in fire safety have caused a dramatic drop in the number of blazes, according to the National Fire Protection Association. Buildings are constructed with fire-resistant materials; clothing and curtains are made of flame-retardant fabrics; and municipal laws mandate sprinkler systems and smoke detectors. The striking results: On highways, vehicle fires declined 64 percent from 1980 to 2013. Building fires fell 54 percent during that time. When they break out, sprinkler systems almost always extinguish the flames before firefighters can turn on a hose.
But oddly, as the number of fires has dropped, the ranks of firefighters have continued to grow — significantly. There are half as many fires as there were 30 years ago, but about 50 percent more people are paid to fight them (see chart).
This is no secret. Across the country, cities and towns have been trying to bring firefighting operations in line with the plummeting demand for their services. Many solutions have been attempted: reducing the length of firefighters’ shifts; merging services with neighboring towns; and instituting brownouts, which temporarily take an engine out of service. But often, these efforts have failed against obstinate unions and haven’t reversed the national increase in fire department payrolls.
Local firefighter unions have fought hard to grow their ranks as fires decline. Although private-sector unions have been diminishing, representation of government employees has remained strong, and firefighters have been among the beneficiaries. Labor contracts have allowed them to maintain healthy incomes: Firefighters earned a median salary of $45,250 in 2012, according to the U.S. Bureau of Labor Statistics, but overtime can more than double that. In Los Angeles, for example, the average firefighter was paid more than $142,000 in 2013, including overtime and bonuses, the Los Angeles Times reported. Exorbitant overtime costs are fueled by union-negotiated minimum-staffing levels that often mandate four firefighters per engine be on duty at all times, regardless of the cost or workload.
Union leaders and fire department chiefs have found new ways to justify their growing budgets and payrolls. In a February 2001 report, the Wall Street Journal noted that 90 percent of firehouse calls in Los Angeles, Chicago and certain other cities were to accompany ambulances to medical emergencies. “Elsewhere, to keep their employees busy, fire departments have expanded into neighborhood beautification, gang intervention, substitute-teaching and other downtime pursuits,” the newspaper added.
As the risk of massive infernos declines, what we really need is to rethink our entire firefighting model — and how much we should be paying for it. Instead of addressing this municipal waste with patchwork plans to cut overtime and shrink staffs, many cities and towns should consider throwing out the very concept of the career firefighter and return to the tradition of volunteers.
MP: It’s a good case study in the inevitable expansion of government-funded bureaucracies and illustrates how public-sector unions have continued to grow and gain power even as unions have lost power and membership in the private sector. For example, while unions represent nearly half of all local government employees, only 7.4% of private sector employees are represented by unions.
Kevin Williamson: Investment, not union extortion, is what really turbocharges the value of workers’ labor
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Kevin Williamson has an excellent Labor Day-related article in National Review titled “What Makes American Workers Great? It Isn’t Thieving Union Bosses,” here an excerpt:
The good news is that in the real economy, the American labor movement is dead as fried chicken. It’s just waiting to keel over.
The Obama administration and its allies have done everything they can to prop up the labor syndicates, for obvious reasons: They are important sources of donations and manpower for Democratic campaigns — not to mention the occasional act of political terrorism — and they are an indirect source of influence in that the more tightly an industry is under political discipline, the more opportunities there are for political profiteering. The National Labor Relations Board’s improper persecution of Boeing, which had the temerity to go into a place that it owns and act like it owns the place, and the recent risible NLRB franchise decision are acts of desperation. And the union goons should be desperate: Private-sector union membership is steadily declining, down to 6.6 percent of the work force in the latest figures (see chart above).
A world without union bosses is not a world of wicked coal-mine operators exploiting helpless serfs with nobody standing in the way but the Molly Maguires. It isn’t a union that inspires Google to offer such high wages and rich amenities to its employees — it’s Apple, Facebook, Microsoft, etc., each of which would love to drive a fleet of buses over to Mountain View and bring back everybody it could.
“Well, that’s Google,” you might say, “and not everybody has the skills or the talent to work in High Nerdery in San Jose or Austin or to tote a pitch book around lower Manhattan.” True enough, but the same principle applies to pipefitters and machinists and the 244 other labor categories Evan Soltas takes a look at here. His finding? That changes in productivity account for about 74% of changes in wages within any given industry. Workers get paid more because they produce more, not because there’s some coddled predatory halfwit threatening to pass out picket signs.
Detroit is dead. But when Europeans fire up their nifty new turbocharged Honda Type R Civics, they’re enjoying 276 horsepower made in the USA — in a car that isn’t ever going to be sold in the American market. Americans will have to make do with the new NSX supercar, which is built at the same facility in Marysville, Ohio, by highly skilled, highly paid American autoworkers with no UAW bosses around to gum up the works and skim from the paychecks.
Why is Honda so successful in the United States? Last year, automakers announced $1.8 billion in investments in Ohio, and $1.5 billion of that was Honda: $70 million for NSX production here, $123 million for a painting facility there — it adds up. Investment, not union extortion, is what turbocharges the value of labor. There’s a world of difference between what 100 skilled workers with a 20-year-old facility can create and what 100 skilled workers with a state-of-the-art facility can create. Real investment in real capital is what enables economic growth and higher wages.
If you’re unlucky, you’ve heard some speeches this weekend about all the great things the Teamsters and the UAW have done for the American worker, and all the things they want to do. Don’t believe a word of it. You want to do the American worker a favor, then get rid of the interference — the taxes, the regulations, and, yes, the dopey antiquated union rules — that stand between the worker and the factory door. American workers are among the most creative and productive people who have ever lived, and it wasn’t a corrupt Jimmy Hoffa protection racket that made them great. They aren’t weaklings, and they don’t need protection — not from you, not from Donald Trump, not from Bernie Sanders, and not from James P. Hoffa. All they need is a chance to use the talents and the strength God gave them.
On Labor Day in 1941, a Dallas editor coined the term ‘right to work’ – the ‘legal heritage of the free citizen’
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On Labor Day in 1941, Dallas Morning News associate editor William Ruggles (pictured above) wrote an editorial that set an important economic movement in motion – the “right to work.” Ruggles later said in a 1956 speech that he “felt in every fiber of his being” that the right to work was the “legal heritage of the free citizen” and he therefore strongly opposed forced union membership. In his September 1, 1941 editorial, Ruggles proposed that a 22nd amendment to the US Constitution be passed to guarantee American workers the right to work with or without union membership.
Here is a key paragraph from Ruggles’ 1941 Labor Day editorial:
Now this country may wish to become a vast network of union labor. If so, it is within the rights of a democracy to so decide. But the greatest crisis that confronts the nation today is the domestic issue of the right to work as a member of a labor union, if the individual wishes, or without membership in a union if he so elects.
In his editorial, Ruggles coined a phrase that would “change the labor landscape in America,” according to a story in the Dallas Morning News about Ruggles in 2010 as part of its 125th anniversary celebration.
Here are some excerpts from that article:
“The answer seemed to me to be an amendment to the federal Constitution that would be so clear and unequivocal that no jurist could argue against its meaning,” William Ruggles said later.
Although that constitutional guarantee never materialized, 22 states [now 25] enacted legislation patterned after the Ruggles editorial. Texas passed its right-to-work law in 1947. These laws prohibit agreements between trade unions and employers that make membership and payment of union dues or fees a requirement of employment even if the company is operating under union-negotiated bargaining agreements.
Love them or hate them, economists, historians and lawyers agree that right-to-work laws were the leading factor in the Sun Belt’s success. “Economic growth in places like Georgia and Texas was driven by the combination of the right to work and the cost of labor,” says Al Niemi, dean of the Cox School of Business at Southern Methodist University. “Since the right to work dictated the cost of labor, right to work was the single most important driver.”
MP: Thanks to the movement started by Texas native William Ruggles, the Lone Star State became America’s 11th Right to Work state in 1947 (see state Right to Work timeline here) and has contributed to the state’s economic success. In recent years, the Lone Star State has led the nation in job creation during the recovery from the Great Recession, see chart below. Since 2007, payroll employment in the state of Texas has increased by nearly 1.3 million jobs (and by 12.3%), compared to an increase in payroll jobs outside of Texas of less than 2% over the last 7.5 years. It’s an impressive record of job creation — with only 9.4% of the US population, the “Texas Job Machine” has created 34.5% of the net increase in payroll jobs since 2007.