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1. Socialist hypocrisy? The Freedom Socialist Party (owner of the website domain name Socialism.com) routinely advocates that employers be forced to pay workers a minimum wage of either $15 an hour or $20 an hour. Yet when it comes to hiring a “graphic designer / web content manager” for its Seattle office, the organization is only willing to pay $13 an hour, see advertisement above and Craigslist listing here.
(HT: Reason via Morgan Frank)
2. Good things happen when healthcare buyers and sellers are in the same room? Dr. Keith Smith, founder of the Surgery Center of Oklahoma, says that it is the “ethical and moral obligation of the healthcare services seller to provide the prospective buyer a price in advance of the provision of the service.” By posting prices and increasing transparency, The Surgery Center of Oklahoma have decreased prices to such a level that care is now accessible to his community. Dr. Smith notes that “Price-revealing actions have allowed people to purchase care they previously assumed was otherwise unaffordable, people who had neglected their health entirely, based on a lack of visible pricing.” Source.
3. Obama cares more about politics than worker safety? Oil pipelines like the Keystone XL pose fewer risks for workers and fewer spills compared to transporting oil by rail or truck? That’s what a study released this week by Ken Green at the Fraser Institute concluded.
4. Democrat hypocrisy on the gender wage gap? An analysis by the Washington Free Beacon in April found that female staffers in Democratic Senate offices were paid just 91 cents for each dollar paid to male staffers. The average salary for a woman was more than $5,500 below the average salary for a man. (HT: Juandos)
North Dakota sets more oil production milestones in August – one billion barrels of total oil and more than 13% of US oil
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Oil drillers in North Dakota pumped out 1.13 million barrels of oil per day (bpd) in August, setting another new monthly all-time record high for the state’s crude oil production (see blue line in top chart), according to oil production data released yesterday by North Dakota’s Department of Mineral Resources. August marked the fifth straight month that daily oil production in the Peace Garden State exceeded one million barrels. Another important production milestone was reached in August, as average daily crude oil output from the state’s shale-rich Bakken oil fields topped one million bpd for the third straight month (see brown line in top chart), as the Bakken recently joined an elite group of only ten oil fields in world history whose daily output exceeded one million barrels at peak production. Oil production in the Bakken has increased more than 7X over the last 5 years, from only 151,522 bpd in August 2009 to 1.067 million bpd in August of this year, with accumulated production reaching the one billion barrel milestone in August (see bottom chart above).
Here are some other highlights of North Dakota’s record-setting oil output in August:
1) The state’s average daily oil production increased in August by 24% (26% for Bakken oil) compared to a year ago. Remarkably, in less than three years, oil production in North Dakota has more than doubled from 547,326 bpd in January 2012 to 1.13 million bpd in August.
2) Due to improvement in drilling technologies, the daily oil produced from each well in North Dakota averaged 101 barrels in August (129 barrels per well in the Bakken), just slightly below the record-setting level in June and July of 102 barrels per well. In 2009, the daily oil per well in North Dakota was only 52 barrels, so the productivity of oil extraction in the state has more than doubled in only five years.
3) For the 2nd consecutive month, North Dakota’s oil production in August represented more than 13% of all US crude oil, another new milestone for the Peace Garden State. Five years ago in August of 2009, North Dakota produced only 4.3% of total US crude oil output, and the state’s oil production was about half of oil production in both California and Alaska. Due to the phenomenal growth of oil output in the shale-rich Bakken oil fields, North Dakota surpassed California and Alaska in 2012 to become the country’s No. 2 largest oil-producing state and is now producing more than 13% of all US crude oil.
4) In dollar terms, the oil produced in North Dakota in August had a daily market value of $109 million at the average oil price during the month of $96.54 per barrel for West Texas Intermediate (WTI). For the entire month of August, that would put the market value of North Dakota oil at almost $3.4 billion, just below the $3.6 billion all-time record high for the dollar value of the state’s monthly oil output in July.
5) The Bakken oil fields in western North Dakota produced more than one million bpd in August for the third straight month (see brown line in chart), setting a new all-time monthly output record, which also represented a new record high 94.3% of the state’s monthly oil production. In contrast, the Bakken region produced less than 9% of the state’s oil output at the beginning of 2007, before breakthrough drilling techniques (hydraulic fracturing and horizontal drilling) were able to tap into a bonanza of unconventional oil in the shale-rich areas of western North Dakota. As mentioned above, the Bakken now joins an elite group of only ten super-giant oil fields worldwide to ever produce more than a million barrels of oil per day at peak production, and just surpassed one billion barrels of accumulated total production.
Bottom Line: August was another stellar month in “Saudi Dakota,” with average daily oil production surpassing one million bpd for the fourth straight month, and establishing yet another new record high for the state’s oil output at 1.13 million bpd. The state’s shale-rich Bakken oil field reached an important energy milestone by producing more than a million barrels a day in August for the third consecutive month, and surpassed one billion barrels of total accumulated production.
The shale boom continues to make the Peace Garden State America’s most economically successful state – with growth in employment and personal income that lead the nation, the lowest state jobless rate in the country for the last 68 months starting in January 2009 (2.8% in August), an enviable and whopping state budget surplus of more than $1 billion, the highest state GDP growth in 2013 of 9.7%, strong housing and construction markets (more than 1,000 permits for single-family homes were issued in both June and July, setting new all-time monthly records), thousands of landowners who have become millionaires from oil and gas royalties (estimated oil royalty payments of more than $16 million every day in August, at 15% of the approximately $115 million in market value calculated above), jobless rates in 15 of the state’s 53 counties at or below 2.0% in August (with Williams County at only 0.8%, the lowest county jobless rate in America), and starting hourly wages at the Williston ND Walmart of $17.20 — 2.4 times the state’s minimum wage of $7.25, and even above the $15 per hour “living wage” that is being proposed in some cities around the country and by fast-food workers for their industry (see photo below).
North Dakota’s economic success, job creation, and energy-based prosperity is being driven by the development of the state’s vast energy resources, especially the vast oceans of shale oil and shale gas in the state’s Bakken region. The Peace Garden State, along with Texas, are the shining stars of The Great American Energy Boom, which continues to be the strongest sector of the US economy and gives us the best reason to be optimistic about the future of the US economy.
Law Enforcement Against Prohibition’s 10 Reasons to end the senseless, costly, deadly and immoral War on Drugs
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Law Enforcement Against Prohibition, (LEAP) a group of law enforcement officials opposed to the war on drugs, created a Buzzfeed list to show why the War on Drugs has been one of the most disastrous policies in American history. From mass incarceration and tremendous loss of life to billions of dollars seized from citizens every year, drug prohibition is a colossal failure. LEAP’s list is meant to draw the attention of the public and introduce them to the civil and human rights violations being committed against so many of us every day. Here’s a link to “10 Shocking Reasons to End the Drug War (And Consider Legalization and Regulation)” and here’s a summary of the ten reasons to end the War on
Drugs Otherwise Peaceful Americans Who Voluntarily Choose to Ingest Plants, Weeds, and Intoxicants Arbitrarily Proscribed by the US Government:
1. Mass Incarceration – Drug arrests account for more than 50% of federal prisoners, and more than 16% of people in state prison. Today, about 500,000 Americans are behind bars for drug law violations, 10 times the amount in 1980.
2. Racial Bias in Drug Arrests and Jail Sentences – Blacks and whites use drugs at about the same rate, but blacks are three times more likely than whites to be arrested on drug charges and ten times more likely to be sent to state prison on drug charges than whites.
3. Asset Forfeiture Abuses – In 2012 alone, the US Justice Department confiscated $4.2 billion in forfeitures.
4. America’s Deadly Heroin Epidemic — From 2006 to 2010, heroin overdose deaths in the U.S. increased by 45%, and the numbers continue to climb. As the nation has cracked down on prescription opioid abuse, people suffering from addiction have turned to heroin, a cheaper, easily accessible option.
5. The Breakdown between Law Police and the Community, because of the Increasing militarization of US law enforcement and aggressive enforcement of drug laws.
6. Mexican Drug Cartel Violence – 60,000 Mexicans have died since 2006 in drug cartel-related murders, deaths and violence.
7. The War on Women – No country incarcerates more women than the US, and 85% of women jailed in America are serving time for non-violent crimes like drug offenses.
8. Entrapment of Minors – Like the case of Jesse Snodgrass (an autistic teen also diagnosed with bipolar disorder and Tourette’s Syndrome who struggles socially). A police officer posed as a high school student, pretended to be Jesse’s friend, and harassed him until he sold him marijuana.
9. SWAT Raids Kills People and Family Pets – 34 Americans have been killed just so far this year in US domestic drug law enforcement operations.
10. The Costly Drug War Spends Billions of Taxpayer Dollars on Enforcement, Arrests, Court Costs, Jail Time, etc.
Working around the delayed Keystone XL pipeline: In the US with oil trains and in Canada with ‘Keystone on steroids’
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The White House blockade of the Keystone XL and other modern pipelines hasn’t stopped domestic fracking or development of the Alberta oil sands. Instead, the industry transports oil and natural gas to refiners and midstream companies using the technology of the 19th century: Seven of every 10 barrels from North Dakota’s Bakken shale move by rail, and total U.S. carloads of crude oil have increased 4000% since 2008.
So you’re the Canadian oil industry and you do what you think is a great thing by developing a mother lode of heavy crude beneath the forests and muskeg of northern Alberta. The plan is to send it clear to refineries on the U.S. Gulf Coast via a pipeline called Keystone XL. Just a few years back, America desperately wanted that oil.
Then one day the politics get sticky. In Nebraska, farmers don’t want the pipeline running through their fields or over their water source. U.S. environmentalists invoke global warming in protesting the project. President Barack Obama keeps siding with them, delaying and delaying approval. From the Canadian perspective, Keystone has become a tractor mired in an interminably muddy field.
In this period of national gloom comes an idea — a crazy- sounding notion, or maybe, actually, an epiphany. How about an all-Canadian route to liberate that oil sands crude from Alberta’s isolation and America’s fickleness? Canada’s own environmental and aboriginal politics are holding up a shorter and cheaper pipeline to the Pacific that would supply a shipping portal to oil-thirsty Asia.
Instead, go east, all the way to the Atlantic. Thus was born Energy East, an improbable pipeline that its backers say has a high probability of being built. It will cost C$12 billion ($10.7 billion) and could be up and running by 2018. Its 4,600-kilometer (2,858-mile) path, taking advantage of a vast length of existing and underused natural gas pipeline, would wend through six provinces and four time zones. It would be Keystone on steroids, more than twice as long and carrying a third more crude.
The increasing precision and efficiency of revolutionary drilling technologies have made US world’s largest producer
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The Department of Energy (EIA) video above explains how the steadily increasing productivity of oil and natural gas wells in the US — thanks to the increasing precision and efficiency of horizontal drilling and hydraulic fracturing — is increasing US oil and gas production. The shale revolution has increased domestic energy production so much in recent years that the US is now the world’s largest producer of petroleum products and natural gas combined.
The EIA also just released its monthly Drilling and Productivity Report, with estimates through the month of November, and here are a few highlights of that report.
1. Shale gas in the Marcellus. The amount of natural gas produced per rig in the Marcellus Region has increased 8-fold over the last five years, from a million cubic feet per day in 2009 to 8 million cubic feet per estimated by next month.
2. Shale oil in America’s three elite oil fields. The combined daily oil output in America’s three largest oil fields – the Bakken, Eagle Ford and Permian Basin – has increased from 1 million barrels per day (bpd) in 2007 to more than 2 million bpd by late 2011, to more than 3 million bdp at the end of 2013, to more than 4 million bpd in May of this year, and all the way to 4.6 million bpd projected by next month.
Related: Thanks to the shale oil boom in North Dakota, the state just attracted its largest-ever private investment of $4 billion from a company planning to build a polyethylene manufacturing plant in the Peace Garden State that will use the ethane byproduct of oil production as a feedstock.
Also, partly as a result of the ongoing increases in US oil production, gas prices have fallen to a national average of about $3.17 per gallon in recent weeks, the lowest price at the pump in almost five years going back to early 2011. Missouri currently has the lowest gas prices in the country — $2.88 per gallon on average — with prices approaching $2.50 per gallon in some parts of the state.
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…. is from Harvard President Drew Faust, in her statement explaining the university’s position on fossil fuel disinvestment:
Universities own a very small fraction of the market capitalization of fossil fuel companies. If we and others were to sell our shares, those shares would no doubt find other willing buyers. Divestment is likely to have negligible financial impact on the affected companies.
I also find a troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies’ products and services for so much of what we do every day. Given our pervasive dependence on these companies for the energy to heat and light our buildings, to fuel our transportation, and to run our computers and appliances, it is hard for me to reconcile that reliance with a refusal to countenance any relationship with these companies through our investments.
The truth about the CEO-to-worker pay gap — looking at all US executive officers, it’s about 5-to-1 not 331-to-1
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Michael Saltsman and I have an op-ed in today’s WSJ titled “About That CEO/Employee Pay Gap“:
Income inequality is a key theme of Democrats’ 2014 re-election strategy, and the nation’s chief executive officers are an easy target. Before retiring to their districts for the fall, the House Democratic Caucus rallied behind the CEO/Employee Pay Fairness Act, which would prevent a public company from deducting executive compensation over $1 million unless it also gives rank-and-file employees raises that keep pace with the cost of living and labor productivity.
Meanwhile, the AFL-CIO and its aligned think tanks have made hay of the huge difference between the pay of CEOs and employees. One of the most widely cited measures of the “gap” comes from the AFL-CIO’s Executive Paywatch website. The nation’s largest federation of unions laments that “corporate CEOs have been taking a greater share of the economic pie” while wages have stagnated for the rest of us. As proof, it points to a 331-to-1 gap in compensation between America’s chief executives and the pay of the average worker.
That’s a sizable number. But don’t grab the pitchforks just yet. The AFL-CIO calculated a pay gap based on a very small sample—350 CEOs from the S&P 500. According to the Bureau of Labor Statistics, there were 248,760 chief executives in the U.S. in 2013. The BLS reports that the average annual salary for these chief executives is $178,400, which we can compare to the $35,239-per-year salary the AFL-CIO uses for the average American worker. That shrinks the executive pay gap from 331-to-1 down to a far less newsworthy number of roughly five-to-one.
Of course, it’s true that some chief executives heading large multinational companies do command impressive seven- or eight-figure compensation packages. But the data don’t support the rhetorical claim that this slice of the “economic pie” is what’s driving stagnant pay for others on staff. Consider Yum Brands, the parent company of well-known fast-food brands like Pizza Hut, Taco Bell, and KFC. The compensation of the company’s five-member executive team has been a point of contention for the Service Employees International Union-backed fast food protests that have occurred periodically over the past two years. Filings with the Securities and Exchange Commission put the total pay package for the company’s executive team at $30.7 million.
That might seem like a lot of wealth the company could “share.” But like many service-industry employers, Yum Brands has a lot of people to share it with. The company’s 2013 annual report indicates that it employs 539,000 people, 86% of whom work part-time. If the executive team were able to redistribute 25% of their salaries, incentive pay and stock options to these part-timers, the net impact on hourly pay would be just over a penny-per-hour raise before taxes. Even if the executive team took a 100% pay cut and distributed the money equally to the company’s 463,000 part-timers, hourly wages would only rise by five cents [before taxes].
The point is not that CEOs deserve more money, or less. If an executive is underperforming, the corporation’s board can and should adjust his pay appropriately or terminate his employment. And if the CEO is making the shareholders rich, the board might increase his compensation. But neither voters nor policy makers should make poorly informed decisions about redistributive public policies based on a faulty understanding of how much executives are paid and why entry-level employees aren’t paid more.
MP: As I calculated in this recent CD post, you could confiscate 100% of the compensation of all US CEOs in the S&P 500 last year and then redistributed that $6 billion of executive compensation to America’s 94.5 million middle-class workers, and the average worker’s income would only increase by about $1 per week – and that’s before taxes. Also, as my AEI colleague Alex Brill pointed out on Twitter, the CEO-to-worker pay ratios for the highest paid officers of the AFL-CIO are much higher than average: 8.5-to-1 for president Richard Trumka (based on his 2013 salary of $298,542) and 10.5-to-1 for executive vice-president Arlene Holt-Baker (based on her 2013 salary of $368,652).
Economic freedom generates huge benefits, but the US has experienced a substantial decline during the past decade
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The annual report on the “Economic Freedom of the World” by economists James Gwartney, Robert Lawson, and Joshua Hall has just been released by the Cato Institute for the year 2014 (based on 2012 data). The report has been published annually since 1996 and assesses the degree to which countries around the world support the cornerstones of economic freedom like personal choice, voluntary exchange, freedom to enter markets and compete, rule of law, and privately property rights. Here’s how the authors explain their mission:
The foundations of economic freedom are personal choice, voluntary exchange, and open markets. As Adam Smith, Milton Friedman, and Friedrich Hayek have stressed, freedom of exchange and market coordination provide the fuel for economic progress. Without exchange and entrepreneurial activity coordinated through markets, modern living standards would be impossible.
Potentially advantageous exchanges do not always occur. Their realization is dependent on the presence of sound money, rule of law, and security of property rights, among other factors. Economic Freedom of the World seeks to measure the consistency of the institutions and policies of various countries with voluntary exchange and other dimensions of economic freedom.
The empirical results from this year’s report demonstrate why economic freedom is so important:
Nations in the top quartile of economic freedom had an average per capita GDP of $39,899 in 2012, compared to $6,253 for bottom quartile nations (see top chart above). Moreover, life expectancy is 79.9 years in the top quartile compared to 63.2 years in the bottom quartile (see bottom chart above), and political and civil liberties are considerably higher in economically free nations than in unfree nations.
Citizens of economically free countries have a standard of living that is more than six times higher than citizens of unfree countries (based on per-capita GDP), and they live almost 17 years longer on average. Also, the average income of the poorest 10% in the most economically free countries ($11,610) is 8.5 times higher than the average income of the poorest 10% in the most unfree countries ($1,358). Those are huge differences and demonstrate the power of economic freedom for elevating the quality of life for both the average and poorest citizens.
From the report’s Executive Summary, a summary of the world’s most and least economically free countries:
Hong Kong and Singapore, once again, occupy the top two most free positions. The other nations in the top 10 for economic freedom are New Zealand, Switzerland, Mauritius, United Arab Emirates, Canada, Australia, Jordan, and, tied for 10th, Chile and Finland. The 10 lowest-rated countries for economic freedom are: Myanmar, Democratic Republic of Congo, Burundi, Chad, Iran, Algeria, Argentina, Zimbabwe, Republic of Congo, and, lastly, Venezuela.
As Scott Grannis reports, there are a few sobering conclusions from this year’s report:
The United States, once considered a bastion of economic freedom, now ranks 12th in the world, tied with the United Kingdom at 7.81. Due to a weakening rule of law, increasing regulation, and the ramifications of wars on terrorism and drugs, the United States has seen its economic freedom score plummet in recent years, compared to 2000 when it ranked second globally.
Global economic freedom fell slightly in this year’s report, and it remains well below its peak level of 6.92 in 2007. The average score fell to 6.84 in 2012, the most recent year for which data are available.
Looking at the details of the drop in America’s ranking for economic freedom over the last 30 years (see p. 172 in the Country Data Tables), it appears that one of the main reasons for the ongoing decline is in the area of “Legal System and Property Rights” – one of the five major areas of economic freedom (the others are Size of Government, Sound Money, International Trade, and Regulation). In 1980, the US ranked No. 1 in the world for the category “Legal System and Property Rights,” and by 2011 the US ranking fell to No. 38 before improving slightly to No. 36 in 2012. Since 2000 (the first year for some of the sub-categories), the US has declined for every single measure in this category: judicial independence, impartial courts, protection of property rights, military interference in rule of law and politics, and integrity of the legal system. And as the authors point out above, this deterioration in America’s ranking for “Legal System and Property Rights” is at least partly the result of America’s twin wars on Drugs and Terrorism. Because of the War on Drugs, the USA is the world’s largest jailer by far (50% of federal prisoners are serving time for drug offenses), and the Drug War has fueled the increasing militarization of America’s law enforcement agencies and 45,000 SWAT raids every year, and an increasing and disturbing frequency of civil asset forfeitures.
I realize that the Cato report measures economic freedom, and therefore doesn’t necessarily even capture the extent to which our civil freedoms have been eroded by America’s War on Drugs. So while we should certainly celebrate the demonstrated benefits of economic freedom highlighted in this year’s Economic Freedom of the World report, we should also be concerned about the fact that America, “long considered the standard bearer for economic freedom among large industrial nations, has experienced a substantial decline in economic freedom during the past decade.” And I would argue that at least part of America’s decline can be traced to America’s longest and most deadly, costly, and senseless and immoral War on
Drugs Otherwise Peaceful Americans Who Voluntarily Choose to Ingest Plants, Weeds and Intoxicants Arbitrarily Proscribed by the Government.
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Following up on the same topic that I featured on a recent CD post about ticket scalping and Garth Brooks, Billboard has an interesting article (“Inside Garth Brooks’ Master Plan to Launch the Biggest Tour of All Time“) that provides some details on how Garth Brooks is pursuing some unusual strategies for his national tour that include: single-price affordable tickets (about $65-70 total cost), multiple shows in the same city (11 now in Minneapolis), multiple shows on the same day (6:30 p.m. and 10:30 p.m. shows in Minneapolis), and adding additional shows based on ticket demand (the number of Minneapolis concerts just increased from 10 to 11), and waiting until the last minute to announce shows in a new city. Many of these strategies, including using paperless tickets for the best seats in some shows, will achieve another apparent goal that Brooks has: minimizing ticket sales on the secondary market at prices above face value (“ticket scalping”). Here are some details from the article:
Paradoxically, the singer’s unusual approach to ticket pricing places him at a fraction of his market value: There is no VIP, premium, gold circle or scaling. In Chicago, tickets were $56.94, typical for the tour, plus $2.56 in tax and a $6 service charge, totaling $65.50. The low price and high demand would seem to set up a field day for ticket brokers, but so far it actually has achieved the opposite effect. While tickets are limited to six per person [eight in Minneapolis] and Ticketmaster uses its array of anti-scalping measures to combat bots and brokers, Brooks is playing enough dates to satisfy demand at the primary level to eliminate the need for a secondary market.
“When you look at StubHub on these shows, you would expect to see tickets posted there for hundreds if not thousands of dollars,” says a source close to the tour. “But you don’t, because he has offered so much supply that everybody who wants to go is getting to go, at a reasonable price.”
How those multiple shows are scheduled is another unusual aspect of the tour. In an era when tickets are sold as much as a year in advance — and often an entire tour goes up at once — Brooks announces his about a week before the on-sale date. It’s a practice that has been used regularly at the arena level by only one other artist: Prince. In his case, the aim is to generate excitement and urgency, but for Brooks, the strategy also may be another attempt to stymie ticket resellers. Two or three shows are typically announced in one market at a time, and then more are added as the on-sales progress, based on real-time statistics, website traffic and other factors in Ticketmaster’s secret sauce. The call must be made — several times — to add new concerts while still selling for the previous one. “It’s an imperfect science,” explains one insider. “You have to sell to demand, and pull the trigger at the right time.”
MP: A few comments –
2. Even with almost a quarter-million seats available for Garth’s concerts in Minneapolis, there does seem to be a pretty active secondary market on Stub Hub for all 11 Minneapolis shows, all above face value. I think for the Minneapolis shows, there is a combination of “ticketless (credit card entry)” for the best seats in the house and e-tickets (transferable I assume) for the rest of the seats. The seating chart below of the Target Center showing tickets available on StubHub for the November 7 Garth Brooks show seems to confirm that – there are no tickets for sale in the seating sections closest to the stage (white sections).
3. As I’ve mentioned many times before, an active ticket scalping market at prices above face value can generally only happen when the artist, manager, promoter or venue: a) under-price the tickets relative to the market price, and/or b) under-supply the number of tickets relative to fan demand. Raise initial ticket prices and/or increase the supply and the secondary market will evaporate. In this case, Brooks has kept ticket prices low and only increased the supply significantly – 11 shows in Minneapolis at the 20,000-seat capacity Target Center (and he may add more?) will provide a total of about 220,000 tickets for sale. If his intention was to completely eliminate the secondary market, Garth Brooks didn’t accomplish that goal. But if intended to minimize or reduce ticket scalping, especially for the best seats in the house, he certainly did that! And if he really wanted to further reduce the secondary market, he could have priced tickets closer to their true market value, instead of under-pricing them so significantly at $70.