Underground Economizing: What’s in your panel truck? Garage? Basement? Health plan?

Very interesting post today over at babalú:

The very real shackles on our economy
By Henry Louis Gomez, on October 7, 2011, at 10:29 am

I wanted to share a couple of anecdotes with you to illustrate the very real shackles that are holding our economy back.

As some of you know, I own a 66 Dodge Polara that I’ve spent several years and several thousand dollars restoring. Owning an old car like that requires a trustworthy, inexpensive mechanic to work on it. When I bought my old clunker I was referred to one in Hialeah. Over the years my mechanic did a lot of work on my cacharro, including rebuilding the engine. I became quite friendly with him and during my visits to his shop I passively observed the difficulty of running a shop like his. Permits, insurance, inspectors, certifications, etc. etc. All of that plus the usual overhead like rent and payroll. Well, long story short, my old car was parked in the garage without moving for an extended period of time. I finally got around to calling the mechanic to let him know I was coming in and he told me he had closed up shop, he’d come to me instead. Now, this is typical of what’s going on with small business. It’s being driven underground.


According to this person (an expert on the matter) the cost of corn has historically hovered in the $2.50 a bushel range. Today it’s at $7.00. Can you guess why? Because corn federal ethanol mandates currently require that 50% of the corn crop be used for fuel. So here we are, not drilling for oil on our own land and burning up our food as fuel for our cars. By the way the fuel created from corn is more expensive, less efficient and probably more environmentally damaging than gasoline from oil. But corn ethanol has become a sacred cow to Democrats and Republicans alike. So what happens when we live in a world of $7 a bushel corn? Chicken farmers lose money. Several US chicken companies have already sold to foreign investors. Some will end up closing up shop. Eventually the price of chicken will have to rise. All because the government is interfering in the market for one of the most important inputs.

And don’t forget lemonade stands. They’ve practically disappeared. Forbes even published an article on it: “The Inexplicable War on Lemonade Stands.” Guess Kiddie Kapitalism has also been driven underground.

If you’re interested in having a bit more formal understanding of informal economics, including some insightful thoughts on the drug trade, may I suggest spending a bit of time with Prof. Richard Epstein. He’s my go to guy when I try to discern some reasonably logical way of correcting the course of our seemingly rudderless legal ship of state. I’ve posted a couple of excerpts from his June, 1994, Yale Law Journal article on the underground economy here.

If you’d like to see why many Democratic politicians find him slightly less tolerable than being intimate with a leper, watch what he has to say about keeping your old health plan under Obamacare:

Nancy, would you care to add anything?

Now, how ’bout Ms. Pelosi?


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