Brian.Carnell.Com

Near where I live, there are two small cities, Grand Haven and Muskegon, that are just a few miles apart. Drivers in both cities recently noticed an odd phenomenon — although the cities are right next to each other, gas prices in Grand Haven are several cents a gallon cheaper than they are in Muskegon.

This revelation led a prosecutor in Muskegon to begin an investigation of gas stations in that city for possible antitrust violations. On this view, the only possible explanation for the price difference is the probable illegal collusion between Muskegon gas station owners to artificially inflate prices.

Interviewed on a local television station, the prosecutor insisted his investigation was ongoing and may result in criminal proceedings. But a few second interview with a driver who delivers gasoline to both cities cleared up the mystery.

Unlike Muskegon, Grand Haven is a big tourist attraction with any gas stations. As a consequence, many gas stations there sell gasoline at a loss and recoup the difference on profits made from sales of the variety of products now stocked by gas stations.

Gas stations in Muskegon cannot afford to adopt this strategy, and as a result actually make a small profit (gasp) on gasoline sales.

To the prosecutor and motorists interviewed by the TV station, there must be some sort of nefarious plot to overcharge them for gasoline. But this was based on the false assumption that because they were in a similar geographical area that the gasoline markets in the two cities were identical.

A small example, perhaps, but a classic case of how people are lead astray in economic thinking through overly simplistic and often false assumptions.

ArsTechnica points out a hilarious page on Amazon.Com for David Hasselhoff’s greatest hits CD. The reviews are very funny, especially the one submitted by that all time great cartoon star Scooby Doo.

Somewhere along the line somebody who believed the world was not overpopulated pointed out that the entire population of the world could be comfortably placed within the confines of the state of Texas. Countless online debates have occurred centering on whether or not this is a sensible comparison, with environmentalists often pointing to this claim as an example of the sort of absurdities that their opponents are willing to entertain.

Now, however, the Sierra Club has gotten into the act by implicitly endorsing urbanization levels that make the whole-world-in-Texas argument look positively spacious. They’ve temporarily taken down the page, but in June the Sierra Club put a page up at http://www.sierraclub.org/sprawl/community/enviroimpacts.asp which contained a calculator applet to measure the impact of various population densities. The page was constructed to promote the Sierra Club’s anti-sprawl initiative. But it contained some very curious results.

The applet compared the environmental impacts of what it called “efficient urban density” versus “sprawl density,” with the sprawl density, of course, coming out the loser. But the Sierra Club’s definition of efficient urban density might surprise some people. Initially, when the page went live, the Sierra Club defined efficient urban density as 500 households per acre. Given the average number of people per household in the United Stats, that works out to more than 750,000 people per square mile.

Folks ridiculed people for suggesting that the entire world population could fit in Texas, but at the density level the Sierra Club was advocating, all 6 billion people in the world today would be able to fit in an area just 2 percent as large as Texas. The state could hold upwards of 300 billion people at that level of density.

Responding to criticism, the Sierra Club quickly took the page down and retooled it, defining efficient urban density as only 100 households per acre. But that’s still a population density of 153,600 people per square mile, or a density high enough to put every single man, woman and child in Texas almost 7 times. Forget Texas, the entire world population could fit in Virginia!

It is almost beyond belief to see a mainstream environmental organization actually advocating population densities that exceed those proposed by the Texas thought experiment. At least the critics of overpopulation claims never actually advocated such an absurdity.

Source:

Sierra club exposes “smart growth” madness. Randal O’Toole, Heartland Institute, September 2001.

Nothing illustrates the enormous problems that Africa has to overcome than the recent agreement by several AFrican nations to form the African Trade Insurance agency which will underwrite insurance policies to reduce the risk for investors wanting to move capital into Africa.

Why would such an agency be needed in the first place? According to the BBC, investments in Africa have an extremely high rate of return that approaches 30 percent. But by the time that rate of return is adjusted for risks such a military coups, government confiscation of assets, etc., the real rate of return is closer to 10 percent.

The new insurance agency will essentially compensate investors if their capital is wiped out by government actions. As Ugandan president Yoweri Musevini said, “The ATI is a scheme that is telling investors, ‘please go ahead and trade,’ and if a coup d’etat occurred, you will not lose because we shall cover you.

The seven countries initially putting up $100,000 each to start the bank (along with a $105 million loan from the World Bank) are Burundi, Kenya, Malawi, Tanzania, Rwanda, Uganda, and Zambia. This is an important, necessary first step, but a better long term solution would be stable liberal democracy (foreign investors in developed countries rarely are forced to take out insurance protecting their assets from military coups or illegal government confiscation).

Source:

African risk scheme aims for trade boost. The BBC, August 21, 2001.