I was drinking last night in Snyder's tavern in West Shokan,
and two friends were defending Trump's tariff program. After four Canadian
Clubs, I wasn't about to go into the apples-and-oranges example that illustrates
comparative advantage; then, one of the friends emailed this Breitbart column defending the tariffs because products made with the protected metals have been
in strong demand.
Comparative advantage is a simple insight: If someone can do
something that you can do, even if not as well as you (i.e., so that they are
poorer and less productive than you in all respects), it makes sense to have
them do the thing or things at which they are most productive or at which you
are least productive if it enables you to spend more time on the things on
which you are most productive. The total output goes up (their production plus
your greater production), and the surplus can be divided.
Studies of comparative advantage have confirmed that it
works in the real world. When you shop at Wal-Mart or Target, you benefit from
free trade.
When tariffs are first imposed, it is normal for output in
the protected industries to go up in the short-term because the effects of
making yourself poorer aren’t yet felt. In addition, today’s economy is
accelerating due to the monetary expansion of the Obama years. There is high
demand as the monetary cycle peaks, which probably enhances the short-term
effect on the protected industries.
The greater demand for home-based products (what Breitbart
calls “firms hit by tariffs”) creates short-term employment gain in those few
industries. A year or two after employment goes up in the specific industries,
the prices of the protected products that they make go up, so there is less
money to spend, and demand in other areas falls, so people lose jobs in
computers, plastics, barber shops, and so on.
The tariffs make the protected industries seem to do better
(as Wall Street has done since the 1970s because of monetary subsidies), but in
a few years everything else turns sour. You will have made yourself poorer.
Tariffs are one example of short-term or
focusing-on-the-obvious-but-ignoring-secondary-effects thinking that the famous
book by Henry Hazlitt, Economics in One Lesson, explains. It is an easy-to-read
book, and I recommend it. It is available for free here.
Ray Faiola of Ellenville has uploaded to Youtube a pilot of a 1951 television program with Mary Margaret McBride, who interviews Ed Dowling. Dowling was the director of the first major Tennessee Williams play, The Glass Menagerie. The interview takes place in her West Shokan home, which is a two-minute drive from mine. The panoramas of the reservoir and the mountains look as they do today.McBride's house is still there; I've met the owner.
McBride was a personal friend of Eleanor Roosevelt. Roosevelt frequently visited the same West Shokan home in which the interview takes place. According to Wikipedia, during World War II McBride was among the first to break the color barrier in radio. She broadcast on all the major networks until 1960. She was known as the first lady of radio. One of the old timers in West Shokan told me that he recalls Mrs. Roosevelt's visits. In this 1960 newspaper article, Roosevelt writes about an afternoon at one of McBride's local radio broadcasts:
On Monday of this week I went from Hyde Park to West
Shokan, where Mary Margaret McBride lives in a house on the side of a
mountain. The house is built of redwood, and the porch looks out on the reservoir.
Mary Margaret McBride was her charming self, sounding
as though she had really never thought till that minute of the things
she was about to say, and yet never forgetting the thread of what she
said or of what she wanted the person she was interviewing to say. I
think she is one of the most expert interviewers I have ever known.
She had about 50 of her neighbors as an audience, and
she does this local broadcast, with local commercials, just as she once
did her New York broadcasts. I just have a lovely time talking to her,
so I enjoyed every minute with her and was delighted to have lunch with
her afterwards, sitting on her porch and drinking in the beautiful view.
She is one person who accumulates books just the way I
do, so everywhere you go in every room of her house, there are books
and more books. I was encouraged, for I never have enough room for my
books and I felt I could now go on building shelves in many places I had
not thought of before.
Someday I hope I will have the time to read the
books I now have on my shelves, besides all those I know I will
accumulate in the next year or so.
Wikipedia describes her last years, which were spent in West Shokan:
As time went on, she appeared in smaller radio media markets, in upstate New York,
and toward the end of her life hosted "Your Hudson Valley Neighbor"
three times a week on WGHQ Kingston, NY from the living room of her home. Her longtime companion and business partner, Stella Karn, died in 1957.[2]
She died at the age of 76 on April 7, 1976 at West Shokan, New York. McBride's ashes were placed in her former rose garden. She has a star on the Hollywood Walk of Fame for her work in radio.[3]
Her name was spoofed on the classic CBS-TV sitcom I Love Lucy in Episode # 79, "The Million Dollar Idea", which aired on January 11, 1954. In that installment, Lucy (Lucille Ball)
comes up with an ambitious idea to make money. She decides to appear on
television selling her Aunt Martha's salad dressing. Assisting her on
the program is her best friend Ethel Mertz (Vivian Vance) as "Mary Margaret McMertz."
McBride's celebrity was hardly a secret confined to daytime radio
listeners, either: her 15th anniversary celebration in 1949 was held in
Yankee stadium, the only facility large enough to hold the 75,000 people
who filled every seat and formed huge crowds outside. Her magazine show
was on the air continuously for 25 years.
As I blogged earlier today, Hurricane Irene caused the Bushkill Creek to overflow onto our lawn, but before the overflow was sufficient to threaten the house, debris blocking a downstream bridge was loosened and the stream receded quickly. I grabbed a camera as the stream was receding back to its banks. At its peak the stream was covering most of the lawn.
Perhaps Americans were never really that moral and American exceptionalism was only a hope. Perhaps John Winthrop's "city on a hill" was a pipe dream. It is true that America was never perfect. But it is also true that there always were Americans like Henry David Thoreau who protested injustice and believed in freedom from the state. Initially, much of the impetus for the "Progressive" reaction to big business was moral indignation at its corruption. But the Progressive response was to establish institutions that were even more corrupt than the trusts and cities at which Americans, mostly rural in the late nineteenth century, were aghast.
By the the 1930s industrialization and the expansion of the state had eroded the Christian moral values of many Americans. In Germany, birthplace of the university, the welfare state led to what Hannah Arendt termed "the banality of evil". Adolph Eichmann, a bureaucrat who oversaw the German extermination of Jews and Gypsies, claimed that he acted in accordance with Kant's categorical imperative in that his "duty", which all men should follow, was to obey orders.
The pattern of moral flexibility molded to the dictates of large organizations has been characteristic of American Progressivism as well as German statism for the two have the same origin. One of the ways that Progressivism leads inevitably to authoritarianism and then totalitarianism is the erosion of moral sense that occurs as people relinquish independence in exchange for security and begin to depend on "their betters" to do their thinking for them. This has a great deal to do with the dependent psychology that urban Americans have developed because they work for large organizations and spend most of their lives obeying their bosses and following orders. The concepts of organizational control and organizational culture are tightly linked to Progressivism. Other-directedness, the psychology of reliance on popular opinion for one's own views, is also a function of government authority, large organizations, and tightly configured belief systems under the control of one's boss, the media and the state. Conformity, other-directedness and ethical decline all reflect the economic structure that the large-scale economy has created.
The argument in favor of scale is that it produces consumerism. But since 1970 the real hourly wage has been stagnant. Thus, the large-scale economy has been an economic and consumerist failure as well as a moral failure.
In his classic work on management Functions of the Executive, Chester Barnard, president of New Jersey Telephone, described his success in changing a telephone operator's moral sense around so that she placidly watched her mother burn to death while on duty. He felt justified in having ingrained in the woman the dominant moral belief that her first duty was to the telephone company and that she could not leave her post even if it meant trying to help her mother as she died in her house across the street. Likewise, the notion of organizational culture advocated by William Ouchi in Theory Z and numerous other management books is one of sacrifice of moral sense in the interest of corporate values. Enron is one example of the end result of a century of corporate brainwashing, Progressive economic policies and government expansion. The only reason that Enron was able to exist was credit expansion by the Federal Reserve Bank that was deposited in the money center banks which in turn knowingly provided Enron with the funding it needed to commit ongoing fraud.
Recently in the small Town of Olive in which I reside, population about 3,500, there has been a series of embezzlements. A woman stole $40,000 from a Mobil Mini Mart in Shokan, NY and used it to reopen the West Shokan General Store. Another woman stole from the Onteora* High School Student fund. Another burnt down a local hotel. In fact, there were two cases of arson involving local hotels in the past few years. I checked out the Kingston Freeman's website for "embezzlement" and found the following:
-An obese New Paltz woman was arrested last week for allegedly stealing $700,000 from a local attorney
-In July, a 55-year-old Kingston woman was convicted of stealing $390,000 from a "professional office".
-In April, a store manager was forced to return $25,000 he embezzled from CRSR Designs.
These crimes were not committed by big business or by government. But in a society where taxation, wealth transfer via monetary expansion and the brokerage of special interests have become the chief avenues of success for such professions as law, the judiciary, investment banking, government employees, hedge fund operators and corporate executives, it is not surprising that moral corruption has seeped into the mainstream of American life.
*Onteora was the Native American name for the Catskills. It means "land of the sky".
I got myself appointed to the Town of Olive Republican Committee. Chet Scofield, the Town chairman, leads a group of about 10 or 12 committee members. The meetings are held at Chet's bar, Snyder's, which is on NY 28A in between Watson Hollow Road and NY 28. I thought the committee has great potential and there are quite a few great Republicans in the Town of Olive. Robin Yess, who ran for state assembly in our district last year, was at the meeting in June. I was added to the committee and carried my own petition along with several others to voters in the Olivebridge district. I live in a different district, West Shokan, but Town residents are allowed to cross over.
Here are some things I learned:
1. Olivebridge and the Town of Olive constitute an incredibly beautiful district. I have petitioned in New York City and I must say, it is a pleasure to drive around a place as beautiful as the Ashokan Reservoir, Route 213, Brown Station, Beaverkill Rd. Driving around there is like being on vacation.
2. The Olivebridge Republicans are a rather contrary group. I think some of them aren't sure if they're Republicans and I had to pull teeth to get 20 signatures. In part the difficulty is the distance. When New York City gutted the Town of Olive and submerged about three quarters of it in the Ashokan Reservoir, they left scattered streets and roads which now constitute the Olivebridge district. It is a disjoint place. It was probably among the first instances of a community utterly devastated by modern urban planning. New York City still pays the County of Ulster a fee for the use of the reservoir land, and Olive does not get its fair share. Recently, a "large parcel" tax bill removed the payment for Olive to the County, and the good people of Olive are justifiably annoyed.
3. There are a lot of very concerned people here, many of whom are quite unhappy with the nation's socialist direction and the incompetent Democratic leadership in Washington.
4. I think the Republican Committee in Olive and everywhere else has a great opportunity. The Democratic Party advocates a stupid, failed ideology, social democracy. The sorry excuse for American politics that we have seen under Bush and Obama poses opportunities.
One of many gripes about Wal-Mart is that it supposedly eliminates competition. Here in the Catskill Mountains in the hamlet of West Shokan in the Town of Olive in the County of Ulster in the declining and falling Empire State I have a few options as to where to go to the supermarket--and it frequently is not Wal-Mart, although I respect its low prices and do take advantage of them with glee.
On the same highway as the Kingston, NY Wal-Mart, which is about 20-25 miles from West Shokan, there is a store called Adams Fairacre Farms and another supermarket called Hannaford's. Both of these stores are successful in competing with Wal-Mart because of their quality. Hannaford's, for example, has a fresh butcher shop and a fresh fish counter. They have a display with a huge assortment of feta cheese and a wide assortment of Greek Olives, not quite as extensive as a deli I remember in my childhood neighborhood of Astoria, Queens but pretty darn good. Their fresh bagels are near-H&H Bagel (of Manhattan's upper west side) quality. Adams is a local chain with excellent quality as well, and its parking lot is always nearly full.
Given this stiff competition, Wal-Mart at the low price end, Adams and Hannaford's at the higher price end, how might an IGA supermarket in Boiceville compete, especially if prices in Boiceville are high because of extra travel and delivery costs and low volume?
The quality of the deli in the Boiceville IGA is the best I have seen anywhere. It is better than what I used to get at Broadway Farm on 84th and Broadway. Their store-cooked roast beef is the freshest deli roast beef I have ever had. Zabars's isn't as good. Plus, until recently they had a daily sushi display, and it was very good. Unfortunately, their sushi chef quit. But their store-prepared hamburger patties are better than Hannaford's butcher (and Hannford's ain't bad). In fact, there is often a line at the deli. In a hamlet like Boiceville, that's an achievement. Sushi in Boiceville? When I was a child, you were happy to get a Slim Jim at the Sawkill Snack Bar not far from here. Now, the good people of Boiceville don't even need to go to Woodstock to have first rate Sushi. Who worries about gasoline prices? You never need to leave town!
But that's not all. There is an even smaller store that outcompetes Boiceville, Hannaford's, Adams' and Wal-Mart. It is called "Smoked Fish and Honey" and it's on Mt. Tremper Road just east of the Mt. Tremper stop sign going toward Woodstock. Smoked Fish and Honey is amazing.
I went there on Friday because I was told that honey comb is good for allergies and I thought I'd give it a try. "Smoked Fish and Honey" is owned by a guy named Lenny. The sign in the front looks like a private homeowner is selling Smoked Fish and Honey, but when you turn into the driveway there's an electric sign in the back and it looks like a regular store, but you can't see it from the road. The driveway is very cool, and there's a car with an imploded roof sitting there because a tree fell on it. Lenny, the bee keeper and trout smoker, wasn't in but his mother is an amazing Latvian grandma with a delightful sense of humor and wonderful old world charm. She regaled us with her insights about life. She mentioned that the tennis star from the 1970s and 1980s, Vitas Gerulaitis was her nephew (I suppose Lenny's cousin). They have a Time or Newsweek cover with him on it hanging in the store. (Tragically Gerulaitis died in a freak accident in the 1990s.)
Now here's the rub. The smoked trout at Smoked Fish and Honey is the best smoked fish I have ever had. Lenny raises much of the trout he uses himself, so it is very fresh. They hot smoke it with a special recipe. It is excellent. Likewise, the ultra-fresh honey is wonderful. I bought a jar and am floored. Unfortunately, a weasel broke into their chicken coop and ate their fresh eggs, but I am looking to buy those next time. (I have to come back to pick up the honey comb on special order.)
Now, can Wal-Mart compete with Smoked Fish and Honey? I think not. No way.
My neighbor had his sister's pressure washer for a few weeks. I hired him to do our front chimney at our house in West Shokan. The chimney hadn't been cleaned since Clayton's uncle built it in the 1950s. My neighbor is very talented. There is still some old fashioned American inegenuity left:
Bushkill Creek, West Shokan, Our backyard I Bushkill Creek, West Shokan, Our backyard II Bushkill Creek, West Shokan, Our backyard III Bushkill Creek, West Shokan, Our backyard IV The "Mayor" of West Shokan
The West Shokan Curmudgeon reports that the West Shokan General Store will close. According to the Curmudgeon, the owner of the store, Ruth Marzulli, has:
"offered to compromise on the rent and to extend the initial rental agreement. The Mansfields feel that it’s impossible to make the store viable even if the rent is almost nothing. I’m sure there’s a compromise in all this, but it doesn’t seem that the parties will figure it out."
The Curmudgeon suggests that a group might open the store in Snyder's, a bar famous for appearing in the film Wendigo, which has apeared on the Independent Film Channel and elsewhere.
Babs and Phil Mansfield, who moved up from the city to run the store (Phil is a professional photographer as well as a retailer) have done a great job with the store. The food is very good and they sell alot of neat stuff like milk in the old fashioned glass bottles that is organic (bottled by a local farmer), organic eggs and world-class soups, pot pies etc. The store is much more crowded than it was when Weber owned it and much more crowded than when the Marzullis operated it themselves.
Ruth's late husband Jerry had purchased Weber's store and refurbished it about 5 or 6 years ago. Unfortunately, rumor has it that the price was somewhat too high to be justified by the volume. The economics of the area may be that commercial properties cannot command the prices that would seem appropriate elsewhere, such as New York, because of insufficient traffic. It is understandable that Ms. Marzulli does not wish to rent or sell at a loss, and it is also understandable that Mr. and Ms. Mansfield cannot operate at a loss to cover Ms. Marzulli's cash flow gap.
As the Curmudgeon points out, the store is a major asset to the hamlet of West Shokan. For those who do not drink (Snyder's is a commodious alternative hangout if you do drink)it is the only "third place" to meet others in West Shokan.
Ms. Marzulli would probably be wise to compromise on the rent, especially if the Curmudgeon's concern that the West Shokan post office might close if the store closes again is true. If the p.o. does close, Ms. Marzulli will lose that rent as well as the store's rent. If so, she will be holding an expensive property with no tenant and will have to carry the interest (or imputed interest) as well as pay the taxes and maintain the property without any revenue.
It would make more sense for Ms. Marzulli to cover her variable costs and at least part of her fixed costs by offering the Mansfields a lease at a market rate. By market rate I mean a rate that is limited to the store's net income less a reasonable estimate of profit and wages for the Mansfields. I sincerely doubt that another buyer will be able to generate more traffic than the Mansfields have. Commercial properties on Route 28 in neighboring Boiceville have been sitting empty for years.
Al Higgly, a Shandaken fruit stand operator, restaurateur and real estate investor, mentioned to me that his "birthday buddy" William T. Golden had died on October 9, 2007, just a few weeks before his 98th birthday. Higgly and Golden were both born in the last week of October. Mr. Golden owned more than 10,000 acres in Olivebridge, not far from my West Shokan home.
According to the New York Times Mr. Golden was an investment banker who, after retirement, was on the boards of nearly 100 organizations, including the American Association for the Advancement of Science and the Carnegie Commission on Science, Technology and Government (as its chairman). Mr. Golden was an advocate for science policy and helped create the National Science Foundation. He worked on the Atomic Energy Commission at the time of its founding in the late 1940s. His neighbor in Olivebridge was his former boss, Harold Lindner, former president of the Export-Import Bank and ambassador to Canada. William T. Golden, RIP.
Another famous New York business figure recently moved into the Town of Olive. Bruce Ratner has purchased an estate also not too far from West Shokan. The Town of Olive has always welcomed many interesting people. Jimi Hendrix lived on Traver Hollow Road, about three miles from where my cabin is now located, in 1969, the year of the Woodstock concert and also a year before Hendrix's death.
Al Higgly once told me that when he was a youngster in the 1940s he used to say "hey" to Eleanor Roosevelt, who was a weekly visitor to the home of Mary Margaret McBride in West Shokan. According to Wikipedia McBride, originally from Missouri, was a radio personality from 1934 to 1940 on WOR in New York City. Also, she appeared on NBC and ABC radio until 1960. According to Wikipedia, "during World War II, she began 'breaking the color line', mixing in African American guests." Ms. McBride died in West Shokan in 1976.
The West Shokan curmudgeon blogs that there are differences between the nearby Village and Town of Woodstock versus West Shokan, in the town of Olive:
>"Culture Woodstock: hippy West Shokan: hippless
>"Shopping Woodstock: tie-dye ear-muffs West Shokan: coffee (coming soon)"
Actually, the coffe is going soon as I have heard a rumor that the only store in town, the American General Store is closing on December 1. Alas, West Shokan is a small town, but there are those who love it. The curmudgeon doth protest too much, methinks. The Town of Olive has a population of 4,579 and West Shokan has 760 or so. It is a privilege to live in a special place.
I have researched and written about employee benefit issues and in my previous life was a corporate benefits administrator. I am currently associate professor of business at Brooklyn College. I hold a Ph.D. from the Columbia University Graduate School of Business, an MBA from UCLA and an AB from Sarah Lawrence College. I am working on a project involving public policy. I blog on academic and political topics.
Our Cabin
Emerson Hotel
Our Cabin (Freda Navigating Slippery Ice)
Freda at Emerson Hotel
American General Store is closed but not forgotten.
Bushkill Creek, West Shokan, Our backyard I
Bushkill Creek, West Shokan, Our backyard II
Bushkill Creek, West Shokan, Our backyard III
Bushkill Creek, West Shokan, Our backyard IV
The "Mayor" of West Shokan
