Tuesday, March 27, 2012

A Better Mouse Trap 2

Remember last week's Ralph Waldo Emerson quote?

It was something like, "If you build a better mouse trap, the world will beat a path to your door."

That wasn't Emerson's real quote, as we learned.

You can read the entire, and correct, quote here.

And it is true.

What is going on in the photo?

What is the company? How do you know what the company is?

I took this photo at one of this company's two local retail establishments. This photo was taken, by me, at around 2pm. I intentionally went in there at that time to see what it was like. Why? Because I have been there just after dinner and there is a wait time to get in.

I want to ask some questions:

1. What is the company? I see no name, only a logo.
What is the logo saying?
3. Why are some people wearing the same blue shirts?
4. Why are there so many of those people?
5. What is that hanging around each of their necks?
6. What are all the tables and stations for?
7. The screens on the walls are not signs. They are similar to TVs. The pictures change often. Why?
8. Where are all the signs that advertise the latest sale? The percentage you can get off if you buy now? The "special" offer(s)? The latest fad product?

9. What you can't see is that there are two purchase stations in the rear, each with a line. People are buying the products!

This company does not just invent and sell better mousetraps. They sell them in a way that nobody else does. You can see the services being provided here. You can see the interactivity of customer and product. You can see the interactivity of customer and certified sales PRO. You can see the interest those certified sales PROS have for the customer.


You should know that both of the stores beside this one are empty. What do they sell? Each of the stores could have a marquee sign that says, "Crap-From-A-Foreign-Country-Sold-To-You-As-Local-Stuff Store."

Each has so many signs on the windows that advertise 60% OFF! and 70% OFF! that you can hardly see inside the store. No matter, you don't really need to anyway. What they sell is cheap junk. What they sell does not improve lives. What they sell is faddish and will not be used for long.


It is the same old same old. And they will be out of business soon and the next SIMILAR store will move in. You see it every day. And the windows will be blocked off and the sign above that says, "COMING SOON!"

It looks to me like a path is being beaten to this better mousetrap. This company has created its many in-demand products without gubment subsidy, without gubment demands about where they locate, without gubment demands about what kinds of people to hire or how to organize them, and without laundering money to grease local or national politicians.

Where does this company manufacture its products? Some place with comparative advantage and outside all the gubment influences mentioned above. Why? Because more can be made more cheaply and more customers can be served. The other why? Profit.


Tuesday, March 20, 2012

A Better Mouse Trap

"If a man has good corn or wood, or boards, or pigs, to sell, or can make better chairs or knives, crucibles or church organs, than anybody else, you will find a broad, hard-beaten road to his house, though it be in the woods."

Ralph Waldo Emerson (1803-1882)

That is the real quote. There is a similar one, attributed to Emerson, but probably not really said by him. It is just as descriptive, and says:

Build a better mouse trap and the world will beat a path to your door.

The mouse trap is the most oft-accepted patent request, with 4,400, more than any other product the US Patent Office has issued patents for. About 400 people still apply for a new mouse trap patent annually.

Any new mouse traps lately?

A new one was put on the market just Friday, March 16. It has sold a million units each day since.

Was it a new product? Not really. It is the third generation of a new product. The famous I-pad.

Does Apple need to have fabulous holiday sales to get its product out? Does it sell its products in discount stores? How about outlet malls? In roadside stop offs, selling them along with pecan logs? Is it sold anywhere in the woods?

No? Why not?

Because it is a product with a new idea, a new way of doing things. All of which it does very well.

It is a product in demand because it not only works, but also because it changes the way people USED to do things! It created a new paradigm!

It is truly a better mousetrap.


As such, people are truly beating a path to the doors of Apple locations, worldwide, to participate in what they consider to be a privilege to buy one. They will pay pretty much any price Apple decides to sell it for. Everyone wants to get into the act of owning Apple stock! Why? Because they see that more people will be buying the stock than selling it. They want to get in on the action.

When more people buy a stock than sell it, the stock price will go up. Always. And people will reap profits.

Along with Apple's profits.

Is Apple reaping windfall profits?

NO! Windfall profits are those earned when somebody or something has nothing to do with the idea, product development or product sales, yet reaps rewards. In this context these rewards can be called pure profit.

When gubment taxes and increases taxes and earns "rewards" on something toward which it has participated nothing, it is earning WINDFALL PROFITS.

You and I have to take a risk.

And when was the last time you beat down a door to buy a crucible?

Part 2 of this post will come out next week!

Tuesday, March 13, 2012


"Necessity never made a good bargain."

Benjamin Franklin (1705-1790)

You ever notice that this is how gubment works?

Here is the process:

Gubment creates a disaster.

Let's take banking. It happens slowly. Centuries of successful banking practices, proven through experience and data, needed changing. It was a necessity.

First came "racial steering." Realtors and brokers could no longer steer prospective buyers to or from certain neighborhoods. Civil rights laws were "changing," crime statistics were "changing," and there was no longer a need to promote or prevent certain people to or from neighborhoods.

Of course people's attitudes had to change too, hence the steering laws. It was a necessity.

Then there was the new gubment mandate called "redlining." The gubment said you can't draw a "red line" around a neighborhood on the disadvantaged side of town and refuse to lend money to borrowers there.

But what if it's a bad risk? No problem - there will be no discrimination based on location, race or income level. It was a necessity.

And the gubment needed to help people buy houses and start businesses! Laws and agencies sprung up like a garden of flowers. For decades.

Then in the 90s it was suddenly discovered in the Constitution that housing was a right! This engendered and promoted a "national home ownership strategy," as "the American dream." And if banks didn't play right with the other kids, they would face - the gubment! It was a necessity.

(Don't get this wrong - the banks were finding plenty of opportunity here to make money, despite these non-market "techniques" they were using... and all with a wink and a nod by gubment...)

This of course all continued until recently, with a Congressman for years screaming, "We mutht pwovide houthing fow evewy perthon, no mattah what! Theah aw no banking pwoblemth! We don't need no thtinkin documentathun!" It wath a nethethity.

And the bubble eventually burst! OUT OF NECESSITY!

Was this the only financial problem gubment had created during these decades? Obviously not. It was only a part! But look at how the gubment has responded in the past few years just to this one. At every step, something had to be done out of necessity or the world would collapse.

Have we the people gotten a good bargain? I say no! Franklin would certainly say no!

Watch all the programs we will need coming up to "fix" the various messes that somehow happened while "fixing" the other messes. It will all be out of necessity and a very bad bargain.

Well, for everything but gubment.

Tuesday, March 6, 2012

"Managing" An Economy

"The idea that even the brightest person or group of bright people, much less the U.S. Congress, can wisely manage an economy has to be the height of arrogance and conceit."
Walter E. Williams

Can I start with this?


Dr. Williams knows that! Any economist knows that!

No group of people, bureaucrats, congressmen (cough!), economists, statisticians, clairvoyants - you name it - no group of people can manage an economy!

What is the only thing that can "wisely manage an economy"?

The famous Adam Smith INVISIBLE HAND.

Milton Friedman went a step further. He called it the invisible hand, and foot.

So, what's this invisible hand thing?

Look at your shoe. Is there a shoe lace there? If so, I ask, how many people did it take to get that shoe lace onto your shoe? One? Seventeen? Over a hundred?

Well, the answer is millions. Untold millions. And none of them is working specifically with others in that group toward the goal of lacing your shoe. Each is doing a particular job in the vertical and horizontal integration of resource acquisition and development, production, marketing and distribution, sales - etc!

Nobody knows how to make a shoelace! But each mini department in that shoelace's development knows how to do what they do best.

This is efficiency at its micro best!

Can any group know how to "manage" those millions or billions of steps necessary to efficiently make something happen in an economy?


How about managing an industry, an economic program? Take health care for instance. Can it be "managed" or efficiently delivered by a group, any group, of people, most of whom have no medical training? Think carefully...

And do you think that lack of efficiency and abundance of waste will be delivered more cheaply? Think carefully...

And do you think this group thinks about you the same way your (former) doctor did? Think carefully...

And do you think money will be sufficient to bring this wondrous, so-called "affordable" health care system to you to the very end of your life? Think carefully...

And do you think the gubment will ever deliver the mail efficiently and profitably? Then how can it do something infinitely more complex and important like health care? Think carefully...

This is where Milton Friedman brought the invisible foot into the mix. He said, "when government attempts to substitute its own judgments for the judgments of free people, the results are usually disastrous. In contrast to the free market's invisible hand, which improves the lives of people, the government's invisible foot tramples on people's hopes and destroys their dreams." (emphases mine)

Read the Dr. Williams quote above once again.  I expect he would agree with me completely!


Thursday, March 1, 2012

What Is Created By Gubment?

"The guiding purpose of the government regulator is to prevent rather than to create something."

Alan Greenspan

Gubment doesn't create anything - not jobs, not economic activity, not wealth.

But it can go a long way toward PREVENTING all those things from being created by a free market economy.

How? The easiest way is crushing gubment regulation. When

  • oil companies cannot drill (or drill where there is oil),
  • banks have to lend or have to lend in certain ways contrary to long-held banking practices,
  • the general populace has to hire accountants to do their taxes so they don't get into trouble from making a mistake,
  • cars cannot be produced without using certain materials and meet certain weight criteria,
  • a dog cannot spend a night in a kennel without a multiplicity of shots not needed even a short time ago...

Certainly this could go on and on, and get more and more micro. I just received our new "rules" for use of the neighborhood pool this summer. The rules now encompass 8 pages - last year's manual was only 6 1/2. This is new - in addition to showing our neighborhood pool pass, we are now required to show a valid photo ID proving that we live in the neighborhood. AND LEAVE IT WITH THE GUARDS ON DUTY! Oh, and if we forget our neighborhood pass at the end of the day, it will be returned for a $25 fee. What?

Can you spell m-o-n-e-y-g-r-a-b boys and girls?

I wrote the HOA nazis - if they think I will be leaving my driver's license with a group of 14 year olds at a table at the door to the pool, they can think again. I haven't heard back and don't expect to. I must conform!

I was shocked last summer to learn that my dog needed a flu shot (a flu shot!?) or could not spend any time in the kennel.

What's the problem with protecting my dog and everyone else's? These very, very micro edicts cost and cost and cost. And for what benefit? My dog has never had the flu. I have never heard of a dog that has had the flu. But the kennel told me there was an epidemic in some state not near here and that our County came down with the new regulation. That regulation probably prevents more economic activity than it promotes dog "health." Who does it benefit? The vet, the kennel, and no doubt the County that takes their portion of the fee. But my dog?


And so it goes. Regulations and regulations, tens of thousands of pages designed to "prevent rather than to create something."

Updated 28 Dec 2011, tens of thousands of pages of regulation were added to the Federal Register regarding the importation of shredded lettuce just from Egypt! There were already tens of thousands of pages! As a tax-paying citizen, how many people do I employ writing and managing regulations to keep me safe from shredded Egyptian lettuce?

If you think that is creating anything viable and ongoing, except the growth of gubment, think again.