Saturday, May 16, 2009

You Get More Of What You Subsidize

Lobster prices are apparently low in New Brunswick this year. The same may be true in other areas as well; I neither know, nor could be bothered to check, whether that's the case.

For those who enjoy eating lobster and live in an area where the price is down, this is a good thing. For my part, I don't care to eat underwater cockroaches, so this has remarkably little effect on my life. I always wonder two things about the first time a person ate lobster. Number one, how did they get one in the first place? Lobsters are bottom-feeding scavengers. They don't, to my knowledge, occasionally poke their eye-stalks above the surface to look around, or creepy-crawl up onto the beach for some sun.

No, it takes effort, and generally a big specially constructed wooden box, to catch lobster. I like to imagine that someone built one of those big wooden boxes and tossed it into the ocean on spec. "I don't know what'll wind up in there, but I'm eating it!"

Yes, yes. Tidal pools, accidental beachings, etc. Things that belong on the ocean floor wind up on the beach all the time. This doesn't help the case of the first person who ate a lobster they just happened to find. Take a good long look at a lobster. It looks like something that escaped from one of David Cronenberg's nightmares. The correct response of the first person who found one, not knowing what it was, should have been to run as far as they could, then dare their friends to go poke it with a stick.

This brings me to my second question about the first lobster-eating. How freaking hungry was that person? A lobster, even disregarding the possible hygiene and disgust factors of finding one lying on a beach, already dead and decomposing, is not an appetizing sight. A lobster is an aquatic earwig.

Of course, my scenario of that first lobster-finder daring their friends to go look (this, of course, assumes that finder was male) leads to another possibility. The first person to eat lobster may have done so on a dare, or possibly when bribed with the epochal equivalent of a dollar. Remember that kid you knew in elementary school who would eat pretty much anything for a buck? The first person to eat lobster was somebody who grossed him out.

Sidebar: at this very moment, somewhere out there a reader who enjoys lobster is preparing an indignant retort about how delicious it is. Save it. If it doesn't nauseate you, then by all means enjoy. The fact that I see eating lobster as pretty much equivalent to scarfing down insect-infested roadkill means all the more for you. You should be thanking me, really. End sidebar.

I have another issue, besides disgust, with eating lobster. I am neither a vegetarian nor an animal rights activist. I understand that every time I eat meat, I'm eating an animal that was killed for that express purpose, and I'm generally OK with that. However, I think that those animals should be killed in as quick and painless a manner as possible. I have a hard time seeing "dropped alive into a pot of boiling water" as humane.

Anyway, all of that was preamble to what I really intended to write today. My actual topic is the economy of lobster fishing (which should be called "lobster roaching" or something - are lobsters "fish" by any definition?).

The low price of lobster is not so good for lobster fishermen. Having learned something from the business acumen in the banking and automotive industries, lobster fishermen have responded to this downturn by asking for government bailouts:

On Thursday representatives from every wharf in the area met to discuss the issue with the hopes they can organize something to get the attention of the government, (a spokesman) said.

"We're not paid enough even to cover costs and we need help from the government."

(The spokesman) said they are hoping both the federal and provincial governments will step in to help fishermen.

Here's the problem with that line of thinking. This applies to every industry, not just fishing. The government cannot help. Oh, they can throw some money (your money and mine, by the way - the government has no money except what it takes from citizens) at a problem to try to put a band-aid on the bloody stump, but in the long term that does more harm than good. Here's how.

Let's assume there are 1000 lobster fishermen in New Brunswick who can't make any money at it this year due to low prices. I have no idea whether that number is remotely accurate, and don't care since it's only for illustrative purposes.

If the government steps in and hands them each a bag of money not to fish this year, or does anything else that has the same end effect of insulating them from any financial losses (regulating prices, etc.), then how many of them will come back and try to fish lobster again next year? Probably about 1000. Maybe more, since a government bailout means guaranteed profits.

The same problem will then repeat itself next year. And the year after that, and the year after that, ad infinitum. This is not indefinitely sustainable. At some point, an industry has to be allowed to suffer some negative consequences of economic cycles. Even if we ignore the debatable morality of the government stepping in and interfering (I'm not going there today; this is going to wind up long enough already), it destabilizes the market and leads to much larger long-term problems.

Now, consider what happens if the government doesn't interfere. Yes, it'll be a rough summer for some lobster fishermen. However, what would happen to those same 1000 lobster fishermen next year? I'll expect that by then, some of them would have found something more profitable to do. Let's say 10% of them move on to other occupations, go back to school, move to another region, whatever. That leaves 900 trying to fish lobster next year. That means less lobster on the market, which means higher prices, which means maybe the 900 can make a living at it. If not, then maybe only 700 will try the next year. Eventually, and in a shorter time than you'd probably expect, the market will stabilize and the remaining fishermen will be making money.

Sidebar for those who went to public schools in the last thirty years, or who don't see the problem with the bailout mentality: when the government keeps its nose out of things, the price of anything is normally determined by two factors: supply (how much of it is available) and demand (how much of it people want). This is called the free market, and it's a good thing for all kinds of reasons that we don't have time to go into today. Sorry to complicate this - I know those three italicized terms will be completely new and foreign concepts to a lot of people these days. End sidebar.

So if the government stays out of it, despite some tough times in the interim for a relatively few people, things will work out in the end. If the government gets involved, and they probably will, they'll destabilize the market and foster a cycle of dependency. Bailing out an industry to avoid a down market cycle (or even a long-term shift - if cars were just being invented now, governments would be making guarantees to buggy whip manufacturers) may prevent a little pain in the short term, but it causes a lot more in the long term. It's the equivalent of not teaching a child the alphabet, because that's an awful lot to ask of a toddler, to let them struggle through life as an illiterate adult.

And about that whole dependency thing, here's a quote from a spokesman for the fishermen, from later in the same article. He's talking about the possibility of the fishermen only running their boats for a few weeks this year: "How would you then qualify for EI?"

I'm not trying to belittle their situation. I appreciate how hard it is to find work under the best of conditions, and Atlantic Canada in 2009 is far from the best of conditions. However, I just don't see how it's the government's problem, or mine, if somebody can't work long enough this summer to qualify for EI ("employment insurance", which is what Canada calls unemployment benefits to try to put on an Orwellian happy face). Once again, maybe people should be encouraged to move on from an industry where you plan to collect unemployment benefits every year, and look for something more stable and sustainable.

For that matter, the fact that the I in "EI" stands for "insurance" makes the thought occur to me that planning to collect on insurance is normally considered insurance fraud. The law says I can't insure my house then deliberately burn it down, or take out life insurance on someone then kill them, and expect to benefit. Insurance is meant to compensate unforeseen losses. But this, again, is a whole other topic that I'll leave for today.

As a postscript, that newspaper I linked to earlier has a "public opinion" feature in their editorial section. I like to call it the Uninformed Person On The Street feature (I used to call it "Ignoramus On The Street", but decided that was too harsh). It doesn't seem to be in their online edition. Like Jay Leno, they send a reporter out to ask people in the streets what they think about various issues. The problem here is that most people haven't given most issues a moment's thought. This includes me - as I've noted before, I don't know enough about most things to form an opinion, and you can assume that the things I write about are the rare exceptions.

So the odds are that this feature will consist of a lineup of citizens expressing uninformed opinions about situations they don't remotely understand, and offering untenable solutions. Sure enough, that's almost always what you get.

In a recent edition, the reporter asked about this lobster situation. Several apparently random people were asked whether the government should step in to help the fishermen (without defining what that means - obviously, we all understand that it means "give them a pile of money").

Every single one of them said yes, most with emphatic emphasis.

I can only hope against hope that none of those people vote.

Enough rambling. Here's a picture of evidence that Hostage Bunny is being mistreated in yet another way: the use of stress positions. You may notice that in every picture his body has been in precisely the same posture, indicating that his fiendish captors are not allowing him to move. Unless he's allowed to stretch occasionally, cramping is inevitable.

1 comment:

Anonymous said...

At my local grocery store, they are selling lobsters for $5.45 each. They are tiny, and most of that is shell and green pus. Who in their right mind is going to spend that much money for so little reward?

There was an old Soviet joke I heard somewhere about how the Communists would have to leave one country in the world with a free economy so they would know how much stuff was supposed to cost. The problem with socialism is that it disconnects the real world from reality, and makes great effort, great sloth, great talent, and great banality all worth the same to the System. Want some proof? People who hunt for underwater rats will get all the subsidy they want.