Marginal Value

A reader recently asked me what price she should be willing to pay for cheap beer by the case. When buying beer at the liquor store (or “beer distributor” if I happen to be in Pennsylvania) I expect “sub-premium” beers (such as Hamm’sPBR, Miller High Life, Keystone, etc.) to be about $15.00 per 30 before tax. When buying slightly better beers, I regard it as a good deal if I can get beers at under $1.00 each. And, of course, one must be willing to pay more for better beers.

But it bears repeating that value is not intrinsic. So I repeat, in the words of Ludwig von Mises: “Value is not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment.” We may attempt to assign value to something, but those values mean nothing without human action. Either we buy at a given price or we do not. If we say “Pabst is not worth $25.00 per 30” but then still make that purchase, we are clearly mistaken. It is only the act of the sale that tells us anything concrete about value.

What’s more, values change relative to each other based on each individual’s hierarchy of wants. “If a man is faced with the alternative of giving up either one unit of his supply of a or one unit of his supply of b, he does not compare the total value of his total stock of a with the total value of his stock of b. He compares the marginal values both of a and of b. Although he may value the total supply of a higher than the total supply of b, the marginal value of b may be higher than the marginal value of a.” This helps shed light on the classic question of why gold is more prized than water, even though water is essential for human survival while gold is not. The answer lies in the fact that under most circumstances, the marginal value of a unit of water is less than the marginal value of a unit of gold. This is because water is generally plentiful enough to supply our basic needs. But it is equally true that in the severest drought, one would not part with a unit of water for any amount of gold; the marginal value of each has changed with the circumstances.

Beer of the week: Casablanca Premium Lager – Among the many conditions that factor into valuing beer is location. In Morocco one may expect to pay slightly more for a beer than one might expect given the prevailing exchange rates. The marginal value of the stock of beer is somewhat higher for its relative scarcity. (That is not to say that it is hard to get beer in Morocco; it is just a smaller market.) Casablanca, Morocco is one of the largest economic centers of Africa. It is also the source of this aptly named beer. Casablanca lager is clear and pale, with a very faint and dry aroma. It is a very standard micro, but plenty refreshing.

Reading of the week: Human Action by Ludwig von Mises – Later in this, his chef d’oeuvre, Mises writes: “The moralists’ and sermonizers’ critique of profits misses the point. It is not the fault of the entrepreneurs that the consumers–the people, the common man–prefer liquor to Bibles and detective stories to serious books, and that governments prefer guns to butter. The entrepreneur does not make greater profits in selling “bad” things than in selling “good” things. His profits are the greater the better he succeeds in providing the consumers with those things they ask for most intensely.”

Question for the week: Do the common people truly prefer liquor to Bibles and detective stories to serious books? Is it not simply true that the marginal value of a second Bible is quite low compared to the marginal value of a second drink?


Void Where Prohibited

In the 1860s, the Supreme Court of the United States heard the case of McGuire v. Commonwealth. Mr. McGuire was prosecuted and convicted for retail distribution of liquor in Massachusetts, where the so-called “temperance movement” had taken hold. Regardless of his federally issued license to sell liquor, Mr. McGuire was indicted and convicted of selling liquor in violation of state law. At the Supreme Court, his attorneys argued that the federal power to sell licenses for the wholesale of liquor preempted the power of the Commonwealth of Massachusetts to effectively nullify those licenses by prosecuting those who attempted to use them. If the states could do so, they would essentially hold the power to excuse themselves from the authority of Congress on any taxation and licensing issue. Their arguments were not availing.

Although the heart of the legal issue was the relationship between federal and state power, Messrs. Cushing and Richardson, the attorneys, were at their best in arguing against temperance laws on their own merits. They argued persuasively (especially to those of us with the benefit of hindsight) against prohibition. Many of their points are worth consideration for how prescient they were and how applicable they remain.

1. It is not true, as alleged, that wines, fermented liquors, or even distilled spirits, are poisons of themselves, otherwise than that everything we eat or drink may be deleterious if used in excess.

It is always striking how the word “temperance” is always used to mean “abstinence”, while the word itself surely implies “moderation.” And not only is alcohol not an evil in itself, it has health benefits as will be seen later.

2. In view of the example and injunctions of our Saviour and his Apostles, in this respect, it cannot be true that the use of wine is immoral of itself.

Rumor has it that there are actually certain Christian sects that claim that when Jesus turned water into wine that it was non-alcoholic because it did not have time to ferment. As if Jesus’s power was limited to changing water into grape juice and was insufficient for turning sugar into alcohol and carbon dioxide.

3. It is not true, as pretended, that it is our duty to abstain utterly from any object of health or enjoyment because others may abuse it. The effect of this doctrine would be to deprive us of everything desirable, even the dearest of all human relations; since nothing exists for the use of man which some men will not abuse.

This is a very similar argument to the one made in an earlier post on this blog about prohibitions on gambling. Viz. the fact that some people are unreasonable is not a sufficient reason to ban reasonable people from X.

4. It avails nothing to make war on the sale of distilled spirits; for spirits may be distilled in every man’s kitchen, by means as cheap, as accessible, and as manageable as the preparation of a cup of tea or coffee; and if it were not so, other anaesthetic agents exist, which the law cannot reach, such as opium and bang, the familiar means of intoxication used by more than half of the human race, to say nothing of the professed anaesthetic medicaments.

There are two arguments here, both of which are commonly advanced regarding the prohibition on hemp. 1. Despite the insane amount of money spent on the “war on drugs”, hemp is still easy to grow or otherwise obtain, and 2. cracking down on any given drug drives people to other drugs, often more dangerous ones. Many people have observed that if hemp were more available and accepted, that would be a tremendous step toward overcoming the current opioid crisis.

5. The universal prevalence of the use of one or another object of this nature, in all ages, all countries, and all states of society, serves to show that they satisfy a physical exigency of man’s organization as imperative as that of food, and of course laws cannot eradicate, although they may regulate, such use.

Ah yes, the biological imperative to get impaired. People have always self-medicated for depression, anxiety, and all of the other conditions for which we have only lately had names. Wine may not be the best medicine for these maladies, but it is also far from the worst.

6. It shocks the sense of mankind, to prohibit absolutely by law the use of wines, fermented liquors, and distilled spirits as a healthful beverage in moderation of use; and the effect of such laws, if rigidly enforced, would only be to introduce by the side of the vice of drunkenness, the worse one of universal hypocrisy.

Again, the parallels with arguments over legalized hemp are stunning. Several states have decriminalized hemp specifically for medicinal use. Those who would impose a total ban on hemp “for the public health” are surely hypocrites in this regard.

7. It confounds all distinction of right and wrong, in the acts of instructed men, and in the conscience of the less instructed, to seek to elevate the use of wine to the dignity of an illegal and immoral thing, for the suppression of which all the energies of society should be tempestuously exerted.

There is a lot going on here. In the first place, there is an important misrepresentation of the law. The laws of prohibition (be they alcohol, hemp, opium, etc.) traditionally do not criminalize the use of the product. It is not illegal to consume hemp, it is illegal to have hemp. This distinction is important because laws properly curtail actions rather than things. One should always remember that when a law purports to ban a thing, it is actually banning you from doing something. All bans are essentially limits on personal freedom.

Secondly, they touch on the amount of government effort that would be required to actually suppress the consumption of alcohol. The combined effect of alcohol prohibition and the “war on drugs” set back society immeasurably, if only because of the tremendous waste of money and manpower on the (attempted) enforcement of these laws.

The so-called temperance agitation has effected no abatement, in the whole, of the use or abuse of intoxicating drinks, and in the end will probably produce, by recoil, a state of things worse than that which existed before the agitation. No superiority then over the nation is due to those legislators of Massachusetts, who pretend to be “more powerful than Nature, wiser than Truth, better than God.”

Hear, hear!

Beer of the week: Lakefront IPA – It is a new year, but not a new beer. I’ve had this Milwaukee brew several times, and occasionally on-site at the Lakefront Brewery. The head leaves plenty of good lacing on the glass. The flavor is quite balanced, with a solid malt body layered with plenty of juicy hops. Lakefront are certainly doing good work.

Reading of the week: McGuire v. The Commonwealth, 70 U.S. 3 Wall 387 (1866) – There are some people who think that government regulation is the solution to every societal problem. But positive law is extremely limited in what it can accomplish. As the learned counsellors argue: “English and American society has been floundering along from one folly to another in the paths of false theory and unphilosophical legislation, under the influence of the idea that statute law is the all-sufficient remedy of every sort of human infirmity; an idea which is itself the special human infirmity of the well-intentioned people of New England.”

Question for the week: The temperance movement was led by Christians. What is the strongest scriptural basis for a policy of teetotaling?

Origin Story

One of my most vocal critics recently commented about this blog, “It’s not like you write anything original; you just rehash the ideas of classical authors.” For the most part, I agree. Even the original poetry that I’ve posted here is absolutely packed with classical references.

But my critic’s observation is, itself, unoriginal. Virtually nothing is wholly original.

“The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.” – Ecclesiastes

“If I have seen a little further it is by standing on the shoulders of Giants.” – Issac Newton

“A thought is often original, though you have uttered it a hundred times.” – Oliver Wendell Holmes

“When Shakespeare is charged with debts to his authors, Landor replies, ‘Yet he was more original than his originals. He breathed upon dead bodies and brought them into life.'” – Ralph Waldo Emerson, quoting Walter Savage Landor, discussing William Shakespeare

“As the ancients
Say wisely, have a care o’ th’ main chance,
And look before you ere you leap;
For as you sow, ye are like to reap.” – Samuel Butler, paraphrasing John Lyly, John Heywood, and St. Paul

“[The] borrowing and refurbishing of shop-worn goods, as a matter of fact, is the invariable habit of traders in ideas, at all times and everywhere. . . .  At the moment of the contemporary metaphysician’s loftiest flight, when he is most gratefully warmed by the feeling that he is far above all the  ordinary airlanes and has absolutely novel concept by the tail, he is suddenly pulled up by the discovery that what is entertaining him is simply the ghost of some ancient idea that his school-master forced into him in 1887, or the mouldering corpse of a doctrine that was made official in his country during the late war, or a sort of fermentation-product, to mix the figure, of a banal heresy launched upon him recently by his wife.” – H. L. Mencken


Beer of the week: Bavaria Premium – This beer is fairly unoriginal. The name clearly meant to evoke thoughts of the great beer-producing region of Southeast Germany, despite the fact that this beer is from Holland. Similarities in the packaging and price of this beer led me to speculate that Bavaria is a product of the same brewery that gave us Hollandia. A quick search indicates that my hunch was correct. Bavaria is a golden pils with little head retention or aroma. There is a malty sweetness that has a hint of honey. For the price, it is not a bad choice, though I prefer a bit more hops in my lagers.

Reading of the week: In Defense of Women by H.L. Mencken –  The introduction to this book is typical Mencken: plenty of wit and cynicism, and, ultimately, a good deal of sense. “If I knew what was true, I’d probably be willing to sweat and strive for it, and maybe even to die for it to the tune of bugle-blasts. But so far I have not found it.”

Question of the week: Many argue that the word “unique” does not admit of degrees; something either is or is not unique. Is the same true of “original”? Can something be “slightly” or “very” original?

Gifts are for the Givers

Christmastime is the season of giving. It is the season of charity. It is the season of gifts. But it is not the season of “pure altruism.” That is because, like Santa Claus, pure altruism is not real.

In both charity and gift-giving, the giver always gives to get something in return. We know this because all human action is a choice between alternatives and every action, as Aristotle teaches, “is thought to aim at some good; and for this reason the good has rightly been declared to be that at which all things aim.” So no charitable act is committed for its own sake, but with an aim at some good.

Only a cynic would opine that the good aimed at by giving gifts is getting gifts in return. And that explanation could scarcely account for charity, especially anonymous charity. One could certainly argue that the good aimed at is the good of the recipient of the gift. But that does not appear to be a satisfactory answer. Economic principles are applicable to all human action, as has been shown by a number of philosophers. And no voluntary transaction is conducted at an absolute loss, because there would is no incentive to do so. (Of course, parties occasionally make a bad deal and lose. And occasionally parties will take a loss now in the hopes of gaining more later.)

As Ludwig von Mises points out, every action is a form of exchange. Barter between individuals is an exchange of the most obvious type, but there are also “autistic exchanges.” An “autistic exchange” is one that an individual makes with himself. For example, if I go to the gym, I exchange my time and energy for perceived health benefits. Gift-giving and charity are other examples of an autistic exchange. “Where there is no intentional mutuality, where an action is performed without any design of being benefited by a concomitant action of other men, there is no interpersonal exchange, but autistic exchange.” The value of the gift is exchanged for the good feelings that come from making other people happy.

Like all exchanges, the autistic exchanges are only undertaken where the participants perceive that the value received is commensurate with the value given. I go to the gym because I perceive that that time and effort is worth the health benefits. I smoke a cigar because I perceive the health hazards and cost are worth the pleasure. I give a gift because I perceive the pleasure of gift-giving (and, to the extent that I expect anything in return, the possibility of gratitude and/or reciprocation) to be commensurate with the thought and value of the gift. Gift-giving, like all other human action, is essentially selfish.

And that’s ok! This is not an indictment of giving or of charity. Quite the opposite. It is in our best interest to give generously. We rightfully perceive that we get value from giving, even when we do not expect a gift in return. Gifts are for the givers, so be a giver this Christmas!

Beer of the week: Fistmas Holiday Ale – This winter seasonal offering from Chicago’s Revolution Brewing Company is a real treat. This pretty amber brew has hints of ginger and cinnamon, without being over-spiced as many spiced winter beers are.

Reading of the week: The Errors of Santa Claus by Stephen Leacock – As noted last week, Leacock is one of the greatest gifts that Canada has given to the literary world. Whether he wrote for money or for his own pleasure makes no difference to us. (In the words of Mises, “a genius may perform his task for himself, not for the crowd; however, he is an outstanding benefactor of mankind.”) This cute little story shows another way in which gifts are given for the sake of the givers.

Question for the week: This economic analysis works for gift giving, but seems to fall apart at self-sacrifice, even to the point of death. Does such self-sacrifice revive the notion of altruism?

Health Food

A concept that is very hard for some people to grasp is the idea that the value of money is governed by the same laws of supply and demand as everything else. One might assume that the demand for money is unlimited, and therefore pushes supply/demand analysis to its breaking point. But this is not so. If the demand were truly unlimited, no one would part with a dollar for any amount of goods or services. The reason that one is willing to spend money at all is that the purchaser’s demand for money is lower (at that time, and in that quantity) than his demand for the particular good or service bought. The “price” of a dollar is it’s purchasing power. And like the price of everything else, it is determined by supply and demand. Where money is scarce, each dollar is more dear. Where the supply of money is inflated, each dollar buys less.

Like money, it seems that intangible concepts such as health, time, and happiness are not subject to unlimited demand. If demand for health were truly unlimited, the demand for candy, cigarettes, and automobiles would plummet. Every potentially hazardous occupation or pastime would find absolutely no willing participants. But people “purchase” health with hours in the gym, the consumption of salubrious foods, abstention from tobacco, alcohol, sugar, gluten, red meat, carbohydrates, sunshine, and whatever else is both pleasant and currently perceived as deleterious. But most people are unwilling to spend all of their time and effort on attempts to improve or preserve their health. And with good reason. As with money, the effort to acquire the absolute maximum levels of health is a hefty amount to pay. Every hour at the gym is an hour not spent elsewhere. Every salad eaten is a pie eschewed. Every kale smoothie is a beer left behind.

To be sure, time at the gym can be enjoyable. Salads can be delicious. Smoothies are often tasty. But as Canadian humorist Stephen Leacock observed, “as long as you have the price of a hack and can hire other people to play baseball for you and run races and do gymnastics when you sit in the shade and smoke and watch them — great heavens, what more do you want?”

Beer of the week: Labatt Blue – This straw colored Canadian Pilsner is fairly bland. It pours with big, fluffy bubbles that fade very quickly. The smell is faint and what aroma is there is of cereal grains. The mouthfeel is quite light, as is the flavor. For a mass produced lager, Labatt Blue is very average.

Reading for the week: How to Live to be 200 by Stephen Leacock – A Canadian author for a Canadian beer. At one point, Leacock was one of the most popular English-language humorists in the world, but his training was in political science and economy. He studied at the University of Chicago under Thorstein Veblen.

Question for the week: It makes evolutionary sense that things that are healthful are also enjoyable, so is there anything that is truly salubrious that is also throughly unpleasant?

What was I thinking?

“What was I thinking?”

That rhetorical question is often used to express dismay at a lack of foresight e.g. “A while back, I passed on a chance to buy a Bitcoin at $400; what was I thinking?” Sometimes it goes to absentmindedness e.g. “I peeled a banana and accidentally threw away the banana and went to take a bite of the peel; what was I thinking?” But in both of these cases, the question is purely rhetorical because it is pretty easy to determine the thought process involved. In the Bitcoin example, the person presumably thought about the risks and advantages of buying a Bitcoin and determined that the potential upside was not worth the $400 risk. In the banana example, the person was clearly thinking about something totally unrelated to the task at hand, and mere distraction caused the errant movements.

There are times, however, when the question “what was I thinking?” is more than rhetorical, times when one honestly does not understand his own motivations. Every once in a while, we each do something that we are later unable to explain. It is occasionally impossible to determine what thought process or motivations led to the decisions made.

There appear to be multiple potential causes for such internal confusion. For one thing, not understanding one’s own motivation may be a simple failure to carefully self-evaluate. For another, there may be pre-rational motivations that get overlooked in the search for a rational explanation, such as instinct or something like it. But most likely, it seems, is the likelihood that the decision in question is the product of a great many thoughts and motivations, possibly even at odds with each other. The complicated interplay between our various desires, instincts, goals, etc. may simply be so convoluted that we are unable to untangle (or even recognize) them all.

In The Underdogs by Mariano Azuela, the motivations of the belligerents during the Mexican Revolution are explored.  A rebel leader called Demetrio tells about the time that he got drunk and spit in the face of a local political boss, Señor Monico. As a result, Monico brought “the whole God-damned Federal Government” down on Demetrio, who narrowly escaped into the hills. Demetrio asserts that all he wants is “to be let alone so [he] can go home.”

His interlocutor, however, sees more in Demetrio’s motivations than Demetrio sees himself:

“It is not true that you took up arms simply because of Señor Monico. You are under arms to protest against the evils of all the caciques who are overrunning the whole nation. We are the elements of a social movement which will not rest until it has enlarged the destinies of our motherland. We are the tools Destiny makes use of to reclaim the sacred rights of the people. We are not fighting to dethrone a miserable murderer, we are fighting against tyranny itself. What moves us is what men call ideals; our action is what men call fighting for a principle. A principle! That’s why Villa and Natera and Carranza are fighting; that’s why we, every man of us, are fighting.”

This speech certainly works on Demetrio’s men, who emphatically embrace this noble characterization of their motivations despite the manifestly ignoble acts of plunder, rape, and murder in which they engage. But Demetrio’s reaction to this impassioned speech is more subdued; he orders more beer.


Beer of the week: Corona Light – A Mexican reading deserves a Mexican beer. Corona Light is clear and pale and foamy. The aroma and flavor are pretty standard macro. There is a hint of lime in the aroma, and just a trace of nuttiness in the finish. A pinch of salt brings out the lime in the flavor, which is a big improvement. Still, Corona Light; what was I thinking?

Reading of the week: The Underdogs by Mariano Azuela – The title The Underdogs (Los de Abajo in the original Spanish) refers not to the rebels, but to the common folk of Mexico. Throughout the novel, it becomes clear that the people are always oppressed, no matter which faction has the ascendency.

Question of the week: Is it really the case that some motivations cannot be discovered through self-examination? Or is it possible that we are just too afraid to look deep enough?


We are told that there are certain individuals who subscribe to a notion known as “biblical literalism”. These people, allegedly, take the Bible as being quite literally true and accurate in all respects. But I doubt that anybody who has given the matter any thought actually holds such a belief. A very simple question based entirely on the first page of Genesis serves to disabuse anybody of the idea that the Bible can be read as literal fact rather than as allegory: in which order were plants, animals, and man created?

The first creation story, contained in the First Chapter of Genesis places the creation of plants in the third day. All sorts of plants sprouted all over the land and bore seeds according to their type. Animals came to be on the fifth day. Humans were created on day six.

1. Plants; 2. Animals; 3. Man.

In the second creation story, contained in the next chapter of Genesis, humans were created before any plants had sprouted. Only after the creation of man did God make trees for the garden of Eden. Then, after man was in the garden, God made all of the animals to keep him company.

1. Man; 2. Plants; 3. Animals.

If they are taken as literal accounts, these two creation stories are irreconcilable. Biblical literalism can go no further than the very first page of the very first book of the Bible. And because this initial contradiction is so evident and so immediate, it seems unlikely that anybody truly is a biblical literalist. This is actually helpful, because it immediately indicates that the purpose of the Bible is to teach something other than literal history. What is left open, however, is the question of what the Bible really means…

Beer of the week: Grapefruit Sculpin- Traditionally, the fruit of the Tree of Knowledge is represented as an apple. But who’s to say that it wasn’t a grapefruit? This beer is a grapefruit twist on Ballast Point’s Sculpin IPA. The grapefruit aroma is evident as soon as the can is cracked. The beer pours with a fluffy head that hangs around. It has some of the bitterness of grapefruit rind and a smooth finish. Pretty good.

Reading of the week: The Book of Genesis, Chapters 1 & 2 – In my younger days, I liked to engage street evangelists. On multiple occasions, I found them unaware that there are two distinct creation accounts. I suspect that they had simply not read much scripture, and had received their Biblical teaching second-hand.

Question for the week: The logical conclusion from the conflicting creation accounts is that they are allegorical, and that each is intended to teach a different lesson. Having abandoned these as literal accounts of creation, is there any reason that creationism remains in conflict with evolution, etc.?