Today the US Supreme Court heard oral argument in Masterpiece Cakeshop v. Colorado Civil Rights Commission.  Transcript here. The biggest case of the year thus far, some say. In the case, a baker of custom wedding cakes in Florida refused to [sell a] / [create a custom] wedding cake for a gay couple. He argues that he cannot be prosecuted for such refusal under state anti-discrimination law because by forcing him to sell/create make such a cake (an expressive work of art), he would be forced to engage in speech. And the First Amendment does not allow a state to force speech.

The case is fun because it produces so many argumentative hypotheticals.  Here’s a few from today’s oral argument. Highlights include talk of Mexican mole and perhaps the first use of the word “rainbowness” in the history of Anglo-American jurisprudence.

JUSTICE GINSBURG: “What if it’s — if it’s an item off the shelf? That is, they don’t commission a cake just for them but they walk into the shop, they see a lovely cake, and they say we’d like to purchase it for the celebration of our marriage tonight.”

* * *

JUSTICE GINSBURG: “Well, suppose we . . .  make the assumption that he — if he makes custom-made cakes for others, he must make it for this pair, but he doesn’t have to write anything for anybody. He doesn’t have to write a message that he disagrees with.”

* * *

JUSTICE KENNEDY: “Suppose the couple goes in and sees the cake in the window and the cake has a biblical verse. Does he have to sell that cake.”

* * *

JUSTICE GINSBURG: “Who else then? Who else as an artist? Say the — the person who does floral arranging, owns a floral shop. Would that person also be speaking at the wedding?”

* * *

JUSTICE GINSBURG: “How about the person who designs the invitation?”

* * *

JUSTICE GINSBURG: “Invitation to the wedding or the menu for the wedding dinner?”

* * *

JUSTICE KAGAN: “So the jeweler?”

* * *

JUSTICE KAGAN: “Hair stylist?”

* * *

JUSTICE KAGAN: “Why is there no speech in — in creating a wonderful hairdo?”

* * *

JUSTICE KAGAN: “The makeup artist?” “It’s called an artist. It’s the makeup artist.

(Laughter.)

JUSTICE KAGAN: — I’m quite serious, actually, about this, because, you know, a makeup artist, I think, might feel exactly as your client does, that they’re doing something that’s of– of great aesthetic importance to the — to the wedding and to — and that there’s a lot of skill and artistic vision that goes into making a — somebody look beautiful. And why — why wouldn’t that person or the hairstylist — why wouldn’t that also count?

* * *

JUSTICE BREYER: “Well, then, what is the line? That’s what everybody is trying to get at, because obviously we have all gone into a Mexican restaurant. They have this fabulous Mole specially made for the people at the table to show what important and wonderful evening it was, which it did import — impart. There are all kinds of restaurants that do that. And maybe Ollie’s Barbecue, you know, maybe Ollie thought he had special barbecue.”

* * *

JUSTICE KAGAN: “I guess I just didn’t understand your answers to Justice Sotomayor’s question. Same case or not the same case, if your client instead objected to an interracial marriage?”

* * *

JUSTICE SOTOMAYOR: “So how about disability; I’m not going to serve cakes to two disabled people because God makes perfect creations, and there are some religions who believe that?”

Rory is willing to join Robert in some sailboat racing this weekend.  So we’re gonna do it in a serious but perhaps too tiny borrowed boat. This will be the first race of the midwinter racing series at RYC.  Very often there is NO wind.  And often there is rain and cold.  But this Sunday is predicted to be perfect!  Woo Hoo!

Here’s someone else’s photos of this event.  Just so you can check out.

Here’s the recording of this week’s oral argument in the US Supreme Court in Carpenter v. US.

https://www.oyez.org/cases/2017/16-402

This is a good case for first-time listeners of a supreme court oral argument.

What are the Pierces reading now?

Nice discussion on Econtalk about the World Bank Doing Business Report 2018.

From Wikipedia:

The ease of doing business index is an index created by Simeon Djankov at the World Bank Group. The academic research for the report was done jointly with professors Oliver Hart (economist) and Andrei Shleifer. ^[1] Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights. Empirical research funded by the World Bank to justify their work show that the economic growth impact of improving these regulations is strong.^[2]

“Empirical research is needed to establish the optimal level of business regulation—for example, what the duration of court procedures should be and what the optimal degree of social protection is. The indicators compiled in the Doing Business project allow such research to take place. Since the start of the project in November 2001, more than 3,000 academic papers have used one or more indicators constructed in Doing Business and the related background papers by its authors.”^[3]

Methodology

The report is above all, a benchmark study of regulation. The survey consists of a questionnaire designed by the Doing Business team with the assistance of academic advisers. The questionnaire centers on a simple business case that ensures comparability across economies and over time. The survey also bases assumptions on the legal form of the business, size, location, and nature of its operations.^[4] The ease of doing business index is meant to measure regulations directly affecting businesses and does not directly measure more general conditions such as a nation’s proximity to large markets, quality of infrastructure, inflation, or crime.

The next step of gathering data surveys of over 12,500 expert contributors (lawyers, accountants etc.) in 190 countries who deal with business regulations in their day-to-day work. These individuals interact with the Doing Business team in conference calls, written correspondence and visits by the global team. For the 2017 report, team members visited 34 economies to verify data and to recruit respondents. Data from the survey is subjected to several rounds of verification. The surveys are not a statistical sample, and the results are interpreted and cross-checked for consistency before being included in the report. Results are also validated with the relevant government before publication. Respondents fill out written surveys and provide references to the relevant laws, regulations and fees, based on standardized case scenarios with specific assumptions, such as the business being located in the largest business city of the economy.^[4]

A nation’s ranking on the index is based on the average of 10 subindices:

• Starting a business – Procedures, time, cost and minimum capital to open a new business
• Dealing with construction permits – Procedures, time and cost to build a warehouse
• Getting electricity – procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
• Registering property – Procedures, time and cost to register commercial real estate
• Getting credit – Strength of legal rights index, depth of credit information index
• Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
• Paying taxes – Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
• Trading across borders – Number of documents, cost and time necessary to export and import
• Enforcing contracts – Procedures, time and cost to enforce a debt contract
• Resolving insolvency – The time, cost and recovery rate (%) under bankruptcy proceeding

The Doing Business project also offers information on following datasets:

• Distance to frontier – Shows the distance of each economy to the “frontier,” which represents the highest performance observed on each of the indicators across all economies included since each indicator was included in Doing Business
• Entrepreneurship – Measures entrepreneurial activity. The data is collected directly from 130 company registrars on the number of newly registered firms over the past seven years
• Good practices – Provide insights into how governments have improved the regulatory environment in the past in the areas measured by Doing Business
• Transparency in business regulation – Data on the accessibility of regulatory information measures how easy it is to access fee schedules for 4 regulatory processes in the largest business city of an economy

For example, according to the Doing Business (DB) 2013 report, Canada ranked third on the first subindex “Starting a business” behind only New Zealand and Australia. In Canada there is 1 procedure required to start a business which takes on average 5 days to complete. The official cost is 0.4% of the gross national income per capita. There is no minimum capital requirement. By contrast, in Chad which ranked among the worst (181st out of 185) on this same subindex, there are 9 procedures required to start a business taking 62 days to complete. The official cost is 202% of the gross national income per capita. A minimum capital investment of 289.4% of the gross national income per capita is required.

The Pierce family is putting together a summer 2018 road trip plan.  The current thinking is to purchase a cheapish motor coach and hit the road for a National Parks + Canadian Rockies + Pacific Northwest tour. We’ve gotta knock out some of the bucket list of American funspots.

We are entertaining the idea of having another family  join us and share the the fun and expense. Maybe a portion of another family (eg. dad can stay at home and meet us for some of the time). Perhaps we can share the cost of purchase of the rig, or you can chip in for gas, or something else.  Please let us know if you or someone you know may be interested.

Examples:

https://sfbay.craigslist.org/eby/rvs/d/1993-jamboree-28-footmiles/6403069416.html

Robert has always wanted one. Now, 3D printable.

https://en.wikipedia.org/wiki/Curta

https://www.thingiverse.com/thing:1943171

The Curta is a small mechanical calculator developed by Curt Herzstark. The Curta’s design is a descendant of Gottfried Leibniz‘s Stepped Reckoner and Charles Thomas’s Arithmometer, accumulating values on cogs, which are added or complemented by a stepped drum mechanism. It has an extremely compact design: a small cylinder that fits in the palm of the hand.

Curtas were considered the best portable calculators available until they were displaced by electronic calculators in the 1970s.^[1]

The Curta was conceived by Curt Herzstark in the 1930s in Vienna, Austria. By 1938, he had filed a key patent, covering his complemented stepped drum, Deutsches Reichspatent (German National Patent) No. 747073. This single drum replaced the multiple drums, typically around 10 or so, of contemporary calculators, and it enabled not only addition, but subtraction through nines complement math, essentially subtracting by adding. The nines’ complement math breakthrough eliminated the significant mechanical complexity created when “borrowing” during subtraction. This drum would prove to be the key to the small, hand-held mechanical calculator the Curta would become.

His work on the pocket calculator stopped in 1938 when the Nazis forced him and his company to concentrate on manufacturing measuring instruments and distance gauges for the German army.^[2]

Herzstark, the son of a Catholic mother and Jewish father, was taken into custody in 1943, eventually finding himself at the Buchenwald concentration camp. Ironically, it was in the concentration camp that he was encouraged to continue his earlier research: “While I was imprisoned inside Buchenwald I had, after a few days, told the [people] in the work production scheduling department of my ideas. The head of the department, Mr. Munich said, ‘See, Herzstark, I understand you’ve been working on a new thing, a small calculating machine. Do you know, I can give you a tip. We will allow you to make and draw everything. If it is really worth something, then we will give it to the Führer as a present after we win the war. Then, surely, you will be made an Aryan.’ For me, that was the first time I thought to myself, my God, if you do this, you can extend your life. And then and there I started to draw the CURTA, the way I had imagined it.”^[3][2]

Herzstark worked hard to move his invention from his knowing how to build the device “in principle”^[3] to concise working drawings for a manufacturable device.

The department head’s celebration plan did not materialize, but Herzstark’s construction plans did. Between April 11, 1945, when Buchenwald was liberated by U.S. troops, and the following November, Herzstark was able, after making only a few “detailed improvements” to the design, to locate a factory in Sommertal, near Weimar, where machinists were skilled enough to work at the necessary level of precision, and walk away with three working models of the calculator.^[3]

Soviet forces had arrived in July, and Herzstark feared being sent to Russia, so, later that same month, he fled to Austria. He began to look for financial backers, at the same time filing continuing patents as well as several additional patents to protect his work. The Prince of Liechtenstein eventually showed interest in the manufacture of the device, and soon a newly formed company, Contina AG Mauren, began production in Liechtenstein.

It was not long before Herzstark’s financial backers, thinking they had got from him all they needed, contrived to force him out by reducing to zero the value of all of the company’s existing stock, including his one-third interest.^[1] These were the same people who had earlier elected not to have Herzstark transfer ownership of his patents to the company, so that, should anyone sue, they would be suing Herzstark, not the company, thereby protecting themselves at Herzstark’s expense. This ploy now backfired: without the patent rights, they could manufacture nothing. Herzstark was able to negotiate a new agreement, and money continued to flow to him.

Curtas were considered the best portable calculators available until they were displaced by electronic calculators in the 1970s.^[1] Herzstark continued to make money from his invention until that time, although, like many inventors before him, he was not among those who profited the most from his invention.^{[citation needed]} The Curta, however, lives on, being a highly popular collectible, with thousands of machines working just as smoothly as they did at the time of their manufacture 40, 50 or 60 years previous.^[1][3][4]

Good stuff.

Robert has been looking at commentary on John Locke’s little-known essay Venditio (see below).

Some Locke scholars say that because of this short essay, which Locke himself called “extemporaneous thoughts,” he should be considered the first modern economist. An honor usually bestowed upon Adam Smith.

In Venditio, Locke analyzes price setting by sellers. In particular, he explores the conditions under which a seller can be said to have set a “just” or “moral” price for for something he wishes to sell. Locke uses four examples to explain that a seller is constrained by morality to not ask too much of a price. For example, a seller does not act immorally by selling grain in the current year at a market price that is greater than the market price in the previous year. For Locke, prices may be set differently at different places and at different times. However, according to Locke, a seller is not morally entitled to differentiate between buyers once the seller has set his price for a product. For example, in Locke’s view, once a seller makes an offer to a man to sell a horse for $40, he may not demand a higher price of another man simply because the other man is willing to to pay more. For example, the other man may be willing to pay more because he knows he’ll be able to make more money using the horse than can others.

Except in cases of natural disaster during which some people would make price “gouging” illegal, we generally don’t think like Locke anymore. Generally, in the modern day free-market oriented world, the seller is entitled to take whatever price he can get.

For Robert, the most interesting sentence of Locke’s essay is the following:

“He that makes use of another’s ignorance, fancy, or necessity to sell ribbon or cloth, etc. dearer to him than to another man at the same time, cheats him.”

For Locke, if a customer is ignorant of the fact that he can get the product for a lower price, if he wants the product out of a sense of “fancy,” or if he needs the product more than other man, then the seller may not sell to him at greater than the price the seller had set for other customers.

Setting aside the question  whether Locke’s view of the moral seller could ever  be put into practice, Robert thinks it fascinating to wonder what Locke would have thought of the modern advertising and marketing apparatus that powers our current consumer goods economy. Robert thinks he would have been aghast. Clearly, the modern seller trades on the fancies of buyers. What would been even more shocking to Locke is that the modern seller is permitted to so flagrantly encourage those feelings of fancy. And they do so through exploitation of all manner of hard-wired human weakness. Celebrity worship. Breast worship. Our inability to stop looking at flickering computer displays. Wouldn’t Locke have seen all this as immorality upon immorality upon immorality?

Would Locke have favored the application of strong-form freedom of speech principles to commercial speech? Robert guesses not.

The text.

Venditio (1695)

Upon demand what is the measure that ought to regulate the price for which anyone sells so as to keep it within the bounds of equity and justice, I suppose it in short to be this: the market price at the place where he sells. Whosoever keeps to that in whatever he sells I think is free from cheat, extortion and oppression, or any guilt in whatever he sells, supposing no fallacy in his wares.

To explain this a little: A man will not sell the same wheat this year under 10 S(hillings) per bushel which the last year he sold for 5S. This is no extortion by the above said rule, because it is this year the market price, and if he should sell under that rate he would not do a beneficial thing to the consumers, because others then would buy up his corn at this low rate and sell it again to others at the market rate, and so they make profit off his weakness and share a part of his money. If to prevent this he will sell his wheat only to the poor at this under rate, this indeed is charity, but not what strict justice requires. For that only requires that we should sell to all buyers at the same market rate, for if it be unjust to sell it to a poor man at 10S per bushel it is also unjust to sell it to the rich for 10S, for justice has but one measure for all men. If you think him bound to sell it to the rich too, who is the consumer, under the market rate, but not to a jobber or engrosser, to this I answer he cannot know whether the rich buyer will not sell it again and so gain the money which he loses. But if it be said ’tis unlawful to sell the same corn for 10S this week which I sold the last year for week for 5s because it is worth no more now than it was then, having no new qualities put into it to make it better, I answer it is worth no more, ’tis true, in its natural value, because it will not feed more men nor better feed them than it did last year, but yet it is worth more in its political or marchand value, as I may so call it which lies in the proportion of the quantity of wheat to the proportion of money in that place and the need of one and the other. This same market rate governs too in things sold in shops or private houses, and is known by this, that a man sells not dearer to one than he would to another. He that makes use of another’s ignorance, fancy, or necessity to sell ribbon or cloth, etc. dearer to him than to another man at the same time, cheats him. But in things that a man does not set to sale, this market price is not regulated by that of the next market, but by the value that the owner puts on it himself: v.g. α has an horse that pleases him and is for his turn; this β would buy of him; α tells him he has no mind to sell; β presses him to set him a price, and thereupon α demands and takes £4o for his horse, which in a market or fair would not yield above twenty. But supposing β refusing to give £40, γ comes the next day and desires to buy this horse, having such a necessity to have it that if he should fail of it, it would make him lose a business of much greater consequence, and thus necessity α knows. If in this case he make γ pay £50 for the horse which he would have sold to β for £40, he oppresses him and is guilty of extortion whereby he robs him of £10, because he does not sell the horse to him, as he would to another, at his own market rate, which was£40, but makes use of γ‘s necessity to extort £10 from him above what in his own account was the just value, the one man’s money being as good as the other’s. But yet he had done no injury to β in taking his £40 for an horse which at the next market would not have yielded above £20 because he sold it at the market rate of the place where the horse was sold, viz. his own house, where he would not have sold it to any other at a cheaper rate than he did to β. For if by any artifice he had raised β’s longing for that horse, or because of his great fancy sold it dearer to him than he would to another man, he had cheated him too. But what anyone has he may value at what rate he will, and transgresses not against justice if he sells it at any price, provided he makes no distinction of buyers, but parts with it as cheap to this as he would to any other buyer. I say he transgresses not against justice. What he may do against charity is another case.

To have a fuller view of this matter, let us suppose a merchant of Danzig sends two ships laden with corn, whereof the one puts into Dunkirk, where there is almost a famine for want of corn, and there he sells his wheat for 20S a bushel, whilst the other ship sells his at Ostend just by for 5s. Here it will be demanded whether it be not oppression and injustice to make such an advantage of their necessity at Dunkirk as to sell to them the same commodity at 20s per bushel which he sells for a quarter the price but twenty miles off? I answer no, because he sells at the market rate at the place where he is, but sells there no dearer to Thomas than he would to Richard. And if there he should sell for less than his corn would yield, he would only throw his profit into other men’s hands, who buying of him under the market rate would sell it again to others at the full rate it would yield. Besides, as there can be no other measure set to a merchant’s gain but the market price where he comes, so if there were any other measure, as 5 or 10 per cent as the utmost justifiable profit, there would be no commerce in the world, and mankind would be deprived of the supply of foreign mutual conveniences of life. For the buyer, not knowing what the commodity cost the merchant to purchase and bring thither, could be under no tie of giving him the profit of 5 or 10 per cent, and so can have no other rule but of buying as cheap as he can, which turning often to the merchant’s downright loss when he comes to a bad market, if he has not the liberty on his side to sell as dear as he can when he comes to a good market. This obligation to certain loss often, without any certainty of reparation, will quickly put an end to merchandising. The measure that is common to buyer and seller is just that if one should buy as cheap as he could in the market, the other should sell as dear as he could there, everyone running his venture and taking his chance, which by the mutual and perpetually changing wants of money and commodities in buyer and seller comes to a pretty equal and fair account.

But though he that sells his corn a town pressed with famine at the utmost rate he can get for it does no injustice against the common rule of traffic, yet if he carry it away unless they will give him more than they are able, or extorts so much from their present necessity as not to leave them the means of subsistence afterwards, he offends against the common rule of charity as a man, and if they perish any of them by reason of his extortion is no doubt guilty of murder. For though all the selling merchant’s gain arises only from the advantage he makes of the buyer’s want, whether it be a want of necessity or fancy that’s all one, yet he must not make use of his necessity to his destruction, and enrich himself so as to make another perish. He is so far from being permitted to gain to that degree, that he is bound to be at some loss, and impart of his own to save another from perishing.

Dunkirk is the market which the English merchant has carried his corn, and by reason of their necessity it proves a good one, and there he may sell his corn as it will yield at the market rate, for 20s per bushel. But if a Dunkirker should at the same time come to England to buy corn, not to sell to him at the market rate, but to make him, because of the necessity of his country, pay 10S per bushel when you sold to others for five, would be extortion.

A ship at sea that has an anchor to spare meets another which has lost all her anchors. What here shall be the just price that she shall sell her anchor to the distressed ship? To this I answer the same price that she would sell the same anchor to a ship that was not in that distress. For that still is the market rate for which one would part with anything to anybody who was not in distress and absolute want of it. And in this case the master of the vessel must make his estimate by the length of his voyage, the season and seas he sails in, and so what risk he shall run himself by parting with his anchor, which all put together perhaps he would not part with it at any rate, but if he would, he must then take no more for it from a ship in distress than he would from any other. And here we see, the price which the anchor cost him, which is the market price at another place, makes no part of the measure of the price which he fairly sells it for at sea. And therefore I put in ‘the place where the thing is sold’: i.e. the measure of rating anything in selling is the market price where the thing is sold. Whereby it is evident that a thing may be lawfully sold for 10, 20, nay cent per cent, and ten times more in one place than is the market price in another place perhaps not far off. These are my extemporary thouht[s] concerning this matter.