Unintended consequences in the coyote industry

Via Hit & Run, I found Debbie Nathan's feminism-and-immigration themed blog, where she describes some interesting consequences of Bush's move to criminalize employment of undocumented immigrants:

Jose has crossed solo several times in the past 15 years to work in agriculture. Lately, though, stepped up border enforcement has made it so difficult to get past Laredo that he’s taken to hiring a coyote for $1300. He knows lots of people who’ve always used smugglers, and until recently, he says, the coyotes were a nasty lot. “They would cross 40 people at a time, impose the charges at the border, make everyone walk three to six days to San Antonio, often rob customers, and frequently rape the women travelers.”

But now, Jose says, all those Border Patrol agents are having an effect. It’s so hard to cross now that fewer people are coming. This has created intense competition among the coyotes, who have responded by vastly improving their services.

“Now, they pay your way on a first-class bus from your home town to the border. They cross only 8 people at a time. After they get you to the US side, you only have to walk a few hours because they’ve made arrangements with farmers in South Texas to put you up for the night, even feed you. And some of those farmers are gringos,” Jose adds. “Then they put you in vans and drive you to Houston.”

“And they’re much nicer to women now. No more robberies. No rapes. They know it will get out by word of mouth, and they desperately want to maintain and expand their customer base.”

Good reporting -- will be checking out Debbie's blog more often.

On capitalism and commerce-free zones

Julian Sanchez today:

It is perfectly coherent to be a thoroughgoing free-marketeer, to appreciate how deftly the price system harnessed the self-love of thousands of individuals, from lumberjacks and miners to carpenters and plumbers, in order to produce your local church—and yet still prefer that Starbucks refrain from opening up shop in the narthex. Having bought prophylactics at the corner deli in the evening does not forbid you from taking umbrage if your lover leaves a fifty on the nightstand the following morning. The most ardent capitalist will want a few spaces where she can feel confident that her neighbor's friendliness is not the opening gambit in a pitch to sell her a T-shirt, even if she was happy to buy the one she's wearing.

This is exactly right, except that an awful lot of people who describe themselves as anti-capitalist or anti-corporate miss this point completely. It seems to be hard for these types to get that, by the miracle of private or quasi private (co-op) property, you can take what benefits you choose from commerce even while excluding unwanted commercial interactions from certain spheres.

Full post here, on why Burning Man attendees who are frustrated that some companies will get to exhibit new green technologies this year have a point.

Whole Foods: Slicing up the natural foods market

Via Cafe Hayek, Chicago Tribune columnist Steve Chapman comes out with the same argument Whole Foods CEO John Mackey makes:

Organic food consumers would not be the suffering captives of this new company. Every grocery store has a raft of organic offerings, and chains from Wal-Mart to Trader Joe's are fighting to get their share of sales. If the bigger Whole Foods tries price-gouging, customers can easily find other sources for what they want - from farmers markets to online suppliers.

The key government error is defining the market as a narrow sector isolated from other sectors that provide reasonable substitutes.

Yup. For virtually any company, one can define its market so narrowly that any merger would sharply inhibit competition (FTC's position here), or so broadly that no merger could meaningfully decrease competition (Mackey's position). As a libertarian, I tend to default to the latter position except in cases of genuine -- often government-induced -- monopoly (and its equally mischievous but oft-overlooked cousin, monopsony). I realize there are somewhat persuasive arguments for FTC intervention in markets that, for one reason or another, closely approximate these two conditions, but the booming natural foods industry just doesn't seem like a good candidate.

Unsealed FTC docs reveal Whole Foods' business strategy, provoke blog rant from CEO

Via the Boulder County Business Report:

Whole Foods Chief Executive Officer John Mackey told his board of directors the purpose of buying Wild Oats would be to "eliminate forever" the chance that a mainstream grocer like Kroger or Safeway would launch "a competing national natural/organic food chain to rival us," according to a document revealed today by the Federal Trade Commission.

"Eliminating them means eliminating this threat forever, or almost forever," Mackey said.

Whole Foods had requested that parts of the company's testimony related to its motive for the Wild Oats buyout be blacked out of the injunction order, but the FTC had the documents unsealed. Mackey promises he'll explain why he asked for the testimony to be kept secret on his blog -- more on this soon. Meanwhile, his post today covers his views on what the FTC has done wrong, so far, in their investigation of the merger. Overall, his issues fall into three categories:

1. The FTC are big bullies (evidenced by burdensome requests for info, deadline extensions, and insistence on having access to all company documents).
2. The FTC failed to collect any comparative pricing data before voting against the merger.
3. The FTC wishes to consider competition only within the special category of 'premium natural and organic supermarkets,' rather than among supermarkets generally.

I don't have much to say about 1 and 2, but here's Mackey on this last point:

A big part of the FTC's argument is their belief that Wild Oats and Whole Foods exist in a very narrowly defined category that they call "premium natural and organic food supermarkets". We aren't sure exactly what other companies the FTC believes exist in this narrowly defined category, perhaps only Earth Fare, with about 10 stores all existing in the southern United States. The "premium natural and organic food supermarket" category therefore apparently consists of only three companies-Whole Foods Market, Wild Oats, and Earth Fare.-and of course the FTC apparently believes that if Whole Foods Market acquires Wild Oats then there would only be two companies left in this category.

Is there actually a separate category of "premium natural and organic supermarkets"? Let me state quite clearly up front that there absolutely is! However, that category actually consists of only one company-Whole Foods Market. We created the category and to-date we are the only company that actually belongs in it.

Mackey wants to say that even though Whole Foods looks like the big bad national chain compared to niche stores like Wild Oats, they're actually just a little fish in the big pond of supermarkets. Which is supported by the newly unsealed testimony, but doesn't look so good for Whole Foods -- it seems like Americans love to support the 'little guy,' as long as he doesn't show any signs of wanting to become the big guy.