Gordon Ramsay Reportedly Relocating Restaurant Headquarters to Texas as California Exodus Continues
Thursday, December 16, 2021
Surly celebrity chef Gordon Ramsay is reportedly heading to Texas—or at least his corporate headquarters is, the Dallas Morning News reports.
CEO Norman Abdallah, who runs the Hell's Kitchen star's restaurants across North America, told the paper he’ll oversee the debut of 75 company-owned locations over the next few years, including multiple locations in the Dallas-Fort Worth area scheduled for 2022 and 2023.
While many high-profile people, including Joe Rogan and Elon Musk, have taken up residence in the Lone Star State, the newspaper reports this is not necessarily the case for Ramsay.
“[The] new Gordon Ramsay North America restaurant headquarters in D-FW does not signal that the British chef is moving to [Texas],” the Morning News reported.
Blazing a Trail
Ramsay’s announcement comes the same week that YouTube star Dave Rubin announced he’s giving up the Golden State for Florida. While we don’t know Ramsay’s reasons for relocating, Rubin was transparent with his own thought process.
“[California has] the top marginal income tax rate in the country, 7 percent sales tax, our gas tax is 50 cents, and now they’re trying to push through a retroactive tax, an exit tax for rich California residents who leave,” Rubin said in a video announcement. “They want to tax you for leaving! They stole all that stuff from you and now they want more because you make the decision to leave. California is the most regulated state in the country, with LA being probably the most regulated city in the state.”
Texas and Florida, in contrast to California, have no income tax.
But as Rubin makes clear, it’s not just about tax rates. California is also one of most regulated economies in America, and lawmakers show little sign of relenting. Just this week Gov. Gavin Newsom announced he was reinstating a state-wide indoor mask mandate. (Newsom last year was caught violating his own mask mandate while attending the birthday party of a lobbyist at the French Laundry restaurant.)
Despite its progressive tax policies, California suffers from some of the highest rates of homelessness, poverty, and income inequality in the US.
For all these reasons, some Californians appear to be souring on the Golden State. Last year saw California experience its first decline in population ever recorded.
The Ultimate Expression of Freedom
Many Californians no doubt love their state and have no intentions of leaving, and that’s perfectly fine. But it’s also good that Americans are free to pursue their dreams in other states that are more suited to their values and ambitions.
The truth is many lawmakers have grown downright hostile to private property. New York Mayor Bill de Blasio, for example, said Americans have a “socialistic impulse” but “what stands in the way of that is hundreds of years of history that have elevated property rights.”
If Americans or the lawmakers who govern them wish to indulge this alleged “socialistic impulse,” they are free to do so. Fortunately however, because of the American system of federalism, businesses and individuals are free to go their own way.
Entrepreneurs in California can move their enterprises to Texas—like Rogan, Musk, and Ramsay. Goldman Sachs can relocate to Florida, if it’s so inclined. If you don’t like what the government says you can build on your property because of government building codes, you can buy a ranch in Wyoming—if you have the scratch—and take your company with you, like Kanye West did when he left California.
Decentralization is one of the great strengths of the American system, and a key to preserving liberty and peacefully coexisting in a country as large and diverse as the United States.
Voting with your feet is one of the greatest expressions of freedom, and one more Americans should appreciate. Just ask Gordan Ramsay.
1 Million Copies Sold Since 1946
Henry Hazlitt's economics primer is more relevant than ever.
Jon Miltimore
Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune.
Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.
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Why College Degrees Are Losing Their Value
Sunday, December 19, 2021
The concept of inflation (the depreciation of purchasing power of a specific currency) applies to other goods besides money. Inflation is related to the Law of Supply and Demand. As the supply of a commodity increases, the value decreases. Conversely, as the good becomes more scarce, the value of the commodity increases. This same concept is also applicable to tangible items such as vintage baseball cards and rare art. These are rare commodities that cannot be authentically replicated and therefore command a high value on the market. On the other hand, mass-produced rookie cards and replications of Monet’s work are plentiful. As a result, they yield little value on the market.
Inflation and the opposite principle of deflation can also apply to intangible goods. When looking at the job market, this becomes quite evident. Jobs that require skills that are rare or exceptional tend to pay higher wages. However, there are also compensating differentials that arise because of the risky or unattractive nature of undesirable jobs. The higher wages are due to a lack of workers willing to accept the position rather than the possession of skills that are in demand.
The Signaling Function of College Degrees
Over the past couple of decades, credentialing of intangible employment value has become more prevalent. Credentials can range from college degrees to professional certifications. One of the most common forms of credentialing has become a 4-year college degree. This category of human capital documentation has evolved to take on an alternate function.
Outside of a few notable exceptions, a bachelor’s degree serves a signaling function. As George Mason economics professor Bryan Caplan argues, the function of a college degree is primarily to signal to potential employers that a job applicant has desirable characteristics. Earning a college degree is more of a validation process than a skill-building process. Employers desire workers that are not only intelligent but also compliant and punctual. The premise of the signaling model seems to be validated by the fact that many graduates are not using their degrees. In fact, in 2013; only 27 percent of graduates had a job related to their major.
Since bachelor’s degrees carry a significant signaling function, there have been substantial increases in the number of job seekers possessing a 4-year degree. Retention rates for 4-year institutions reached an all-time high of 81 percent in 2017. In 1900 only 27,410 students earned a bachelor’s degree. This number ballooned to 4.2 million by 1940, and has now increased to 99.5 million. These numbers demonstrate the sharp increase in the number of Americans earning college degrees.
Today, nearly 40 percent of all Americans hold a 4-year degree. Considering the vast increase in college attendance and completion, it’s fair to question if a college degree has retained its “purchasing power” on the job market. Much of the evidence seems to suggest that it has not.
What is Credential Inflation?
The signaling function of college degrees may have been distorted by the phenomenon known as credential inflation. Credential inflation is nothing more than “… an increase in the education credentials required for a job.”
Many jobs that previously required no more than a high school diploma are now only accepting applicants with bachelor’s degrees. This shift in credential preferences among employers has now made the 4-year degree the unofficial minimum standard for educational requirements. This fact is embodied in the high rates of underemployment among college graduates. Approximately 41 percent of all recent graduates are working jobs that do not require a college degree. It is shocking when you consider that 17 percent of hotel clerks and 23.5 percent of amusement park attendants hold 4-year degrees. None of these jobs have traditionally required a college degree. But due to a competitive job market where most applicants have degrees, many recent graduates have no means of distinguishing themselves from other potential employees. Thus, many recent graduates have no other option but to accept low-paying jobs.
The value of a college degree has gone down due to the vast increase in the number of workers who possess degrees. This form of debasement mimics the effect of printing more money. Following the Law of Supply and Demand, the greater the quantity of a commodity, the lower the value. The hordes of guidance counselors and parents urging kids to attend college have certainly contributed to the problem. However, public policy has served to amplify this issue.
Various kinds of loan programs, government scholarships, and other programs have incentivized more students to pursue college degrees. Policies that make college more accessible—proposals for “free college,” for example—also devalue degrees. More people attending college makes degrees even more common and further depreciated.
Of course, this not to say brilliant students with aspirations of a career in STEM fields should avoid college. But for the average student, a college degree may very well be a malinvestment and hinder their future.
Incurring large amounts of debt to work for minimum wage is not a wise decision. When faced with policies and social pressure that have made college the norm, students should recognize that a college degree isn’t everything. If students focused more on obtaining marketable skills than on credentials, they might find a way to stand out in a job market flooded with degrees.
Peter Clark
Peter Clark is a blogger and enthusiastic advocate of free-market economics. Find his work on Medium.
How CO2 Supply Chain Mayhem Almost Caused a Meat Shortage in Britain
Saturday, December 18, 2021
In recent months, many of us have faced empty shelves, long lines, and frustrating delays as supply chains have seized up around the country, and indeed the world. Some have argued that the government should step in to fix these issues, blaming the problems on “corporate greed” and “the free market”. But while it may be tempting to blame private companies for our current woes and see the government as the savior, the reality is not that simple. Indeed, far from being the solution, government intervention in the market is arguably the primary cause of these problems in the first place.
A good case study for this issue is Great Britain. Back in September, the nation’s supply chain issues got so bad that they almost had major disruptions in their food supply. The UK government has been intervening in an attempt to fix the problems in the short run, but the situation is still extremely precarious.
So who is responsible for these issues? Well, let’s follow the supply chain link-by-link and see if it can lead us to the culprit.
Link 1: Carbon Dioxide
The immediate problem that food producers are facing is a shortage of food-grade carbon dioxide (CO2). The meat industry is particularly affected by this shortage, since CO2 is used in many meat production processes. But aside from that, the gas also plays a key role in modified atmosphere packaging, which is used to prolong the shelf life of many food products. It’s also used in carbonated drinks (hence the name) like beer and soda, and in its solid form as dry ice it is used to keep fresh food cool during transportation.
Why is there a shortage of CO2? Well, most food-grade CO2 comes from fertilizer plants, because CO2 is a byproduct of the fertilizer manufacturing process. These plants, however, have been producing far less CO2 than normal. So to understand why there’s so little CO2, we need to investigate the fertilizer plants. This brings us to the next link in the chain.
Link 2: Fertilizer Plants
Two of the biggest fertilizer plants in the UK are owned by a company called CF Industries. Together, they normally produce about 60 percent of the UK’s food-grade CO2. However, these plants were actually shut down for a large part of September, which drastically reduced the UK’s CO2 production.
The reason they were shut down is because natural gas, an essential part of the fertilizer process, has been very expensive in recent months. With the price of this key input so high, it was actually uneconomical for the plants to operate, so they decided to shut down temporarily in hopes of restarting their operations once the price of natural gas came back down. But why is natural gas suddenly so expensive? This brings us to the third link in the chain.
Link 3: Natural Gas
First, to say that natural gas prices are high in Britain is really quite the understatement. According to Industry group Oil & Gas UK, wholesale prices for gas in September were up 250 percent since January, and had increased 70 percent since August. As one UK energy CEO remarked, this is “the most extreme energy market in decades.”
So what’s causing the high prices? A number of factors. High global demand has played a role, especially since roughly 60 percent of the UK’s natural gas supply is imported. Lower solar and wind output have also been factors, as well as outages at some nuclear stations. The cold winter in 2020 also resulted in depleted stocks (since people use natural gas to heat their homes), and several gas platforms in the North Sea have closed to perform maintenance that was paused because of the COVID-19 lockdowns.
But one of the biggest sources of price volatility is the dearth of natural gas storage facilities in the UK.
“The UK currently has very modest amounts of storage, less than 6% of annual demand.” writes Michael Bradshaw, a Professor of Global Energy at the University of Warwick. “In Germany, France, and Italy, storage covers about 20% of annual demand,” he continues for context. Another report noted that the UK has enough storage to last for about 7 days, whereas Germany and France have roughly 90 days of storage.
While storage is far from the only factor affecting natural gas prices, it certainly plays a significant role. But why does Britain have so little storage capacity? This brings us to the final link in the chain.
Link 4: Natural Gas Storage
One of the reasons for Britain's low storage capacity is that a storage facility called Rough, which used to provide a significant percentage of the UKs natural gas storage, was decommissioned in 2017 as a result of age-related deterioration.
Industry leaders were concerned about the resulting lack of storage at the time, and have been warning about the issue ever since.
“Rough makes up an impressive 70% of the UK’s storage working gas volume,” Timera Energy noted back in 2017, when permanent closure was still being deliberated. “This can be contrasted with Rough’s contribution to the UK’s daily deliverability, at around 25%. And it is the deliverability that the UK market will miss most.”
They go on to explicitly discuss the likely impact of the closure on the price of natural gas. “The loss of deliverability should boost spot price volatility as it reduces the buffer of supply flexibility available to respond to swings in daily demand…The loss of working gas volume is likely to mean that supply shocks...have a sharper and more prolonged price impact.”
The need for more storage was reiterated in 2019 by another industry leader named InfraStrata Plc. “There is more demand in the market than we can satisfy,” said John Wood, the CEO of InfraStrata. “The market in the U.K. is sending out strong economic signals for additional gas storage capacity.”
So why wasn’t more storage built? Well, as it turns out, natural gas storage is taxed and regulated very heavily in the UK, much more so than other industries. Indeed, one of the largest gas storage operators in the country, called Storengy, explicitly called attention to these problems back in 2018, pointing out the “punitive” and “extortionate” tax levels that are applied to storage facilities as well as the numerous regulations that burden the industry.
As a result of these barriers, many potential storage projects have remained on the shelf, since they are prohibitively expensive in the current business environment. Thus, even though the demand is clearly there, the market has been unable to meet it, because taxes and regulations have severely crippled the industry.
This analysis is hardly exhaustive, of course. But at least with respect to the storage issue, it seems clear that government intervention in the market is the primary cause of the food supply chain disruptions.
Innumerable Antecedents
One of the interesting things about this story is how it highlights the plethora of people, items, and systems that work together to keep our grocery shelves full. First, we discovered that food producers rely on CO2. That led us to investigate fertilizer plants and the crazy natural gas market, and then from there we explored natural gas storage and learned about the many ways that government intervention has been crippling that industry. Of course, most people wouldn’t intuitively connect gas storage regulations with food availability, but the rippling unintended consequences of these policies are very real nonetheless.
In his famous essay “I, Pencil,” Leonard Read similarly draws attention to the “innumerable antecedents” of everyday items, such as the seemingly simple lead pencil.
“Just as you cannot trace your family tree back very far, so is it impossible for me to name and explain all my antecedents,” Read wrote, speaking as the pencil. He goes on to discuss some of the many ancestors of the pencil, the people and things that went into producing it, and he points out how they all depend on one another. Indeed, you can’t mess with the trucking industry without impacting the production of pencils, just as you can’t mess with natural gas storage without impacting food supplies.
With that said, trucking and natural gas are not only ancestors of pencils and food. They are also ancestors of many other products, and this leads to an important insight. In reality, it’s actually somewhat misleading to speak of supply chains, as if the economy consisted of independent, linear processes. The economy is much more accurately characterized as one giant supply web, a multiplicity of interconnected processes that all depend on each other in various ways.
With this in mind, it quickly becomes apparent why interfering with the economy can be so dangerous. When the government breaks one part of the web, they aren’t just impacting one chain, they are creating countless unintended consequences, many of which are impossible to foresee.
If we’re lucky, those consequences will only lead to higher prices. If we’re not so lucky, empty grocery shelves await.
Addendum: Addressing the Problem
To address the looming crisis, the UK government ended up bailing out CF Industries, the company that owns the fertilizer plants. The deal, which was finalized on September 21, resulted in one of the two plants resuming operations, with the UK government providing “limited financial support,” which the Environment Secretary later clarified was “going to be into many millions, possibly the tens of millions [of euros].”
Since then, the government has brokered a deal between CF Industries and its CO2 buyers. Though the details are unclear, the government seems to be involved in setting the price of CO2, which would constitute even more intervention in the market.
But intervention is not the solution here. When governments intervene, they inevitably distort price signals, leading to increasingly inefficient outcomes. The real solution is for the government to stop causing the problem in the first place by removing the taxes and regulations that are standing in the way of the natural gas storage market.
Granted, it will take some time before the storage market can adjust, but even in the interim, the best way to address these problems is to let markets and prices do their thing.
Patrick Carroll
Patrick Carroll has a degree in Chemical Engineering from the University of Waterloo and is an Editorial Fellow at the Foundation for Economic Education.
‘Freeloading’ Elon Musk to Pay Largest Federal Tax Bill in History, an Estimated $8.3 Billion
Friday, December 17, 2021
Elon Musk made a bold claim on Twitter on Tuesday. The Tesla founder said he would “pay more taxes than any American in history this year.”
Is the claim true? Only the IRS knows for certain who the largest taxpayer in US history is, but Forbes says Musk appears to be right.
“The eccentric billionaire (and the world’s richest person) likely owes the federal government at least $8.3 billion for 2021,” Forbes reports.
Business Insider projects Musk’s tax bill is even higher when state taxes are included.
“Taxes on his stock, nearly a billion in Net Investment Income Tax, and the billions he likely owes California could add up to about $12 billion in total,” report Jason Lalljee and Andy Kiersz.
CNBC, meanwhile, figured Musk’s total tax bill was even higher—$15 billion.
The bulk of Musk’s tax bill stems from the nearly $13 billion in Tesla stock sold as of December 13, which is even larger than the record $10.2 billion worth of Amazon stock Jeff Bezos sold last year.
Elon Musk will pay over $15,000,000,000 in taxes this year, the most in American history.
— Jeff 💙✌️ (@JeffTutorials) December 15, 2021
Freeloading Off Everyone Else?
Whatever Musk’s tax bill ends up being, it’s worth examining the context of his claim. Musk was not bragging that he had the largest tax bill in history; on the contrary, he was responding to Sen. Elizabeth Warren, who—somewhat unfathomably—lashed out at Musk for not paying his fair share of taxes.
“Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else,” Warren tweeted.
Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else. https://t.co/jqQxL9Run6
— Elizabeth Warren (@SenWarren) December 13, 2021
You read that correctly. Warren, the progressive lawmaker from Massachusetts, called Musk a freeloader. It’s possible that Warren didn’t know that Musk is set to pay more in taxes than any American—perhaps human being—in history, but it’s more likely she simply does not care and is comfortable peddling the fiction that Musk isn’t paying taxes. Warren made this clear in subsequent remarks after Musk had responded to the Senator.
“He’s the richest guy in the world, and he just doesn’t want to pay taxes,” Warren said. “That’s what it’s all about for me.”
She continued:
“I gotta say, on behalf of every school teacher who pays taxes, on behalf of every waitress who pays taxes, on behalf of every American citizen who goes out and works for a living and pays taxes …that’s just fundamentally wrong. We have a broken tax system that lets Elon Musk freeload off everyone else, and it needs to stop.”
Warren’s claim that Musk is a “freeloader” is preposterous, of course. Taking the lowest estimate on what Musk is expected to pay, he’ll cough up more in taxes than the entire state of Massachusetts collected in sales and use taxes through the first half of 2021—from its 7 million residents.
Moreover, unlike Warren, who collects a salary from the government, Musk earned much of his wealth by creating value. Tesla employs nearly 80,000 people who’ve built no fewer than 623,000 energy-efficient cars in 2021 alone. Its market cap is nearly $1 trillion, which has made untold numbers of Tesla employees and shareholders wealthy. Warren, on the other hand, creates nothing. Every dollar of her $174,000 salary—and the money she pays her staff with—comes from funds confiscated from taxpayers. Every dollar she authorizes to be spent was taken from someone else who earned it.
Musk’s success should be applauded, but instead Warren—the true freeloader—accuses him of “freeloading” and believes he should be paying more.
A Philosophy Built on Envy
What really appears to bother Warren is that Musk has so much. In other words, it’s a politics rooted in envy.
Envy is considered one of the Seven Deadly Sins, and for good reason. It’s a corrosive disposition that harms both individuals and societies. The celebrated philosopher Immanuel Kant described envy as,
“…a propensity to view the well-being of others with distress, even though it does not detract from one’s own. [It is] a reluctance to see our own well-being overshadowed by another’s because the standard we use to see how well off we are is not the intrinsic worth of our own well-being but how it compares with that of others. [It] aims, at least in terms of one’s wishes, at destroying others’ good fortune.”
The pre-Socratic philosopher Democritus (c. 460 BC – c. 370 BC)—in a wonderfully libertarian quote—once warned of the danger of envy and purpose of the law.
“[Just] laws would not prevent each man from living according to his inclination, unless individuals harmed each other; for envy creates the beginning of strife,” he wrote.
Strife is precisely what Warren and those who share her philosophy are sowing, and it’s clear she and others view Musk’s good fortune with distress. If that’s not envy, I don’t know what is.
Jon Miltimore
Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune.
Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.
