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The Daily Reckoning Weekend Edition Saturday, March 19, 2011 Buenos Aires, Argentina -------------------------------------------------------- Why it's a good thing that so few things really are "homemade," Another look at division of labor and the pricing system, Plus, all this past week's reckonings for your energetic enjoyment... -------------------------------------------------------- Lock Down Lifetime Access to Every Agora Financial Stock Research Letter Every recommendation. Every report. Every update. Plus total access to special events... Don't miss this chance to get it all - for life. Full details here. -------------------------------------------------------- Joel's Note: Your managing editor is roaming around the northern reaches of Argentina this weekend. We've come here to look at property...and to get away from that old steed we know as our laptop. There's such a thing as too much news, you know. Besides, there is so much going on in the world right now, so many unfolding catastrophes and opportunities all colliding at once, that we felt the need to take a step back in order to get a better grasp of the full picture. How is Japan holding up? ... What's happening on the nuclear front? ... When might the political uproars spreading across the Middle East resolve themselves? ... What about QE III, QE IV, QE V and the rest? And, who the heck is Justin Bieber and why does anyone care about his opinion on healthcare and geopolitics? Mostly, these are important questions...and important questions require careful thinking. So, we're going to think on them for a bit. "In the case of news," the wise Voltaire once remarked, "we should always wait for the sacrament of confirmation." In the meantime, we've dug up a guest column for your reading pleasure. Today, Mr. Jeffrey Tucker, author of the delightfully-titled Bourbon for Breakfast: Living Outside the Statist Quo, takes another look at the division of labor and the pricing system. Please enjoy... -------------------------------------------------------- There's No Such Thing as Homemade Ice Cream By Jeffrey A. Tucker In the freezer section of the grocery store, there's Vanilla Bean, French Vanilla, and yet another vanilla flavor called Homemade Vanilla. Now, come on! I'm in the store here, looking at rows and rows of commercial products produced by a vast capitalistic machinery, a cornucopia of frozen goods made by advanced industrial technologies, made from goods and services that require a global division of labor and a sophisticated trading and price system rooted in private property and replete with entrepreneurial risk at every stage of production. There's nothing "homemade" about anything here, and surely everyone knows that. It's just marketing - not that there's anything wrong with that. But it got me thinking. What is real homemade ice cream? Oh, I've made it before. It has always struck me that you can't really make real homemade ice cream with an electric machine. Electricity is so artificial, and if you are going to plug in a machine, in what sense are you actually making the stuff? Pouring ingredients into an electric bucket and waiting isn't really "making" anything. You might as well let someone else do that and buy it from them. You might as well make a trip to the freezer section of the grocery store. Nope, homemade must be hand cranked all the way, so the "elbow muscle" does the hard work. And it can be exhausting. You turn and turn and crank and crank and it seems like it will never become thick like ice cream. Then when it finally happens, and you are tired out, the turning gets harder and harder until you have to throw your whole body into it and finally you just can't turn it anymore. At that point, it is ready to eat. Is it worth it? That's a subjective judgment. But consider: how many of the ingredients themselves are homemade? Is the stuff that makes the ice cream really homemade and truly authentic? We've already dispensed with the need for an electrical plant in your backyard by settling on the hand-cranked method. This is a great step toward homemade. But what about the rock salt, a product that seems useful for either breaking up ice on the sidewalk or for making ice cream but not much else? I bought my packet at the store. This is clearly a compromise of the seeming need for autarky in ice-cream production, so what if we made this ourselves? Wikipedia says that rock salt: ...occurs in vast beds of sedimentary evaporite minerals that result from the drying up of enclosed lakes, playas, and seas. Salt beds may be hundreds of meters thick and underlie broad areas. In the United States and Canada extensive underground beds extend from the Appalachian basin of western New York through parts of Ontario and under much of the Michigan Basin. Other deposits are in Ohio, Kansas, New Mexico, Nova Scotia and Saskatchewan. The Khewra salt mine is a massive deposit of rock salt near Islamabad, Pakistan. In the United Kingdom there are three mines, the largest of these is at Winsford in Cheshire producing half a million tonnes on average in six months. All I can say is, Yikes, I've got some traveling to do. And some crews to hire. And then I have the problem of packaging the stuff and shipping it back from Islamabad or Winsford or wherever. But wait, it seems like Morton sells a product that might be the same thing but, in any case, markets itself as Ice Cream Salt, as distinguished from just plain rock salt for driveways and the like. What the difference is, I don't know. But I'm not taking any chances, so more research on this point is clearly necessary. Then there's the problem of milk. I could buy a cow but that's a lot of upkeep. I understand that you have to milk one of these things regularly whether you are making ice cream or not. And there's the problem of feed and waste and many other issues. Raising and keeping this animal healthy might turn into a full-time job, with no time left over for making, much less enjoying, ice cream. Of course you need refrigeration and ice, without which matters are rather hopeless. It took most all of recorded human history to invent the refrigerator, which only became common in American homes in the 1920s and 1930s, and so it is pretty presumptuous for me to assume that I could construct one on my own. Plus, these things run on electricity, and I thought I had dispensed with that in the name of authenticity. So long as I'm using electricity to store the milk and ice, why not just let electricity turn the crank too? I'm back to plan A: get a generator. I'll pretend not to notice the problem of making homemade gasoline to power it. After all, I could use a river (need to get one of those) or erect a giant windmill (prepare for dead bird carcasses to litter up the yard), but then there's no power on windless days. How about a solar-based generator? Break out the Windex (can I make that at home too?). This is getting expensive. Of course you need eggs, which means chickens, which I wouldn't entirely rule out, but everyone I know who has tried to raise chickens for eggs eventually throws in the towel. It is a disgusting job, fully of unexpected headaches, like getting rid of varmints and keeping the chickens warm and buying expensive feeds and dealing with filthy critters and chicken coops. It is doable, provided I wanted to quit my job into order to raise a cow and chickens. But there's still the problem of sugar and flavor. Sugar can be had in many ways. I could raise bees or sugar cane or extract it from fruit and many others processes, each rather daunting. It would be far easier just to buy some, but then what about authenticity and that important "homemade" aspect of my ice cream? Now let's talk about vanilla. Apparently this derives from a bean grown in Mexico and Madagascar, and, says Wikipedia, "extensive labor required to grow the vanilla seed pods." Now I seem to have bumped up against an impossible problem. I live in neither place, and apparently my climate just can't do the vanilla-growing thing. Maybe I need a greenhouse. Artificial vanilla would require a chemistry lab out back. I've said nothing about the ice-cream maker itself, which uses stainless-steel gears and a crank. In the whole history of humanity, steel as we know it only became economically viable in the 19th century, and stainless steel is very much a modern invention. It would require vast study for me to even figure out the metallurgical aspects of this. And at the least, I would need a blast furnace out back, and one wonders how the cow, the chickens, the electrical plant, and vanilla-producing greenhouse would fare amidst that. Once I have the steel I would still need to form it. Then there's the problem of the wood for the maker too, so I would need to cultivate trees and mill them and somehow shape them into round slats. Already, it would appear that I need a backyard full of stuff from all nations and all times, not to mention the physical impossibility of maintaining all these contraptions without a vast labor force that included engineers from many fields and experts in a huge range of tasks. Bankruptcy would begin even before this operation began. The division of labor - global and involving thousands and even millions of people - is looking ever better, all beautifully coordinated by the price system and given forward motion by entrepreneurs at every stage, operating in coordination from all parts of the world. In fact, it is pretty clear that there is no such thing as homemade ice cream, and that we use the phrase only in the most metaphorical sense. Thank goodness. In this case, I'm seeing the point: the store is just the last stop in a huge and extended process that emerged over centuries and requires the involvement of people all over the world. They can call their vanilla ice cream homemade if they want to. Given what they go through to get us good food at good prices, capitalists have more than earned the right to stretch the language a bit when trying to persuade us to buy their products. We are the beneficiaries of a remarkable system of human cooperation. Regards, Jeffrey A. Tucker Joel's Note: As we mentioned above, Mr. Tucker is the author of Bourbon for Breakfast: Living Outside the Statist Quo, a tale of why and how the state makes a mess of virtually everything it gets its grubby mitts on. If you're interested in picking up a copy for yourself - or a disillusioned statist you wish to annoy - simply click here. Also, don't forget to drop in your Daily Reckoning discount code [E401M202] when checking out. Happy reading! -------------------------------------------------------- Byron King's Energy and Scarcity Investor Introduces... Why China Is About To Bring America To Its Knees The world is 97% dependent on supply of these little-known resources from the red dragon. At stake is America's ability to create cell phones, hybrid car batteries, even our high-tech military equipment... They are about to shut supplies of this vital resource off from the rest of the world... FOREVER! Click here to see how to make 4,851% gains or more from the greatest global supply squeeze in modern history. -------------------------------------------------------- ALSO THIS WEEK in The Daily Reckoning... Disasters... Both Natural and Unnatural By Byron King Pittsburgh, Pennsylvania Looking at history, there are often major international economic declines after big natural disasters. The example I like is how the San Francisco earthquake of 1906 led to the bankruptcy of many insurance carriers and to an outflow of cash from London and New York money centers. This led directly to the Panic of 1907 - and eventually to the creation of the US Federal Reserve. So in a sense, you could say that a natural disaster produced an unnatural disaster. Japan's "Three Mile Island" By Chris Mayer Gaithersburg, Maryland Japan's nuclear disaster is tragic on many levels. My focus here, though, will be on what it means for uranium investments and the world's energy markets. The main worry is that the situation in Japan chills the industry in the same way Three Mile Island did in 1979. Will political pressures quash the nuclear renaissance? It's too early to know for sure how this will play out, but we can make some guesses. Enterprise, Not Greed, Creates a Better World By Charles Kadlec Greed: The word itself has become central to the political debate over the budget, taxes, union benefits, what constitutes ethical behavior, and the shape of our society. The problem is the indiscriminate use of the word has blurred its meaning. Those on the left use the word as an epitaph against the successful as epitomized by Sen. Bernie Sanders "When is enough enough?" he asked in his impassioned plea for raising tax rates "on the rich." Who's Holding the Bag? By Eric Fry Laguna Beach, California When disaster strikes, the initial victims are rarely the only victims. Collateral consequences fan out in surprising ways. Sometimes, the individual/entities who are left holding the bag are not the ones we would expect. The tri-disasters in Japan will provide a classic example. There will be obvious immediate victims, as well as less obvious subsequent victims. Investors might find it worthwhile to consider who some of the subsequent victims might be. Let's call this little game, "Who's Holding the Bag?" The Power of Exponential Technological Change By Ray Blanco Marco Island, Florida Austrian economist Joseph Schumpeter summed it up well in his book Capitalism, Socialism and Democracy: "The capitalist engine is first and last an engine of mass production, which unavoidably means also production for the masses... The capitalist achievement does not typically consist in providing more silk stockings for queens, but in bringing them within reach of factory girls in return for steadily decreasing amounts of effort." To Schumpeter's words, I would like to add that this process is not slowing down. Technological change is accelerating...exponentially. -------------------------------------------------------- Ex-Lawyer Invents Method for Making 1,329% Four-Day Gains in the Market Now you can use his method for the chance at gains like 178% in four days, 369% in 48 hours - even 545% and 1,329% gains in less than a week! Get started right now with this new video presentation. -------------------------------------------------------- The Weekly Endnote: It there such thing as a "Galt's Gulch?" We don't know...but this comes pretty darned close. "Yes, yes, yes...but where are all the money printing machines?" We'll return to that area commonly referred to as "civilization" on Monday. 'Till then, enjoy your weekend. Cheers, Joel Bowman Managing Editor The Daily Reckoning -------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor atjoel@dailyreckoning.com The Daily Reckoning - Special Reports: Gold: The Truth About Gold Fiat Currency: Using the Past to See into the Future Have You Heard of the OTHER Government Backed "Pension Program?"