Two for the price of One

Two great stories from the blog at Reason Magazine (I seriously cannot wait until my subscription kicks in!) about the death of impartial news coverage and the power of the black market.

First, they report that a small Boston-area newspaper, the Bay-State Banner, is accepting $200,000 in funds from the city to stay open. Why? Because it is the only minority-run paper in the Boston area.

Now, keeping aside the idea that they are being given this money to stay open just because it's a minority paper (don't you think the Boston Globe would like a city bail-out??), consider the ramifications when newspapers begin accepting money from politicians to keep themselves afloat.

Do you think they might be a little more willing to endorse those guys in the next election? I'm gonna say yeah, probably. Not that newspapers have to be entirely objective (and they never will be), but this sets a new low.


Second, how about a black market for cigarettes? But cigarettes are legal, you say, how could there be a black market for them. Well, since taxes on cigarettes vary from state to state, people have begun buying cigarettes in bulk from states with low taxes and transporting them across state lines to places with much higher taxes. Then, of course, the smugglers sell their cigarettes (illegally) at a much lower price.

Just to give you an idea of how much money we're talking about, in New York people have to pay over $4 in taxes on a pack of smokes.

As always, black markets are the natural, market-driven, response to government restrictions on what can be bought and sold. But even though we usually only think of black markets in terms of items that are illegal, we should keep in mind that ANY form of government regulation has the potential to create a black market if it is draconian enough.

Black markets aren't good for anyone (except the relatively few people who make profits off them, until they get caught), and the easiest way to get ride of them is to remove regulations/taxes/tariffs and let the market run as it should.

I mean, $4 in taxes for a pack of cigarettes? I don't smoke, but after reading that, I might need a drink.