ON THE OTHER HAND
*ECONOMIC IDEAS, COMMENTARY AND ANALYSIS*
DALE O. CLONINGER, PROFESSOR EMERITUS
Who is Dale O. Cloninger: www.ontheotherhand.me/about
Previous Commentaries: www.ontheotherhand.me/pastcommentaries
LIBERALS THINK I'M CONSERVATIVE, CONSERVATIVES THINK I'M LIBERAL. BASICALLY, I'M A MILTON FRIEDMAN TYPE OF LIBERTARIAN BELIEVING THAT ALL THINGS ECONOMIC SHOULD ADHERE TO LOGIC, EVIDENCE AND COMMON SENSE. READERS OF MY BOOK (WITH KIM HILL), DEATH ON DEMAND, HAVE A DIFFICULT TIME ASCERTAINING WHERE ON THE ECONOMIC SPECTRUM I FIT BUT THAT'S OKAY. LABELS SOMETIMES GET IN THE WAY OF EXPLAINING IDEAS. THE LATTER STATEMENT IS THE SOLE GOAL AND PURPOSE OF THE ESSAYS PRESENTED HEREIN. HOPEFULLY, YOU WILL FIND THEM OF VALUE.
A simple solution to reduce vehicular drownings
An all too familiar story emanated out of Milwaukee recently of three lives (including a child) lost due to a vehicle in which they were riding crashing and submerging into the Kinnickinnic River. Purportedly all three drowned while still in the vehicle.
According to a previous article on The National Trial Lawyers website (https://www.thenationaltriallawyers.org/2014/02/auto-design-400-to-drown/ ) an estimated 400 people per year drown while trapped in a vehicle after it submerges. Authorities suggest that the best time to escape drowning is while the vehicle floats on or near the surface. Occupants have one to four minutes before the vehicle completely submerges. The surest escape route is through one of the side windows as it’s very difficult to open the doors even if the vehicle is only partially submerged but therein lies the rub.
Assuming the occupants are conscious, escaping through a side window requires that the vehicle still has electrical power and the power window controllers or electric motors have not shorted out. Or alternatively, the cause of the accident did not otherwise disturb the vehicles electrical system. Presently there is no way in cases of power failure in vehicles equipped with power windows to lower the side windows submerged or not. There is a possible solution, however.
All vehicles with power windows should have a mechanical ‘Dead Vehicle Switch’ (DVS) that upon a stiff push by a single finger would drop the glass down (or up in case of a rollover). The window when raised initially would load a strong spring that when released would abruptly ‘drop’ the window into its open position. Being a mechanical device the DVS would operate whether or not the electrical system functions or the doors could be swung open.
Of course, even this device requires that one or more of the occupants are sufficiently functional to active the DVS. Placing a similar switch on the outside of the vehicle would prevent occupants from securing themselves from external threats of a different nature. The DVS would also be useful in case of vehicle fires when power is lost or external damage prevents side doors from opening.
This proposal requires no major redesign of any of the vehicles structure or systems. Being mechanical it need not interfere with the vehicles internal computer or software. Preferably the DVS would operate independently of the vehicles other mechanics or other systems. It’s cost should be minimal at least compared to the total cost of a modern vehicle. Considering the potential lives saved it could be well worth the expense.
What Price US $100 bills? Estimating Black Market Size and Growth
The rapid growth of these bills over the past 20 years implies some nefarious purpose.
It’s not often that customers at US retail stores like Walmart, Kroger, Walgreens, Target, or most any other retail outlet tender a $100 bill in payment for merchandise. They might show up at gambling casinos, racetracks, and massage parlors. The point is that most ordinary retail customers carry $100 bills as they do ones, fives, tens and twenties. Most cash register drawers do not have a slot for $100 notes instead the occasional hundred is slipped under the drawer. Many business establishments display poorly written/printed signs stating they do not accept bills over $20 denomination. Even in establishments that do not display such signs, the cashier when tendered a ‘hundred’ often will call a supervisor or refer the tender to the customer service window.
So what good are these bills? Perhaps, the most relevant purpose is that a rather large sum of cash can be transported in relatively small innocuous containers such as attaché cases and the like. For this reason alone they are often used to settle payments for illicit transactions involving large sums. This reasoning might suggest that the magnitude and growth of the ‘underground’, i.e. Black Market, economy could be approximated by the abnormal growth of ‘hundreds’ in circulation. https://www.researchgate.net/publication/23747685_OVERSEAS_HOLDINGS_OF_USCURRENCY_AND_THE_UNDERGROUND_ECONOMY
The accompanying table indicates that there are more one hundred dollar bills in circulation than ‘ones’. Yet an ordinary US citizen rarely sees any ‘hundreds’. Perhaps, even more noticeable is their rate of growth, 4.31 percent per year whereas the rate of growth of all other denominations is 1.86 percent per year or less than half that of their $100 bill counterparts. Where do the 12.5 billion ‘hundreds’ (valued at $1.25 trillion) go?
Assuming that the rate of growth of all other denominations reflects the volume of cash transactions in the legitimate economy then the rate of growth in ‘hundreds’ in excess of all other denominations [last column] may be used as a first approximation of the rate of growth in the underground economy, or in this case 2.45 percent per year. Abstracting from inflation in the ‘legitimate’ sector and assuming a constant money multiple for the illegitimate sector indicates the growth in the black market economy approaches 2.5 percent per year.
This estimate would apply even if extensive money ‘laundering’ exists. Such laundering consists simply of taking illegitimate cash flows and transforming them into legitimate flows either digital or otherwise. The cash can then be ‘recycled’ in the black market. Assuming the money multiplier for the black market roughly equals the ‘legitimate’ multiplier (~1.5) the US Black Market GDP would be approximately $1.925T or almost twenty percent of the legitimate economy. https://fred.stlouisfed.org/series/M2V. However, this value assumes the entire supply of ‘hundreds’ is available to the Black Market economy. Estimates indicate that up to 72 percent of all ‘hundreds’ lie outside the US. https://ideas.repec.org/b/upj/ubooks/eue.html Limiting this value to the estimated supply of ‘hundreds’ available outside the USA yields $1.4T GDP in the illicit economy or roughly one-seventh the size of the total US GDP a result consistent with earlier estimates.  Although listed as ‘outside’ the US these ‘hundreds’ support the illicit flows into and out of the US.
Mitigating this argument is evidence that other currencies, e.g. the Euro and Bitcoin, serve as substitutes for dollars in the black market. http://www.slate.com/articles/business/moneybox/2004/12/euro_trash.html and http://www.dailymail.co.uk/indiahome/article-3552796/Bitcoin-I0707all-thendia-s-currency-choice-drug-trafficking-illegal-arms-prostitution.html. Even if correct the international economy remains awash with US hundred dollar bills.
A sudden unannounced collapse of these international currencies would have a devastating, albeit one time, impact on the black market trade. Dealers in illicit goods and services recognize this possibility and, hence, have diversified into alternatives to the US dollar. Is there a moral obligation of issuers of these currencies to discourage their use in the illicit trades? Moral obligation or not, tacit support of these dealers in illicit goods have a detrimental effect on the legitimate economy by supporting illegal drug trade, narcotic addiction, human trafficking, prostitution, child pornography and the like. These activities provide a drag on the legitimate economy while at the same time are excluded in the legitimate economy’s estimated Gross Domestic Product.
Many governments devote enormous resources to combat the illicit trade and its devastating effect on the lives of its people. At the same time other governments try to find ways to tax it.