Tuesday, December 6, 2011

Know What You're Talking About

One of the things that irritates me, both as a writer and as a student of markets, is when very well regarded columnists make basic errors in logic or argument. By "basic", I mean something I would expect from the average college sophomore. My suspicion is that it is generally a symptom of a process where the writer starts with his conclusion, and just works his way around the facts so that he can get there, in whatever word count the editor is asking for. The latest example of this comes from the Washington Post's George Will, who's written an unsurprisingly sloppy and inaccurate column on the Affordable Care Act.

Now, Slate's Matthew Yglesias has a much better critique of the article overall, and I strongly suggest you read it. However, I would like to litigate a more narrow point of one of Will's claims; that California's regulatory regime is stifling the construction of more Carl's Jr. restaurants, whereas Texas (an implied paragon of the free-market) is booming with expansion. Specifically, Will writes that
CKE has, however, all but stopped building restaurants in [California] because approvals and permits for establishing them can take up to two years, compared to as little as six weeks in Texas, and the cost to build one is $100,000 more than in Texas, where CKE is planning to open 300 new restaurants this decade.
If one takes a quick look at CKE Restaurant's website however, it's pretty easy to find out that California is already home to 723 CKE establishments, 713 of which are Carl's Jr alone. Whereas Texas only has 53 CKE Restaurants overall (all of which are Carl's Jrs). I'm pretty sure market saturation is just a, if not more compelling explanation for the chain's expansion choices than Will's implication of onerous regulation.

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