The Red Dots Three, Parsley, and Counting Sheep

I thought they'd talk about it in a system where there were no transaction costs . It's an imaginary system . There always are transaction costs when it is costly to transact , institutions matter and it is costly to transact . Before we start , a technical note , some listeners got tired of the muddy sound and contributed a new Shure MV7 microphone to the cause .

So thanks to David and Jack Boyd of Burlington , north Carolina , for the new equipment . Here's last week's letter . I moved to South Carolina some years ago . Our liquor stores are called red dot stores . Why Does any other state do that ? I've asked some people here why they have red dots and the answers vary .

Some say it's because South Carolinians are illiterate , but then why not blue dots for groceries ? Some say it's a symbol of the sun , because liquor is only sold in the daylight hours . It seems like this is more expensive than just having a regular sign . What's up with the red dots Signed not alcoholic but still anonymous . Well thanks , not Al-Anon .

That's a common question down here in the Mid-South . That , and what's with all the racist Pedro signs about SOTB ? Part of the answer has to do with the end of prohibition in December 1933 . There was no right to buy alcohol . All the 21st Amendment did was repeal the 18th Amendment which had outlawed alcohol .

The end of national prohibition meant that law reverted to the states , a lot like the Dobbs decision in abortion , and South Carolina had its own statutes which still restricted sales . Much of what I'm going to say comes from a great book by Robert Moss called Southern Spirits . I recommend it .

South Carolina finally allowed the retail sale of liquor to return in 1935 , but there were constant political challenges from the upcountry busybodies who wanted to tightly restrict the industry . Storefront ads so infuriated drives that in 1938 , the Solons in Columbia commanded discrete retail liquor dealer signs where all that could be displayed .

Seven years later , with the creation of the Alcoholic Beverage Control Board , or ABC , they decided to reduce any such sign to , let us , only a few inches high , placed on the lower right hand corner of a display window or on the front door . Liquor stores of that era had no back door , because everyone would have used it .

Anyway , in 1945 , the legislature passed a measure that limited advertising no neon signs , no price advertising and no bottles displayed in their front windows . The only signage allowed were the words retail liquor dealer , which could be printed in letters no more than three inches high , along with the dealer's name and license number in three-inch high letters .

This increased the transactions cost of finding liquor stores , which reduced sales . Why ? Because to the consumer , all costs are transaction costs . There's no requirement of higher price . Just making it harder to find and less convenient reduces the quantity demanded . South Carolina legislators knew the answer is transaction costs . Before it was cool .

Within a few years , though , people started noticing big red dots painted on the side of liquor stores around the state . In October 1951 , the Associated Press reported that the origin of the symbol seems to be a mystery , but in the two years since the State Tax Commission officials and retail store owners say they first noticed its use , it has become universal .

A month later , dan Henderson of the Charleston News and Courier tracked down the source . A Charleston liquor dealer and of course it was Charleston named Jesse J Fabian , was the first to have the red dot on his store at the corner of Spring and King Street , and it appeared there in July 1945 , just after the state's advertising ban went into effect .

Fabian had hired Doc Wensley , a longtime Charleston sign painter , to inscribe retail liquor dealer letters on his store using the legally required 3-inch letters . They didn't show up very well . Inspired by the logo on a pack of Lucky Strike cigarettes , wensley painted a large red dot around the lettering to serve as background .

Henderson was unable to account for how the symbol had spread to other states , but by 1949 they could be found all the way up in the northwestern part of the state , so as far as from Charleston as you can get . The state alcoholic beverage control board tolerated the red dots for more than two decades .

For South Carolina residents , it became the main way they figured out where to go buy a bottle . Suddenly , in 1968 , though , the ABC board ruled that the red dot was advertising and could no longer be used . Several legislators promptly introduced legislation exempting red dots from the ban , codifying the use of the symbol in law .

In 1976 , the rules were further clarified , specifying that red dots not exceeding 36 inches in diameter may be placed on each side of the building and on the rear and front of the building . The laws prohibiting liquor store advertising were gradually relaxed over the decades that followed , and today the South Carolina statutes ban only advertising .

That quote is addressed to and intended to encourage persons under 21 years of age to purchase or drink alcoholic liquor end quote . But the red dots have stuck , much to the bafflement of folks from other parts of the country .

These subsequent rules have been relaxed somewhat , but into the 21st century the red dot has remained a faithful beacon for those seeking liquor , as well as a warning sign for those determined to avoid it . There's actually many instances of this sort of signaling . It fulfills a function of advertising in the sense that it provides information .

In ancient Pompeii that has been excavated after the explosion of the volcano , you can find on the sidewalk and on walls of building carved representation of male parts oriented to point towards a nearby brothel . Now , using a depiction of male parts to advertise cis-het brothels may seem odd , because that's not what was being sold .

Maybe it's easier to carve an identifiable representation of that rather than the alternative , and of course , the directional function is more specific . So well , the answer is transaction costs . This kind of social encoding reminds me of one of my favorite concepts , the shibboleth . A shibboleth is a cultural focal point , something that discriminates among groups .

To be precise , the meaning of the word shibboleth was a small flooding stream , a fresh-het or an ear of corn , but the reason we remember the word is its pronunciation , not its meaning .

In the Bible , in the Book of Judges , there was one tribe , the Gileadites , who could pronounce shibboleth with the SH sound , but the Ephraimites , lacking the SH sound , pronounced the word shibboleth . How in the world did they get people to be quiet in the library ? That's a mystery for anthropologists .

Well , the Ephraimites , though they were a larger tribe , were ethnically defined and were scattered . They mostly lived west of the Jordan , northwest of Jericho and the tribe of Benjamin . The Gileadites , though , were concentrated . Even though they were smaller numerically , they were much more concentrated east of the Jordan than the land bordering the Ammonites .

Well , there'd been a war with the Ammonites . They'd been defeated , and the Ephraimites felt assertive . They tried to assert their rights , even in the land of the Gileadites . But the Ephraimites were scattered and the Gileadites easily defeated them . The Ephraimites were trying to get back home , but to do that they needed to cross the Jordan .

They were on the east side . They needed to cross back to the land of Ephraim , which is on the west

side . It turned out that the difference in pronunciation mattered , as the following passage from the Old Testament illustrates . This is from Judges , book 12 , verses 5 through 7 , and my source here is the King James Bible . And the Gileadites seized the passages of the Jordan before the Ephraimites .

And it was so that when those Ephraimites who had escaped and said let me go over that , the men of Gilead said unto them art thou an Ephraimite ? And if he said nay , then they said unto him say now Shibboleth . And he said Shibboleth , for he could not frame to pronounce it right .

Then they took him and slew him at the passages of the Jordan and there fell at that time of the Ephraimites 40 and 2000 . It's a pretty long line . I can't imagine people lining up to be told say Shibboleth . But that's the story . Next crucifixion yes , good . Out of the door line on the left , one crossy . Next crucifixion Good .

Out of the door line on the left , one crossy . Next crucifixion no freedom . Freedom for me . They said . I'm done in a thing so I could go free and live on an island somewhere . Oh , that's really good . Well , I could go then . Now I'm only putting your leg . It's crucifixion , really . Oh , I see . Very good , very good .

Well , out of the door , yeah , out of the door line on the left . Why is it that we're concerned about Shibboleths and the cultures that they delineate ? Well , in this case , it was possible to tell something about your clan or tribe , and that is often code for your loyalties . Remember , one of the big sources of transaction cost is asymmetric information .

If I think that you're a trader but I say are you a trader , you're likely to say me no , I'm not a trader . But if I had some source of information that you could not fake or counterfeit , that would be very valuable . Being able to identify yourself and be trusted make exchange and cooperation much cheaper , both in economics and in international relations .

A famous example is the use of baseball as a Shibboleth in the Second World War . In the Battle of the Bulge in December 1944 , german infiltrators crap behind American lines dressed as military police .

Now , the Germans had chosen young men who had been raised or who had spent a lot of time in the US and spoke flawless English , and they were using captured American MP uniforms . They had prepared papers that identified them as American MPs , so it was very difficult to identify them . The US troops confronted each other with questions about baseball .

So in a personal account of Robert Gravelin from the 23rd Armored Engineer Battalion , they went like this I asked him if he thought Detroit would win the World Series . He said no . But they put up a bloody good fight . We pulled them out of the Jeep because the World Series in 1944 had been between the Cardinals and Browns .

A side note that was the only all St Louis World Series ever . It's hard to believe that St Louis had two teams when apparently this year there's not even enough decent pitching for one team . Back to the quote . It was discovered that they were Germans in US uniforms . We sent them back to our G2 Intelligence Group .

So any American man , the theory goes , would know who played in the World Series . Now , woe betide , the soldier who didn't follow baseball , who suffered like a Gileadite who happened to speak with a lisp . Another example is the so-called Parsley massacre .

In October 1937 , rafael Trujillo , the dictator of the Dominican Republic , announced basically war against Haitians living in the Dominican Republic . A lot of Dominicans felt that Haitians brought with them crime , drunkenness . They blamed their problems on Haitians who were living in the Dominican Republic .

What Trujillo said was for some months , I have traveled and traversed the border in every sense of the word . I have seen , investigated and inquired about the needs of the population .

To the Dominicans who were complaining of the depredations by Haitians living among them thefts of cattle , provisions , fruits , and thus were prevented from enjoying in peace the products of their labor I have responded I will fix this . We've already begun to remedy the situation . 300 Haitians are now dead in Banica . This remedy will continue .

This is an actual public statement of the leader of a country saying that they're just executing , conducting ethnic cleansing , something like the Gileadites were trying to do to the Ephraimites . But of course , it may have been difficult to tell who was a Haitian .

So the so-called Parsley massacre , in Spanish El Corte , the cutting was a mass killing of Haitians who were living in the Dominican Republic and in certain parts of the Cebau region . Army troops from different areas of the country carried out the massacre on the orders of Trujillo . The massacre claimed the lives , ultimately , of between 14,000 and 40,000 .

That's four oh thousand Haitian men , women and children . Dominican troops interrogated thousands of civilians , demanding that each victim say the word Parsley in Spanish . Now , in Spanish , the word for Parsley is perihil . It has an R you have to trill once and then the J is a pretty hard 8 sound .

Perihil the French word for Parsley and French is what most Haitians spoke was persil . If you said perihil without trilling the R , it meant that you were likely Haitian . If the accused couldn't pronounce the word to the interrogator's satisfaction , they were deemed to be Haitians and killed .

Now , all three of these examples have involved the distinction of friend from foe in war time , being able to pronounce Shibboleth , knowing who won the World Series in 1944 and being able to pronounce the word for Parsley in Spanish . All three of those were basically about distinguishing friend from foe .

Now , in war , the idea of the other is stark , but even in peacetime , knowing who we are may require knowing who they are , and the very existence of a we may depend on their being a they . More precisely , it's about culture and ways of knowing that have to do with shared understanding and differences .

That may solve larger problems of cooperation , because I think that I can trust you because you're one of us . But that works better when there are people who are not one of us , who are they , and that means that Shibboleths can be used both as good and as evil . Whoa . That sound means it's time for the twedge .

A man walking along a road in the countryside comes across a shepherd in a huge flock of sheep . He tells the shepherd I'll bet you $100 against one of your sheep that I can tell you the exact number in this flock . The shepherd thinks it over . It's a big flock , so he's willing to take that bet . 973 , says the man .

The shepherd is astonished because that's exactly right . He says well , okay , I'm a man of my word . Pick any sheep you want . Man goes over , picks up an animal and begins to walk away . Wait , wait , wait , cries the shepherd . Let me have a chance to get even Double or nothing . That I can guess your exact occupation .

Man says I think that'd be pretty hard . So sure . And the shepherd says you are an economist for the US Bureau of Labor Statistics . Amazing response , the man . You're exactly right . But how did you deduce that I'm an economist for the BLS ? Well , says the shepherd , if you'll put down my darn dog , I'll tell you .

The idea is that the BLS , which calculates both unemployment rates and inflation , is really good at counting things specifically , but it's not very good at using consistent or useful definitions . Some people claim that both rates are grossly inaccurate . For that reason , the things that people buy or the way that people work changes over time .

The BLS counts things but can't identify them . It's time for this week's letter . Jk writes I have a disability under control now . On a drug trial , doing great , I found myself quickly unable to perform routine home care and maintenance , so I traded my tool belt for a checkbook . When I moved to a condominium , my neighbors would complain about our HOA fees .

I thought I'd won the lottery . I give you $200 a month and you mow the lawn , shovel the walks , fix the roof , paint the garage , pay my water and trash bill and I get a swimming pool . Shared resources help .

But it occurs to me that a big part of the bargain in transactions cost is that there's one contract for 500 lawn sections , one contract for 500 sidewalk segments .

Now , going more macro , could you extend this as an argument against anarchy ? One could individually contract for all of those services . That's really high transaction cost . Or you can subscribe to a big Randy Barnett style super HOA . That would have fewer transaction costs but might start to resemble a government as it grows to cover more services .

My HOA is a bargain , but it's not utopia . They tell me how many plants I can have on the patio . For heaven's sakes . All the best , jk . Well , thanks for listening . We'll work on that puzzle . Have another hilarious twedge and more next week on TidySea .