We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day

Not everyone is an entrepreneur. Still, everyone should try—if only once—to start a business. After all, it is small and medium enterprises that are the key to job creation. There is also something uniquely educational about sitting at the desk where the buck stops, in a dreary office you’ve just rented, working day and night with a handful of employees just to break even. As an academic, I’m just an amateur capitalist. Still, over the past 15 years I’ve started small ventures in both the U.S. and the U.K. In the process I’ve learned something surprising: It’s much easier to do in the U.K. There seemed to be much more regulation in the U.S., not least the headache of sorting out health insurance for my few employees. And there were certainly more billable hours from lawyers.

- Niall Ferguson.

I am not quite sure about his assertion about the UK being so much freer, but I get the general point. By the way, I have just returned from a week in Singapore, and the pro-capitalist vibe there is so strong you could almost put in a bottle. (Actually they do: you go to the bar at Raffles Hotel, natch.)

 

25 comments to Samizdata quote of the day

  • Nick (nice-guy) Gray

    Is this the same Niall Ferguson what writes books? I’m reading ‘Colossus’ write now! He seems to know his stuff!

  • Jan Hards

    Singapore, may be “strongly” capitalist but I see from The Economist that, unfortunately, its media regulator has just imposed new rules on local “news” websites. The rules apparently require that anyone who reports on Singapore regularly and attracts more than 50,000 Singaporean readers needs to be licensed, and must post a bond to do so – rules that may or may not affect blogs.

    Of course there is nothing new to Singapore’s authoritarian tendencies when it comes to freedom of expression or the lack thereof. I am getting way off topic but it is an interesting question as to how well these mega-capitalist polities will continue to develop without a well developed fourth estate holding their politicians and elites to account.

  • Paul Marks

    Yes it is the same Niall – I do not always agree with him (for example he sometimes takes an establishment line on monetary policy), but he is always worth reading.

    Ferguson and Harvey Mansfield are about the only people worth reading at Harvard (although many universities have no conservatives at all – at least Harvard has two).

    American States vary (although the lawyers are crooks everywhere – for example there was no law in Arizonia saying that one could only choose “qualified” people to represent one in court but the representives of the lawyer guild, the judges, ILLEGALLY refused to “recognise” “unqualified” people – till the law was changed to favour the lawyer white-collar-union Closed Shop).

    However, even low regulation States with reletively straight legal systems (such as South Dakota) have the Federal government sitting on them.

    Since World War II “regulate interstate commerce” has been translated as “the Federal government can do anything it wants”.

    And things have got a lot worse in recent years (the years of so called “deregulation” – yes the “mainstream” media and most of acadamia are LYING again).

    Many leading businessmen admit that, if they were starting out now, it would be impossible for them to build up a business, and (“libertarian” left please note) the level of regulation is now so intense that even the largest and best established business enterprises are hit by it.

    Is the United Kingdom really less regulated?

    To me comparing the United Kingdom and the United States is like arguing between a louse and a flea.

    J.P. says that Singapore is less Red Tape obsessed – and other people have also told me that.

    I have also heard reasonable things about New Zealand on Red Tape (“licensing” and so on).

    Now people will write in telling me that New Zealand is really terrible…..

  • Paul Marks

    By the way (in case there are morons about) the trouble with American health insurance is government regulations and subsidy programs (both of which have been increasing since the 1960s).

    Obamacare (tbe final stages of which hit in 2014) will complete the process of making real independent health care unaffordable for most people.

    If I lived in the United States I doubt I would be able to afford dental cover and health care.

    “But as you live in Britain you do not have to pay”.

    Silly, silly, silly people – of course I have to pay (both for dental cover, and for my breathing meds and so on).

    “Because you are very rich!”.

    Errr NO.

    I am one of the working poor.

    And I am certainly not interested in “Tax Credits” (or in “Thresholds” and “claiming back…”). I never have been.

    I am not going to spend what is left of my life filling in forms.

  • Reconstruct

    He’s right – it’s relatively easy to start at business in the UK. He’s also right that everyone should do it at least once.

  • Anonymous

    Singapore is a very friendly place for capitalism approved of by the Lee family, who essentially own the place. They are smart enough to understand that it is much better for a family owned dictatorship if that dictatorship is prosperous than poor, and largely understand what it is that makes a country prosperous. This is vastly better than what happens in most dictatorships, which is that the people in charge drain what existing wealth exists from it while keeping it poor. The place is anything but a beacon of free markets or liberty, however.

  • Martin Seebach

    He doesn’t say that the UK is freer, he says it’s easier to start a business. Statism is very helpful when your interests align with the state’s – which they do while you start a business and create jobs. Once you begin making money, on the other hand, your interests begin to diverge from the state’s.

  • Lee Moore

    Horses for courses. My brother and I share one character trait – we both hate being told what to do. But I am stupendously lazy and he is not. So I have compromised and have lived my life as an employee, earning as much as possible for doing as little as possible, and letting someone else take the strain of keeping the business going. While brother escaped from employment early and has founded and run a number of small businesses since. Not hugely successful, but good enough to stay fed. It works for him, but I would hate all that hard work. But I am immensely grateful to entrepreneurs – I know who butters my bread. I am not the sort of employee who whines about the disparity between my wages and my employer’s profits.

    On which subject I recall an amusing exchange with a fair wage warrior, a while back. I attempted to explain the traditional stuff, eg “in what way is your wage unfair if you can’t find anyone in the world who wants to pay you more ?” It was unfair, I was told, that businesses could set themselves up to exploit the surplus value of employees. But, I said, there is no surplus value. There’s machines and land and raw materials and bank loans. They all need to be paid for. And then any profit once all that has been paid for is just the wage for going to the trouble of starting the business up, working out what to do, keeping the show on the road, and taking the risk that it’s all going to go tits up. But, said the fellow, I grant you that the boss works hard and takes the risks but he is still taking way too much compared with the wages he pays -he’s not doing anything that I couldn’t do. Well then, I said, why don’t you do it ? Run your own business and so extract all this surplus value that you’re convinced exists. Ha bloody ha, said the fair wage warrior; I want to relax when I go home-not everybody wants the hassle and worry of running a business. So, I said, you wouldn’t do the boss’s job for what he does it for ? He’s actually being UNDERPAID for what he does ? Go forth and multiply said the fellow. But not in so many words.

  • Average Joe

    I work for a financial services firm that was formed in the UK around 10 years ago and has been quite successful since. The company now employs over 150 staff in London, generating lots of well paid jobs and loads of money for the Treasury.

    We launched our US outfit about a year ago and were prepared for a highly regulated market but are still shocked. Whereas here you need to register with HMRC and the FCA (former FSA), in the States you must not only register with the federal regulator but also with every single state regulator in which you want have clients as well. You must also be prepared to leave deposits (or post bonds) with each state in order to do business there running from the hundreds of thousands to the millions of dollars per state. Mr Ferguson is absolutely correct with regards to the disparity in legal fees between the UK and the US. It’s not a case of 20% or 50% more expensive to pay lawyers in America, it’s sometime twice and three times the costs for routine contracts or advice and of course with more rules, you need more and more advice.

    Americans may still have more entrepreneurial spirit overall than we do in the U.K. but it is assuredly being crushed under the weight of the system they’ve allowed their politicians to create around them.

  • the other rob

    A very good anecdote, Lee Moore – I chuckled, of course, but your point is spot on.

    Mr Ferguson may well be correct about the disparity between the US and the UK – I, for one, was shocked by the sheer volume of petty regulations that I encountered upon moving to the relatively “free” state of Texas. In addition to general regulatory creep, the low purchase price of politicians at all levels in the USA has led to a much wider range of guilds and cartels using the state to restrict competition, as opposed to the UK where only the top white collar professions seem able to afford it (along with those blue collar trades that can make a plausible safety argument – CORGI – I’m looking at you).

  • Tedd

    This fact, that the U.S. is no longer that easy a place to start (and run) a business compared to many other places, is a very important fact for those who want to promote freer markets. Many, many people still believe that the U.S. is the benchmark free-market society and that the relative decline of the U.S. in economic power is, therefore, proof that free markets don’t work. That’s a wonderful argument for free-marketers to counter because it’s only wrong due to a flawed premise, and that premise is easily debunked with a quick check of facts from any number of sources.

  • I did work in equities research for a large firm in London. The parent company was American, but that’s not really relevant. I had to be registered (licensed is probably a better word) with the FSA – to get this I had a pass an exam and fill out a form, and my employer presumably had to pay a fee – but that registration was recognised by every other European country and most other countries anywhere else. Not the US, though. Our lawyers thought that we would possibly be in breach of US securities laws if a US based client called us and someone without US licence did as much as answer the phone. Therefore, the corporate policy was for pretty much everyone in the office to get a US licence – even those people who did not regularly speak to clients. For this there were more exams, submission of our fingerprints to the FBI for background checks, and other delightful nonsense, all of which our employer was presumably paying for.

  • Paul Marks:

    …the level of regulation is now so intense that even the largest and best established business enterprises are hit by it.

    They may suffer some costs, but in general, the largest businesses benefit handsomely from onerous regulation, as it forms a very effective barrier to entry.

  • Lee Moore

    I agree with Paul Lockett, but only up to a point. Heavy regulation is certainly a terrific barrier to entry and that’s undoubtedly a handsome benefit for big business. But these days, regulation carries some quite serious costs even for big business. The sort of regulation that is fine for big business is where you have to have a large compliance system, but if you have it, you’re OK. That keeps out the competition, but has costs that are predictable and which can be fed through to the consumer. You can add to that the financially vast cost of green regulation. (Not just energy, either. EU clean water regs are even more staggeringly expensive than they are pointless.) But even these costs can all be built in to the consumer price.

    There’s still that kind of regulation, of course, in spades, but regulation seems to be morphing more into shakedown territory. Some of the regulatory shakedowns these days seem to be (a) almost completely arbitrary and (b) financially enormous. Competition shakedowns, “mis-selling” shakedowns, and the amazing BP shakedown in the Gulf spring to mind. As it’s arbitrary it can also be retrospective too. And if it’s retrospective it’s hard to recover the costs from consumers. It’s not obvious to me that the shakedown state is in the interests of the shareholders of even the big companies.

    But it’s not really against the interests of the managers of these companies. They don’t pay the costs of the shakedowns, and they generally either get to keep their jobs, or even n the rare case they lose their job, they get very healthy pay offs. Even if managers know that a lot of regulation is crazy, and not even useful for keeping out competition (which may be coming from the Far East anyway), they know there’s no advantage in attracting the enmity of Leviathan. Who needs an extra competition review, or an extra tax audit ? This sort of “regulation” can be used to discriminate between big companies. The big companies that play ball, and the big companies that don’t. The management of the latter can be made to see the light. And not necessarily to the advantage of their shareholders.

  • Richard Thomas

    It was not that hard to start a business here in TN. Sadly, I was not that good at it. Glad I tried though.

  • Nick (nice-guy) Gray

    One of the troubles here in Australia is that the Unions are doing their best to interfere in as many businesses as possible. At the moment, the PM (Julia Gillard- a Red-head- someone should tell Doctor Who!) is beholden to the unions, but the Labor government is in terrible trouble in the opinion polls, and the next election should occur in September. The opposition, called the Coalition, is considered pro-business, so the unions are very worried. I wouldn’t start a business here, now, but after the election it might be a good idea.

  • Mr Ed

    OT but the Greek State broadcaster has been shut down ‘to save money’.

    As Mrs Thatcher put it ‘Just rejoice at that news!’.

  • Michael Jennings (London)

    Nick: I expect a coalition government after September to be slightly better, but only slightly. This is saying very little, alas.

  • Michael Jennings (London)

    Mr Ed: this is why the BBC likes having its own tax and its own tax collectors: it’s budget is separate from that of the government, and isn’t a line item that can be crossed out. Shame.

  • Mr Ed

    @ Michael. Indeed, although I have no TV, living in the UK so I pay no licence fee, ad I get iPlayer to catch up the rare programmes worth watching. Life without TV is much nicer, if in a holiday let with TV I don’t use it.

    Although, technically, the licence fees go directly into HM Treasury’s Consolidated Fund and then go out again to the BBC as a grant, it is virtually ring-fenced.

  • Paul Marks

    No Paul L. – the costs of the regulations (even to the largest business enterprises) is far greater than any possible gain from reduced competition.

    I suspect you have been listening to the lies of the “libertarian” left.

    Let me guess – the government is really controlled by the “corporations”, and when one reads deeper into the literature the word “corporations” is dropped in favour of the word “capitalists” (it turns out it is not really the corporate form they are opposed to), then we are told……

    Disgusied Marxism – and not even particularly well disguised.

    Up till recently they (the “libertarian” left) still pretended to believe in the nonaggression principle, now even this pretense has been dropped.

    Actually (on reflection) I am rather pleased by this outbreak of, relative, frankness.

    After all if they reject the nonaggression principle (which they do) then it does not apply to them…..

  • Julie near Chicago

    Left-libertarianism…Roderick Long explains himself:

    What makes someone a left-libertarian? I can’t answer that question: surf through the other member blogs and you’ll soon see that there’s not much in the way of a common essence.

    A question I can answer is: why do I call myself a left-libertarian?

    See the rest (not very long) about halfway down the page, next to the neat red-and-black socialist-realist poster of a gal wanting to smash patriarchy, at

    http://praxeology.net/unblog08-05.htm#07

  • Paul Marks

    The last time I came upon something written by Roderick Long, he started off by claiming that the education system was controlled in the interests of a rich power elite (the schools and universitiees served the interests of the wealthy capitalists).

    Even Marxists find it hard to claim this sort of thing with a straight face – as most schools and universities are so obviously dominated by “Social Justice” (down-with-big-business blah, blah, blah) doctrine.

    I concluded that either Dr Long was insane (in which case he deserves sympathy), or he was a wild liar – i.e. a liar who believes that “the bigger the lie the more easily it will be believed”. If a detail or so on is wrong people may spot it, but if someone says (and says very powerfully….) that water is dry and fire is cold (and …..)then people may be reduced to such a punch-drunk state that they will just accept it.

  • Julie near Chicago

    Paul, next thing you’ll be trying to tell us there’s no such thing as a square circle.

  • Paul Marks

    Julie – Anthony de Jasey (a truly civilised man – about as different from me as it is possible to be) has already explained this point. “This Square Circle” was his refutation of “market socialism”, and “The State” was his refuation of those people who pretend the state is not an independent thing (but most be under the control of “the rich” or whoever).

    But, sadly, no work can teach people what they already know – but deny because they are flim-flam men (conmen such as Roderick Long).