Recently a friend who works for the BBC asked if I knew of any good general interest but topical stories coming up any time soon, and I said that when they finally finish London Gateway, the new container port now being constructed and even already slightly used, on the north bank of the Thames Estuary, that will be made a big fuss of.
She then told me about a series that the BBC World Service is doing about 50 Things That Made the Modern Economy. I said that the Container certainly should be one of these Things. She later determined that the Shipping Container does indeed feature in this series, and she sent me that link. Amazing what a difference an email with a link makes to your willingness to attend to something.
This piece about the Shipping Container lasted under ten minutes, and, although I had heard most of the story before, I liked it. So I then sampled a couple of the other Things, about which I knew less and nothing, namely: the Barcode, and the Haber-Bosch Process. The latter is for turning the nitrogen in the air into fertiliser.
The next Thing I listen to will be Concrete. I already know what concrete is, but I expect to learn a lot more, about it, and about what it did to and does for the world. Made life a lot easier for farmers, apparently. Which, to a townee like me, is one of those many things which is obvious, but only if someone makes me think about it.
Recommended. An economist and economic historian by the name of Tim Harford has done a number of these Thing broadcasts, including the ones about the Container and about the Barcode. He is already very well known, but not so well known to me. But, I can already tell you that he also is to be recommended, going only by how he talks about these Things.
LATER: See also this earlier posting here, about similar Things.
I wanted to believe that Hillary Clinton would lose the recent US presidential election, so when I started reading Scott Adams saying that she was indeed going to lose, to Trump, I kept on reading him. Like so many others, I like to read within my bubble, as well as outside it. That means I also now read Scott Adams on every other subject he deals with in his blog. I am now digging back into his archives for more wise and witty verbiage. I am surely not the only one doing this now.
Scott Adams has a girlfriend called Kristina Basham, who, it would appear, is working and working at becoming one of those people who is famous for being famous. This is one of those labels that most people seem to assume is an insult. But being famous is a skill and a job, like any other skill and job. Your basic skill is that you know how to attract attention, and you basic job is that you sell this ability and live with the adverse consequences of it as well as the benefits. Scott Adams describes very well the sort of work that goes into becoming one of these F4BF people, as I will call them from now on. Kristina Basham is not, you see, outstandingly good at anything in particular. She is just pretty good at a whole “stack” of things, which, when you combine them, are making her into someone F4BF.
I say: good for her.
The claim that people who are F4BF contribute nothing to the world is the latest iteration of that very old and very bad idea that there is a “real” economy, consisting of work that people are used to doing and which their ancestors even did, like farming and then after that factory working; and then there is the “unreal” economy, consisting of silly things that add nothing to the “real” economy, but instead just leach off it, like financial services (which actually make farming and industry massively more productive by telling farmers what to farm and industrialists what to industrialise), and more recently jobs like being F4BF. (Even being a factory worker was once upon a time denounced as being unreal.)
Being a celeb, and in particular being nothing but a celeb, an F4BF, which is to say being good at attracting attention to oneself but for no single and obvious reason, but still being good at it, is a vital part of the modern economy. Celebs, including F4BFs, enable attention to be diverted away from major economic investments, while the work of creating or building them is being done and needs not to be disturbed, in the secure knowledge that when attention is finally demanded, and you need to attract a lot of business very quickly or else a lot of money will be lost while the word spreads by mere unassisted word of mouth. For that grand opening of whatever it is that you have been quietly working on for however long it has been, you hire a bunch of celebs. Including maybe some of that particular sort of celeb who are F4BF, pure and distilled celebs who are nothing but celebs.
Back in January of 1987, about thirty years ago, before it opposed economic theory on principle, The New York Times wrote an editorial against the minimum wage.
In a short piece provocatively entitled: “The Right Minimum Wage: $0.00”, they said, among other things:
[…]It’s no wonder then that Edward Kennedy, the new chairman of the Senate Labor Committee, is being pressed by organized labor to battle for an increase.
No wonder, but still a mistake. Anyone working in America surely deserves a better living standard than can be managed on $3.35 an hour. But there’s a virtual consensus among economists that the minimum wage is an idea whose time has passed. Raising the minimum wage by a substantial amount would price working poor people out of the job market.[…]
The newspaper was hardly expressing the sort of fully libertarian view I would prefer — the editorial suggests wage subsidies and state sponsored job training as an alternative to minimum wage laws. However, it is still noteworthy that thirty years ago, the New York Times’ editors still possessed the fundamental understanding that raising the price of something lowers demand, and that labor isn’t an exception.
It is worth reading, if you can, if only to remember how far the terms of the debate have slipped over the decades. Today, the editorial board of the same newspaper strongly favors doubling the minimum wage, to $15 an hour, which, in inflation adjusted dollars, vastly exceeds any level it has had in the past. No serious consideration is given in the more recent editorials to the notion that doubling the price of low skill labor might result in unemployment. This is quite a change, and not one for the better.
Said the Donald to the Salmon(d), erstwhile First Minister of Scotland, in a letter about the plans for windfarms off the Aberdeenshire coast, we know now from the Trump letters, obtained under the UK’s Freedom of Information Act.
A series of colourfully-written letters sent by Donald Trump to then-Scottish first minister Alex Salmond has been published in full for the first time.
The letters formed part of an intense lobbying campaign against plans for an offshore wind project near Mr Trump’s Aberdeenshire golf resort.
Some examples of Mr Trump’s forthright style:
On 12 March 2012 he asked Mr Salmond: “Do you want to be known for centuries to come as ‘Mad Alex – the man who destroyed Scotland’?”
He added: “If you pursue this craziness Scotland will go broke and forever lose whatever chance you currently have of making Scotland independent.”
he sent a one-sentence missive to the then first minister asking why Swedish energy firm Vattenfall was being allowed to “ruin” the Scottish coastline, adding: “Let them ruin the coastline of Sweden first.”
On 9 February 2012, Mr Trump told Mr Salmond: “With the reckless installation of these monsters, you will single-handedly have done more damage to Scotland than virtually any event in Scottish history.
I note that the letters indicate an appreciation of pragmatism by Mr Trump.
In one letter Mr Trump said: “History has proven conclusively that the world’s greatest leaders have always been those who have been able to change their minds for the good.”
He also said he would be “your greatest cheerleader if you can change or modify your stance on at least the inappropriately placed turbines.”
In the other letter he told Mr Salmond: “Your idea of independence is ‘Gone With the Wind’.”
Well, I am slightly puzzled by Mr Trump’s writings, if only by the use of the future tense in the reference to a third-world wasteland. And he surely meant to say ‘sh*thole’, which in Scots English I’m told is spelt ‘Cumbernauld‘.
I have to say that I am looking forward even more to 12 noon on 20th January 2017.
“The perceived ills of Anglo-American shareholder capitalism shown up in the bursting of the 1990 stock market bubble are not therefore a sign of some decrease in corporate morality – though there have been some clearly illegal practices which are rightly being dealt with by the courts – but due to the perverse incentives created for managerial `rent seeking’ by the regulations limiting hostile takeovers, and the unintended effects of fiscal policy through the double taxation of dividends. With the double taxation of dividends due to end, if all the regulations preventing hostile takeovers can also be repealed, the unregulated market for corporate governance would again provide checks on predatory managements. Executive compensation will begin to fall, accountants will have less pressure to cook the books, and the Anglo-American corporation would pursue the innovation, efficiency, and profitability that has till now been its hallmark.”
– Deepak Lal, from Reviving the Invisible Hand, page 202. (The book was first published in 2006.)
Why you should feel cynical about government projects, part umpteen thousand.
New York State’s Governor, Andrew Cuomo, proudly tweeted this today:
“Right now, there is a lot of cynicism and skepticism about our projects. We’re going to restore credibility. #2ndAveSubway will open Jan 1.”
He is referring, of course, to the imminent opening of a small segment of New York City’s long planned Second Avenue Subway.
Let us recall that planning for the Second Avenue subway began in 1919. That’s quite literally just short of a century ago.
Let us recall that construction began in 1972. That’s 44 years ago.
Let us recall that what is opening on January 1 is not even remotely a full Second Avenue subway. It is just three stations, at 96th, 86th and 72nd streets.
Let us recall that to get just these three stations, and just since the latest phase of work resumed in 2007, $4.5 billion, that’s billion-with-a-b, have been spent. That’s $1.5 billion per station. That’s $3.75 billion per mile for the 1.5 miles built to date, by far the world’s most expensive subway line.
The line has about 13 other stations to construct according to current maps, so completing this single subway line would cost about another $20 billion dollars. If we judge on the basis of the per-mile cost of Phase 1, the seven miles still remaining would cost another $26 billion. However, for projects like this, costs generally go up with time, not down, so the price may even be far worse.
No, Andrew Cuomo, this minor expansion of the transportation network, which is not yet remotely complete after a century of work, which has cost an astonishing sum and will cost vastly more if it is to ever be complete, has only reinforced cynicism, and has done nothing to restore credibility in government projects whatsoever.
The New York City subway system was mostly built privately, until the government forcibly took it over. Since the takeover, the system has stagnated, leaving a major metropolis with a public transportation network that has barely been improved since the First World War.
The system is grotesquely filthy, so noisy that scientific studies say routine users suffer hearing loss, is slow, is unreliable, is vastly overcrowded, often reeks of human excrement, is a sweat-box throughout the summer months, and yet, in spite of huge numbers of passengers, loses money year after year.
So what would I do to fix it? That should be obvious.
We’re living longer lives these days, we’re working for fewer decades of them and thus people are rationally saving for their expected golden years. Thus capital as a percentage of GDP rises – not to produce inheritances, but to produce incomes in retirement. And rises by potentially at least more than 100% of GDP.
We can’t see that this is a problem and we most certainly cannot see that this is an argument for greater taxation of capital. Quite the reverse in fact, people saving for their old age should be encouraged, not specifically taxed.
– Tim Worstall
Some say that membership of the Single Market, the ability to export without facing tariffs, is so important that we should accept the freedom of movement. My argument is exactly the opposite. I’m not against freedom of movement, regard it as being economically and morally useful in fact. But then some large percentage of my fellow Britons don’t think that way. My objection though is to the Single Market idea. For it isn’t just a system allowing tariff free exports. It’s an entire system for governing and regulating the participating economies.
Just as an example, one that rather boggled the mind this morning, there’re rules about when a supermarket can offer you free parking (that in itself will boggle the mind of many Americans, that parking must be paid for at a store?). If you go and buy whiskey, diapers and beef they can stamp your ticket, give you a voucher, and you get free parking. If your purchases include formula milk then they cannot stamp your ticket and you cannot get free parking. And yes, this is a result of an EU law. Must do wonders for adoptive mothers, those who simply do not produce enough milk and so on. But the entire ruling system of Europe thought this was important enough that there must be a law about it.
And the final sentence of Tim’s piece is the crunch argument for me as to why the Single Market is a cruel hoax (and Mrs Thatcher, who signed the Single European Act in 1986, kicked herself for not grasping this). We are told that to have access to the Single Market and the supposed benefits of such membership, “We” (Britain) “must” (because it says so, apparently) accept regulation of everything, down to the size of the plug on electric kettles, the rules governing sales of vitamins, the lot. And while no-one should have any illusions as to zeal with which local politicians in the UK might want to regulate these things, it is a million miles easier to resist such nonsense at the national level than at the supranational one, not least because MPs cannot hide behind the “Brussels made us do it and anyway we need to because of the Single Market” line they come out with.
Free of the EU, we are free of a great mass of legislative empire building that has, as such examples show, tiddly-squat to do with trade, commerce and entrepreneurship.
Of course, this debate does not touch on the fact that at the global, not European level, there are all manner of intergovernmental agreements and treaties that will continue to affect us in or out of the European Union. I can think, for example, of a global system coming into force called the Common Reporting Standard, a bland term that describes how scores of governments, ranging from the likes of Singapore to Germany, will swap financial data with one another to hunt down alleged tax evaders. And in one of those beautiful ironies, the US, home to Delaware, one of the most secretive legal jurisdictions on the planet, isn’t a signatory, and under Mr Trump, isn’t likely to be.
I believe in making a bit of a fuss about visiting pro-free-market luminaries. Our movement needs celebs, and one good way to get celebs is to make our own people into celebs. One more photo of whoever it is, on a blog, won’t turn him into a celeb on its own, but every little helps. So, below is a photo I took last week, of Robert Lawson, during the Q&A after a talk that he gave at the Adam Smith Institute office in Great Smith Street, on the subject of the Economic Freedom of the World, and more to the point, on the measuring of it:
He looks like he’s conducting an orchestra, doesn’t he? Actually, he was drawing graphs in the air in front of him. The lighting in the ASI’s upstairs premises where this talk took place prefers to light the walls rather than the speaker, so that was one of the very few semi-adequate photos of Lawson that I managed.
This other photo, on the other hand, which showed the final graphic that Lawson gave us on one of those big telly screens that used to cost a fortune but which are now ubiquitous (thank you: economic freedom), came out much better, because the screen supplied its own light:
Free The World indeed.
This work by Robert Lawson, putting numbers to which countries are doing what in the realm of economic freedom, should not be confused with that being done by a rival enterprise, the Heritage Foundation.
It’s good that there is competition in this important intellectual arena, but to me it is very confusing, and I don’t think I am the only one thus confused. The ASI email about the event included the words “Economic Freedom of the World Index”. But googling for that before the event took me to this Heritage site. On the subject of this rivalry, Lawson was very polite, and I think we all sensed some behind-the-scenes animosity there. He described the Heritage Freedom Index as somewhat more speculative and opinion-based and less based on actual data sets, supplied by others, than his own efforts. “Black box” was the phrase he used, by which he meant that it is harder to scrutinise how the decisions were arrived at in the Heritage process than it is to scrutinise the Fraser Institute process. In contrast, all the data that Lawson referred to in his talk, with his other graphic offerings on the screen above, is publicly available.
Here is a .pdf of the Economic Freedom of the World 2016 Annual Report, which tells the story as of 2014, which I believe is the latest date that Lawson has done the sums for. Scroll down to page 8 and you get the big national league table. The positions I notice are: Hong Kong in the lead, the UK at number 11, USA at 16. Hong Kong is top every time. The UK is holding about steady. The USA has been falling steadily during the last couple of decades or so.
Lawson also drew our particular attention to that remarkable ex-USSR-possession, Georgia, which is trying to do a Leicester City and is currently at 6. (Heritage doesn’t include Georgia in its top 10.)
And so on. Hours of fun to be had. The more serious point is that economic freedom the world over had been rising healthily until about 2010, but is now flatlining.
True Believer Austrianists might have winced a little at Lawson’s determination to be empirical, to gather evidence, to test theory against fact. He was quite explicit that social science, broadly defined (in the German manner) to mean systematically gathered and systematically tested knowledge about how the world works, is something that is entirely possible. He pointed out that economics is not the only science that is unable to conduct all the experiments it might like to, but instead must mostly depend on theories, and on observations to test those theories. When was the last time you saw an astronomer conducting an experiment with some planets or stars?
But, please don’t take my word for any of this. Thank goodness for those websites, because if you really want to get to grips with all this stuff, you need not depend on me to tell you about it. All I really want to say here is: interesting man, interesting talk, and well done the ASI for hosting it. Apparently Lawson was only here because he wanted to be at this sporting event, last Sunday. If so, then thank you: sport.
The following article over at the CapX site explains why the UK should go for unilateral free trade immediately, and summons up arguments deployed a century and a half ago by the likes of Richard Cobden, and Sir Robert Peel, the Conservative prime minister of the time (who had a rather stronger grasp of political economy than, I suspect, any member of the present government):
I trust the government … will not resume the policy which they and we have found most inconvenient, namely the haggling with foreign countries about reciprocal concessions, instead of taking that independent course which we believe to be conducive to our own interests…[L]et us trust that our example, with the proof of practical benefits we derive from it, will at no remote period insure the adoption of the principles on which we have acted… Let, therefore, our commerce be as free as our institutions. Let us proclaim commerce free, and nation after nation will follow our example.
And these comments from the author of the CapX article, Louis Rouanet, who is a student in Paris, strike me as crucial:
A unilateral free trade program is very simple: the British Parliament declares the abolition of all tariffs. To avoid a race in non-tariff barriers, the Parliament can pass a law declaring that every product which conforms to the EU norms and regulations can be sold freely in the UK. This should not be a problem since the UK still is a member of the EU.
By Parliament’s act, most of the “non-tariff barrier” problem withers away without any need for regulatory harmonisation. If the EU legislator considers it necessary to regulate the curvature of vegetables, so be it! But, although EU producers will be free to sell their product in the UK, the British legislature may deem it unnecessary to regulate its producers in the same absurd way.
The advantages of this approach are many. First, the UK can have free trade now instead of waiting through years of negotiations. No need to wait for bureaucrats to agree on which laws we burden consumers and producers with.
Read the whole thing, as they say.
I received the following e-mail from Airbnb:
The Airbnb Community Commitment
Earlier this year, we launched a comprehensive effort to fight bias and discrimination in the Airbnb community. As a result of this effort, we’re asking everyone to agree to a Community Commitment beginning November 1, 2016. Agreeing to this commitment will affect your use of Airbnb, so we wanted to give you a heads up about it.
What is the Community Commitment?
You commit to treat everyone—regardless of race, religion, national origin, ethnicity, disability, sex, gender identity, sexual orientation or age—with respect, and without judgment or bias.
How do I accept the commitment?
On or after November 1, we’ll show you the commitment when you log in to or open the Airbnb website, mobile or tablet app and we’ll automatically ask you to accept.
What if I decline the commitment?
If you decline the commitment, you won’t be able to host or book using Airbnb, and you have the option to cancel your account. Once your account is canceled, future booked trips will be canceled. You will still be able to browse Airbnb but you won’t be able to book any reservations or host any guests.
What if I have feedback about the commitment?
We welcome your feedback about the Community Commitment and all of our nondiscrimination efforts. Feel free to read more about the commitment. You can also reach out to us at firstname.lastname@example.org.
The Airbnb Team
I have added emphasis to the words religion, gender identity and judgment as they particularly leapt out at me. So I am being told by Airbnb that I must not judge someone based on a prescribed list of things, some simply matters of genetics or location, but others being ideas someone has chosen to believe or adopt, which is a very different category to race for example. This is the first time I have ever had a company or indeed anyone ask me to sign an agreement to interact socially in a certain manner as a precondition to doing business, or they will cancel any existing bookings I might have in their system and prevent me from making any in the future. Well that is their prerogative of course, but does anyone else find this utterly bizarre?
Now I have travelled to a great many places on this planet over the years (well, not by Michael Jennings standards perhaps, but most would say I was very well travelled). I am also a straight white atheist who thinks all religion is arrant nonsense. And yet I have stayed in hotels, motels, yurts, boats and b&bs owned by Christians, Jews, Muslims, Buddhists, Animists, Homosexuals, Heterosexuals, and goodness knows Whateversexuals, and never once had any problems due to the owner’s religious beliefs or personal peccadilloes, because I am really a very tolerant person. And yet none of the proprietors have required me to sign an agreement not to ‘judge’ their religion or what they do in bed, so such topics really never came up, which is just as well because when I am asked what I think, I typically say what I think (unless the person is pointing a gun at me).
But if a hotel ever sent me a confirmation e-mail for a booking and included a rider stating: “as a precondition of this booking, please confirm that you will not judge our religious beliefs…” or perhaps “as a precondition of this booking, please confirm that you will not show bias against my demands to be called Doris even though I have a beard and a baritone voice…” well my terse reply would be: “Cancel reservation”. Yet this has never actually happened, because most people who run hotels or B&Bs are just not that stupid. Perhaps making such demands does not seem like unhinged behaviour at Airbnb HQ in San Francisco, but that is indeed how it strikes me.
And so even though I have never once in my entire life had a problem renting a room anywhere in the world, I will be closing my Airbnb account, deleting their app, and telling Airbnb to get stuffed for their sheer effrontery and presumptuousness.
Economist have taken positive empiricism one step beyond and formulated economic theory from empirical regularities; Okun’s law, the Phillips curve or, more recently, the popularity of Rogoff and Reinhart’s debt-to-GDP tipping point. Economists, also, have little restraint in throwing up graphs showing empirically causal relationships between economic variables.
This is, however, taking economics way beyond what it can do, yet, few professional economists take to the airwaves to denounce this bastardisation of the science. Empiricism can support an economic theory, but it cannot prove or disprove an economic theory.
– Frank Hollenbeck