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

“The unemployment rate was 3.5% in July, the same as in February 2020, but the U.S. has three million fewer workers. Where did everyone go? This in an economy with 11.2 million job openings. It’s mostly men 25 to 54 who haven’t come back to work. Now a McKinsey study suggests that 40% of workers are thinking of quitting their jobs. Does anyone want to work anymore?”

Andy Kessler, Wall Street Journal ($).

Samizdata quote of the day

Mr. Biden forgives half-a-trillion dollars in student debt without the assent of Congress. White House aides collude with tech platforms to silence dissenting voices on Covid. His regulators stretch the law beyond previous understanding to impose more control over the private economy. And that’s before they get the votes to break the Senate filibuster, add new U.S. states, override 50 state voting laws, and pack the Supreme Court. Mr. Biden has become his foe’s polarizing mirror image. It is exactly what he promised as a candidate he wouldn’t do.

Wall Street Journal ($), from which I have quoted quite a lot lately.

Samizdata quote of the day

“Setting aside the stunning sexist double standard being applied to the current prime minister of Finland Sanna Marin, forgive me if I don’t think it’s news, or relevant, or important, or even noteworthy that she’s got moves. Look, I don’t believe politicians are any more noble or courageous or quasi divine than the rest of us. What’s more, if I were running a Western European democracy I’d imagine my stress level would be considerably higher than it is now. She’s got the right to burn off some steam, live life, and relax every once in a while. And unlike Dick Cheney’s hobby, no one went to the hospital.”

– G. Patrick Lynch, at the Econlog blog.

Elon Musk, the cheeky chap, has also weighed in on the issue.

Force people to use electric vehicles, and then cut the power

“It was bound to happen. After skating through the summer without rolling blackouts, Californians on Wednesday were told to raise their thermostats to 78 degrees and avoid charging electric vehicles during peak hours as a heat wave grips the state. Good thing new gas-powered cars won’t be banned until 2035.”

Wall Street Journal ($).

In my view, the idea of making people rely on electric vehicles (EVs) and then curbing how much power they have, is a design feature, not a bug. Those of a Big Government cast of mind (most politicians) might rather like the idea of fitting “kill switches” into EVs so that a bureaucrat can disable them. By making cars costly and annoying, it also forces people to use public transport.

At its root, hatred of the car is hatred of individualism and freedom. It is hatred of autonomy, even the joys of owning and driving a vehicle. All that “car culture” stuff is just so vulgar. Lord (David) Frost, the former UK Cabinet Minister and all-round-good egg, wrote a recent article about how, as a teenager, he bought a Rush album containing the song Red Barchetta, which posits a dystopian future when motor cars are banned.

He wrote:

Cars should also be about beauty. They represent the society that made them. Communist East Germany produced the Trabant. Communist China produces Politburo-style boxes. Western civilisation produced the VW Beetle and the Mini, the Ferrari Testarossa and the E-type Jag – symbols of achievement, of individualism, of power.

And cars are about excitement. The Fiat 500 nipping around the streets of Florence. The elation of burning down the Autoroute du Midi with the Alps in the distance. The sense of anticipation of heading along the urban freeway, the towers of New York or Chicago before you, as the signs flash by and the off-ramps flicker past.

We’ll miss it when it is gone. And that time is closer than you think.

Working from home – who’s the exploited proletariat, exactly?

CEOs at prominent firms such as Apple, Tesla and Goldman Sachs have required employees to return to the office, curbing the working from home trend that got going at the start of the pandemic.

One point that jumps out at me is how this shows that skilled employees have a lot of market muscle today – firms need to persuade them to do certain things and don’t have all the power.

Consider: Labour is not homogenous and takes time to replace. We have seen a dramatic example of this in the airline sector, where thousands of staff, such as those working in security and baggage handling, were let go, creating a bottleneck problem when restrictions ended. Airlines are now scrambling to get people re-hired, but that is not easy as employees and contractors must go through security vetting. Hence the thousands of cancelled and rescheduled flights that have been a feature of the holiday travelling season.

What all this shows is how flawed Karl Marx was in his claim that capitalists have the superior bargaining power over “workers” and that business owners hope to create a “reserve army” of the unemployed who will put downward pressure on wages, hence creating the “surplus” that becomes profit.

Among the many things wrong with Marx’s idea is that claim that the majority of the risks and uncertainties are on the employees’ side. Hiring and retaining labour, including skilled labour, is not straightforward. There are search costs to consider in hiring, and employers know that it is often better to retain a worker, even if they could get someone a bit cheaper, than have the cost and time of hiring another. Also, a worker is paid a wage/salary, at least initially, whether a firm has made a profit or not, and that is a risk the employer has to bear (otherwise why else do firms have revolving credit facilities to manage cashflow?) Further, all workers are to some extent also “capitalists” – they have built skills and character (punctuality, agreeableness, ability to follow rules, get on with others and serve clients, etc) that take time and effort to acquire. A plumber, software programmer or security manager have capital sitting in their heads, and when a firm hires such a person, it is renting that capital.

There are of course of lots of reasons why Marx’s description of labour/capital relations is wrong and simplistic (example: his insertion of the idea of “socially necessary labour” begs the question of how one knows what that is, and it turns out that SNL is revealed by the interplay of prices in a market, rendering his idea circular). But the current working from home/office argument seems to bring home a particular point, which is that those supposedly evil capitalists don’t have all the power, and in many cases, have far less than even they might have hoped for.

Addendum: Thomas Sowell’s critique of Marxism remains one of the most succinct and effective that I have read. Also, there is a segment in Robert Nozick’s Anarchy, State and Utopia where he demolishes the “exploitation” theory very effectively. Another good treatment of the issue is by Kevin McFarlane, an engineer and libertarian.

Now he tell us

Mr Sunak…..explained how the minutes from Sage meetngs were edited so that dissenting voices were not included in the final draft.

(Report from the Daily Telegraph.)

In other words, the committee – Sage – that was created by the government to oversee COVID-19 policy deliberately suppressed views from one of the most important departments of state – The Treasury – because it did not go with the lockdown narrative.

I am not a particular fan of former Chancellor of the Exchequer, Rishi Sunak, one of the two senior figures running for leadership of the Conservative Party. We have the highest tax burden in 70 years, and he could, had he been so inclined, resigned rather than gone along with that. Nevertheless, his comments on how policy on Covid was driven over the past few years are shocking, if true. Maybe he is trying to justify himself after events – he could, of course, have resigned and explained why he was so appalled at what happened. We must not forget the efforts made by the scientific/policy “establishment” to suppress awkward voices such as the signatories of the Great Barrington Declaration in their calls for focused action against the virus rather than indiscriminate lockdowns.

I am not particularly hopeful that the right lessons will be learned from the COVID-19 debacle, such as how dangerous it is to give power to a group of people with no wider appreciation of the damage actions can cause (assuming that said damage was not indeed part of the actual point). The dynamics of power being what they are, this sort of thing can and will happen again. Groupthink is killing people, in some cases, literally. A solid consensus in the banking/financial services sector before the 2008 financial crash held that central bankers had more or less cracked the problem of setting interest rates, running monetary policy and inflation, and that if banks got involved in odd-sounding derivative products, they’d be fine in lending sub-prime loans; we have had “the science is settled” consensus on global warming, and part of our current energy clusterfuck can be pinned on a determined drive against fossil fuels in much of the West. The response to covid was another dangerous “the science is settled” moment. The way that children are taught – or not taught – in schools is another example of a dangerous consensus.

Challenging these “the science is settled” mindsets is hard, but it has to be done.

Samizdata quote of the day

“The U.S. could have set an example for the world through innovation. Instead the government chose to spend hundreds of billions of dollars to achieve no noticeable climate benefit.”

Bjorn Lomborg, Wall Street Journal ($).

Water – Can It Be A Competitive Industry?

(I focus on the UK here in this brief commentary; needless to say, readers in the US and other countries such as Singapore or parts of Europe will have plenty to add. I remember reading about how water rights and arguments over it has been a huge issue in the US Southwest, for example, for decades. Chinatown, the old Jack Nicholson film, is a favourite of mine.)

There are restrictions on water use in the UK at the moment, which has been through one of those long, hot summers that are great for a few weeks as people get out the barbecues and soak up the Vitamin D, but become a pain when folk have to work when the country cannot seem to manage air conditioning. And then the “green and pleasant land” goes the colour of café au lait. There are issues about whether, if such weather remains a regular feature, that certain crops such as wheat have to be irrigated. (Much wheat is grown in East Anglia, where my Dad had a farm and is the driest part of the UK, being on the eastern side of the country.)

From a free marketeer’s point of view, the water business is a bit of a challenge. The system of pipes, reservoirs and meters put in place can, to some extent, have business features and use the price mechanism to allocate resources (water meters, for example), but it is not all that feasible or politically easy to have different water firms competing to supply the stuff over rival pipes, dig out rival reservoirs, or desalination plants, etc. Digging a reservoir typically will require a compulsory purchase power, or what in the US is called Eminent Domain, and that is not something that is easily granted to a wide variety of suppliers of water.

So in the eyes of many, much of today’s water sector is what economists call a ”natural monopoly”. (The competitive bits might include supplies of bottled drinking water, home equipment for filtering water, private water storage, etc.)

Monopolies tend to be abused by those running them unless there is a realistic prospect of competition to keep people honest. The cluster of firms running the water organisations in the UK, such as Thames Water, are in some cases listed firms and pay a dividend, or they are owned by other listed firms (sometimes classed by asset managers as “infrastructure”). The salaries of their senior executives are the subject of much angst in the press, including the supposedly pro-capitalist ends of it, never mind those reflexively hostile to business. Because of the natural monopoly aspects of these firms, they are regulated by a quango called The Water Services Regulation Authority, which sets certain standards including pricing. From time to time there are calls for water utilities to be renationalised, although it is worth noting that in the last big drought in the UK of 1976, utilities were state owned, and that certainly did not prevent all kinds of water bans and restrictions. (Here is a paper written 21 years ago from the Institute of Economic Affairs about water utilities and competition.)

So what should classical liberals and libertarians think about this? Are there examples from around the world on how to inject genuine competition into a field deemed always to be a monopoly, or should water supply be a sort of minimal state function like law and order, akin to how one might think about the cardiovascular system of the body? Would an anarcho-capitalist order be able to handle these questions (rival agencies running packages for water/power, etc with different pricing regimes all competing against one another?)

It does seem to me that there should be more opportunity for innovation and change that could put water companies under healthy pressure. For example, building several desalination plants (they don’t have to be even very big – nuclear-powered submarines use them) might be an idea for a commercial provider who could offer to supply cheaper water into the system, but I am guessing the price incentives would need to be big enough to justify the costs, depending on how expensive a plant is or whether they can be build in sufficient amounts to achieve economies of scale.) There is even a specialist market in small desalination/reverse osmosis tech for producing water for folk such as sailors, etc. (See an example here.) And see here for an interesting article from the Massachusetts Institute of Technology.

One could, I suppose, have a system where water suppliers compete to supply water into a series of reservoir hubs for an agreed amount; the water could even be shipped or piped from wetter parts of the UK such as Wales and Scotland, and be a nice source of revenue for those places. Maybe it is time for Scottish nationalists to spend more time figuring out how to get rich by using this resource instead of bellyaching about the evil English. Also, very large users of water – agri-businesses irrigating land, or industrial users – have the bargaining power to negotiate prices and hence could even build mini-reservoirs of their own, assuming governments allowed it.

There may be plenty of other ways to think about the limits, but also the potential, of making the business of water more competitive and businesslike. Because it strikes me that if those arguments aren’t made in a constructive way, the usual calls for State control will be ever louder. The past few years, such as over COVID-19, have taught us, surely, that fear of bad things happening plays all too often in one, clunky direction.

(I haven’t mentioned global warming yet, but while that issue has obviously been raised a lot by those who extrapolate trends from a period of weather, I think the issues here aren’t dependent on whether man-made global warming is true or not, or bad or not. For once, I am parking that subject to the side of the road.)

Samizdata quote of the day

“Schumer-Manchin won’t reduce inflation, won’t reduce the budget deficit, and it won’t reduce the world’s temperature. What it will do is transfer some $369 billion from taxpayers and drug companies to the pockets of green energy businesses and investors. It will tighten the hold that politicians have on the allocation of capital, as they pick winners and losers with their grants and tax credits. Everyone will get a nice warm feeling as they pretend they are cooling the climate.”

Wall Street Journal ($), commenting on the latest abomination to pass through the House of Representatives. It points that the supposedly “green” parts of this bill will, according to Danish “skeptical environmentalist” Bjorn Lomborg, reduce the estimated global temperature rise at the end of this century by all of 0.028 degrees Fahrenheit in the optimistic [United Nations scenario] case. And meanwhile China proceeds apace with building coal-fired power stations.

Samizdata quote of the day

“When did you hear any public figure extol cheap energy as an agent of poverty alleviation? When did you hear any historian describe how coal, and later oil, liberated the mass of humanity from back-breaking drudgery and led to the elimination of slavery? For 10,000 years, the primary source of energy was human muscle-power, and emperors on every continent found ways to harness and exploit their fellows. But why bother with slaves when you can use a barrel of sticky black stuff to do the work of a hundred men – and without needing to be fed or housed? The reason no one says these things (other than Matt Ridley) is to be blunt, that it is unfashionable. The high-status view is that we are brutalising Gaia, that politicians are in hock to Big Oil, and that we all ought to learn to get by with less – a view that is especially easy to take if you spend the lockdown being paid to stay in your garden, and have no desire to go back to commuting.”

Dan Hannan

I remember reading TS Ashton’s book on the Industrial Revolution many years ago as an undergraduate, and it was emphatic that no serious civilisation lifts out of poverty without an Industrial Revolution. Even Karl Marx, wrong as he was on so much around economics, gave grudging respect to the IR in his Communist Manifesto. (Old Soviet propaganda posters would show pictures of rosy-cheeked workers in front of factories belching out smoke.)

HSBC’s hypocrisy over China and “woke” culture

This is savage and just from the Spectator:

There’s a rich irony in HSBC now refusing to collect data on its customers, given its involvement in abetting the Chinese government’s crackdown on Hong Kong. HSBC not only publicly backed the draconian National Security Law but also froze the bank accounts of prominent pro-democracy activists in exile at the behest of Beijing, something that obviously involved keeping tabs on the troublemakers. Its chief executive, Noel Quinn bleated that ‘I can’t cherry-pick which laws to follow’; given the law claimed universal jurisdiction, it doesn’t exactly suggest pro Hong Kong democrats in London are safe with the bank, non-binary or not.

Read the whole thing, as they say at Instapundit. I noticed, for example, that every time I fly into or out of a major airport such as Heathrow, Geneva or Gatwick, the jetway bridge has a big fat HSBC logo on it. And on the inside, there are lots of HSBC messages about “sustainability”, about how we are all in “one world”, and all the other bland cant of modern corporate messaging.(None of that vulgar stuff about creating wealth and making a profit. Goodness me, no.) It is rather like the kind of “lounge” or “Muzak” music one gets in elevators and hotel lounges. After a while one tunes it out.

I wonder how long this situation can persist. HSBC now has Chinese Communist Party folk sitting on its China subsidiary. (HSBC denies these folk have any influence. If so, what are they doing? Drinking tea?)

Given the various frictions and problems between the West and China, I don’t see this as sustainable in a sense rather different from how the Greens use that word. Anyone doing business with HSBC must start to wonder if it really is an autonomous commercial enterprise. Rather, a large part of it would appear to be little more than a Beijing front organisation. HSBC is listed on the London Stock Exchange and its HQ is in London. At some point, if there was, for example, a Chinese invasion of Taiwan, and sanctions and all the rest had to be imposed, that would put HSBC in an invidious position. The UK may even insist that HSBC spins off its mainland China business if it wanted to retain its UK banking licence.

Samizdata quote of the day

“AI, machine learning, robotics and the power of computational science hold the potential to drive explosive economic growth and profoundly transform a diverse array of sectors, while providing humanity with countless technological improvements in medicine and healthcare, financial services, transportation, retail, agriculture, entertainment, energy, aviation, the automotive industry and many others. Indeed, these technologies are already deeply embedded in these and other industries and making a huge difference.”

“But that progress could be slowed and in many cases even halted if public policy is shaped by a precautionary-principle-based mindset that imposes heavy-handed regulation based on hypothetical worst-case scenarios. Unfortunately, the persistent dystopianism found in science fiction portrayals of AI and robotics conditions the ground for public policy debates, while also directing attention away from some of the more real and immediate issues surrounding these technologies.”

Adam Thierer