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]
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In the course of my day job, I have to give my boss a round-up of the Sunday business pages to keep track of all the latest news and features. Not surprisingly, the Sundays are full of stuff right now about Britain’s ‘super-rich’, such as those folk brokering lots of mergers and takeovers at the moment (see my post below defending private equity). Well, the socialist looters among us will be thrilled to know that the enemies of personal enrichment are alive and kicking. Here is a job ad in the Sunday Times:
“HM Revenue & Customs. Make a real difference, take our information to a new level” (I liked that bit)
“Attractive six-figure package – central London”
I am sure it is very attractive.
“You probably know HM Revenue & Customs as the people who collect tax but there’s far more to it than that”
I bet there is. Go on, we are dying to know.
“We play a vital role in law enforcement and protecting society”
Yep. When Gordon Brown fucked the UK pensions system, it was all about protecting society.
“90,000 work within HMRC, and we have over 40 million customers (taxpayers, claimants and others)
“Customers” – that is beautiful. And we ‘customers’ of VAT, income tax, inheritance tax, stamp duty, national insurance (tax), etc, are being cared for by 90,000 caring, sharing, hugging, cuddly people. Terrific.
“In every sense we have a huge responsibility for society and the economy, so customer focus sits at the heart of everything we do”
I do not know who writes these adverts, but the Comedy Central Channel is always in need of new blood. Hire this person immediately.
When I read the following column by Will Hutton, lambasting private equity firms for daring to take over big UK companies like supermarket J. Sainsbury or whoever, I laughed out loud. Here is his lead paragraph in Friday’s Guardian:
It is time to come to the defence of the public limited company, one of the great Enlightenment gifts to western civilisation. Increasingly capital, in the quest for higher returns to make vast personal fortunes, is going private to escape the demands of public accountability on stock markets. If uninterrupted, the long-term adverse consequences of this privatisation of capital for our economy, society and democracy will be profound.
Rubbish. Firms that are floated on the London Stock Exchange, Nasdaq or the Martian 250 are privately owned, Will. They are not owned by the state. True, limited liability laws, as the libertarian writer and friend of mine, Sean Gabb, likes to point out, present serious issues in terms of the gap between ownership, responsibility and control (I wrote about this topic a while ago). But to argue that private equity shops like Apax, Carlyle or Texas Pacific – those evil Amerikans – are taking what should be ‘public’ into grubby ‘private’ hands is economic illiterate nonsense. Firms exist to make a profit, Will. As Milton Friedman trenchantly put it without hint of apology to the gods of ‘social responsibility’, a company’s job is to make a profit for their owners, not to further whatever corporatist/fascist/socialist/ist agenda that happens to attract the gaze of Guardian editorialists.
Why the current wave of hysteria about private equity? It is being fuelled by two things: fear and envy. Fear of the power of these sometimes shadowy firms to buy up famous companies with great wodges of debt finance, or leverage, as the finance geeks put it. Envy, because of the large bonuses that the private equity honchos pay themselves and the often high profits they make in turning firms around. And of course no story about private equity can be written without referring to the Masters of the Universe lampooned by Oliver Stone in Wall Street or portrayed in books with such objective titles like Barbarians at the Gate.
In the main, what these firms do is target cash-rich firms that are run by often lazy executives who have presided over crappy business decisions. Take the meltdown of Marconi a few years ago, one of Britain’s most famous companies. That was a listed company. The destruction of value and jobs in that company remains, in my mind, one of the most disgraceful episodes in British corporate history and who knows, it might have been saved from making big errors had a private equity fund been in charge, rather than deluded executives. Private equity firms helped stymie Deutsche Börse’s foolish bid for the London Stock Exchange 2 years ago, and have turned around businesses. They typically buy and hold a firm for 5 years or more, take a hands-on approach to running firms before spinning them off to another buyer or floating them in an IPO. So Will Hutton should spare us sentimental guff about how limited liability firms floated on the stock exchange represent the perfect model of doing business or something that Adam Smith or Voltaire would exalt. They are merely one of the many ways in which economic activity manifests itself. As interest rates rise and the economic cycle turns, some of the excesses of leveraged buyouts will fade and private equity transactions will decline. No doubt Will Hutton will forget everything he has written and go back to bashing listed firms for their “short-termist” fixation with pleasing shareholders, or whatever.
As mentioned several times in these pages, by the way, one additional reason why listed firms go private is because their bosses prefer not to have to put up with onerous reporting requirements under US and other laws, like the onerous Sarbanes-Oxley rules. If Hutton or other big government advocates are worried about the migration of companies off the listed stock market, they might like to remember that point.
Right, my rant of the day is over. Enjoy the rest of the weekend.
Update: have slightly amended the text about Marconi, just to reinforce the point. One commenter, Bryan Appleyard, has argued that firms become “cultural” forces, as if released from the laws of supply and demand. I have heard some odd attacks on private ownership and M&A before, but that is a new one. Companies that have been taken over by private equity include the Automobile Association, Kwik Fit, Debenhams, various property firms, HEA, the US health chain, and many more. I don’t really see how the cultural issue makes a bit of difference to the folk who work in them or buy their products.
I’d also add that I think some of these private equity deals are in danger of coming unstuck, and no doubt much gloating and gnashing of teeth will occur when or if this happens. It is partly a function of low interest rates and the impact this has on asset prices. Monetary growth is strong at the moment and this is one of the ways in which money supply growth comes out. Another lesson from Friedman to remember.
Via the Norman Geras blog (and in turn via Glenn Reynolds), is a long letter that challenges head-on the disgraceful spectacle of Iran’s conference of December 2006 to “debate” whether the Holocaust existed. Good. It is a letter that reminds us that thousands, maybe millions, of Iranians do not subscribe to the same claptrap as its leaders. It is welcome and important that such views get an airing. I hope it happens a great deal more often.
Sometimes you see a set of numbers and they really make you sit up and gasp:
Last year, more than 350 companies went public in Europe, selling $86
billion of stock, according to data compiled by Bloomberg. In the U.S.,
235 companies raised $48 billion in IPOs. In 1999, 507 companies went
public in the U.S., selling a combined $63.93 billion of stock. Not one of the 10
largest stock issues of 2006 was listed in New York.
Nice work, Messrs Sarbanes, Oxley and Spitzer.
Bryan Appleyard has a terrific piece in defence of 4×4 vehicles, often dubbed as “Chelsea Tractors” on account of their often being driven by well-heeled west Londoners in the narrow streets of said neighbourhood rather than being driven in muddy village lanes. He says what I suspect has been the obvious point, which is that class hatred and the current puritanical culture explains what fires the dislike of these vehicles. The amount of petrol consumed per mile has, I expect, not got a lot to do with it.
These cars have become emblems of all our environmental crimes. They represent 7.5% of the UK car market and 100% of British car loathing. The very idea that in town, or even in the country, anybody should use a car in which all four wheels are driven is regarded as a crime comparable to logging the rainforests or clubbing seals. Across Europe, owners of 4x4s
(or, as they are also called, Sports Utility Vehicles, or SUVs) have become eco-pariahs, malevolent planet-warmers. If you happen to be sitting in a Range Rover Sport, a BMW X5 or, worst of all, a Porsche Cayenne Turbo S in London, it is best not to catch the eyes of any pedestrian.
I can sympathise, however, with some, not all, of the annoyance that these vehicles provoke. Their drivers are often terrible, imagining that their being surrounded by massive lumps of metal means they are somehow absolved from the rules of the road. They gobble up a lot of parking space, which is at a premium in highly-taxed London. They have a higher centre of gravity than most cars and yet some drivers do not adjust their driving to take account of this. And I occasionally do wonder quite why a person needs such a large vehicle to take little Johnny to school or do the shopping.
But whether I think people should or should not “need” to have such a vehicle is beside the point. I have an opinion, but the Greenies want to use the coercive power of the state to limit our motoriing ambitions, and I very much doubt that concern for the welfare of the planet has much to do with it.
Talking of politics of envy and massive City salaries, this article is worth a look.
I have been keeping an eye on the French Presidential race, if only because it is high time perhaps that that great, sometimes infuriating country had the sort of leader who might unleash the entrepreneurial energies that do exist. (Entrepreneur being of course a French word). We like the witty French economics writer Bastiat at this blog and it would be lovely to think that some of his classical liberal spirit might return to that country.
Alas, Nicolas Sarkozy, the Gaullist candidate, has already signalled that he is as hostile to capitalism as any Sartre-reading socialist:
Nicolas Sarkozy will push for a European tax on “speculative movements” by financial groups, such as hedge funds, if he wins this year’s French presidential elections.
The centre-right candidate to replace Jacques Chirac said in comments published by Wednesday’s Les Echos, the Financial Times’s sister newspaper, that he aimed to “raise moral standards and improve security in financial capitalism”.
Hedge funds, which are investment pools usually registered in sunny Caribbean islands, have become a bugbear for protectionist-minded politicians, who fear the ability of these folk to quickly move in and out of a company’s stock, a currency or bond to make a profit. Hedge funds typically amplify the size of the market positions they take by what is called leverage – borrowing to you and me – and from time to time their bets go badly wrong, as happened during the Russian debt default crisis 9 years ago. On the whole, though, hedge funds make markets more liquid and efficient by increasing the number of buyers and sellers in a market and their arbitrage skills remove inefficiencies in how assets get priced. They also, on a more venal level, generate enormous revenues for financial centres like London and Wall Street. They often put pressure on underperforming company boards to raise their act, which is hardly a bad thing. Like private equity buyout funds, however, hedge funds sound mysterious and a bit dodgy; they prefer to operate in secret and their PR is often awful. For most people, a hedge fund manager is a guy with a slicked haircut shouting into a telephone.
The French business culture, despite a few improvements, is overwhelmingly dirigiste, and can ill afford to give the finger to some of the sharpest financial talents around. If Sarkozy wants to market himself as a sort of French proto-Thatcherite, this seems hardly the way to go about it. Bashing speculators is the oldest and one of the grubbiest tricks in the political book. It plays on public ignorance about economics, it plays on envy at great wealth, and panders to the out-dated idea that wealth is only real if you can hit it with a hammer or or dig it out of the ground. Sarkozy should do his underperforming republic a favour and read some Bastiat instead.
I love the BBC TV programme Top Gear but even great men have their weaknesses. Jeremy Clarkson takes the ‘Borat’ route by making fun of folk in America’s Deep South. How jolly original of you, Jeremy. Is not the whole “These guys from the South are thick, whisky-swilling in-breds with mullet haircuts and guns” a bit tired?
Oh well, even the good guys have their off-days (thanks to Andrew for the link). Clarkson should stick to driving insanely quick Bugattis and cheering us all up.
A certain amount of media interest, as we English put it in our understated fashion, has been stirred by the revelations that David Cameron, leader of Her Majesty’s opposition, supposed Conservative, windmill advocate and former PR consultant, took drugs while at Eton (for those living outside Britain, Eton is an incredibly posh and expensive English public, ie, private school). Cameron has so far said little about this. There have been rumours, of varying degrees of believability, that Cameron has taken drugs, including cocaine.
This saga tells us a lot about how the debate about whether the state should ban adults from injesting substances of their choice. Had this story broken 20 years ago, then Cameron would have been reduced to burnt toast. Remember, this twerp once chided wicked capitalist retailers from flogging chocolate oranges to obese Britons, and yet, if the allegations are correct, Boy Dave was quite happy to partake of South American exports and in quite impressive quantities. I personally am not a prig on this issue: I have smoked the odd joint and felt pretty bad afterwards. I once took coke and talked at about 150 miles an hour about some incredibly meaningful subject and later felt like a bit hazy. I did not repeat the experience. I find that champagne is frequently cheaper and legal. I suspect that quite a large percentage of people of my age – professional, reasonably intelligent, have had the same experiences. To listen to the Daily Mail type persons out there, most people should never touch anything stronger than Italian coffee. I think drugs should be decriminalised, believe the War on Drugs has been an unmitigated disaster and would hope that Cameron’s alleged behaviour might, just might, lead to a more sane political conversation about such issues.
But although the Tory leader may inadvertently encourage different views, he has a continued problem. Cameron, after all, is in love with a drug far worse than cocaine, LSD, Qaaludes (what the heck are they?) or dope. He is in love with power over other people. He suffers from hallucinations about how the Tories will win power by conceding Blairist ideas of the role of the State. He suffers from the extraordinary idea that Oliver Letwin is a great thinker.
Compared to Bolivian marching powder, that is heavy shit he is smoking.
Here is a website for the film Amazing Grace, due for release soon. It centres on the life of William Wilberforce, friend of great British Prime Minister William Pitt, and the man most people will associate with the abolitionist movement. The campaign to end slavery lasted for years before eventually succeeding in the first decade of the 19th Century, although it lingered as an institution in the colonies for many years before ending in the conflagration of the US civil war. I have no idea whether this new film will be any good and what sort of “point” it will make, but if there is a point worth making on a libertarian blog like this, it is that slavery in all its forms is an abomination, a stain on humanity and should be resisted. Furthermore, man since ancient times has known that slavery is an evil but for many centuries was either resigned to the institution, or was cowed into thinking that it was part of the natural order of things. I have read comments on this blog – by an individual who thankfully no longer bothers us – that slavery was a product of its economic times and it would be quite wrong for us to “lord it over” our ancestors by condemning the practice. This is moral relativism, pure and simple.
Some people have tried to argue that the British slave trade proves the wickedness possible through capitalism, although I think it demonstrates a quite different point. Kidnapping people from their homes and then forcing them to work in conditions as appalling as a plantation has not, as far as I know, got anything to do with consensual acts of commerce as classical liberals might understand it. Quite the reverse. What slavery shows is that trade without respect for the rights of individuals is in fact a form of thuggery.
Here is an article I wrote over a year ago about a less well known opponent of slavery, Thomas Clarkson. On the 200th anniversary of Britain’s outlawing the slave trade, let’s celebrate what these men achieved.
“I always felt this country was going down the tubes when the television folk replaced Basil Brush with Roland Rat.”
My dad, with his finger on the pulse as usual. Here is a tribute page to television’s most superior fox.
Richard North has a terrific review of the book “Affluenza” by Oliver James. Even reading the cover of this book while browsing through a Waterstone’s shop the other day, I could tell that a book called “Affluenza” was bound to trot out the argument that we comfortably-off westerners were being ruined by too much of a good thing. Flumoxxed by thousands of choices of toothpaste, CDs, breakfast cereals, cars, wallpapers, books, foreign holidays and designer clothes, we just cannot cope. All this stuff, all this wealth, is crippling us.
North will have none of it:
The book’s macro case – the case it makes about society and economics – is that “selfish capitalism” is bad for the middle class (it makes them greedy and nasty). It insists that there is a powerful correlation between a nation’s mental distress and the selfishness of its capitalism. James seeks to substantiate this case by asserting that a “definitive WHO study” and “14 national studies” rank mental ill health in just the way he’d like, and that they prove the more orientated toward affluence people are, the more miserable they are. That is: the Anglosphere is sickest and everywhere else is healthier.
Well, since “selfishness” is often a pejorative way of saying that people wish to be happy and prefer to breathe and have a good time rather than be miserable, I usually automatically tune out criticisms of capitalism on the grounds that it fosters selfishness. Even if one is not a great admirer of the late novelist Ayn Rand, I think it is fair to credit her with re-connecting with the old Aristotelian tradition in pointing out that happiness, enjoyment of the material things of life can and do go hand in hand with virtue and goodness. Well all is said and done, when a collectivist/socialist/fascist/some other bully attacks liberalism for “selfishness”, what they are really demanding is that we live our lives according to their – selfish – desires for a particular utopia. → Continue reading: A great demolition of a very, very silly book
A U.S. politician wants to pass a law that would make it a crime to cross the road while listening to an MP3 player or some other device that presumably screens out the noise of approaching traffic. For one’s own safety, naturally. People who wear iPods while walking around are a menace to themselves and this sort of bad behaviour should be banned immediately, naturally (sarcasm alert).
Alas, the story I have linked to does not give any examples of where a pedestrian was run over by a car because the person happened to be daydreaming while listening to Mozart or for that matter rocking to ACDC.
Music, it’s the new menace.
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Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
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