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]

Cheap electricity should be a noble cause, not something to be embarrassed about

I was watching this interview with “lukewarmer” Matt Ridley, who agrees that global warming is a problem but who thinks technology and market-driven solutions are a way to address it, not State dictats. He was being asked about the UK government’s proposals (I have no great confidence this will be remotely achievable) to ban sales of petrol- and diesel-powered cars by 2030. As he noted, such changes will weigh disproportionately on those on low to medium incomes. Even if electric cars and other appliance costs fall because of economies of scale, there is a high probability in my view that a push for “net zero” carbon emissions in the UK is going to require a big rise in electricity costs, and hence prices. And because energy is central to so much of our economy, that means more expensive food. More expensive everything.

Almost two centuries ago, free market lobbyists set up the Anti-Corn Law League to fight against tariffs on grain imports – and other items. Their cry was for “cheap bread”. It was a potent political message. I wonder if any political figure has the gumption to make “cheap energy” such a rallying cry. Because once the full, eye-watering cost of “net zero” becomes evident to ordinary consumers – forcing them to rip out gas appliances, lose their reliable cars and so on – the groundswell of anger is going to be considerable.

Another problem is that there is no real political opposition to this madness. The Labour Party – at least at the moment – is in thrall to this hairshirt Greenery. The Tories are for the moment rallying behind Boris Johnson although one wonders for how long once the costs come even more painfully evident. My hope is that a lot of those MPs in Midland and Northern seats who were swept in last December may be among those telling Johnson to show some realism.

Recent spending and delivery overruns on projects such as Crossrail give me no confidence the UK could create a grid to enable electricity-powered vehicles by 2030 on a scale to fill the gap left when petrol and diesel are taken off the table.

The cynic in me says that Johnson, who is mainly a political stunt artist, does not really care about the details, and will probably be retired from front-line politics, in a cushy job somewhere, once the nature of this mess comes home, and that someone else will have to clear up the mess.

Here’s another interview with Ridely about energy innovation. I can also recommend Alex Epstein’s The Moral Case for Fossil Fuels, which has the sort of title designed to raise the blood pressure of today’s Green humanity-diminishers.

Samizdata quote of the day

“The Soviet Union (also Mao’s China, North Korea, Cuba, and Venezuela) have proved that central planning is impossible. Even something as simple as corn. To grow corn, you just plant seeds in fertile soil, and wait. Yet every country that attempted to centrally plan it, has starved.”

Keith Weiner, who runs a precious metals investments business, based in Scottsdale, Arizona. He’s become a friend, and a fount of good sense on issues such as money and central banking. Check out his blog.

The bonfire of the vanities comes to Wales

I know Wales sometimes has been partial to a medicinal drop of puritanism – some areas prohibited the sale of alcohol on the Sabbath as late as 1996 – but I struggle to see what conceivable benefit this brings to anyone other than Jeff Bezos:

Wales lockdown: Supermarkets told to sell only essential items

Supermarkets will be unable to sell items like clothes during the 17-day Covid firebreak lockdown in Wales.

First Minister Mark Drakeford said it would be “made clear” to them they are only able to open parts of their business that sell “essential goods”.

Many retailers will be forced to shut but food shops, off-licences and pharmacies can stay open when lockdown begins on Friday at 18:00 BST.

Retailers said they had not been given a definition of what was essential.

The Association of Convenience Stores and the Welsh Retail Consortium have written urgently to the first minister, expressing alarm over the new regulations.

Sara Jones, head of the Welsh Retail Consortium, said: “Compelling retailers to stop selling certain items, without them being told clearly what is and what isn’t permitted to be sold, is ill-conceived and short-sighted.”

Welsh Conservative Andrew RT Davies tweeted: “The power is going to their heads.”

Samizdata quote of the day

No place has got rich – that is, the population enjoying a multiplicity of those three squares and a roof – without being roughly capitalist, roughly free market and trading across the borders of that place or society. Non-capitalism, non-marketism and autarky just don’t produce the result. We can and should go further too. Any place that is rich has been that roughly capitalist, marketist and tradist for some time now. Those places that have only in recent decades adopted the trio are getting rich. Those that still haven’t done so are still poor.

Sure, there’s a spectrum of possible policies, from Sweden’s tax heavy social democracy to Hong Kong’s near laissez faire. But that is a spectrum that always includes our trio.

Tim Worstall

The ultimation

The Times reports,

FTSE 100 businesses ‘must bring minorities on board’

One of Britain’s biggest institutional investors has told the 30 or more FTSE 100 companies with all-white boards that it will vote against them unless they hire an ethnic-minority director in the next 15 months.

Legal & General, which manages more than £1.2 trillion of assets on behalf of pension funds and other clients, issued the ultimatum in the past few days in the wake of the Black Lives Matter protests over the summer.

L&G has written to all 100 companies in the FTSE 100 as well as the US companies in the S&P 500 telling them it expects them all to have at least one director of black, Asian or other minority ethnic (Bame) origin in place by January 1, 2022.

It told them it will vote against the re-election of the company’s nomination committee chairmen if they fail to meet this target. Nomination committees are the main board panels responsible for board appointments.

L&G, which typically owns 2 or 3 per cent of almost every British blue chip, is thought to be the first big UK institution to warn explicitly it will vote against any company failing to comply.

Does Legal and General as a company have the moral right to invest as it sees fit? Absolutely. But as a commenter called David C says,

I have a pension invested with L&G. I’m taking this as an early indicator the company has fallen into woke hands, which means performance is going to suffer.

David C then spoils a good point by saying that that social diversity matters should be left to government. The L&G plan to “force” racial quotas on those companies in whom it invests by threatening to put its money elsewhere unless they comply with its wishes is preferable to the actual force-with-threat-of-jail as used by governments.

Even so, members of the board of Legal and General should remember three points:

1) They are investees as well as investors. What they do to others can be done to them, with equal legitimacy.

2) L&G say that research by McKinsey & Co shows that “more racially diverse boards make better decisions and produce better financial returns to shareholders.” In itself I can well believe that heterogeneous boards help a company avoid groupthink and hence improve profits. But when a person is hired for their skin colour it is probable – not certain, but probable – that they will not be as competent as a person hired for their competence. I admire L&G for being willing to put this oft-made claim that affirmative action helps the bottom line to very a public test.

3) Isn’t racial discrimination illegal?

I lied when I said three points. Point four is affirmative action never delivers equality. Decades of caste quotas in India and racial quotas in Malaysia have been dandy for a small sub-class of hereditary quota-fillers while entrenching the assumption that the “helped” class could not make it on their own. Point five is that, legal or not, racial discrimination is wrong.

Samizdata quote of the day

openDemocracy wants to tell us all that coronavirus has entirely upended the assumptions of neoclassical economics. This is because openDemocracy doesn’t have the first clue about the assumptions of neoclassical economics. This is not, therefore, a good starting point for a reordering of the economic assumptions we use when trying to deal with reality.

Tim Worstall

Samizdata quote of the day

Perish the thought that we may allow those pesky Africans to export food to the UK without tariffs. If we allow that they might not need our charity, then how would we feel superior to them?

Sandy Wallace

Actually, I think there was enough context

“It’s actually a Republican myth that has, over the last 20 years, really crawled into even leftist discourse: that the small-business owner must be respected, that the small-business owner creates jobs and is part of the community.”

That was said by Vicky Osterweil, author of In Defense of Looting. Ms Osterweil was given such a fawning interview by Natalie Escobar of the American state radio station npr (note the cool lowercase initials) that it became an embarrassment, and the record of it is now prefaced by the words:

This story was updated on Sept. 1, 2020. The original version of this story, which is an interview with an author who holds strong political views and ideas, did not provide readers enough context for them to fully assess some of the controversial opinions discussed.

Samizdata quote of the day

None of the arguments against rent controls are new. You can already find them all in Verdict on Rent Control, a book which the IEA published in 1972. The book is actually a collection of papers on the subject, some of which are much older than that. It contains one paper by Milton Friedman and George Stigler on wartime rent controls in the US, which were still lingering after the war had ended. It was first published in 1946, but they were already having the same arguments then that we are still having today.

The oldest contribution is a paper by Friedrich Hayek, on rent controls in interwar Vienna (which he obviously did not call “interwar”). Hayek shows how rent controls do not just lead to shortages of rental properties, but have all sorts of secondary effects that distort the wider economy, for example the reduction in labour mobility. This was first published in 1929, and yet, the parallels to today’s situation immediately stand out.

Economic papers often end on the more cautious note that “more research is needed”. You would not do this in a publication on rent controls, because the situation is too crystal clear. No more research is needed. We know – or rather, could know, and should know – everything there is to know.

What we need to do is finally accept it.

Kristian Niemietz

The UK’s financial services sector is not capitalism

For a variety of reasons, the sector that is sometimes dubbed “The City” (or for that matter, “Wall Street”) has not much connection to capitalism these days. Sure, financial institutions still channel money to borrowers who may include businesses that are investing it in some way. But given how central banks act as lenders of last resort, print money without limit, it seems, and interfere with the capital buffers and dealings with firms to the extent they do, this hardly counts as a free market. Obtaining a banking licence, for example, is not straightforward. The way that central banks and regulators can prop up established institutions, and interfere with their internal workings, is a clear case of the “mixed economy” at best. (Here is a good book on the subject and why claims that problems in financial markets were down to de-regulation are unfounded.)

The latest example of how financial services are increasingly being absorbed into the maw of the State comes from the Financial Conduct Authority. Its new boss wants to block appointments of directors at firms if they are too white or male. Unless a firm names sufficient numbers of women and members of ethnic minorities to sit on boards, the appointees currently in play might be blocked. Whether the persons being blocked are more competent or experienced will be secondary to their gender or colour if the choice comes right down the wire. (No-one wants to admit that this is what will happen.)

It is true that a preponderance of people of Group A or B can occupy certain roles and that this is not necessarily anything about bias as such. There are feedback/network effects when it comes to people being selected as directors or some other role. A knows B, who has been chummy with C, and C recommends D for a directorship at Filthy Lucre & Sons, and so it goes, and while there are still interviews and qualifications to think about, it is easy to see how a lot of people who go for certain jobs come from the same sort of pool. We see this in politics, even sport. (A schoolteacher might seek out black kids because he or she assumes they are great at athletics, and so over time a disproportionate number of black students are track and field athletes, etc).

And even when people try hard as possible to make their choices of talent more diverse, it is not always easy to do if the pipeline of talent is not there. Firms need to have directors, etc – so if there is a talent shortage created by a pro-diversity policy that could hamper corporate governance and add yet another competitive disadvantage. It is actually time-consuming and potentially costly to find certain talent – which is why City firms pay retainer fees to headhunter firms to find people (I know a bit about how this market works). Believe me, firms are desperate to recruit a more “diverse” management base – but they also have to locate the best they can find. And if the judgement call is about who is going to make the business better, that judgement should rest with the people who own the firm, not some civil servant ticking off some sort of virtue box.

Another point: when talking of “diversity”, such comments from the likes of the FCA invariably focus on gender and race. But rarely do you hear about diversity of experience, philosophy and background. Arguably what the City and other clusters of business need is to avoid group-think and stifling consensus. Imagine hiring a director who is a genuine liberal, who thinks that a lot of modern “corporate social responsibility” policy is a waste of time and so much fashionable cant? That firms’ primary duty is to build shareholder value, rather than push some sort of agenda? Ask yourselves how much chance this person might have of getting a seat on a board if his or her views are widely known? I don’t actually have to ask because you know the answer.

It might have escaped the notice of the FCA and other policymakers, but the UK and the rest of the world is trying to recover from one of the worst calamities in recent human business history – the lock-downs – and therefore adding hurdles towards recovery and rebuilding of business might not be a great idea.

Too late now

Labour launches new campaign with “24 hours to save British jobs” warning, reported the website Labour List the day before yesterday.

Refelections on wealth from City 17

Sometimes you do not quite appreciate a thing until you find you can not get it. In the game Half Life: Alyx (one of the best things you can do in virtual reality right now), the Earth is oppressed by totalitarian inter-dimensional rulers and the player must roam the deserted, alien biohazard-infested quarantined streets of City 17 as part of a resistance attempting to sabotage enemy super-weapons. Needless to say luxuries are hard to come by. It is all a bit close to the bone for a game that was in development for four years and released on March 23rd.

As Alyx, controlled by the player, has to make her way down a dark, slime-soaked, head-crab-infested passageway, she asks her friend Russ to talk about the past to provide some comfort. What was life like before the coro^H^H^H^H Combine? “Alyx, have you ever heard of a club sandwich?” Er, nope, not once.

Right. To make a club sandwich, you need to start with bread. Not from a bread line. From a bakery across the street, baked that day, okay? You add tomatoes, lettuce — not vegetable paste — fresh. Then you add bacon — that’s from an animal we used to call the pig. You toast the bread, and you put all that inside it.

You guys had all that? That’s insane.

It is! And I’m not done. Then you add a second sandwich on top of the first one. You put ham in it — also from a pig — and turkey, from an animal we used to call the “turkey,” and more tomato, more lettuce, and a bunch of other things I’m forgetting. It was six inches tall and weighed a pound and had a dozen ingredients from five different continents. It was the most impossible food item you could imagine in any age before ours.

Wow. That does sound pretty amazing. I am really going to appreciate my next club sandwich.