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]
|
Following on from this post about how technology can boost some businesses but later turn them over, I thought about a specific type of business that I use, as a result of one of the comments. Namely, the optician. I am one of those folk who wear glasses pretty much all day and I do not like bothering with contact lenses or laser eye surgery. I have a slight stigmatism in my right eye and contact lenses for such a thing are very pricey. Since I was a young boy I have worn specs, and after the usual phase of being teased as a “four-eyes”, I got over that, and decided, “To hell with it, I am going to go for the intelligent preppy guy look instead”. (It worked on the ladies, I find. Come to that, I find some women in glasses incredibly attractive).
But will modern technology and things like the internet put some opticians out of business? Possibly. If you know your prescription and the type of lenses you need, then I suppose that if you see a frame that suits, you can submit the order, and assuming the postal system is working, get the specs in a few days. In my case, though, I actually like to browse through a number of different frames and try them on first. There does not seem to be a substitute for doing it in the flesh, so to speak. It is the same, surely, for buying some kind of clothes, even off-the-peg ones where you know your size. Sometimes there is just no getting around the need to go to a store, go to the changing room and try stuff on.
Patrick Crozier recently did a podcast interview with our own Michael Jennings, on the subject of businesses that are now failing, which I heartily recommend. Michael zeroed in, in particular, on bookshops, spectacles, newspapers and – very topically for today (although the conversation itself took place a short while ago) – postal services.
A particular point which Michael emphasised was how the same technology can start out by helping a particular business, but then turn round and smack it in the vital organs.
The dead tree press, for instance, thanks to the lead given by men like Rupert Murdoch, at first thrived on computer technology. Now look at it.
Computer technology also started out by making postal communication a better deal rather than a worse one. Junk mail, without the e- at the front, was, after all, an early bastard child of computers. And postal services the world over, like most businesses, have enthusiastically applied computer technology to their various activities, making old-school physical communication that much quicker and cheaper and thus more attractive to users than it would otherwise have been. But again, now look at the predicament of post offices, and in particular, today of all days, our own Royal Mail. Note how easily the Royal Mail itself is managing to communicate with us all, despite not being able to send out any letters.
I found particularly interesting what Michael said about the book-selling trade. Once again, the same pattern repeats itself. Early computer technology helps the old-school businesses, in this case the big book-selling chain stores like Borders, by making them more organised. But the big Borders expansion has now gone into reverse, with, for instance, the Oxford Street, London, manifestation of it having just now closed.
Book selling works well on the internet because books are a standard product that you don’t necessarily need to smell, fondle, weigh in your hand, and so on, like you might want to do with something like a camera or a laptop computer. But a product doesn’t have to be generic and standardised to work well as an internet purchase. It just has to be easy to describe with complete accuracy. Most pairs of spectacles are a bespoke product. You just have to know exactly what you want. But this is doable. So high street opticians are a good candidate for execution any year now. I am sure that the Samizdata commentariat will be able to suggest more candidates for imminent death.
Patrick and Michael ended their conversation by agreeing that they didn’t think that the bad economic conditions we’ve been having lately are going to go away any time soon, which means, as Michael pointed out, that people are not going to stop being highly price-conscious, which is one of the big drivers of computerisation and internet-isation, and failure for all the businesses that can’t adapt to these processes.
I’ll end this by recycling an interesting comment that Michael has just added to Patrick’s posting:
As Patrick said, we recorded this over Skype. I was in my home in South-East London talking into my laptop and Patrick was in his home in South-West London conversing with me and replying. This may be another example of what we were talking about. In the late 1990s the traditional former telco monopolies had a huge boom, due to their being seen as the companies that would provide this bold internet future. Now, where are they? BT is now a company that one barely notices, although they do admittedly own the copper that our conversation was going through between my flat and the exchange (although not the equipment in the exchange). Mobile carriers themselves are probably next in this regard.
Like I say, recommended.
“There is no real evidence that any fewer UK banks would have gone bust had this separation been in place. It was not proprietary trading that brought down HBOS, it was bad lending to commercial property. Northern Rock, Bradford and Bingley and the Dunfermline did not own investment banks. RBS was brought to its knees as a result of a multitude of bad lending decisions, the over-priced takeover of ABN Amro and vast holdings of dodgy “assets”; its collapse was not caused by a giant investment banking bet gone wrong. In the US, it is likely that Citigroup would have required a bailout even had it not owned an investment bank. Generally, the same is true of all of virtually all the recipients of Tarp funds.”
– Allister Heath, arguing against the idea, floated the other day by the Bank of England governor, that governments should force banks to split off their supposedly high-risk investment banking arms.
Of course, with the “too big to fail” doctrine now more or less entrenched, the danger is that politicians will feel – with some justification, arguably – that they do not want taxpayers to be held to ransom by the threat of having to bail out huge firms, so the “solution” is to prevent banks being so big in the first place. My own preference is that all state-backed deposit protection should be abolished, so that any bank operating on a fractional reserve basis would have to take its chances in a free market, with the only deposit protection coming from private insurance. But in the current policymaking environment, that does not appear very likely or politically palatable. But sooner or later, the idea of taxpayers’ underwriting the losses of FRB banks has to be confronted.
Nichola Pease, a top City executive, caused a stir last week when she said that state-enforced maternity leave “rights” for women – and for that matter, paternity leave – was a cost that had a bad consequence. If you tell a company that it must pay a woman her full salary for a year while she is not working and raising her child, say, then, other things being equal, fewer women will be employed in the first place, however hard one tries to enforce so-called equal opportunity hiring practices.
This is a simple fact. If you raise the cost to a company of employing a person or increase the risk that employing a woman will be more expensive than employing a man, say, then fewer women will be employed. It is a fact as undeniable as a the laws of gravity. Unfortunately, one of the driving characteristics of many politicians down the ages is a petulant hatred of such facts, and a desire that 2+2 could equal five rather than four. Consider this reaction to Ms Pease’s comments by a Labour MP. It is not so much an argument as a tantrum:
“I am absolutely horrified to hear such an old-fashioned view expressed by someone who should know better.”
In other words, a City executive has said something that this MP considers to be unsayable. There is no argument given, no attempt to explain how driving up costs will not have an adverse result. End of discussion.
What needs to be pointed out is that every time the government creates some new “right” to such things, such as paid long holidays, long periods of paid leave for child-rearing, or whatever, there is a cost of some kind, that is borne by someone, often those more vulnerable than the group intended for the original benefit. The honest answer is for such MPs to openly admit as much rather than to pretend otherwise. For example, it would be refreshing if defenders of minimum wage laws could state that they prefer a bit more unemployment to the sight of people working on very low wages. Of course the argument is still bad and involves coercively arranging affairs to benefit some groups at the expense of others, but it would at least be preferable to what we usually get.
“If spending on munitions really makes a country wealthy, the United States and Japan should do the following: Each should seek to build the most spectacular naval fleet in history, an enormous armada of gigantic, powerful, technologically advanced ships. The two fleets should then meet in the Pacific. Naturally, since they would want to avoid loss of life that accompanies war, all naval personnel would be evacuated from the ships. At that point the US and Japan would sink each other’s fleets. Then they would celebrate how much richer they had made themselves by devoting labor, steel, and countless other inputs to the production of things that would wind up at the bottom of the ocean.”
– Thomas E. Woods Jnr, in Meltdown: A free market look at why the stock market collapsed, the economy tanked, and government bailouts will make things worse. (Page 105).
This is a marvellous, succinct and pretty devastating indictment of bailouts and an excellent little primer on the Austrian school’s analysis of the business cycle and the role of money. I thought I knew quite a lot about the subject but this book explains the idea of money, as a claim on resources, and the importance of understanding the balance of supply and demand for savings, quite beautifully. The book also highlights how the sharp recession of 1920-21 ended with no bailouts and is an episode that seems to baffle Keynesians.
Rather amusingly, this has been a New York Times best seller, much to the chagrin, no doubt, of NYT columnist Paul Krugman. Krugman, needless to say, believes that the sort of massive government spending seen during WW2 helped end depression. To think that he actually won a Nobel. Oh, wait a minute…
More good sense on the current economic difficulties.
At the bottom of the interventionist argument there is always the idea that the government or the state is an entity outside and above the social process of production, that it owns something which is not derived from taxing its subjects, and that it can spend this mythical something for definite purposes. This is the Santa Claus fable raised by Lord Keynes to the dignity of an economic doctrine and enthusiastically endorsed by all those who expect personal advantage from government spending. As against these popular fallacies there is need to emphasize the truism that a government can spend or invest only what it takes away from its citizens and that its additional spending and investment curtails the citizens’ spending and investment to the full extent of its quantity.
– Ludwig Von Mises as quoted by Toby Baxendale
Here is a nice little video, via the blog of Tom G. Palmer, singing the praises of free trade, ahead of the upcoming G-20 meeting in the US. Incidentally, the recent decision by The Community Organiser to slap tariffs on Chinese tyre imports – focusing particularly on China – looks to be especially dumb. Given that the Asian giant holds rather a lot of US debt, and has the ability to switch dollars for euros on a vast scale, making such a move seems almost reckless. About as clever as moving to switch off anti-missile defence over Poland on the 70th anniversary of Hitler’s invasion of Poland. In the latter case, the decision may have been right on specific military grounds, but the timing was dumb. Was not part of the appeal of the chap from Chicago that he did not make such errors?
We were promised that Mr Obama would be all smooth and charming to other countries, unlike the terribly vulgar Mr Bush with his Texan drawl (sarcasm alert). But I am not really sure that Mr Obama is not as capable of making an even more dangerous mistake: he pisses off really important, or potentially important, allies and large economies in a position to act. Annoying the French, as Mr Bush wonderfully did, is hardly a mistake, but hitting China with a very public act of protectionism, most decidedly is.
It is not just the economic downturn that has got us deep in debt, it is a consumerist politics in which our elected representatives feel compelled to tell us we can have our cake, eat it and walk out without paying.
Writes Matthew Taylor, former policy adviser to the Blair government, in today’s Times. I think that is not quite right. Not “feel compelled” – “are compelled”. Elected representatives do not stay elected very long unless they maintain the fiction for those who voted for them that someone else is less deserving, someone else is paying.
Taylor says ‘leadership’ is the answer. I wonder why we should believe that, when politicians are actually exercising leadership all the time, in the manner their interests direct. Leadership conferred by outbidding other leaders for the favour of the public is precisely where consumerist politics comes from.
There is a nice article in the Daily Telegraph today talking of how humans, be they religious, pagan or unbeliever alike have celebrated the festival of the harvest, in this time of Keats’ “season of mists and mellow fruitfulness”. And as we remember the other day after the death of “Green Revolution” scientist Norman Borlaug, the harvest has been something that we not only take for granted these days, but have even reached the point where, in recent years, our political leaders have thought fit to actually pay farmers not to grow stuff. The idea of set-aside subsidies was, if I recall rightly, one of those many terrible ideas of Roosevelt in the Great Depression.
Some idea of how far we have travelled comes up in this nugget of information from David Carpenter’s account of early Medieval Britain, The Struggle for Mastery. On page 36, we come across this:
“On the estates of the Bishop of Winchester yields of wheat remained around eight to twelve bushels per acre (a bushel is 36 litres), where on modern farms they are in the seventies.”
Such a massive increase has a lot to do with why, despite the population increase since the 12th Century, Britain had a sufficient surplus of food production to embark on an Industrial Revolution several centuries later. For in the time of William the Conqueror and for some time thereafter, mass famine was a grim reality of life.
So I will be celebrating the harvest this year and salute the scientists, farmers and yes, the commodities speculators of Chicago and elsewhere for making our daily bread as plentiful as it is. Here’s to them. Now, shall I go for wheat beer or the barley variety later this evening?
From time to time, the Guardian, to its credit, likes to shake up its leftist readership with a dose of sanity. Here is a fine example.
The other day, I criticised a short programme slot about how the Chicago school of economics – to use that rather loose term – might have to carry some responsibility for the credit crisis. The programme was put together by the Channel 4 news programme. Anyway, someone at the show noticed my comments, and the journalist who put the programme together, Faisal Islam, was kind enough to comment at some length in an email to our editors. Here goes:
“Hello Johnathan,”
“I saw your comments on the piece on economics that aired on C4 News last month. I thank you for your understanding of the limitations of television. Even C4 News would be hard-pushed to do a piece on the history of economic thought. It was really meant to be the entree for a main course of red-blooded economic debate, but that didn’t quite come off. Anyway, clearly I would dispute the notion that it was ‘propaganda’. I think it’s a bit harsh when the main protagonist is a chicago professor who does a fairly good job of defending his position, yet also recognises that they did get some things wrong.”
“Likewise we ran almost unchallenged a piece featuring Jim Rogers’ Austrian-ish critique of Obama/ Brown’s global stimuli. so I’d like to think we are more eclectic than you seem to indicate.”
“Anyway, you’ll be interested to see the rest of the Robert Lucas interview. I put it on the blog as a balance to the Paul Krugman NY Times magazine article. It’s all here, I’m sure it might stimulate some debate on your excellent blog.”
Here is Faisal’s link.
Good for Channel 4 for its reponse to what was a fairly grumpy posting by me. I guess I should have mentioned its Jim Rogers interview. I actually did link to it a while ago on this site. Jim Rogers is great value.
Anyway, I think my original point still stands, although in the light of the reaction, I will be a bit easier on Mr Islam from now on. It is gratifying that we got a response, and that Mr Islam even understood the significance of why we are writing about this topic and get annoyed if schools of economic thought are presented in a seemingly unfair way. If parts of the MSM pick up on the idea that the credit crisis cannot be blamed on “greedy bankers” and derivatives – although these instruments can be aggravating factors – but has origins in erroneous ideas of printing money, “too big to fail” bailouts and the rest, then we might be making progress. By continuing to slog away at it, we can influence ideas that are held in the media/academy and even public affairs more broadly. And influencing a guy who presents economic and business news for a major UK news channel is a pretty big deal.
|
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.
|
