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]
|
Even to a jaundiced observer of the mainstream UK media like yours truly, it is sometimes surprising how much bias there is against private property and privately owned business. The left just about tolerates big listed companies, I suspect because socialists imagine that such companies are easier to harass and bully via large shareholder groups like pension funds. This has certainly been part of the thinking in the United States, where large state pension schemes, such as the Calpers fund in California, have used their shareholder voting power to hammer the boards of firms they dislike or think are letting investors down. It is odd, as I remarked a few months ago, that the left, in the form of writers like Observer columnist Will Hutton, used to wax indignant about the short-term investment horizons of listed firms, and now regard them as the finest business model that there is, while regarding companies that are owned by private equity firms as somehow bad, even evil. Well, we had another example of the sort of prejudice against non-listed companies today in the Observer:
Britain’s leading bookmakers, including the private equity-owned Gala Coral, face serious allegations about the vulnerability of thousands of staff who are regularly attacked during robberies and by punters who have lost huge sums on new-style gaming machines. Gala Coral is owned by Permira, the private equity company headed by Damon Buffini.
Union officials paint an ugly picture of betting shop staff regularly abused and intimidated by gamblers, with hundreds of employees experiencing serious attacks. Staff have been injured and murdered as robberies of shops become an increasing occurrence.
The implication, lazily expressed, is that the horror of being robbed and murdered is somehow connected to the private ownership of the firms in which these people work. The Observer has been among the most vociferous attackers of private equity firms – firms that buy businesses and restructure them, usually with large amounts of borrowed money – and its criticisms are usually wide of the mark. Various studies, such as from Nottingham University, have shown that private equity firms invest for the longer term, create more jobs in total, and generate more profits, than listed businesses. But these firms are mega rich and their owners are very wealthy men (it is a male-dominated world) and so are clearly evil in the eyes of the left-leaning media. But even I was struck at how casually the Observer has tried to link the problems of robbery to private ownership in readers’ minds.
Of course, with interest rates rising and debt markets getting a lot rougher due to the sub-prime mortgage SNAFU in the US, the ability of private equity firms to borrow money will drop, so those economic illiterates at The Observer can rest easy, and go back to bashing publicly-quoted firms.
Ecogeek reports:
In the next 12 months, McDonald’s plans on creating enough fuel to power its 155 delivery vehicles while having enough fuel left over to sell into the public market. The fuel will be composed of 85% waste vegetable oil and 15% virgin rapeseed oil. So, while it will be 100% carbon neutral, it won’t be entirely waste oil.
It is all very well training executives in communication with the media. Somehow I have a feeling that if the guy was allow to talk normally instead of using the pseudo-technical press-release talk, this might have been avoided.
However, Matthew Howe, Senior VP of McDonald’s UK was quoted saying:”As we get better at the refinement we will be able to remove virgin rape from the process”, a line which we sincerely hope never gets taken out of context. [emphasis mine]
Now please excuse me whilst I clean the tea from out of my keyboard.
Which of these places would you say is more economically important?
Shenzhen, China. March 2005.
Silicon Valley, California. June 2007.
On Sunday evening, I returned a rental car at Los Angeles International Airport prior to boarding a flight to London. LAX is one of those airports where the car rental station is some distance from the terminals, and having returned your car, you board a shuttle bus that takes you to your terminal. There were only a small number of people on this particular bus, and the driver asked each of us which airline we were travelling on and hence which terminal we needed to be taken to. One of the other passengers was a young woman – perhaps 30 years old. She told the driver that she was flying on United, hesitated and said “…but it is an international flight. Is that the same?”. As is the case with many Americans, she gave the impression that she did not fly internationally very often, so I assured her that she was going to the correct terminal.
I asked her where she was going. She answered “Johannesburg”, and told me that she was going via London to get there. I expressed surprise that she had to take such a long route, and she told me that she could have flown to Washington and got a direct flight from there, but that the 15 hours non-stop from Washington to Johannesburg was a longer flight than she wanted to take. Personally, I have done more than a few 15 hour flights in my time, and I would not have made the same choice she did (for me, getting the total journey time down to as small a time is key, but other people’s mileage does vary, somewhat literally in this case). I mentioned that I had friends and family in Johannesburg and that I had visited that city earlier this year, and she asked me what it was like. I told her that the rich parts of northern Johannesburg (where she was going) are like southern California but with more fortifications, which may or may not have reassured her.
I asked her why I was going. She said it was “Business”, and that she was “involved in the Live Earth concerts”. I probably should have asked her how she was involved, or what she did, or something, but connections between LA and the music industry are not exactly surprising. I was tempted to make some snide remark about how the Johannesburg concerts had just been relocated to a smaller venue due to lack of interest, but in truth the discovery as to why this woman was travelling rather caused me to lose interest.
I suppose the real question might have been just exactly how she thought that flying lots of people like her from LA to London to Johannesburg was going to help global warming exactly, but I could not be bothered asking. And in truth it would have been rude to ask, because I was just making friendly conversation with a perfectly pleasant woman before catching a flight.
I fear though, that we are back to “essential” travel for “important” people like politicians, rock stars, and people who work in the music industry somehow not counting. Making sacrifices to save the world is something for the plebs to do.
Anatole Kaletsky, one of the newspaper columnists I read regularly, despite his incurable Keynesianism, has smart things to say in defence of private equity firms that have been taking over major businesses lately, provoking the ire of unions and leftist policians. Good for Anatole for refusing to jump on a silly bandwagon. Here are my thoughts on the issue a while back.
(Full disclosure: I do work for a non-listed company, thank god).
A week or so ago, Ross Clark, the eminently sane columnist who writes for the Spectator, defended globalisation and attacked what he sees as a growing hatred of rich people. We see it in the endless bleating about the supposed Evil of private equity and hedge funds, or of financial speculators generally. Much of the reason, I think, for this hatred, is not that the rich are so much better off in relative terms than the poor – the poor probably don’t have the time or the inclination to spend time hating the rich – but that the rich are a lot better off than the broad middle class. In my experience, many anti-globalistas are middle class intellectuals, not poor folk living in state subsidised housing. As it becomes more difficult for middle class folk, for example, to educate their offspring privately without going into massive debt, and to buy a house for the same reason, naturally the Man on the Clapam Omnibus – or his US version – gets a bit cheesed off if he sees City financiers buying swanky homes or sending children to nice schools with ease.
But this hatred of wealth is dangerous and it draws on economic illiteracy. To demonstrate a good case of such dunderheadedness, in the print version of the Spectator (16 June, page 26), is this letter from a Mr Edward Collier, of Cheltenham, a traditionally genteel spa town in the west of England famed for its posh girls’ school and a rather fine horse racing festival in March:
“Sir, In his article “Hatred of the rich is back in fashion” (9 June) Ross Clark wondered “What about the people who sew £10,000 handbags together – surely the more that the wealthy spend on their handbags, the more they earn?” Does he really believe that the sewers of hyper-handbags earn more than those who sew the mundane totes of everywoman? They’re sewn by the same people, for God’s sake, and for the same pathetic pittance.”
I could quote more from this character, but you get the idea of where he is coming from. So let’s spell it out for this Sage of Cheltenham: if more people spend money on luxury goods, which typically often require more intensive labour to produce, such as fine leather handbags or Breitling wristwatches, this increases the profits of the people who make these things, and in turn, increases the demand for the skilled labour required to make them, and hence, raises the real wages of the persons who make them, and so on. If a luxury leather handbag really does require no more skill to produce than a bag one could buy for a fiver, then presumably this letter writer might have a quarter of a decent point, but he does not. He merely asserts that the “same people” produce high-value goods as cheap ones, and uses this to dismiss the argument that when rich people spend their milions, it recycles wealth back into the economy.
In fact, even John Maynard Keynes’ argument of stimulating demand to encourage production presumably was based on the notion that if people spend money in the shops, it creates jobs, and therefore is a good thing. What this character seems to be saying is that no matter how much money rich folk spend on luxury goods, it makes no difference whatever to the people who make them. Apparently, the money never reaches the poor downtrodden producers, but ends up in a few capitalists’ pockets. But presumably, if more money is spent on goods than before, then, other things being equal, the prices of those goods will rise or output will have to be increased. To argue that none of this process filters through into the living standards of people is quite extraordinary.
Meanwhile, this story, if it is true, is not going to help the blood pressure of Mr Collier, I fear.
I am looking forward to this book by Ross Clark.
One of the downsides of being stuck in a hotel is having ones breakfast browsing depend overly on the dismal International Herald Tribune, the incestuous off-spring of the Washington Post and the New York Times.
There was an article in the IHT about the Italian state cracking down on tax evasion which cause the customary eye rolling when a free marketeer reads statements of of unquestioned absurdity such as:
If tax evasion is Italy’s national sport, as many people say, then the government of Prime Minister Romano Prodi has been working to change the rules of the game since taking office last year. Prodi says he believes that cracking down on tax cheaters is essential for an upswing in Italy’s lackluster economy. This month, he warned that his government could not lower taxes until “the indecent level of tax evasion” was reduced.
So taking more money away from people, essentially destroying some of their wealth, will make the economy better? And the government will not reduce the amount of personal wealth it destroys until people start cooperating more with having their wealth destroyed?
Yes, that all makes perfect sense.
Published from Addis Ababa in Ethiopia where internet access is… challenging.
Last week I went to Whole Foods Market, the US “natural foods grocer” that opened in London on 6th June. It took over a splendid Art Deco building in Hight Street Kensington, where Barkers department store used to be. The store is spacious and even full of people it is still easy to walk around. The design is effective both in presentation and logistics. The prices are comparable but more importantly the selection consists of products sourced locally as well as internationally.
It was a slice of US retail at its best imported to this country but without crowding out the best of local stuff. I found my favourite British products in varieties I did not even know existed. There are whole sections labelled “Best of British”. Fortunately, Wholefoods also passes on the lesson learnt from decades of gross junk foods in the US and there is a great selection of tortilla and no transfats chips, i.e. junk food with damage limitation. I have not seen the awful Walkers crisps but then I was not looking for them. 🙂
There is no question that the contrast between the experience of shopping in Wholefoods and then going to Waitrose or M&S a few yards down the same street will have a profound impact on the supermarkets in the UK. If I were M&S, Waitrose, Holland & Barrett or any other retailer marking up organic, green and sustainably virtuous products, I’d be quaking in my boots. There was a man walking around the entrance to Wholefoods with a board for M&S inviting people to come & taste their food. A bit transparent methinks. He could have just as well have ‘losers’ tattooed on his forehead.
There is also no question that some green people in the UK will splutter venom at the sight of Whole Foods. Why? Because this is the opposite of what they are trying to achieve. They want us to stop consuming and here is a Texan bigga betta supermarket barging in, taking over one of the London’s splendid and capitalist buildings (the façade has carvings of ships and even a de Havilland jet plane) telling us that spending on their produce will satisfy our consumerist cravings, make them plenty of money and will be better for our bodies and the planet. Aaarrgh! I predict a barrage of attempts to find ‘fraudulently’ green, natural or organic products at Whole Foods as the hair-shirted, sandal wearing hoards comb through the aisles. I also predict that they will end up green with envy. I shall refrain from going into more organic details.
This startling story from France even made yours truly, who has become a jaundiced observer of French political life, sit up and take notice. Apparently, a bunch of people styling themselves as protectors of the Gallic wine industry have issued an ultimatum to new French President, Nicolas Sarkozy, that unless those evil cheap imports from countries such as Australia (the horreur!), New Zealand (Rainbow Warrior, anyone?), South Africa (enough said), America (the Great Satan) and other places are stopped, then supermarkets, offices and other places will be dynamited.
Suppose that people in such venues get killed. I think that such a terrible outcome might begin to get across to the politically and economically uncommitted the true nature of the thuggery that sometimes accompanies protectionism and any form of coercive interference with voluntary economic exchange. Ultimately, such folk believe that you, the consumer, or worker, or entrepreneur, are beholden to buy, produce or sell not on the basis of freely consenting exchanges with your fellows, but on account of some state of affairs that the protectionists deem right and proper. In this case, the wine industry of France, or at least the mass-produced bit of it, is under threat from the cheaper stuff from other parts of the world. (I think it is safe to assume that the producers of Latour or Lafite are unlikely to be worried). I am actually off to Southwestern France in early June for two weeks’ much-needed holiday and the Languedoc region is one of the places where these thugs hail from, apparently. I tend to notice that whenever I visit France, which is quite often, it is hard to see non-French wine in the shops. So if these thugs are getting upset at the arrival of a relatively small amount of foreign imports, they would go totally batshit if they saw the mixed wine-racks in Sainsbury’s or Tesco’s in a standard English town.
Sarkozy’s time in office is unlikely to be a quiet one.
You sometimes hear of how London’s taxi drivers like to regale their passengers with their views on matters of public affairs. Maybe it is their self-employed, independent nature that lends itself to a certain feistyness of attitude. I do not always agree with what I hear from taxi drivers but often or not, they have their fingers on the pulse. Well, it turns out that the news service Bloomberg is polling the men and women who drive the London black cabs for their views on the state of the economy. If their views are correct, the UK economy is slowing down.
To hell with the official government statistics. The cabbies have spoken.
To have a free and prosperous country, it is important to have strong institutions underpinning things like contract and property rights. Yet all too often we forget the roll of social attitudes and world-view in creating wealth and its handmaiden, liberty.
There are two interesting articles in The Telegraph today (on the same page in the print version in fact) that shows that places like Russia and China may be vastly wealthier and freer than they were under the darkest days of Communism, but both those places have yet to develop either a culture that expects liberty, understands the implications of state money (they are hardly alone in that) or accepts the usefulness of profound outside influences.
The Chinese government is trying to lure foreign educated Chinese back to China, which suggests at least the people at the top are aware that there is value in the way the rest of the world does things..
Under the government’s new incentives, returnees will be able to work wherever they like, regardless of which city they have a residence permit for, and will be offered higher pay, while their families will receive preferential treatment.
Which is interesting as that means most people still cannot live and work where they like, requiring internal passports and state residence permits. How can a place with such restrictions on a person’s ability to sell their own labour ever hope to become affluent and truly dynamic? Can they not see the link between the ability of individuals to make fundamental choices and the effectiveness of markets?
Those graduates who return, expecting their foreign education and work experience to be a passport to a glittering future in the new China, frequently face discrimination rooted in a deep-seated distrust of those who have left the motherland for the West.
Which makes me wonder, do most Chinese people not realise how much more affluent the First World is than they are? I am guessing they do but this is trumped by the cultural imperative for Chinese-ness… the sort of mindless nationalism that is thankfully largely dead in much of the Western world. This suggests to me that regardless of how China’s leaders tinker around, if Chinese culture is that obsessed with China-is-always-best attitudes, there are serious limits to their ability to grow into a prosperous and civil society.
Also in Russia, most of the institutions associated with advanced nations (courts, property rights, contract law etc.) are not known for their robustness or independence from politics. But also I wonder how much the culture in Russia allows people to imagine things any differently?
Russia’s ageing but revered scientific geniuses are on a collision course with Vladimir Putin after the 1,200-member Academy of Sciences rejected Kremlin proposals to end its unique independence from state control […] Now, however, its autonomy is threatened by a proposed new charter which would give the government control of its management, funding and multi-billion pound property holdings. Kremlin officials claim the institution needs dragging into the modern world to harness its members’ brainpower for lucrative scientific patents and commerce. But critics fear it will fall victim to Mr Putin’s appetite for control and his distrust of free-thinking institutions.
Which is interesting. But then…
The Academy receives £870 million in federal grants, owns about 400 affiliated institutes and employs around 200,000 people across Russia. Prof Valery Kozlov, 57, its vice-president, said: “This is simply an attempt to seize control of our finances and property.”
I am sure Professor Kozlov is a very smart man, yet I wonder if it even crossed his mind that perhaps his Academy should respond to Putin’s power grab by refusing to take any more state money. If they are a centre of excellence as claimed, surely there must be companies and institutions around the world which would love to fund them and allow them to be truly independent of the state.
Yet the notion that everything must happen top-down with the blessing of the state is probably so deeply ingrained that the reality of what is involved with making yourself independent does not track at all.
It is has been a long-standing complaint from pro-market folk – like yours truly – that business and capitalism tends to get a pretty crummy deal in Hollywood and its equivalents around the world. Even one of my favourite movies, Wall Street, starring Michael Douglas as the corporate raider Gordon Gekko, is normally taken to be an anti-capitalist film, even though there is nothing in the magnificent “greed is good” speech with which I fundamentally disagree (it is like Ayn Rand on acid). In the main, businessmen are treated as shysters, or cold, or boring, and business is regarded as either vaguely venal or not very dramatic. The trouble is, I suppose, that the creative process of forming a business, running it and exploring a new market is not always full of obvious drama the same way that a crime story is, or at least not obvious to people who tend to view business in a hostile light. Some processes of bringing a new product to market might actually be very dramatic, and it is surprising that the arts world has not picked up on this more.
People have of course speculated why business tends to get treated like this. In part, artistic people, including extremely intelligent and creative ones, will regard the process of raising funds for a film or play as a chore, and often resent the process of getting money and having to suck up to people to get it. Also, creative people often do not get close to the grubby necessity of having to pay bills, meet salary payrolls and so on. As a result, a lot of people in the arts world do not really understand business all that well. The results tend to bear this out. Take UK soap operas on television, like the terrible Eastenders, Coronation Street or the US shows Dallas and Dynasty. (The latter two cases were admittedly self-parodies to a degree). In almost every case, the businessman – it is usually a man – is presented as a crook, or brutal, shallow, uninteresting and generally unpleasant. And even in so-called “reality” business tv shows like The Apprentice, starring the Amstrad computer firm boss Alan Sugar, the impression is that being a great businessman means being a total wanker, which alas is the impression that Sir Alan conveys, although for all I know he is a much nicer man in real life and is just hamming it up for the cameras.
So is there any hope? Well, this interesting blog item suggests that things might be brightening up. Why does it matter? It matters, I am afraid, because people these days seldom form their views by reading long books like Economics in One Lesson by Henry Hazlitt or Milton Friedman’s Capitalism and Freedom. For better or worse – and it is usually the worse – we get our opinions, our prejudices and our ideas from watching visual media.
On a qualifying note, I should add that I do not, of course, want television dramas or films to become propoganda for the views that I like, as a reaction to propoganda for views that I detest. Rather, it is just that it would be nice to see entrepreneuriship given a bit of a fairer shake from the luvvies, once in a while.
I can unreservedly plug this film, however, I can also repeat my admiration for this film as well. This old movie, Cash McCall, is worth a look although it might be hard to get hold of easily.
|
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.
|
