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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Alex Singleton says that this is good news:
The Royal Mail will lose its monopoly on delivering Britain’s letters on Jan. 1, an industry regulator announced Friday – 15 months earlier than originally planned.
Regulator Postcomm said that from the beginning of 2006 private companies will be able to bid for licenses to deliver letters, previously the sole preserve of the state-backed Royal Mail Group PLC.
Postcomm chairman Nigel Stapleton said more competition would create “a more innovative and efficient postal industry.”
“This is only the first step in a process which the commission hopes will eventually see market forces replace regulation as the main driver of an efficient and effective mail industry,” he said.
Bulk mail delivery is already open to competition, but domestic letter services are the exclusive domain of the Royal Mail.
I agree. I have no problem with the principle that postal services ought to be competitive rather than monopolistic, and most of the arguments I hear which allegedly defend that monopoly strike me as misguided. For instance, I have never understood why sending a letter to people living at the far end of beyond in the deep, deep countryside, should cost no more than sending a letter from a dweller in a city to another dweller in the same city. If a competitive postal delivery service wants to have a one-price-fits-all policy, as many do, for simplicity’s sake, fine. If it wants to deliver non-urgent packages sent by me to someone half a mile from me by sending them to Birmingham and back, again: their problem (and their solution) rather than mine. But if other postal services want to ‘skim’, that is, do only easy deliveries (and maybe do them really, really quickly), and thereby force a little product differentiation into this market, well, again, why not? Making a bicycle is easier and cheaper than making a luxury car, and bikes accordingly change hands for far less. Where is the problem with that? Why should both cost the same?
Add all the obvious advantages associated with competitors competing with each other to establish reputations for reliable, efficient and really clever service, and you get a compelling case for a free market.
There is also the point, which I was only reminded of when deciding whether to label this as being about “globalization”, that postal services these days cry out to be global, rather than merely national with global stuff treated as a bolted-on afterthought.
However, I believe that I do see one problem with this particular exercise in demonopolisation. → Continue reading: Demonopolising postal services: the front door problem
We all knew that, of course. But when the Manolo puts the evil eye on you, well, time to update your will, launder your cash, gas up the Lear, and oil the hinges on the back door.
Beautiful shoes for everyone! Death to the tyrant who would deny the peoples the beautiful shoes! This it is the political philosophy of the Manolo.
The Cuban embargo should be lifted, not for ideological libertarian reasons, but for pragmatic ones. Doing so will unleash a tide of cash and goods into Cuba, not to mention Americans, and nothing could be more corrosive of the tyrannical regime there.
Much as I love cigars, I won’t buy Cuban cigars, because that is a state-controlled industry and I choose not to do business with the Cuban state. (Plus, I think they are overrated). I would go to Cuba, though, after the embargo is lifted because doing so would allow me to circumvent the state, meet real Cubans, and undermine a Stalinist bastard in my own small way.
Sarah, after her first day (as an intern?) at the Fairtrade Foundation:
I don’t suppose trade can ever be fair. Someone always has to lose. It’s just they lose less with fair trade than with the regular variety.
Milton Friedman:
Adam Smith’s key insight was that both parties to an exchange can benefit and that, so long as cooperation is strictly voluntary, no exchange can take place unless both parties do benefit.
A few weeks ago, I attended one of the talks that are hosted in London by Brian Micklethwait on the last Friday of every month. The speaker was fellow Samizdatista Alex Singleton, and was essentially on the subject of why globalisation is good (and was incidentally about Alex’s new think tank devoted to this very issue).
In the discussion after the talk, one thing that came up was the benefits of global economies of scale and global competition in manufacturing, retailing and the supply chains in between. A point made was that although it is certainly the case that prices on many goods (clothes and electronics being the examples brought up) have dropped due to retailers being able to easily shop throughout the whole world for products to sell, we do not really yet see customers buying goods directly from foreign retailers. Internet commerce is becoming large, but mostly it is domestic in nature.
However, something happened to me this week that made me think that perhaps more international commerce is happening than we realise, and that a lot of it is happening under the radar.
My present mobile phone is a Motorola v500, which is a lovely phone. (Motorola has always had great engineering. Five years ago they were losing badly to Nokia, who had inferior engineering but better industrial design and better user interfaces, but in recent times they have caught up in both regards). However, it has a small external antenna, which is removable and screws into the phone. As it happened, the thread on the antenna became damaged, and I needed a new antenna.
I went into the Carphone Warehouse store from which I had bought the phone, and they were sympathetic but not very helpful. They were more interested in selling new phones and high mark up accessories than tiny replacement antennas. (They suggested that I visit their repair centre in a different part of London or check the Motorola website). I went to a couple of other mobile phone shops with similar results. Checking the Motorola website led to similar results.
So what to do. Well, I checked on ebay, found that there were plenty of people selling replacement antennas for my phone, put in a bid, and purchased an antenna, online, for £2.77 including postage. Although an antenna probably costs 5 cents to make, I suspect that if I had gone to a “repair centre”, I would have been charged considerably more than £2.70 for a new one, and the other advantage of buying on ebay is that the new one would arrive in the mail in a couple of days.
Just as I was logging out of ebay, I noticed something else, which was “Location of Seller: Singapore”. So it turned out that it was easier and cheaper for me to obtain a new antenna from some guy in Singapore than from a local retailer in London.
Thinking about it some more, I suspect that a lot of this is typical. If you set up a “shop”, then there are still restrictions on where you can obtain goods from and who you can sell to. The producers of branded goods still try very hard to make sure that retailers only sell goods that have been bought from the “authorised distributor” of their brand in a particular country, and that they only sell to people in the same market. In a world where every buyer is also potentially a seller, and where goods can be sold on to people elsewhere in the world, though, this is hard to enforce. And what we do have now are large, trusted companies that act as brokers of goods of all kind. Ebay is the classic example, but as I have discussed before, more and more of Amazon’s business is of this kind too, acting as a broker for third party sellers. I haven’t seen any statistics in the percentage of this kind of trade that is cross border, but I suspect it is growing. (I also buy large numbers of DVDs from the US and Canada through third party sellers via Amazon).
Quite sadly, there is also another obstacle to the growth in this kind of cross border commerce. If you send something through the mail, it is subject to cross border bureaucratic interference in the terms of customs duties and local taxes. (In the case of importing most goods into Britain, the issue is the payment of VAT). If you receive a package and HM Customs and Excise decides to charge you VAT on it, then rather than receiving the goods through the mail, you receive a card explaining the situation. You then have to visit the local post office, and pay the VAT plus an “administration charge” before receiving your goods. The inconvenience and the administration charge can between them make it no longer worth your while to buy from overseas in the first place, which is irritating. Ultimatelly it isn’t so much the tax as the inconvenience that goes with it.
But of course there is a loophole. The VAT is waived if the total value of the goods is less than £18. This regulation was presumably brought in some time in the past to avoid the inconvenience of having to charge tax on every small gift sent throught the mail, but it has now grown into being an examption widely used by customers of internet commerce. You learn not to order multiple DVDs in the same package but to order them one at a time. The additional postage costs are often as much or greater than the tax would be, but this way you avoid the bureaucracy. This doesn’t precisely improve the economic efficiency of the whole process, but the exemption is great enough to allow a large global economy to exist in goods under about £18, whereas there are substantial restrictions on trade in goods of higher value. None the less, some stores have set up specifically in order to take advantage of this tax advantage (Amazon Jersey for instance).
One would hope that someday this exemption would be so widely used that it will lead governments to remove the taxes in resignation, but this is sadly much too hopeful. More likely are attempts to charge taxes on all goods, however small, and much more government intrusion into commerce. And it is the intrusion and bureaucracy that is likely to really be economically destructive, even more so than the taxes themselves.
“This is why all goods must have a price set on them; for then there will always be exchange and, if so, association of man with man.”
Aristotle, quoted in Nicomanchean Ethics.
A truly bizarre article has appeared in the American Prospect arguing that President Bush’s proposed social security privatization should be opposed. Why? Because social security privatization has happened in Britain and has been a disaster.
How odd. I live in Britain and work in an economic think tank, and I never knew that Britain had privatized social security. Indeed, the Inland Revenue (Britain’s equivalent of the Internal Revenue Service) wrote to me recently on the subject of my state pension.
Social Security Privatization was floated as an idea after Labour came to power, but it has never become government policy. It was advocated by Frank Field MP, then the Minister for Welfare Reform, who soon after left the Cabinet.
The Prospect article is, frankly, drivel. Social security privatization has not happened in Britain.
Dr Eamonn Butler has more on the UK’s pensions on the ASI Blog.
He may not be the sort of man who gets the attention of the ordinary citizen, or the sort of man one talks about down the Dog and Duck on a Friday night, but New York Attorney General Eliot Spitzer, wannabe Democrat politician and formidable lawyer, is making quite a name for himself as a legal terror of big Wall Street businesses, launching a flood of suits against insurers, brokerages, fund management companies and banks.
Some of his suits may have an element of justice behind them and no doubt he has calculated that bashing the Gordon Gekko classes makes for good copy and will no doubt endear him to the sort of folk who regard Michael Moore as a political seer. To the rest of us, however, who make a living in the financial markets, his zeal is troubling. Take the recent so-called “scandal” surrounding the case of mutual fund firms which allowed certain types of quick-fire trades to happen in and out of their funds. The activity, while not illegal, is considered harmful because it can damage the long term investments of ordinary investors. Well maybe, maybe not. I find it worrying, however, that the cumulative impact of Spitzer’s energies will be to push up the costs of doing business in the U.S. capital markets, and drive many smart would-be financiers into other fields.
We tend to forget that despite high-level scandals such as the collapse of energy giant Enron, the world economy has greatly benefitted from the efficiencies and new products driven by the entrepreneurs of the modern age. My worry about the whole raft of laws spawned in recent years, such as Sarbanes-Oxley or even the awful Patriot Act, is that financial innovation will be curbed. And as a result, many businesses will shun the public listed stock market and choose to go private instead if that is the way to avoid the glare of the Eliot Spitzers of this world.
Regulatory growth is not a sexy subject, I admit, but let’s not forget that the destruction of wealth and entrepreneurial morale will end up biting us in the economic behind if we don’t take a full regard to the effects.
I like airplanes, but am rather suspicious of this huge new Airbus that they have just rolled out, handsome though it does look and useful though it will surely be in many circumstances. In particular, I suspect that the A380 is costing Europe a whole lot more than is being officially suggested, and that Boeing decided not to build a similar aircraft for good, loss-avoiding reasons.
Well, I still do not know very much about Airbus finances, but this story certainly backs up the costing-more-than-they-are-admitting aspect:
TSUNAMI-struck Thailand has been told by the European Commission that it must buy six A380 Airbus aircraft if it wants to escape the tariffs against its fishing industry.
I realise that it is carrying the search for a silver lining to absurd lengths to say such a thing, but one good thing about this whole Tsunami horror is that it has brought this EU vileness rather more out into the open than would have happened otherwise. As it is, the combination of nastiness and lack of political sensitivity being shown by the EU is extraordinary even by their low standards. Do they not see that the Tsunami has somewhat changed things?
The Thai trade negotiators, not unreasonably, seem to betting that things are indeed now rather different. They seem to be calculating that, if they simply expose the nature of the deal they are now being faced with by the EU, the EU will back down in the face of worldwide disgust, not least within Europe itself. The Thais will get their aid. They will be allowed to sell their keenly priced fish products without punitive tariffs being slapped on them. And they will not have to buy six of these damned great airplanes unless they decide that they want to. All of which is a lot to hope for, but at least they may get more of what they want than they would have done if the Tsunami had no struck.
The EU Referendum Blog has more on this whole sordid episode:
The aircraft will cost Thailand some £1.3 billion – nearly the amount that all 25 EU members states have pledged in tsunami aid to the whole affected region.
Richard North also points out that Thailand was being shafted before the Tsunami in a similar manner. This is not about the EU getting nasty; it is about it remaining nasty.
But that is the EU, naked in tooth and claw. While workers from across world are on the ground, helping to rebuild the Thai economy, EU officials are also right in there – undermining the basis of any recovery.
And according to North, Thailand is not the only country that is being “encouraged” to buy Airbuses with EU trade policy concessions.
The irony is that by swapping a bit of freer trade for aircraft orders, the EU is agreeing, reluctantly, to do itself a favour. It is agreeing to impose the terrible burden of cheaper goods upon itself. But even when it does good things, it cannot seem to help stirring in bad things, like flogging unwanted airplanes.
I was so struck by the hostility expressed inthe comments section of my previous post about Virgin airline boss and entrepreneur Richard Branson, in some cases for quite valid reasons, that it got me thinking of whether there is, in today’s business world, any entrepreneur who would pass the kind of harsh ideological standards we libertarians might want to set and be able to become a major business player.
I doubt it, sadly. If I am wrong about that, comment away.
With all the understandable attention being focused on the dreadful situation in the lands skirting the Indian Ocean, there is always a danger that disasters of a different, more Man-made kind, get overlooked. Well this week the German statistics office reported a dreadful set of unemployment figures, showing the number of jobless in Europe’s biggest economy to be at the highest level for seven years
A Bloomberg report on the story contains the following passage:
New measures cutting benefits for the long-term unemployed took effect on Jan. 1. Those without a job, including people previously registered as social-welfare recipients rather than as jobless, will also face increased pressure to accept job offers or risk losing benefits. The changes will add an as yet undetermined number of people to the January jobless total.
But it is clear that the German authorities are still tinkering with the issue. That 10.8 percent of the working age population of such an important country should be out of a job is a disgrace. What I find odd though is how little outraged commentary in the economics part of the press there is about this. It is almost as if the European chattering classes have come regard this problem in Germany, and also France, with an air of sullen resignation. Of course, dealing with it will involve lots of vulgar, Reaganite actions such as deregulation, tax cuts to spur business formation and the like, which of course goes against the grain of Germany’s ‘managed’ form of business so beloved of leftist commentators like Britain’s own Will Hutton.
Germany needs to get its act together. Some 15 years since reunification with the eastern part of the country, Germany has failed to live up its early promise. With so many young people, including those from immigrant backgrounds, on the dole, no wonder commentators wonder about the social fabric of that country. They should.
Entrepreneurship does not seem to get a very fair run on our main terrestrial television channels, as far as I can tell. The BBC is a particular offender. So credit is due to the BBC for a programme that shows how contestants with business ideas compete for money and interest from a panel of venture capitalists.
I watched the programme on Tuesday evening, and after my initial reservations about the format I became pretty engrossed. At the end, the final contestant, who eventually negotiated a deal where the others had failed, came across as such a smart fellow that I would have invested my own meagre funds in his idea.
The impression I got was that the producers asked the panel of VCs to play the role of flint-faced, capitalist bastard. They certainly succeeded. I disliked all of them intensely. No doubt that was the goal of the producers, but despite all that, I could not fail to be impressed by the enthusiasm of the wanna-be entrepreneurs.
The BBC may not fully realise it, but it is spreading the entrepreneurial meme.
As regulators impose more onerous capital adequacy and reporting requirements on the Western world’s banks, investment firms and brokerages, demand surges for increasingly sophisticated computer infrastructure to keep track of all the new systems deemed necessary to make the regulations work. As a result, demand is rising, according to this Financial Times article, for graduates with science degrees, especially in the field of physics. And it does not come as much of a surprise to learn that Britain’s mostly state-run education system is not doing a very good job at churning out young physics students. I am shocked, shocked to hear this!
I would greatly prefer it if clever folk with scientific knowledge were engaged in the potentially fruitful areas of nanotechnology, biotech, aviation and civil engineering, all fields likely to see continued rapid growth, than working to make increasingly Byzantine bank regulations work better. It looks like a waste to me. We want our budding Isaac Newtons and Richard Feynmans working on spacecraft, not greasing the wheels of the latest EU banking directive.
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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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