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.
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The daft furor over the outsourcing of job to India (and other places) is just another example of how amazingly primitive the understanding of economics is which prevails amongst the media and political elites in the USA (though no worse than elsewhere I might add).
The same troglodyte notions that lead people to think that cheaper foreign steel being imported into the USA is a bad thing (which is just another way of saying that manufacturing cheaper cars, homes and ships in the USA are a bad thing), lead the same people to in effect say that allowing Americans to purchase cheaper computer programs and requiring them to pay more for call center services is also a bad thing.
President Bush went on the defensive Thursday on the issue of outsourcing after a firestorm erupted over an aide’s contention that free flow of jobs, including the migration of services to India, benefited the US economy in the long run.
Although the aide, White House economic adviser Greg Mankiw, was merely echoing what was stated in Bush’s economic report to Congress, Washington’s political class came down on him like a ton of bricks.
Lawmakers from both parties, including Republican House Speaker Dennis Hastert, demanded he be fired. The criticism forced Mankiw, a Harvard economist, to clarify that he did not mean to support or praise loss shifting of US jobs overseas.
Sure, if your IT or helpdesk job as just been outsourced to Bombay, it might seem like A Bad Thing for you personally… but then that is just as true if your job in New Jersey has just been taken by someone in Biloxi, Mississippi because your company has just relocated to where costs (and taxes) are cheaper… the overall effect is that companies, and outsourcable functions of companies, will go wherever it makes sense for them to go… and so they should!
However notion that India has such a comparative advantage just because they have produced a reasonable pool of IT and call centre people who will work for far less than their counterparts in California does rather miss the obvious fact that India is far from suitable for all or even most IT or call centre jobs. Troubleshooting a network in Texas is rather hard to do from New Delhi and to think people in Asia will have such a deep understanding of American (or British or European) cultural mores that all help desks and call centres will end up there is rather bizarre. Companies who out-source unsuitable jobs will end up being punished by the market if their quality falls below the point which lower costs can offset such a fall, and some jobs are very quality sensitive indeed.
It should be screamingly obvious that stopping people in India (and elsewhere) from exploiting their competitive advantages does not only hurt them, it hurts everyone who is a customer for those products. Rather than engaging in unbecoming grovelling, George ‘Steel & Lumber Tariff’ Bush should redeem himself by responding to the Troglodyte faction by pugnaciously asking them “So, what exactly did the American consumer do to you to make you hate them so much, guys?”
If a company is not free to run their business and the location of the people who make it work, to best suit the company’s interests, who pays in the end? The company’s customers do, of course. And that means you.
Two decades ago I used to love arguing about the rights and wrongs of capitalism, socialism, social democracy, collectivism, communism, etc. Now, I don’t have the adrenalin for it. Now I prefer to offer observations, big or small, and let others fight about them while I cook up my next observations. Thank God (by which I of course mean Perry de Havilland and his editorial confreres – thank goodness might be a better way of putting it) for Samizdata.net, because here I can do just that.
But if you want a good old libertarians-versus-collectivists row to join in on, this Chris Bertram post together with all the comments it has provoked could be just your ticket.
Chris Bertram says this about the Morecambe tragedy in which nineteen Chinese cockle pickers perished:
But one thing that needs saying is that such tragedies are a normal and predictable consequence of capitalism and not simply the result of coercion and abuse by a few criminals.
Bertram’s piece is a classic example of what one might term Implied Collectivism. Capitalism, says Bertram, regularly causes violent deaths. The clear implication is that therefore “capitalism” needs in some way to be severely hobbled, if not done away with altogether, and that if that happened, poverty would likewise be diminished or even done away with too. But he doesn’t dare come out flat with the claim that capitalism ought to be cut back, still less got rid of, on poverty relief grounds, because that would be too daft. He doesn’t even think this, because he does have more than a trace of intellectual efficacy and moral sanity in that befuddled head of his. Nevertheless he allows the implication to float in the air, because he wants it to be true, or seems to. Not admirable. He ends his piece thus:
But we mustn’t forget that the root cause of many such tragedies is that poor people need to risk themselves in order that they and those they love may live. Unless they cease to be poor, and cease to face such unpalatable choices, such events will happen again and again.
There is as much truth in that bit of writing as in any where the words “root” and “cause” are to be found next to each other and in that order, but so what? Why blame “capitalism” for that? This is like blaming oxygen for forest fires.
And if poor people are to cease to be poor, what they need is more capitalism, different bits of capitalism to choose between, not less of it. If those wretched cockle pickers had had more and consequently better choices, they might not have chosen the risk of drowning for the sake of £1 a day. And … oh, but I’ve said all this, argued all that. → Continue reading: An argument about the root cause of poverty
Ever since I struck the chords of some of my libertarian friends with my Libertarian Alliance piece entitled The Fixed Quantity of Wealth Fallacy, I and several of the friends have been on the lookout for new uses for the phrase “fixed quantity of [insert new something whose quantity is not fixed] fallacy”. Well, here is another. See title above.
The beauty of the FQ?F is that all you have to do is state it. Much of the argument is made simply with the phrase. Jobs. Happiness. Travel. Linoleum. Blogging …
The point is that simply altering the price of something massively increases the demand for it. And when economists talk about demand, they are not merely discussing potential consumers standing about with stupid plackards and stamping their feet and getting in a rage – as in political ‘demand’ – they mean actual ‘effective’ demand, demand that counts for something, demand with cash to back it up.
Just to get the linking thing out of the way, I here give thanks to two recent articles which stirred me into saying what follows, one the already much linked-to Wired piece about how Indian programmers are now turning Silicon Valley into a dust bowl, and the other being a piece in today’s New York Times in which you can see the beginnings of the dawning light in the Western Official Mind that this might not all be entirely bad news after all.
So, let us think about this Fixed Quantity of Programming Fallacy. It applies, of course, to the row now raging about the way that those sneaky Indians are stealing all our – I use the words “sneaky”, “stealing” and “our” ironically – computer programming jobs.
Now I do not doubt that there are many computer programmers in the West who will, in the short run and maybe if they can find nothing else to do in the longer run as well, suffer severely. But it is also true that the availability to the West of much cheaper Indian programming power will create massive new economic opportunities in the West, and everywhere else.
Basically, what it means is that Western computer experts will have to stop writing programmes and start, well, demanding them. In less florid language, they will have to switch from writing programmes to writing specifications for programmes, from making programmes to saying what a new programme must do.
At the moment it is simply assumed that ‘writing a computer programme’ is something that only someone very rich can afford to finance. → Continue reading: The fixed quantity of programming fallacy
Mathematician John Allen Paulos, in his most recent book (A Mathematician Plays the Stock Market, Basic Books, 2003) coined a term which I had hoped would catch on throughout the finance community. He describes under-researched puff pieces on personal finance (e.g. Five Hot Stocks to Pump Up your 401k NOW!) as “financial pornography.”
One of the biggest purveyors of financial pornography online is the MSN.com website, and this column doesn’t disappoint: Seven Signs a Stock is Ready to Soar. The author purports to explain how to locate ‘hot’ stocks, those that are about to appreciate rapidly in price, by reviewing some research on what types of conditions most often preceded (notice I did not say caused, and neither did the research) a price increase.
It should not take a Wharton MBA to figure out what is wrong with the premise of the article. The cited research identifies the seven conditions that most often preceded a big run-up in the price of a particular stock, but nowhere does it suggest that these conditions were sufficient (or even necessary) to cause a stock price to take off.
Obviously, all of the conditions that make up the ‘CANSLIM’ acronym are desirable things for a corporation — for its management and for its ownership. But that doesn’t mean that the stock in question is about to outperform the market. I’m not a hard-and-fast believer in the semi-strong efficient market hypothesis — I think a few super-stud investors can outperform the market — but for the average investor reading MSN’s Money Insight column, the CANSLIM approach is not going to turn those people into super-stud investors. EMH is still going to apply to those investors; there are just too many other investors who have the same type of information and insights at their fingertips.
In his 1974 commencement address to Cal Tech, the late Richard Feynman described what he called “cargo cult science:”
In the South Seas there is a cargo cult of people. During [World War II] they saw airplanes with lots of good materials, and they want the same thing to happen now. So they’ve arranged to make things like runways, to put fires along the sides of the runways, to make a wooden hut for a man to sit in, with two wooden pieces on his head to headphones and bars of bamboo sticking out like antennas — he’s the controller — and they wait for the airplanes to land.
Feynman (about whom I will have much more to say in an upcoming post) was using the term to deride psychics and ‘paranormal’ advocates like Uri Geller. But the MSN piece is urging investors to do exactly what Feynman describes the naive south island natives as doing: falling hook, line and sinker for a post hoc fallacy.
I happened to catch the BBC Radio 5 sports punditry show Fighting Talk on Saturday. One topic under discussion was whether soccer’s FA Premier League should “do something” about dominance of the current top three teams in the league, it being alleged that their success made the rest of the league boring. One of the pundits was against this notion, making the point that, as little as 15 years ago, there were different dominant teams. Those who celebrated Liverpool’s invulnerability in the mid 1980s could hardly have imagined that that club’s place would be taken by Manchester United in the 1990s. Indeed, barely six months ago, nobody could have predicted the emergence of oligarch-funded Chelsea as title contenders. She argued that the league had evolved “organically” – any problems would tend to correct themselves – and lamented the prospect of a “genetically engineered” league with structures designed to hobble the successful teams and boost the mediocre.
I thought it was interesting to hear those specific terms used to support a laissez faire position and it struck me that there is a paradox about environmentalism. That is that, while it holds that organic processes are desirable in food production and any kind of “artificial engineering” is bad, it holds that the reverse applies to society and the economy. Capitalism has developed without a plan. Nobody had to sit down and design civil society. Yet these natural phenomena are scorned by the likes of the Green party whose underlying premise is that society should be re-engineered so that it can become “more natural”.
This week’s Economist has an article on online retailing in the UK. The basic gist of the story is simply that in the last six months it has really taken off. Online sales in November-December were 60 percent greater than in the lead in to Christmas 2002. Forrester Research forecasts that 5.7% of the British retail market will be online sales in 2004, compared to 5.6% in the US. (Actually, the difference is greater than this, as the US number includes travel and auctions, and the British number does not).
This is entirely consistent with my own impressions of the situation, and indeed my own behaviour in the last six months. I have been buying certain things (most prominently books) online for quite a few years now, but the number and more importantly the diversity of the things I have been buying has exploded in the last twelve months. Okay, my personal tastes in shopping perhaps aren’t that of the average consumer – I buy too many electronic products, no doubt – but I have found that the number of websites I can find selling almost any of the things I want to buy has increased enormously.
Whereas in the insane dot com boom years there were lots of large capitalised businesses without that good an idea of their business model and with few customers, a second wave of internet retailers seem to have come into being that are small, focused, and lean. For electronics there suddenly seem to be lots of little garage based stores, selling a good selection of one very specialist type of product. The credit card handling is outsourced to a company that specialises in handling credit card transactions for small internet retailers, off the shelf software is used to run the website and keep track of inventory, suppliers have to be found, orders have to be packed and presumably the post office has to be asked to send a truck round once a day to collect the filled orders. No expensive retail premises have to be rented, and there are no losses to shoplifting. The honesty of such retailers is generally not an issue. The level of consumer protection given to credit card holders is such that the retailer will be dropped instantly by the company to which it outsources its credit card processing if it fails to deliver what it promises. And in any event other web sites exist that provide feedback on online retailers.
What does all this mean? → Continue reading: Thoughts on the online retail business, and why Britain leads the world.
Bruce Bartlett has one of the most thought-provoking columns on economic history that I’ve seen in a while. In recent months, we’ve seen a number of lame attempts to compare Bush to Hitler. (Blogger Stephen Green is doing a good job of documenting these things.) I’ve seen a number of sites that display a series of Bush photos, each juxtaposed with a photo of Hitler in a similar pose … Bush is seen here eating a ham sandwich, and here’s Hitler eating a ham sandwich in 1937. Here’s Bush talking to some children, and here’s Hitler doing the same. See? Bush = Hitler! QED. Self-indulgent celebrities and hard-left ideologues have picked up on this tiresome Bush = Hitler meme, and the wave of moral equivalence crested with the recent controversy over MoveOn.org’s anti-Bush ad contest.
Meanwhile, Bartlett is seizing on this theme to take issue with some, both on the left and on the right, who want to compare Keynes to Hitler. He starts with Alexander Cockburn, quoting his most recent effort in The Nation:
Hitler, genocidal monster that he was, was also the first practicing Keynesian leader. … There were vast public works, such as the autobahns. He paid little attention to the deficit or to the protests of the bankers about his policies. … By 1936, unemployment had sunk to 1 percent …
Then, to pick an example from the opposite end of the spectrum, he points to an August 2003 column by Llewellyn Rockwell, longtime chairman of the Mises Institute. Here is the full text of the Rockwell piece that Bartlett is citing.
While I admire the Mises Institute and enjoyed the time that I spent at the Mises annual seminar in ’96, my take on Rockwell is that his writing style often loses focus due to its underlying anger. This is a classic example. And note that even he can’t help but juxtapose images of Keynes and Hitler, striking similar poses, just as those sophomoric “Bush = Hitler” websites do.
The money quote from the Rockwell piece, which Bartlett cites in his column, is this non sequitur:
Keynes himself admired the Nazi economic program, writing in the foreword to the German edition to the General Theory: “[T]he theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under the conditions of free competition and a large measure of laissez-faire.”
I don’t see how the quote from Keynes is tantamount to “admiration of the Nazi economic program.” Taken in full context, Keynes is just pointing out that it would be much easier to implement an activist fiscal policy in a state that is already centralized and forceful than in a state that was characterized by decentralization and federalism, a point that I would take to be obviously true. How this is supposed to represent Keynes’ “admiration” of the Third Reich is not clear.
Yes, Nazi Germany, in a roundabout way, did employ policies that Keynes would have prescribed if he had been running Germany at the time. This does NOT mean that Keynes’ idea of “public works” was building prison camps. Bartlett is correct in concluding that there are enough substantive problems with Keynesianism that we don’t need to resort to ad hominem criticisms of the man himself — just as there are plenty of ways that one can oppose the policies of Bush without resorting to the same. I disagree with a lot of the policies of the Bush administration (campaign finance reform, Medicare “reform”, on and on) but I have better things to do than try to fit this opposition into some tortured “Bush = Hitler” framework.
To put the shoe on the other foot — Rockwell was against the war in Iraq, and so was Noam Chomsky, but that doesn’t mean that “Rockwell = Chomsky!” or anything close to it. It doesn’t mean that Rockwell “is an admirer of” Chomsky, or that Rockwell also agrees with Chomsky’s denial of the holocaust, or even that Rockwell would use his brakes if Chomsky was crossing the street in front of his car.
Now, when are we going to see the article that says, “Bush used Keynesian fiscal policy, and so did Hitler, therefore Bush = Hitler!”
Given the global prominence of this brand, I find it quite surprising that only now are Starbucks about to open their first branch in Paris:
When Disney arrived with its theme park they called it a cultural Chernobyl. Many Parisians will view as an even bigger disaster the opening today of the city’s first branch of Starbucks.
Six years after it served up the first decaf cappucino in Europe, the Seattle-based global coffee giant is ready to take on the nation that invented café society.
They better hire some burly security guards as well. If they manage to get through the first month without succumbing to a Jose Bove-led sit-in protest they will be able to consider themselves fortunate.
Despite the global success, purists are predicting that in France, where ordering an express (often consumed with a cigarette) is a sacred tradition, the brand will flop. Bernard Quartier, spokesman for the organisation that represents French café owners said: “I don’t believe this concept is going to work because nothing can replace the conviviality and sociability of the French café.”
Now this is a different matter. If Starbucks fails to ignite the interest of the Parisians then so be it. The market rules and, in as much as he is basing his dismissal on his understanding of local market conditions, then Monsieur Quartier has got a point.
After all, if your idea of a good night out is lashings of Sartre and dollops of Foucault washed down with litres of bitter café noir and a lungful of Gitanes then the child-friendly play areas and sanitised chirpiness of Starbucks is probably not for you. → Continue reading: Would you like guilt with your coffee, sir?
Just before Christmas I rang up a friend of mine and asked if she had taped a television program that I had missed, and if she had whether she could send me the tape. She had, but she was due to fly off to Italy the next morning and I hadn’t realised this. I told her to worry about it when she got back, but she decided to be nice to me and send it anyway. There is no post office in the terminal at Stansted airport but there are a couple of post boxes, and she put what she thought was correct postage (from the limited selection of stamps she had) on the package and posted it to me. As it happened she made a mistake. She put stamps worth 68 pence on the package. Correct 2nd class postage was 69 pence.
Now, what did the post office do? They actually noticed that the postage was one penny short. Rather than receiving the package I received a card on December 30 saying that insufficient postage had been paid on a package for me and that I had to come to the local post office parcels office to pick it up. I attempted to pick it up on December 31, but the office in question was closed due to it being New Year’s Eve (not actually a holiday, but a good enough reason to close the post office parcels office). I came back on the second of January, and the office was open. I took the card to the counter, and the man behind the counter took close to ten minutes to find the package. I was then charged one penny additional postage and a £1.00 “handling charge”. Total wasted time for me due to two trips to the parcels office: a couple of hours. Total wasted time for post office staff: probably about 15 minutes. Plus I was inconvenienced by not receiving my video tape until three days after it should have arrived.
And this is all about a single penny not paid, which was clearly a mistake and not a genuine attempt to defraud anyone. I tend to think a certain amount of flexibility could be shown in cases like this. In fact I think I would prefer to send my mail via one of the Royal Mail’s competitors that is more concerned with providing good service to customers and less concerned with inconveniencing both customers and themselves with idiotic bureaucratic inflexibility.
However, I can’t. Such competition is illegal. → Continue reading: Two tales of customer service, or If only McDonald’s ran the post office
It was recently announced that after talks between the British and Hong Kong governments, Richard Branson’s Virgin Atlantic Airways had won its long desired rights to fly from London to Sydney, Australia. In return for this, Hong Kong’s Cathay Pacific Airways were given the right to fly from London Heathrow to New York and other cities in the United States. Various observations were made about how an additional competitor on each route would increase competition and give passengers lower fares and more options.
While this is true as far as it goes, this is a pretty bizarre paragraph if you think about it. Why does the British government have to negotiate with the Hong Kong government before a private company can fly to Australia? In what parallel universe is the quid pro quo you must offer to get your airline permission to fly to Australia the permission for another airline from a third country to fly to New York?
And if additional competitors are good on routes, why were these airlines not allowed to fly on them already? And why did Singapore Airlines, Delta Airlines, and Continental amongst others object strenuously to the deal?
To answer these questions, we have to look at just how international aviation is regulated. This is bizarrely anachronistic. This most global of industries is regulated by a web of bilateral treaties between nations that dramatically limits competition. And to find this out, we have to look back into the dim depths of the past, to 1944. → Continue reading: The insane world of bilateral international aviation regulation
Taxation is in the news just now in Britain, because the word is that Middle England is finally getting fed up with Gordon Brown and his relentless drizzle of sneaky tax increases and failure or refusal – it doesn’t really matter which, does it? – to keep a lid on public spending. Which is perhaps why, when I supped last night with Alex Singleton, we fell to talking about Tax Freedom Day. And I heard myself saying, the way you do, that there is another way to dramatise the scope and nature of the British tax burden, which is to ask: How many taxes does Britain now have?
Frankly I have almost no idea at all of what the answer to this question is, for Britain. But to ask it might achieve many benefits, I surmise. → Continue reading: How many taxes does Britain have?
I am in Antwerp. As well as being a city of great economic importance as one of Europe’s largest ports, and also one of those great Dutch trading cities in which modern capitalism was invented in the sixteenth and seventeenth centuries, Antwerp is today a very cool city: full of great bars, interesting shops, jazz clubs, assorted types of cafe, you name it. This afternoon, after drinking two or three glasses of fine Belgian beer while listening to a piano and bass jazz duo, I got on the metro to go back to my hotel. (The Belgians are the first people I have encountered who have managed to make a single line metro system confusing to use, but I digress). I found myself sitting in a seat on the metro platform, waiting for a train.
Suddenly, quite softly, I heard a familiar song being sung. It was one of the songs from the famous musical epsiode of Buffy, The Vampire Slayer. As I do happen to count knowing the lyrics (and far too much dialogue) of Buffy amongst my many skills, I paused for a moment or two and (perhaps it was the beer) joined in. After a few seconds, the girl noticed that there was somebody else singing and stopped, and seemed slightly embarrassed to be caught doing this. However, I mentioned that as someone who personally owned six seasons of Buffy on DVD, I was unlikely to think less of her for singing songs from Buffy. (There is also the minor matter that she was quite beautiful, and few guys mind it if a beautiful girl is a little embarassed).
She said that she was still waiting for the DVDs of season 5, as she is buying the US versions. (It is a point of dispute amongst Buffy fans as to whether the US or European DVDs are better. The European ones have been released first and are in widescreen, but the US ones are cheaper and have more special features, including a particularly hilarious commentary track on one episode from Seth Green. So we discussed this briefly. But once again I digress).
She expressed her surprise about the whole thing: she said that she sings that song when walking the dog, but that nobody had ever recognised it before. She said this in an accent I couldn’t quite place: it sounded sort of posh English, but it wasn’t quite that. So I asked her. She said that she was Argentine, but that she had lived in England for a time, and also had spent a while in Germany. I could sense that there was more to the story than this, But that was as much as I got.
If I was writing this in a film script, this would have been a wonderful example of what Roger Ebert calls a “meet cute”, and I would have no doubt used the whole episode as an excuse to invite her back to the jazz club, and it would have ended up being a wonderfully amusing story to tell our grandchildren.
But, sadly, there is something that I have left out of this story, which is that the girl in question was not alone. She was with a young Belgian man, obviously a boyfriend. So, I chatted with them a little until my train came, wished them goodbye and boarded my train.
I am not sure that there is a point to this story, other than that a globalised world in which I, an Australian who lives in London, can spontaneously start singing a song from a musical episode of a television series of light gothic horror set in a Californian high school with a beautiful somewhat anglicised Argentine woman in an underground train station in Antwerp is something I like immensely. And also, Joss Whedon is a genius.
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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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