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]
There has recently been widespread media coverage of wholesale gas prices, and the effect this could have on household energy bills. The impact on certain areas of industry, and its ability to continue production, has also attracted attention.
This explainer sets out the background to the issue and the action the government is taking to protect the UK’s energy supply, industry, and consumers.
Natural gas prices have been steadily rising across the globe this year for a number of reasons. This has affected Europe, including the UK, as well as other countries around the world.
Later, the author of the “explainer” reassures us consumers that energy prices may not go up as much as one might expect:
The high wholesale gas prices that are currently visible may not be the actual prices being paid by all consumers.
This is because major energy suppliers purchase much of their wholesale supplies many months in advance, giving protection to them and their customers from short-term price spikes.
The Energy Price Cap is also in place to protect millions of customers from the sudden increases in global gas prices this winter. Despite the rising costs of wholesale energy, the cap still saves 15 million households up to £100 a year.
Isn’t it nice that the government protects consumers by stopping energy firms passing on price rises?
Some of you may remember that the Bishop Hill blog used to cover climate and energy issues in a moderate and well-informed way. Unless I missed the announcement of a move, that blog does not seem to have been active since 2019. However I recently found that the Bishop is on Twitter, one of the few reasons left to visit that horrible place.
“President Biden’s tax plans might soon make Europe look like a capitalist heaven by comparison. He wants to raise the long-term capital-gains tax from just below 24% to above 43%. Switzerland has no such tax. In Britain, inventor of the welfare state, it is 20% and in Germany 26%. On income tax, the U.S. may soon top the scale. Mr. Biden wants a top marginal income-tax rate of just below 40%. Add state and local income taxes, like California’s 13.3% for top earners, and wealthy U.S. taxpayers could pay more than their European counterparts.”
I have been covering this news story about the tax proposals in my regular day job in the banking and wealth management/media sector. Joe Biden, who has been having such a shit-show lately over Afghanistan, is equally terrible over tax and the economy, and also a bit two-faced. This is a man who, let it not be forgotten, was a senator for Delaware for many years. Delaware is a bit like a mini-“Switzerland”, one of those states that is favoured by corporations and creators of trusts (South Dakota, New Hampshire, Nevada and Alaska are similar).
The US is going to have to familiarise itself with the “Laffer Curve” all over again.
So many libertarians, such as the good fellows at Reason magazine for example (who I do like, I hasten to add), have a simplistic, dare I say dualistic notion about bad-things-done-by-private-business and bad-things-done-by-the-state. One is met with “so start up a rival company” the other with “an outrageous example of state overreach that must be opposed politically.”
And in an ideal world, yes, that makes sense. We do not live in anything resembling an ideal world.
In an era when three (two really) credit card companies and a handful of payment processors have an off-switch for pretty much any on-line business they take a dislike to (unless they are called Apple or Amazon), as more and more of the economy goes virtual, what we have is turn-key tyranny for sale to the highest bidder, and the highest bidder is always going to be a state. I am uncertain what the solution is, but as we do not live in a ‘free market’, not convinced “so go set up your own global credit card and payment processing network” adds anything meaningful to the discussion. It is a bit like saying when the local electric provider turns off the power in your office (or home) because they disapprove of what you are doing “so go set up your own electric supply company”, as if that would be allowed to happen.
Fascism is the organised attempt to introduce socialist planning with the consent of big business
Writing books about “current affairs” is tricky. If you write your book while whatever you are writing about is not yet over, you are liable to be wrong-footed by later events, especially if you thought it was over.
But if you wait until you are sure that whatever it is has finally finished, your book is liable to be lost in a throng of rival books on the same subject, written by people all of whom, like you, know that it’s now or never, and at a time when whatever happened is now pretty much obvious to all. But what if you are spot-on about what is happening while it is still happening, but you wait until the dust settles? Then you miss your chance to have been “prophetic”. “That’s what I said!” works far better if you actually did say it, loud and clear, before it all became obvious.
Davies has written a book about a process which still has a way to go, but also about one of the consequences of this process which is already very clear. The larger process is the political realignment which Britain is now still in the thick of. But one of the many consequences of this realignment has now been pretty much settled.
To its credit the Times publishes several columnists who go against the opinions of its readers. Sometimes, however, I suspect that the Times ignobly picks writers who are not the best ambassadors for their causes. The readership of the paper’s Scotland section is devoutly Unionist. Every week Fiona Rintoul reminds them why. In an article called “Scotland can prosper once we take the wheel”, she writes:
Fresh ideas have also come from Jim Osborne, of the Scottish Banking and Finance Group. He has proposed reforming the pension system to benefit pensioners and the wider community. Scotland’s council pension funds, which control £45.5 billion of assets, could, he feels, help to support the expansion of Scotland’s social housing stock. This chimes with global developments in pension funds’ asset allocation. With bond yields at historic lows, pension funds are turning to infrastructure investments for yield.
Osborne has also suggested that Scottish local authorities be allowed to issue municipal bonds to power spending. Again, this chimes with global developments as bond markets diversify. Scottish local authority “munis” could form suitable investments for pension funds too.
This excellent article in the US Spectator by Paul Wood is two weeks old. That probably means all the prices he quotes should by now have an extra zero at the end. The vividness of his portrayal of Lebanon as the magic stops working is unaffected, so read it anyway: “What happens when your currency collapses?”
An extract:
The government continues to insist that for imports of some vital goods — food, fuel and medicines — the lira is worth the fictional rate of 1,500 to the dollar. What this means is vast government subsidies to import these goods.
This has had some perverse effects. For a long time, you could fill up your car for about five bucks. The gas station would charge you, say, 60,000 lira, which was $40 at the official exchange rate, except your lira would have come from the black market at a fraction of that. As any economist will tell you, if you don’t ration by price, you ration by queuing, as in the Soviet Union. So there have been long lines at gas stations and now actual rationing, a quarter of a tank per customer — and that’s if you can find a gas station open at all. A side effect of the fuel shortage is that the internet is slowing to a crawl, sometimes breaking down altogether. The commonly accepted explanation is that there’s not enough diesel to run the power plant belonging to the national phone and internet company.
It’s the same with medicines. We’ve just bought a year’s course of treatment for our daughter’s nanny, who has breast cancer. We went to the hospital with 225 million lira in cash. It filled a small backpack. Those lira cost some $15,000 on the black market but they paid for $150,000 worth of medicines at the official exchange rate.
Lebanon is temporarily the cheapest place in the world to have cancer. People are coming here for treatment; subsidized medicines of all kinds are being smuggled abroad. A hypertension drug named Atacand has turned up for sale in Kinshasa, at $20 a box. It was bought in Lebanon for $2 a box. Atacand is therefore unobtainable here now. One report about this absurd situation quoted a Lebanese expat in Kinshasa who was buying the drug there to send back to his village at home.
The human will to self-deception is strong. There are some who will read this article and only take in one line: “Lebanon is temporarily the cheapest place in the world to have cancer.” There are some in Lebanon living through these events who will only take in one thought: “Isn’t it great how fuel, food and medicine are so cheap now!” They will not ask themselves why they are so hard to get, or why, as Mr Wood mentions elsewhere in the article, half of Lebanon’s doctors have left to work abroad.
One product so affected is apparently bottled water. I can say I have been having trouble buying the particular brand of bottled soft water I put in my coffee machine to avoid having to descale it so often.
The Road Haulage Association wrote to the Prime Minister with five causes of the shortage: covid, Brexit, retiring drivers, a driving test shortage and IR35. The first two are causing foreign drivers to return to their home countries, not to return, they say. The last two I imagine are exacerbating the first three. If you make lorry driving pay less and cost more (whether obvious monetary costs or by increasing bureaucratic hurdles) it stands to reason that supply will diminish. To get supply back to the same level, you will have to pay more. In macroeconomic terms: taxes and regulations reduce economic growth. This is how that looks in real world terms.
The effect of the IR35 reform is to force agency workers who previously operated as Ltd Companies to pay more tax and their agencies or end clients to pay Employer NI Contributions. If we were to keep the drivers’ net income the same, it would result in an increase in employment costs of 25% to the agency.
Maybe they are exaggerating their own costs, but the exact number does not matter too much. More tax is being collected from the employment of lorry drivers: that is the point of the IR35 regulation. One way or another it will be paid for by people directly and indirectly using the services of lorry drivers. Someone might argue that prior to IR35, the haulage industry was immorally getting away without paying enough tax, but that someone must now accept the increased costs of certain goods, including to poorer people for whom such goods are a more significant portion of their income.
Increased barriers to immigration are also said to play a part here. It is undoubtedly true that increased immigration drives down wages as it increases supply, which is to say it drives down the cost of hiring lorry drivers, and drives down costs to everyone who is indirectly using their services. Quite possibly the remaining lorry drivers are happy about this shortage (although I do suspect that any thus increased earnings are just going towards the now higher taxes). Also happy are the people who want everyone to have higher wages and use terms such as “living wage”, even if (as I suspect) those people also want more freedom of movement without wanting any reduction in wages that comes with it.
In the long term, more immigration should not mean lower wages: there is no lump of labour; if there are more people then there is more work to be done. On the contrary, denser concentrations of people create efficiencies that decrease costs, which makes things cheaper, which is the same thing as increasing wages. But dynamics are often overlooked. If you suddenly reduce the supply of lorry drivers you are going to suddenly increase the price of them. All of the other effects take time. And some of those effects will be cost-cutting innovations that reduce the need for lorry drivers. So watch out, lorry drivers.
I am a computer programmer. There was a time when there were suddenly many computer programmers arriving from Europe. My wages did not go down. The increased supply of programmers meant that more projects were started, there were more interesting things to work on, more interesting people to work on them with, and in general much more opportunity. Now it is becoming harder to hire programmers. I suspect if this continues, a lot of projects will happen in places where it is not so hard to hire programmers. My wages will not go up. The equivalent problem for the lorry drivers might be that as things get more expensive, people buy less things. Everything gets less interesting. That is how economic decline looks and it will not be good for the remaining lorry drivers in the end.
I have my doubts about whether the shortage will become a real crisis. So far, supply chain crises as a result of Brexit and covid have proved remarkably short-lived, and supply chains remarkably robust. Some new equilibrium will be found. But relative costs do change, and the people who want higher taxes, more regulation, higher wages or less immigration, ought to have the downsides of their demands pointed out to them.
For these CEOs, the problem isn’t just the media and external critics: The wokeness is coming from inside the building. At dinner parties, they ask each other the same question: How do we keep woke activists off the payroll? “It’s the first thing they want to talk about these days,” a vice president at a venture-capital shop told me. “It’s the crazy, activist, political stuff. I’ve not met a founder who doesn’t think it’s a problem. There’s a state of what the fuck?”
“Gender neutral and feminine”? Click on the words below* that in your opinion best match what was going through Boris’s tousled head as he said these words.
(a) Pay up, Matt, I did it.
(b) Hey, if Joe can get away with “Those RFA pilots”, I can get away with this.
(c) You’re looking awfully pretty today, Carrie.
(d) You’re looking awfully pretty today, Ursula.
*Nothing will happen when you click. But you will feel better for having expressed yourself.
“The `robber barons’ gave us railroads and public libraries. Zuck gave us Farmville and censorship.”
– Glenn Reynolds, apropos criticisms of how Big Tech bosses such as Mark Zuckerberg carry on. For what it is worth, the censorship operated by the Facebook and other Big Tech folk is still, in my view, less serious than of the traditional government kind. If you don’t like Facebook then don’t use it. By contrast, with government, we are forced to pay taxes to the bastards, regardless of what we use or how we vote.
And by the way, most of the “robber barons” weren’t robbing anyone, but adding value and doing such evil things as producing cheaper steel, oil and transportation. Much of the anti-trust furore was built around a total failure to see competition as an active process across time, not a static sport. The “perfect competition” model of neoclassical economics has done a lot of damage.
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.
All content on this website (including text, photographs, audio files, and any other original works), unless otherwise noted, is licensed under a Creative Commons License. Powered by WordPress & Atahualpa
