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]

Water shortages solved

Today’s quote of the day was from a longer conversation about water, starting with the conventional wisdom that climate change will inevitably lead to global water shortages. It is not immediately obvious why this should be so, given that melting ice, for example, presumably leads to there being more non-frozen water about.

The impression from the mainstream media is that any water-related problem can be caused by climate change. Floods? Climate change. Drought? Climate change. A summary from NASA suggests that some places, the places that get plenty of rain, will get more rain: so much that it floods. And other more typically dry places will see more droughts. So there is not necessarily a contradiction. On the other hand it is not clear how reliable such predictions are.

Different climate models provide different answers about what will happen to rainfall where. You can almost pick the result you want for a particular place by picking which climate model you want to listen to. You can take the mean of all the model outputs but that only seems useful if they all broadly agree, and even then they could all be wrong. The question of the usefulness of climate models is a big topic. The way they are tuned seems to allow for a lot opportunity for bias to creep in. Also the resolution of GCMs is not high, and the resolution affects the results, especially for precipitation.

In any case, there is a practically unlimited supply of water in the oceans, it is simply a matter of energy to turn it into drinking water and transportation to get it where we need it. With photo-voltaic panels becoming cheaper and more efficient as solar generation capacity has been growing exponentially for the last 25 years, energy is cheap. For desalination there is not even an energy storage problem, since we can make water during the day and water is easy to store. The technology is effective, simple and cheap.

As for transportation, I have heard there is some new technology called an aqueduct.

So there are no technical difficulties, it is not particularly expensive, and with poverty on its way out there seems little to stop any water supply problems from being solved.

As Sir James Bevan, chief executive of the Environment Agency, put it, we will reach the “jaws of death – the point at which, unless we take action to change things, we will not have enough water to supply our needs”. It was ever thus. Luckily the action is not difficult.

Samizdata quote of the day

If private companies sold people water, they would regard high levels of demand as a market opportunity. When the government runs water systems, high levels of demand mean shortages. It’s insane. Instead of finding good ways to meet demand with technology, we get price distortion, rationing, and glum pronouncements about the sins of mankind.

– Perry Metzger, reacting to this drivel.

Space regulations

United Launch Alliance is a joint venture between Lockheed Martin and Boeing that can put payloads into orbit on expendable rockets. They launched 7 payloads for commercial customers in the last decade, none since 2016. Their only customer is the US government.

In 2018, Spacex launched 14 payloads for commercial customers on their re-usable rocket. They are doing it for a fraction of the cost. Even the US government is using Spacex. ULA must be worried. What are they going to do?

ULA, and its parent companies Boeing and Lockheed Martin, have stood virtually alone in their support of the FAA’s rules revision.

What is this?

“I don’t blame ULA,” Eric Stallmer, the president of the Commercial Spaceflight Federation, told SpaceNews. The revised rules the FAA proposed favor large companies that have bureaucracies in place to comply with onerous requirements, he said. “But for new entrants, small launch companies, reusable launch companies, the rules are backbreaking. It’s a tremendous barrier to entry. It’s almost as if the Russians and the Chinese wrote these rules.”

And now we know how ULA hopes to beat the competition.

Ooh, can I be poor too?

The gullible Metro freesheet claims that 14,300,000 people in Britain are living in poverty, quoting something called the Social Metrics Commission.

The current population of the UK is 66.87 million. According to the Office for National Statistics Labour market overview for July 2019, 32.75 million people aged 16 years and over are in employment, 354,000 more than for a year earlier. The unemployment rate is lower than at any time since 1974. I have no doubt that poverty still exists but this claim is not credible.

Samizdata quote of the day

In many cases rent control appears to be the most efficient technique presently known to destroy a city – except for bombing.

– Economist Assar Lindbeck, which seems a timely reminder in view of this absurdity. Some actually take the view it is worse than bombing.

The restructuring of capitalism as we know it

A new kind of capitalism. A new way to measure progress. An end to the obsession with growth. We know what they really mean. Once in a while they spell it out nice and clearly.

nothing short of dramatic structural change in the way capitalism works can deliver the 2030 target of a 45 per cent cut in carbon emissions. To deliver the net-zero carbon emissions demanded by 2050 will require an economy so different from ours that we are unlikely to recognise it as capitalism.

Very unlikely, I would say.

a Sustainable Investment Board, comprising the chancellor, the business secretary and the governor of the Bank of England. First proposed by City analyst Graham Turner, the board’s original aim was to achieve a 3 per cent productivity target by funnelling private sector investment into high tech.

The state telling the private sector where to invest its money. Fascinating; and I am sure far more productive than the private sector deciding where to invest its money. Why have billions of investment decisions made by millions of people when three posh blokes obviously know better? A different kind of productivity! Greener productivity!

a £250bn National Investment Bank, its money raised over ten years, to fund some of that investment, combined with regional development banks

This is just more of the state deciding where to spend money.

I am no fan of the Stalinist planned economy

I sense a but coming…

Yet the unpleasant fact may be that centralised state intervention, planning and ownership might be the only thing that’s going to achieve the rapid reduction in carbon emissions we need.

Oh, it will achieve the rapid reduction of something all right.

If millions of human brains simultaneously accepted the need for a survival level restructure of society, akin to a wartime mobilisation, the population itself would become the change agent.

Why can’t well all just get along? Also, bring back rationing!

we are going to need a transition beyond the market and beyond an economy where incomes are largely based on work.

To each according to his need.

The central bank becomes an arm of the state, its preoccupation becomes to direct capital away from carbon

Just when you thought central banks were a bad idea, someone finds a way to make them worse.

capital flight is the financial elite’s all-purpose answer to the shutdown of its gravy train. In which case, having created the carrot, a government serious about climate change has to create the stick.

Ok, no more Mr Nice Guy, I guess.

the left has to put it to people straight. The “rights” of global finance capital have to be subordinated to the needs of the human race, via the democratic states we live in.

I am sure it will all turn out lovely.

Who is saying all this? Some crazy fringe lunatic everyone will ignore? I hope so but I am not sure. It is in the New Statesman, circulation 35,000. Paul Mason used to be economics editor of two state-funded TV news programmes, Newsnight and Channel 4 News. He is not nobody. People will be listening to him. He might be saying things that even more influential people want him to say. It is a bit of a worry.

The thing is, even if the end of the world is now imaginable, even if climate change threatens an end to universal human rights, an end to development, and “the fracture of globalisation and multilateral systems” (whatever that means); even if it really is as bad as they say: making ourselves less free and therefore poorer is only going to exacerbate it. Economic growth is more important, not less, because richer people can build infrastructure to overcome the environment. Richer people can move around. Economic growth means more people (even poor people!) get richer. When there is a natural disaster in a poor country, far more poor people are harmed than are when there is a natural disaster in a rich country. That is the difference that old fashioned, bog-standard, neo-liberal economic growth makes. That is why I am against Paul Mason’s brand of communism: because by reversing ordinary economic growth it will be more harmful than the IPCC’s most dire predictions about climate change.

There is not even any reason to suppose that freedom and growth is incompatible with reducing carbon emissions: solar energy is undergoing something of a Moore’s law cost reduction; new technology means using energy more efficiently. And there are undoubtedly ways to turn things around that Paul Mason has not though of. He thinks a few hundred human brains can direct “millions of human brains” to solve problems; but that is not how it works. Millions of human brains are very good at solving problems if they are free to figure things out for themselves.

Samizdata quote of the day

“They’ll often talk about anything they do apart from making a profit, which is the central purpose of a business and which is what drives businesses forward.”

Liz Truss, UK Treasury minister, reflecting on how many business leaders today seem embarrassed and incapable of talking about building wealth, and would rather talk about how they want to give it away, or pander to environmental pressures, etc. It is refreshing to see a UK minister giving this mindset hard treatment. It would be good if this happened more often.

(I am writing these words from Singapore, which I am visiting for a business trip. The city-state that does not appear to have quite such a cringe about capitalist success.)

A very British attitude to tax

Here is very British YouTuber Dr Jake explaining the tax implications of monetising a YouTube channel:

On having to pay an accountant, file paperwork for self-employment, spend hours finding and filing receipts, throw himself on the mercy of a Her Majesty’s Revenue and Customs amnesty, pay hundreds of pounds in back-dated tax and spend hours every year filing paperwork so he can pay a large proportion of the small income he gets from his hobby business to the state, he says:

isn’t a huge amount of money […] not brilliant […] now I’m a law-abiding citizen […] at least I can sleep at night

I would go on an extended rant about the unseen consequences of all this, but as usual, even thinking about tax and its complications has sucked out all my enthusiasm for anything. I think I will go and have a cup of tea instead.

Quite…

Samizdata quote of the day

At a news conference last week in Brussels, Christiana Figueres, executive secretary of U.N.’s Framework Convention on Climate Change, admitted that the goal of environmental activists is not to save the world from ecological calamity but to destroy capitalism.

“This is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for at least 150 years, since the Industrial Revolution,” she said.

Referring to a new international treaty environmentalists hope will be adopted at the Paris climate change conference later this year, she added: “This is probably the most difficult task we have ever given ourselves, which is to intentionally transform the economic development model for the first time in human history.”

The only economic model in the last 150 years that has ever worked at all is capitalism.

quoting the remarks of Christiana Figueres, executive secretary of U.N.’s Framework Convention on Climate Change, in 2015.

h/t David Bolton

Corporate social responsibility – is it socialism by the back door?

“When I hear businessmen speak eloquently about the `social responsibilities of business in a free-enterprise system,’ I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned `merely’ with profit but also with promoting desirable `social’ ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously – preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”

Milton Friedman

If you want to wind up a certain kind of activist in the realms of modern investment, one of the quickest ways to get their pulse rate up is to quote the late Chicago economist above about what he thought was the sole responsibility of business owners. He stated that this was to maximise shareholder value. Period. To do anything else is tantamount to an act of theft:

“In a free-enterprise, private-property system, a corporate executive is an employee of the owners of the business. He has direct responsibility to his employers. That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom. Of course, in some cases his employers may have a different objective. A group of persons might establish a corporation for an eleemosynary purpose – for example, a hospital or a school. The manager of such a corporation will not have money profit as his objectives but the rendering of certain services.”

This seems fair enough to me and stated with Friedman’s admirable clarity. The key is that the purpose of the firm is set by the folk who created it and those who own it. If it meets customers’ needs it will thrive, and if it doesn’t, it goes out of business. If you and I, dear reader, found a business to sell chocolate ice cream, at what point do we suddenly become “responsible” in some sense to “society” or “the environment” or “God” in how we run things unless we have expressly chosen to make those considerations part of our business mission?

It is crucial to be clear on this point. If a group of individuals band together to create a corporation that expressly states that it shall distribute 30 per cent of profits to a specific charity/cause, or that it will source its supplies from a particular group on ethical grounds, or hire as equal a balance of men and women as possible, regardless of other considerations, then anyone who becomes, say, a shareholder in that business cannot complain if things go wrong. And in fact there are more and more cases of firms that go out of their way to brandish their ethical principles, with varying levels of credibility or cant. Also it turns out that firms which are run by honest people, publish transparent accounts and don’t treat staff like crap tend, according to some metrics, to outperform their peers over the long term (see a study claiming this here). As Adam Smith might have noted, if people pursue their rational self-interest it tends to be the case that dealing with decent, honest people tends to work out better than dealing with shysters.

In my present working life I am bombarded with press releases and material from investment firms talking about the wonders of environmental, social and governance-related (ESG) investing, and also what is called “impact” investing (putting money to work to achieve a specific result, both financial and non-financial). To the extent that fund managers use their market muscle to achieve these goals in a free market rather than bring in the State to do their bidding, that’s all fine by me. After all, why should not, say, a libertarian fund management firm be able to state that it will refuse to invest in any business that knowingly produces services/products that threaten privacy and expand the reach of the state, such as firms that act as contractors to certain governments? (How about Classical Liberal Wealth Management Inc?) In other words, in this view the purpose of a firm or other legal entity is to enable the wishes of its creators to be brought about, whether making a profit, advancing world peace, spreading the ideas of Ludwig von Mises or whatever.

There will be investment funds that will want to focus on holding stakes in firms, be they listed, or unquoted, that focus 100 per cent on becoming more valuable and profitable no matter what else it does, because those investment funds’ clients expect and hope to fund a decent retirement, for example. In an ageing population, beset by growing strains on public finances, it is going to be difficult sometimes to square some of the supposed high-minded desires of corporate social responsibility activists with the desires of millions to have something to live on in old age. The point is that balancing those things must ultimately be the investors’ decision, not that of a government.

The issue becomes more problematic when government steps in. Firms that claim CSR is good for the shareholder in the long run may simply be rationalising what they have to do anyway by force of law. Investor pressure to save the earth as well as make money may be misguided in some ways, but at least it is not coercion. But things take a different turn when the state intrudes. An article here by Quinn Connelly makes this point well:

“Empirically speaking, the market has moved against Friedman’s philosophy. The largest firms in America and Britain spend more than $15 billion a year on CSR, and new research suggests this spending may create monetary value for companies. As The Economist concludes, “even if you accept Friedman’s premise and regard CSR policies as a waste of shareholders’ money, things may not be absolutely clear-cut.” Indeed, they may not be, but not for the aforementioned reasons. In the current environment, it may be rational for companies to adopt CSR policies in order to contend with regulatory and competitive pressure; however, this says little about the inherent value of the policies themselves, or the principles behind them. In fact, a cynic might point to the increase in CSR spending as an indicator of reverse regulatory capture, or merely as an exercise in public relations.”

To sum up, ideas such as ESG investing or corporate social responsibility can in some ways sit alongside an entirely free market view of the world, but I am wary. In a recent phone call, one advocate of these ideas talked about how “we are in an era of late-stage capitalism”. I pointed out to this person that such a term has been used as long as capitalism has been a word. The phone call did not go well.

Samizdata quote of the day

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

– Frederick Hayek, The Fatal Conceit: The Errors of Socialism