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]

The mask slips

The Guardian‘s Owen Jones asked the following question on Twitter:

How quickly should anti-LGBTQ rail tycoon and SNP donor Brian Souter’s assets be nationalised by a Labour Government?

On how hard-earned skills become redundant and why that’s not a reason for intervention

As a side-issue to the recent decision by London’s TFL [Transport for London] to stiff Uber for alleged safety concerns (please try not to laugh at the back), it occurs to me that there are various reasons why people across the spectrum, including Tories, seem quite fine with the ban (it may be that Uber will do some sort of deal and get back into business in London, mind). One seems to be a sort of fogeyish dislike of Uber (it’s American, which is vulgar, and relies on newfangled tech that some people don’t understand, such as apps, and satellites, etc); another seems to be “fuck-the-consumer-why-can’t-they-use-the-night bus?” level of grumpy nastiness, and another is a sort of feigned, or maybe real, worry about the loss of a set of skills (learning the streets of London by heart). I regard the first two reasons as so fatuous as to not be worth responding to. The latter, however, does interest me.

Consider, a standard Marxist argument, and indeed one not just associated with Marx but even early classical economics (the Labour Theory of Value) It holds that the value which a provider of a service/product should receive is linked to his labour, his effort and skill (learned via effort), not simply the interplay of demand and supply. There are, of course, all manner of problems with it: you cannot simply work out whether a skilled worker is worth X or Y times more than an unskilled one – there is no formula to do this. Second, resource allocation is impossible if the amount paid for Y or X is based not on the relative differences in wants and scarcities of something, but labour, instead. The marginalist revolution in economics, which broke in the 19th Century and which seems to have passed Marxists by, points out that the subtle differences in the subjective preferences of people for this or that are what drive economic exchange. Prices are signals; a labour theory of value leaves out the vital signalling function of prices, which is why an economy driven by such a theory breaks down, with shortages of much-wanted goods over here, and a glut of not-wanted stuff over there (evidence: socialist countries throughout history).

It may be a bummer for the taxi drivers of black cabs who have spent ages learning the streets of London by heart – getting “the knowledge” – to find that satnav and apps have driven a stake into their business model and potential sources of earnings, and be forced to get all those newfangled gizmos and compete with a chap from Hounslow who is second-generation Indian and who cannot name the first-11 team sheet of your favourite soccer team. But in a free market, technology and innovation means the customer isn’t paying for the effort to acquire a skill, but the outcome of it. And that seems a tough argument to sell, but it is nevertheless correct.

On a related note, this essay by Jeff Tucker of FEE about marginal utility and human happiness is brilliant. I shared it on social media and people who might not normally give a crap about such ideas said how much they liked it. Economic wisdom can spread in mysterious ways!

 

Samizdata quote of the day

Here’s where we get to the economics lesson. When producers aren’t allowed to profit, they don’t produce.

Daniel Mitchell

Now this might seem screamingly obvious, yet even the UK is full of people who are either utterly oblivious to this self-evident and often demonstrated fact, or simply do not care, as equality via privation-for-all is actually their objective, with Venezuela’s example on that score being much admired.

Samizdata quote of the day

Not paying corporation tax is an advantage to those who don’t pay it as against those who do. Which is what we’ve been saying about corporate and capital taxation all along. If you tax corporations then there will be less investment in them in your economy. This makes everyone poorer – the deadweight costs are high. This is indeed exactly the same reasoning which leads us to insisting, as a result of optimal tax theory, that we shouldn’t be taxing the corporations at all.

Which is interesting, even amusing, don’t you think? The EU’s justification for why they just must tax companies is the very reason basic theory says we shouldn’t be taxing corporations at all.

Tim Worstall

Uber petition breaks 600,000

The #SaveYourUber petition has, as of 10:45 pm in London, attracted 600,000+ names, and one of them is mine.

Of course the best way to save Uber is to get rid of Sadiq Khan and make the issue politically radioactive.

The Prime Minister has poorer housekeeping skills than a badger

This may seem a rather strange proposition, but in terms of ‘housekeeping’, there are various aspects to running a ‘household’, and I am comparing the financial discipline and general acumen of the First Lord of the Treasury (aka Mrs May) making the analogy to running the national ‘house’ to the practical but non-monetary skills of a badger, or rather, some badgers local to me.

The other day I found a badgers’ latrine on my morning walk, it was rather obvious, a ‘not-quite steaming’ pile and I immediately thought of the Prime Minister. I was struck by how careful the badger is to look after his household (or rather, his sett) and not to dump in it, instead using a carefully-dug latrine. This one was unusual in that it was very close to the roadside and highly visible.

Whereas it seems that the Prime Minister is quite happy to dump on the country a €20,000,000,000 bill for the privilege of leaving the EU and letting the UK run a trade deficit with them, and also dump a load of regulations on the UK. If you are going to make a payment, at the bloody least make it in Sterling, so the Bank of England can QE the money out of thin air (if this has to be done at all, which it doesn’t) and they can spend their nice pounds rather than HMG buy Euros. The good folk at Lawyers for Britain have debunked the case for any payment to be made for leaving. How about telling the EU that if your income falls, you cut costs, so that there are fewer than 10,000 in the EU earning more than the UK’s Prime Minister (which ought not to be an ‘office of profit’ under the Crown anyway).

The plan to graft into UK law all EU Regulations has at least the attraction of providing certainty, but why not plan a bonfire ‘On Day 1‘ to quote the Donald (yeah, it still hasn’t happened).

So if I have to choose between the two?

or

Having had to negotiate with a badger at 3 am one winter morning to get him to leave my garden, in my pyjamas and armed with only a garden fork for self-defence (this is England), I can testify that they do not give up a position easily, but my bluff worked.

To be fair to Mrs May, the badger seems to know instinctively not to foul its home, however, this is a skill that some of our politicians have yet to learn, and they are so very busy doing the opposite, it may take some time for them to lose their habits, but why?

Photo credits: Per Wikipedia, The Rt. Hon. T May MP, per Controller of HMSOOwn work, CC BY-SA 3.0, Badgerhero.

Samizdata quote of the day

That’s terrible economics. It’s a classic application of a well-known fallacy called the Lump of Labor — the idea that there are a fixed number of jobs in the world, and those jobs get divvied up among people.

How do we know this is a fallacy? It’s obvious that the number of jobs in the world isn’t fixed. Imagine if the United States deported every single American except for Jeff Sessions. Would Sessions then have his pick of any job? No, he’d be in the forest trying to eat berries to survive. Kicking people out doesn’t just reallocate jobs from one person to another. It also destroys them.

Noah Smith

Globalisation is very weird.

The above picture is the most commonplace thing in the world. There is a gift wrapped car in a shopping mall. Obviously, this is a prize in a competition, designed to encourage people to visit the shopping mall and spend money in the shops. The car is first generation Daewoo Matiz – later known as the Chevrolet Spark – an old design now but one of the cheapest cars in production in the world. It’s an utterly awful car to drive, but it is A NEW CAR!. If you are a shopping centre owner, then the main thing is that it is a new car. That it is the cheapest new car in existence is not the point. The point is that the prize in our competition is A NEW CAR! It’s a city car, also. If you are in a place where the traffic is bad enough, a lack of acceleration and an inability to drive above 80km/h matters less, anyway.

Well, yes. And no.

There is, of course a story.

I live in London by myself. My family are in Australia. London is cold, dark, and deserted between Christmas and New Year, and it can be depressing to be here by yourself. Although I don’t need much of an excuse to go travelling at the best of times, I particularly try to get out of town, ideally to somewhere where there is no Christmas. Last year this led to my finding myself in Tehran, Iran. I didn’t quite entirely escape Christmas – there was still a Christmas tree in the lobby of my hotel – but I mostly escaped Christmas. Certainly, the traffic gridlock on December 25 was horrendous, as indeed the traffic gridlock is horrendous in Tehran on most days. There is a metro in Tehran, but Tehran is a sprawling city which makes it only so useful, a little like the metro in Los Angeles. Tehran is a sprawling city of multi-lane freeways and horrendous traffic in a basin surrounded by mountains, a little like Los Angeles. In the expensive suburbs of north Tehran, it’s not especially hard to find yourself in achingly hip cafes that might almost be in Silver Lake, too, but let’s go there some other time.

The whole “enormous, car-centric sprawl with an immense freeway system” makes Los Angeles a polluted city by American standards, but in all honesty it is much less polluted than it used to be. Modern cars are more efficient and have more advanced emissions control systems than was the case even a few years ago, and like all developed world cities, the air in Los Angeles is much cleaner than it once was.

In Tehran, though, imagine a rapidly growing city, that despite sanctions is getting richer. Demand for cars is high, but due to those sanctions Iran is unable to import cars from many industrial countries. Cars stay on the road longer, which means the pollution will remain worse for longer than in many other cities of similar levels of development. Sanctions are uneven, so it is much easier to do business with carmakers in certain other countries than others. When you look around, you find that most of the cars are Korean, or French, or will be oddly familiar things or brands you haven’t heard of.

This gets us back to the overtly Korean car in the shopping mall.

→ Continue reading: Globalisation is very weird.

Samizdata quote of the day

Think of how stupid the average person is, and realize half of them are stupider than that.

– George Carlin, as quoted by the Cobden Centre.

Ok, here is the ‘real’ SQOTD 😀

If investors were rational, they would choose their investments on the basis of valuation. Cheap assets good, expensive assets bad. Markets are tricky things and tough to beat or even match, so it helps to have an edge. No other characteristic has more bearing on the likelihood of an investment’s long term success than its starting valuation. That tiny word “if” carries an awful lot of freight, though. The reality for many is that, consciously or otherwise, they favour financial assets that have self-evidently “worked”, in that their prices have risen strongly in the recent past. Human beings are nothing if not straightforward extrapolation engines. This is not to denigrate price momentum, which is a perfectly respectable trading strategy, but it is to denigrate the animal spirits of the average investor, who has an unerring tendency to conduct investment strategy by way of the rear view mirror.

Tim Price

Automated truck trial

I have written before about automated cars. Today the British government announced that it will allow a trial of automated lorries on motorways to go ahead next year. The idea here is that a human drives one lorry, and automated ones follow close behind, saving the cost of extra drivers and reducing air resistance.

The Automobile Association complains about it.

A platoon of just three HGVs can obscure road signs from drivers in the outside lanes and potentially make access to entries or exits difficult for other drivers. On the new motorways, without hard shoulders, lay-bys are every 1.5 miles. A driver in trouble may encounter difficulties trying to get into a lay-by if it is blocked by a platoon of trucks going past.

I think they are overstating the problem because there are already convoys of human driven lorries on motorways. It is already a good idea not to drive alongside them for any distance. Something I do see as a problem is reported matter-of-factly by the Telegraph:

The Government has provided £8.1 million funding towards the trials, which will initially take place on a test track before being carried out on motorways.

I left this comment on the Telegraph’s news article:

If some private company was spending their own money I would have no complaint. If it is a good idea, people will do it and they will invest their own money in it. I have no idea why the government thinks it is a good idea to hand out free money to anyone who goes begging with the right story.

As for the idea itself, I can imagine it working. The lorries can drive just inches apart so unlike others I think slipstreaming will work and there is little risk of cars getting in between the lorries. Someone asked about trailers and a powered trailer may also work but I can also easily imagine that some electronics would be cheaper than a heavy mechanical coupling.

The real test of the idea is whether someone can make a profit at it with their own money (third party liability included). It is the government subsidy that is causing the controversy here.

British, indeed world, politics is dominated by the idea of ‘Social Reform’ – and this is an idea which violates basic economic law

What is “Social Reform”? Social Reform is the idea that increasing government spending and/or regulations reduces poverty or other “social ills” (sickness and so on) and it is the idea that has dominated British thinking since the late 19th century. Liberal Party “Radical Joe” Chamberlain of Birmingham (so beloved by Prime Minister May) outlined his program of using government to improve life (the central idea of “Social Reform”) in 1865 – but Liberal Party Manchester had already taken over such things as the provision of water and gas and undertaken various other “Social Reforms” in the years after the Act of 1835 set up modern local government in the cities and towns, replacing the old “Closed Corporations” – apart from in the one-square-mile City of London that has kept its Closed Corporation to this day.

Conservative Party Prime Minister Disraeli made it compulsory for local government to do about 40 Social Reforms (i.e. perpetual government spending functions) in 1875 – whether local tax payers wanted this or not. And J.S. Mill stated in 1848 (in his “Principles of Political Economy”) that “everyone agreed” (by which Mr Mill meant that he and his friends agreed – no opponent counted as part of “everyone”) that local government should do X,Y, Z, to help the people. Liberal Party Prime Minister Gladstone agreed in 1870 that School Boards be set up in most of the country (some towns, such as the one I am sitting in, refused to have one – but were forced to have one some 20 years later) to build state schools on the Prussian model – although denying they would be like the Prussian schools. And Conservative Party Prime Minister Disraeli put unions above the Common Law in 1875 – by allowing “picketing” (obstruction) and giving the unions immunity from some claims of civil damage. This was part of the theory that wages and conditions of work should not be determined by the market (by supply and demand) but by “collective bargaining” – basically (as W.H. Hutt explained in the “Strike Threat System”) of “give us what we want – or we will not allow people to go in or our of your place of business, at least we will make it very difficult for them to do so”. Conservative Party Disraeli was a Social Reformer – he had no love for “capitalists” believing (or half believing) that they “exploited” people, and Liberal Party Mr J. S. Mill had much the same opinion (indeed a more radical one) – longing for the day when workers co-ops would replace the “capitalists”.

Since about 1870 the British state has grown – not just spending more money, but spending more money even as a proportion of the economy (leading to a rise in taxes over time). In the early 19th century the state, at least as a proportion of the economy shrank – since the 1870s it has grown. Also the early 19th century witnessed deregulation – the repeal of various restrictions and edicts. From the 1870s onwards there has been a massive increase in regulation – with the state seeking to control every aspect of life, much the like the last years of Queen Elizabeth the First when there was an orgy of statute passing, often quite demented statutes such as the “Statute of Artificers” which tried to make everyone follow the occupation of their parents, there were also attempts to tie people to the parish of their birth and other throwbacks to the late Roman Empire (the Emperor Diocletian and all that).

→ Continue reading: British, indeed world, politics is dominated by the idea of ‘Social Reform’ – and this is an idea which violates basic economic law

Samizdata quote of the day

“Most people understand “single market” to mean something like “free trade zone”. In fact, in the EU context, it means “single regulatory regime”. Membership of the single market doesn’t mean the right to buy and sell there (pretty much the entire world can do that); it means accepting EU jurisdiction over your domestic technical standards… Only six per cent of British companies do any business at all with the rest of the EU; yet 100 per cent of our firms must apply 100 per cent of EU regulations. Our aim should be to exempt the 94 per cent … from EU directives and regulations.”

Daniel Hannan, quoted in a new paper from the Institute of Economic Affairs, making the case for unilateral free trade. The item is by Kevin Dowd, a noted exponent, among other things, of genuine competition in banking and money, and a scathing critic of our current banking and monetary regime.

Tim Worstall had thoughts on all this some time ago. And a little history: the speech by Sir Robert Peel, one of the greatest British statesmen of all time, on the case for ending agricultural protection.