When there are no unemployed then the various capitalists are in competition with each other to find the labour they wish to exploit. That competition raising the price paid for the labour, that is, wages go up. Full employment really does mean wages rise. It’s worth noting that minimum wages have somewhere between little and nothing to do with this. The current Federal such is $7.25 an hour. Walmart already pays $10 an hour, from next month $11. Competition in markets is thus very much more powerful than legislation, no?
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In 1820, the vast majority of people lived in extreme poverty and only a tiny elite enjoyed higher standards of living. Economic growth over the last 200 years completely transformed our world, with poverty falling continuously over the last two centuries. This is even more remarkable when we consider that the population increased 7-fold over the same time. In a world without economic growth, an increase in the population would result in less and less income for everyone. A 7-fold increase in the world population would be potentially enough to drive everyone into extreme poverty. Yet, the exact opposite happened. In a time of unprecedented population growth, we managed to lift more and more people out of poverty. […] Despite the clear evidence, many people are not aware of the fact that extreme poverty is declining across the world. The chart below shows the perceptions that survey-respondents in the UK have regarding global achievements in poverty reductions. While the share of extremely poor people has fallen faster than ever before in history over the last 30 years, the majority of people in the UK thinks that the opposite has happened, and that poverty has increased! The chart below presents evidence from a survey in the UK, but ignorance of global development is even greater in other countries that were also surveyed. The extent of ignorance in the UK is particularly bad if we take into account that the shown result corresponds to a population with a university degree. January 11th, 2018 | 20 comments - (Comments are closed)
 War and Peace is 1,200 pages long. Bleak House spreads to 1,000. Dodd-Frank, the US’s sprawling overhaul of financial regulations after 2008, runs to 848 pages – earning itself the nickname `Dodd-Frankenstein’. And the EU’s bumper trade deal with Canada reaches a hearty 1,600 pages. Last week, surmounting all of these achievements, the EU introduced a truly spectacular piece of regulation. `Mifid 2′ is its name and it weighs in at a princely 7,000 pages. That’s 1.4 million paragraphs, or six Bible-lengths. It must surely be a contender for the longest piece of red tape ever. – Juliet Samuel (Daily Telegraph, registration required). Needless to say, people continue to drone on about “neo-liberalism” and “unfettered markets”. If only. I can predict a standard retort: that if the UK wanted to be an enthusiastic EU member (no laughing at the back, kids) then it could influence the EU machine and reduce this regulation. But how has that worked out, really? True, I know of some politicians who have tried to slow this process down, but it continues regardless. Sure, when the UK leaves, then UK-based firms that wish to do business with the EU will need to comply with EU regulations just as they must do so with the laws of the US, or Canada, Australia, or Planet Zog. But the process cuts two ways. If the UK parliament has any sense (big if, course) and keeps rules within bounds rather than “gold-plates” whatever is in force in other countries, then the UK will gain. Further, the very existence of countries with independent rule-making makes it harder for policymakers in transnational groupings such as the EU to create tax/regulatory cartels. (This is why countries such as Switzerland drive Brussels nuts.) In time, the regulatory costs of doing business in the EU will cripple its financial markets, and that makes it rather harder to persuade yours truly that being outside this regulatory behemoth is so bad for business. Being outside a relatively free and flexible customs union, which is what the Single Market is, can sound risky, even daunting. Being outside an expensive, inflexible, bureaucratic nightmare is far less so. In fact, getting as far away as possible from such a structure is not just a smart gamble, but essential. January 8th, 2018 | 24 comments - (Comments are closed)
Public regulation is static by principle. According to his knowledge of the past, a regulator will define conditions for the presence. However, she cannot know what will come in the future. By definition, innovation represents the direct opposite. Innovator cares not about what people did in the past or what the current situation is. Innovation is a projection of the future. The issue arises when these two concepts collide in a concrete case. The regulators then judge the innovation on the basis of the old standards and the innovators judge the regulation based on their own vision of the future. Today the static barriers of government regulations are exceeded by new technological innovations and new entrepreneurs. Therefore, it is necessary to take a step back and look at these issues from a broader perspective. We can also look at this problematics simplistically and see if the new technology fits into the official regulatory box, or not. And if it, by chance, doesn’t fit, we ban it automatically. January 8th, 2018 | 9 comments - (Comments are closed)
Specifically, Buffett offered to bet that over a ten-year period from January 1, 2008, to December 31, 2017, the S&P 500 index would outperform a portfolio of hedge funds when performance is measured on a basis net of fees, costs, and all expenses. Hedge fund manager Ted Seides of Protégé Partners accepted Buffett’s bet and he identified five hedge funds that the predicted would out-perform the S&P 500 index over ten years. As I reported last September on CD, Buffett’s now-famous bet was actually settled early and ahead of schedule, because the outcome was so one-sided in favor of the S&P 500 index over hedge funds I have been following this for a while and given my views on hedge funds, I was not in the slightest bit surprised at the outcome. Factor in fees, costs, and all expenses and the difference becomes eye-watering. Personally I am a big fan of the Terry Smith school of thought (which is to say when it comes to investments “don’t just do something, sit there!”): with a few glorious exceptions, managed funds almost always over-trade. January 7th, 2018 | 13 comments - (Comments are closed)
A hundred and fifty years ago it took twenty-five men to all day to harvest and thresh a ton of grain. With a modern combine harvester, a single person can do it in six minutes. In other words, it contributed to a 2,500-fold productivity increase. – Johan Norberg writing in Progress: Ten Reasons to Look Forward to the Future. January 2nd, 2018 | 43 comments - (Comments are closed)
Festive photos to add to that photo of meat, from Christmas Eve, meat which I was lucky enough to share. That evening we all did much toasting, and one of us photoed all our glasses while we were doing this. Many get angry about the modern habit of photoing food and drink just before it is consumed, but I say: Why not? Where’s the harm? On Christmas Eve I was too busy holding up my own glass and joining in the fun to be photoing it. But, I did take a photo of a very similar event back on December 18th, on Primrose Hill, just to the north of Regents Park:
Christmas, or in this case the run up to Christmas, is a time to renew old acquaintances. I don’t know who these people were and how they were connected, and in this time of computerised face recognition, I have deliberately made this difficult with my photo. Friends? Relatives? What I do know is that they were greatly enjoying each other’s company, just as Perry and I and his other guests did on Dec 24th. Later on Christmas Eve I did get my camera out, and I got this shot of our Dear Leader, enjoying a present that one of us had given him, of one of his favourite chocolate treats:
On a more serious note, I have been reading Deidre McCloskey’s book, The Bourgeois Virtues. At the beginning of her chapter entitled: The Very Word “Virtue”, McCloskey offers a number of quotes from bygone years, including this one from Benjamin Constant, who until now has been only a name to me. Apparently, in the year 1814, Constant said, in celebration of the greatly increased opportunities for human enjoyment that commerce was at that time beginning to make available to the generality of people, this:
Plus, a bit of spare cash and the chance to spend it on luxuries, like high quality meat (as Perry put it: “Duck with skin turned to quackling, stuffed with pheasant & wood pigeon”), and amusingly packaged chocolate. Here’s another toast, to: stuff. The stuff that has, since Benjamin Constant’s time, so greatly increased, by means of exactly the processes he refers to. Concerning who and what Benjamin Constant was, I have yet to read this. Tomorrow, I intend to. Happy Christmas everyone, what’s left of it. December 27th, 2017 | 8 comments - (Comments are closed)
I have a dim memory of a TV news report on how the 1973 oil crisis was affecting Holland. I can’t remember the specifics but it was something along the lines that the crisis was much worse in Holland than elsewhere. At some later date I got the idea that the Dutch had been selling arms to the Israelis and the Arab oil embargo introduced after the Yom Kippur War was much more strictly enforced on Holland than elsewhere. As I got older (I was very young in 1973) this made less and less sense. How, I thought, do you control what happens to oil you’ve sold once it has been put on a ship? For some reason this week I was reminded of this dim and distant memory and decided to do some duckduckgoing. I discovered that someone has written a book on the subject. This is what the rubric says:
Oh.  Some hippies on a road on a “car-free” Sunday in Holland, made “car-free” because the government was worried about oil supplies. December 24th, 2017 | 32 comments - (Comments are closed)
Today the Shadow Chancellor John McDonnell launched a report commissioned by the Labour Party from GFC Economics & Clearpoint Corporation Management Ltd. I have had a quick read of it, not in any detail but enough to think that you might be interested in reading it too. Here it is: Financing Investment: Interim Report It is called Financing Investment but it does not say much about financing investment. I suppose a report called Let’s Put The National Investment Bank And The Strategic Investment Board And A Bit Of the Bank Of England All Next Door To Each Other In Birmingham And Mention It Twenty Times is better for votes in Birmingham. They’ll be able to put out a special Birmingham edition of Monopoly with that street collecting a massive rent. However there is more to this report than just more swanky government buildings in Birmingham. Branch offices in Glasgow and Cardiff are also promised. And this caught my eye:
You hear that, South East? Only in Labourland is an increase in the number of technology companies in one area seen as a “risk” in itself. But that is a mere taster. On page 47 we begin to reach the meat of the proposal. Rejoice! There is to be something called a Strategic Investment Board.
We learn that
It is nice to be reassured that private sector R&D will not be crowded out, but the very fact that the possibility is mentioned does rather imply that public sector R&D will be crowded in. Who will be deciding who gets this “investment”, and what reason have we to suppose they would be good at it? The answer is not reassuring:
Ah, “getting round the table”, I remember that. I was too young to understand all the hoo-hah about Barbara Castle’s In Place of Strife in 1969, but I can just about remember the series of increasingly ineffectual “Solemn and Binding agreements” and “Concordats” agreed between Labour governments and the unions over beer and sandwiches at No.10 as the 1970s wore on. None of them stuck. (Edit: in the comments Sam Duncan says, “So they’re basically digging Neddie and the NEB out of the dustbin and bunging them in the microwave for a couple of minutes, then? That’s the Great Corbyn Plan?”) On page 48 it says,
That all sounds very nice, but why is a bunch of scientists, businessmen and trade unionists moonlighting from their proper jobs expected to be able to tell what lending is unproductive? While lending to “innovative companies” can turn out well, it is not a game for amateurs. God only knows that the banks have not always done a good job, but at least it was their job. And it is strange to see the socialists display such faith that the capitalist exploiter will act for the common good and not, for instance, draw an enormous salary augmented by backhanders to ensure that companies in which he has a well-disguised interest get all this luverly investment. On page 49:
Wha-wha-what is the Royal Bank of Scotland doing there? They’re not thinking of using money deposited by the public with RBS for this “investment”, are they? Investment specifically directed at innovative companies? That might, er, cause queues to form outside RBS branches on the morning of a Labour election victory. I have left the biggest question, where the money is to come from – because I really don’t think RBS can cover it all – as an exercise for the reader. The Labour party answer is “From the National Investment Bank, stupid.” December 11th, 2017 | 19 comments - (Comments are closed)
People talk and think about jobs like they are things. Like you can possess one, lose one, or like you need to go get one from someone. So they go to job boards looking for the people who are giving away jobs. They go through the societal rituals that are expected of job seekers. But they are making a fundamental mistake–because jobs are not things, they are abstractions. Getting lost in this abstraction causes a lot of pain and confusion. Seeing past the abstraction lets you see the countless opportunities you have available to you. A job is an abstraction to describe a relationship between one person and another individual or group of people that agree to a certain type of ongoing trade. To get a job, you don’t need someone to create it and give it to you; you simply need to convince someone that you can make them more money than you cost. December 11th, 2017 | 14 comments - (Comments are closed)
It has been quite a grim century for Mongolia, many decades under the Soviet yoke after the ‘Mad Baron’ von Ungern-Sternberg managed to take over in the chaos after WW1, and write his own grim chapter, and still its capital is called ‘Red Hero’, but despite that name, Mongolia has got itself into the EU’s bad books, not by human rights abuses, but by a lack of them as a tax haven.
The scoundrels, the shame of it, not taxing someone!
OK, how about undercutting or matching them for starters? That would, actually, hurt them. For some reason, the ‘charity’ Oxfam thinks it is entitled to chip in.
Are Oxfam’s shops taxed (or business-rated) in the same way as their commercial neighbours? Can they explain how sanctions (so useful against South Africa under Apartheid) improve the lot of the poor? Since sanctions harm, the corollary is that free trade doesn’t, and yet… But I digress. Let’s hope that Mongolia shows the same defiance before its accusers as the Baron von Ungern-Sternberg did when facing a People’s Court, from ‘Setting the East Ablaze’ by Peter Hopkirk.
Then they shot him. The full blacklist is:
and conceding the point that taxes create poverty:
December 5th, 2017 | 12 comments - (Comments are closed)
Recent UK gross domestic forecast predictions, issued this week via the glum figure of UK finance minister Philip Hammond, have encouraged some of my friends who are EU Remainers to shout about how Brexit is damaging Britain, we are going to lose tens of thousands of jobs to the continent, or wherever, etc, etc. The rage is not dying, in fact. Some of the language (Brexit supporters are “retarded” being a recent one) is not becoming milder. We haven’t yet reached the acceptance phase after the initial shock and anger. Apart from the devaluation of sterling after June last year, there hasn’t been all that much of a shift on the economics front. The underlying performance of the UK economy does not appear to have altered that much. Some American banks such as Goldman Sachs and JP Morgan talk of shifting some business to the continent to create subsidiaries in anticipation of any EU access shenanigans, as I would expect, but it hardly fits with a Biblical level of terror to justify some of the vehement language I see on forums such as Facebook. Assume we must take seriously the risk of life outside the joyous embrace of the EU Single Market, this is worth considering, from Tory MP and former minister, Peter Lilley:
He also responds to the point that apparently, by being outside the EU, the UK will now submit to EU rules without being able to influence them:
And on the “passporting” issue that comes up:
And on the terror that outside the EU, the UK will be hurt, Mr Lilley looks at EU-regulated mutual funds and alternative investment funds regulation (private equity, real estate, private equity, etc):
In other words, you don’t have to be in the EU to manage investments sold within its borders. And yet if you take some of the Remainer arguments at face value, you would think that the UK is to be cast into a dark, lonely place. A final thought. One of my Remainer co-jousters talks of the folly of the UK “going it alone”, as he claimed we had done after 1945. That, however, not only ignores our membership of NATO but also the UK’s web of trade with not just the continent of Europe, but also the old Commonwealth nations and places such as Argentina, and of course the US. The UK was hardly living under a rock during the period before EEC membership began in 1973, and further, that membership involved slapping tariffs on many of those countries. As Mr Lilley says, it has taken ages for the EU to hammer out free trade deals with nations such as India, China, etc, and to improve on what we have with the US. (I have even seen some of my Remainer friends dismiss this range of countries as “minor”, or “colonial outposts”). So let me get this straight: the US, Canada, Australia, New Zealand, India, South Africa, parts of Latin America, the Pacific-Rim, etc, are “minor”, but the European Union is a powerhouse. Great, got it. Have a good weekend everyone. November 24th, 2017 | 17 comments - (Comments are closed)
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