Feel Privileged

There's something in the air, something strong smelling and righteous.  It is a heady concentration which brings tears to the eyes.  Not tears of joy or pain but tears of self righteous fury.  The righteous bombast with which the world was pursued, explored and celebrated until only 10 years ago... and now it it being abused. 

From  where comes this dark, manly and pungent odour...?  Oh I see it now, they stand there, mighty, translucent in their fury, speaking forth their munificent consent as to the outrageous state of the world and their endearing realisation that conservationism must be prioritised above all else.  The inconsideration of those monstrous hordes; did they not know their place?  Did they not know that only one group was able to live thus?

Chinese and Indian tourism is increasing exponentially.  This is as a result of visa restrictions being lifted, economic development creating a huge middle class and the rest of the world realising that there is a substantial amount of money to be made selling things to this new middle class.  This is not a new phenomena, there have been waves of tourists before, but nothing has reached the scale of the outpouring of new tourists from China and India over the last decade.  Suddenly Westerners, used to stomping all over the world and murdering local custom (and customers), have to align themselves to a new reality.  They are visiting us.

They, unlike the Japanese who were quiet, submissive and not particularly numerous, are coming in vast numbers.  Hordes of new temporary interlopers.  They come with buses, airplanes, trains and cars.  They are impervious to our attempts to discourage them with hard-minded tutting racists, shocking infrastructure, unwelcoming nimbies and a score of unscrupulous rip off merchants looking to profit from their naivete.

Its hard to read the commentary about the spate of deaths on Everest without taking a step back and considering quite why this is becoming such an issue globally.  The fact that people are dying on Everest is not particularly new, or particularly surprising given its very high up and widely considered dangerous.  It's that so many of them seem to be of non-white origin...

Therein lies one of the potential problems with the rise in the ecological movement in certain, countries.  Conservationism is fine when it limits itself to pushing for renewable power, recycling and environmental protection; but there is something in this new wave, linked to the rise in the far-right, which hints at a darker side.  When viewed through a certain lens, conservationism, particularly anything which deals with population control and entitlement to resources (hello Melinda Gates, if you're so keen to spread your message then why isn't your book on empowerment free?) smacks of white privilege and an assertion that the reason the planet is going to pieces is not because of us but because of them. In order for us to save our planet, they need to forego what we have and if they're not prepared to sacrifice it, then this is a fantastic reason for us to continue to skew the rules in our favour and stop them from having it.

Trump could, by putting the world into recession and retarding the Chinese economic model, become the worlds greatest conservationist.  Just as the good people at Lehman Brothers, the Federal Reserve and the United States Treasury inadvertently contrived to reduce carbon emissions globally by 5-10% with the largest world recession since the 1930's.  Trump seems to have belatedly realised his end-game is not to beat the Chinese on absolute terms, just to do so on a relative basis.  At the same time this will probably put the entire world back 15-20% in economic terms once his monstrous bull market lurches into a wall but by then we'll have invented a new number (Gross Happiness Product anyone?) and we can justify the world order on a new basis and with a new perspective where human well being is at the centre of development.  Plus the Chinese economy will be in chaos and he can claim victory.  The Ultimate. Pyrrhic. Victory.

GDP is a flawed metric, of that there can be no doubt, but without economic development we will not be able to pull those parts of the world which are currently mired in it, out of poverty.  What is becoming clear is that the diminishing returns that arise from economic growth as economies mature is a problem for those parts of the world rich enough to be concerned about this issue.  However, for those parts of the world unfortunate enough to not have partaken in the economic party thus far, a certain amount of economic development is absolutely necessary for them to bring the standards of living of their citizens up to the required level. 

We should definitively not be prioritizing economic growth as a panacea to the ills of modern western society, it demonstrably isn't working.  But likewise we should not resent other countries their turn at the wheel and we should celebrate their success, even if it makes us feel like we're missing out.  Like an older person who celebrates the success of their younger colleagues, the developed world should help the developing world, not lecture and tut and surreptitiously disrupt their progress...

Marx

I thought of you when I read this quote from "Capital: A Critique of Political Economy (Das Kapital series Book 1)" by Karl Marx, Ernest Mandel, Ben Fowkes - "The means of production are at once changed into means for the absorption of the labour of others." Start reading this book for free: http://amzn.eu/gK47956

Terrorism and hate preachers of the Alt Right

Its pretty clear that the White Supremacist alt-right philosophy purveyed by hate preachers like a certain Canadian with his rules, a former White House strategist and a recently unemployed Greek is equivalent in its outcome and impact to the kind of Islamist hate preachers we have been decrying since the early 2000s in relation to the Islamist terror threat.

Like it or not, their brainwashing hate speech seems to be, whether intentionally or not, inspiring cretinous, reprehensible inadequate men across the world to take their vile hate speech to its logical conclusion, which seems to be the murder of innocents.  It has now happened time and again and is by far a greater threat in the west than other forms of terrorism at this time.  They have killed members of parliament and butchered people across society.

When are we going to start having these preachers of hate properly dealt with?  How many more murders must the world experience before we take action to stop them in the same way we have done with other Islamist hate preachers?

Brexit the next step

So with this latest act of procrastination by the British government, it becomes clear that we are drawing ever closer to the inevitable departure of the UK from the EU.  For a long time, it was not clear why both of the main parties seem to be so committed to this departure.  The stark political reality is that the age old tactic of all political parties (not just in the UK but also across Europe) of using the EU as a whipping boy for all major social issues continues to be a guaranteed vote winner.  At the end of the day, political organisations, like most organisations, work on the basis of incentives.  The incentive in politics is votes.  The votes guarantee we are on the way out because people in the UK continue to believe that they are going to be better off outside of the EU and the politicians that count are elected domestically.  Whether this is true or not will be seen but the real argument that mattered on this went on for the 10 years prior to 2016 and now, it does not matter anymore.

Now that we are set to depart, the temptation to blame the EU for our current ills will continue until we are out for a sufficient decade or so amount of time. Then, when things are not going well we will no longer be able to blame it for what we all, deep down, know are our own failings as a country.  No one wants to believe that their issues are their own fault because our immediate reaction is to believe that those failings are the fault of someone else.  Were it not for those others, we would be happy and better off.  The truth is more complex and more difficult to work through but this is act of complex collective psychiatry will unfortunately have to be experienced, it cannot be taught.

Following this inevitable (for it is, indeed, inevitable) course of affairs there will be a negative reckoning.  An apparently healthy country starts to suffer due to the slow degradation of its status versus it´s largest trading partner and its similar diminution in status versus countries which it historically bullied.  There are other countries which sit on the edge of major trading blocks and these have historically struggled to establish an identity (Hong Kong and Singapore are incomparable).  As a consequence of economic reality and the loss of a perceived safe haven status, the UK will likely eventually be forced back into the EU via one of the supra-national authorities we helped to establish such as the IMF.  This will then leave the same group of angry people who have been maltreated by a political class they helped to vote in as frustrated as ever.

Even then, the chances of this being avoided will only be arrested, relatively, by another EU member, such as Italy, exiting and causing such damage to the EU such that we would be able to say that in comparison to them we are better off.  But even then, both parties end up damaged.  Similar to a divorce or, heaven forbid, a war, neither party ends up benefiting from a dispute that ends up destroying more than it could ever have hoped to create.

Welcome to Brexit.  We hope 2019 will be better than 2018.  Somehow I doubt, politically,  that things are getting much better from here for at least the next three years.

The inevitable fate of Google...

This is a fantastic podcast from Russ Roberts:

http://www.econtalk.org/michael-munger-on-sharing-transaction-costs-and-tomorrow-3-0/

What he's basically discussing with Mike Munger in this weeks episode are a number of phenomena arising from their considerations of the technology giants in the US.

These companies are clearly of the utmost interest and relevance to our colleagues in the economics sphere as they are to some extent redefining economic models.  As old school economists try and grapple with the meaning of companies that literally manufacture nothing but at the same time are worth trillions of dollars or remnimbi, they find more and more of the gospel truths which they have held to for their careers as economists (and which previous generations of economists also espoused) being challenged by this looming spectre.

It seems strange that technology should be causing such soul searching and such existential angst among the economics fraternity, but the way in which these companies work, the fact half of them are based in a nominally communist country, and the fact that much of the internet, while subject to more and more rigourous control and "privatisation", is still a substantive force for anarchistic and demonstrably different views in the world, confounds the classic economics fraternity.

What was particularly fascinating in this episode was their consideration of the economic form of technology companies that are effectively built on input from the users (as opposed to paid employees).  The value of these companies, in fact much of their activities, are not actually provided by the companies themselves.  The companies are "platforms" which act as a form of nexus between the real participants in the economic model.  If you think about these kinds of companies, providing a bridge between participants in markets by clarifying the terms on which these businesses or individuals can interact are not entirely dissimilar from a much older and more entrenched type of intermediary which all of us are far more familiar with.  I speak of course of banks.

It is clear that the most successful forms of this we consider today (the FAANG and their Chinese equivalents) are typically for profit companies, with publicly issued shares listed on various stock exchanges held by a broad sweep of underlying owners.  However what Munger and Roberts effectively touch on, and this is very unusual for them as they are quite hardline free marketers, is that the best economic form for these kinds of company might be as not for profit entities.  They don't really explore this point further but the point is made that these entities are effectively intermediaries, and historically in order to preserve their "independence" these kinds of intermediaries have been mutually owned, municipally or government owned or owned by not for profit companies. in various forms of trust.  By removing the for profit motive, you more effectively limit the risk of misbehaviour by a marketplace.  Notice I say "more effectively limit" as opposed to "eliminate".

So what is becoming more clear as time passes is that the technology companies in their present form are coming to represent more the role of intermediaries and marketplaces and of themselves may be better transferred into a form of ownership (akin to exchanges or marketplaces in the pre-modern era) which are more disposed to not abusing their dominant position.  One of the most successful internet based companies, though one which does not garner the same attention as there is no gravity defying stock price to point at, is Wikipedia.  Who owns that...?

Brexit

OK its now time to listen up and do something differently. The approach we are taking is not going to work and whichever way the negotiations and politics and business decisions being made at the current time go, we all can see is that this is going to be very damaging for the people living in this country.

Whether one person or party “leads” in the rhetorical competition that has been raging for the last 10 years in the UK is of virtually no consequence for the overall good of the country as a whole. We are in metaphorical competition to prove who has the biggest hat while the Titanic sinks beneath our feet. The currently proposed solutions to this sinking are similarly built around demonstrating how the size of our respective hats will somehow address the fact that the ship is sinking. Seemingly ignoring the disconnection between hat size and bouyancy.

The current generation of politicians are blessed and cursed by Brexit. They are blessed because they will always be remembered historically as the group that managed the country through a self imposed disaster similar to a war. Cursed because they wont be able to do anything beyond managing this particular issue. It is all that is relevant for them. May knows this and has, partly at least, accepted it. Corbyn knows it but doesn’t want to accept it.

Similar in the way in which Churchill is remembered for his wartime role, both for what he did but also what he stood for, the current group of politicians will also be remembered for their roles during this crisis.

History has been kind to Churchill, who stood on the right side of one particularly significant issue but on the wrong side of many other issues. Brexit is similar insofar as it is not something that will be negotiated over two and a half years. It wont be negotiated over ten years. The impact of effectively changing our form of government will play out over the next two decades. The negotiations taking place now will shape the course of these two decades of change but the unpleasant reality is that we dont know where it will go or whether it will be good or bad. We know that now it is messing up a lot of things that were designed when we were part of the EU, but that is understood; when you change a system itself rather than a component of a system, the impact of that change will filter through the components of the system in ways which it is very, if not entirely, impossible to predict. At the moment we dont even know what the changes will be, so the impact is totally uncertain but at least not pressing. As soon as we start changing things, then we will really see what is going to happen.

So if we are going to do it, and it looks as though the only two people in the country that could actually stop it are convinced it is in their best interest to let it happen, then we had better be pretty damn sure that the way in which we do it is the most optimal way of doing it. But what is that method?

We have got to stop the haemoraging of negotiating credibility which we are currently stuck in. In order to do that, we have to have another public vote on the options open to the country. In order to grant whoever is negotiating with the EU the credibility to undertake those negotiations, the options we can present are:

1. Exit without negotiated period or settlement (Hard Brexit), or; 
2. Exit on the basis of whatever the government is able to negotiate by a pre-determined timeframe of March 31st 2019 (Negotiated Brexit), or; 
3. Remaining in on the basis of our existing status (No Brexit). 

At least this will draw a line under it. The principles of the referendum will be met as we will have a clear choice as to what we can get and whatever the result, we will live what we decide. In addition, by taking it out of the hands of our utterly inept current government, it will remove the political aspect from our current negotiating team (basically a "national government" will undertake the next three months of negotiation) and following the referendum, we can have another general election.

So whats to lose? It cannot get worse than our current siituation.

Writing book reviews

Being a self-involved kind of a person, I do enjoy my own views on things; one of the things I spend most of my free time doing is reading, so why not write book reviews?  Here's one: Puritan Gift, The: Reclaiming the American Dream Amidst Global Financial Chaos by Kenneth Hopper
My rating: 3 of 5 stars

This book is two books effectively.

One is a vague socio-cultural history book which expounds the values of the puritan settlers and endows upon them everything good which was later to come from the growth of the United States. This part of the book is absolute guff, conflating topics and coming up with blanket assertions (puritans made America, Puritans are all cooperative and perfectly adjusted, Puritans accept all others in the community) without any evidence. As to the virtues of the puritans it enormously flatters their society (without any reference to their witch burning, sexist, racist, exploitative and divisive failings) and attributes negative things to "others" in the US. It's borderline racist in it's language, it's definitely sexist and it's otherwise rubbish.

The second is a fascinating insight into the American business environment and business culture since the war of independence. This book is interesting, thought provoking, analytical but most importantly of all; dispassionate. I found it enormously helpful in understanding the American business culture but also fascinating in explaining the way in which American business culture has evolved to what it is today. It contains many indications and recommendations which a non-MBA educated individual will appreciate and challenges a number of widely held beliefs about the way business and our economy work today. It provides a fascinating critique, effectively from inside the tent, of what has led to the world economy evolving to the point which it has today. Useful for those with a social perspective in helping to understand what's happening, and for business people to understand what may be frustrating their longer term aims.

The first gets 1 star (I think this is written by one of the brothers) the second gets 5 stars. Therefore 3 is the average. Well worth reading though. Unfortunately the two books are effectively intertwined so there's no way of reading one without the other.

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