He is really here now

So now he is elected he is manufacturing the monster of what he knows, but what does he know?

The irony of the celebration of success of the machine of his personality is an amazing reconstruction of the same way in which the welcoming hordes of middle class Germans stood enthralled before Adolf as he strode into their political future.  They were unsure of what he stood for, but they knew that his persona was something they could rally around.  A strong, white, aryan hero which we can all look to for sustenance in these days of insipid liberal chauvinism.

It is only when you really look into the yawning chasm of their personalities and what they actually stand for and are motivated by that you start to understand where these over-rated heroes fall down.  Johnson is the figment of the collective imagination of a group of people who have been struggling to rally people to their banner since the death of their ideal on the battle fields of the late 2000's. He is the nationalist ideologue who gives truth to the lie of the ideology of the late 1990's in which so many believed and in which so much was lost.  He is an ideologue who blames the ills since then on migration, something which is literally impossible to stop.  He also blames the EU, hilariously unaware that even if we leave it, 90% of the rules will stay as part of our membership of other multi-national bodies.

But then you look at who voted for him and you realise that it is ourselves we are deceiving.  That we believe we are moving to a better place by voting for people who claim that someone else will pay for everything else that we want.  If you are Boris Johnson then the EU and the lower classes are the ones who will pay.  If you are John Mcdonnell and Jeremy Corbyn then the richest 25% and corporations will pay.  Well;  someone has to pay...  and to be honest its probably everyone, but some people have been paying a shit load more for the last 30 years than others, and I do not believe this is an absolute, rather relative, call!

Boris Johnson is a liar, a racist and a demagogue who has very little track record and very little chance of making anything work within our existing framework.  However, like others he is likely to try and bend the framework to facilitate his own failings and deliver his own agenda.  We must resist this at all costs lest he destroy us.  Unite against Fascism.  Bring down this Johnson government.

Johnson is coming

So riding in on a pack of lies comes the nations saviour, Boris "Shagger" Johnson. Ready to hurl the country into the unknown territory of a no-deal exit from the European Union in order to enforce the democratic will of the British people.

Before we had Theresa May, who despite her tough talk was not prepared to go ahead with this act of folly because, in reality, no one really knows what will happen as a consequence.  Boris is not constrained by any form of conscience or similarly feels in any way responsible for his actions, therefore exiting the European Union in the most abrupt and final way possible is something he has no qualms about doing.

The future leader of the Conservative and Unionist Party of the United Kingdom does not understand what or why he is doing as he is doing, he just knows that when he says that he is going to do it, the people who's opinions he values (Conservative writers, politicians and thinkers) tell him that it is what people want.  Therefore he will do it.

The irony, oh the sweet, bitter irony.

In the same way that Lenin supported the first world war as a means of finally destroying the Tsarist regime, it may make sense for those of a left wing persuasion to standby while Boris takes this final step into the unknown.  Fast forward 18 months...

Following the chaotic exit from the UK the economy has flat-lined.  Lacking any method of supporting the economy, the government struggles to support a currency that has fallen a further 20% in anticipation of a structural decline in appetite for British exports and the collapse of trade in Ireland.  To support the currency the Bank of England vacillates between sending messages about the need for currency stability (higher rates) but also the need to support the economy (lower rates).  No one knows what they are going to do, so the exchange rate continues to meander downwards.  This prolonged and interminable decline prompts calls for the Conservative government to "Take Back Control" of monetary policy, while across the Atlantic, the newly elected government of Donald Trump does exactly that.

The Irish question remains unanswered, as the border remains there as the hard fact of a failed EU negotiation. Its effectiveness is unenforced on the UK side and randomly enforced on the EU side.  The presence of this border and the responsibility for its damaging effects being blamed on the Unionist Party causes a haemoraging of support for that party and a collapse in their vote share. The Unionist approach to this is to effectively kick the implementation of the Stormont agreement into the long grass, prolonging their hold on power but further stirring popular discontent as the Northern Irish economy strongly goes into reverse.

In the UK, with elections not due for a further year and the economy ticking downwards, a further exodus of foreign capital sees investment declining and industrial unrest increasing.  The Conservative Party, led by a now thrice disgraced Boris Johnson, who's multiple blunders and personal scandals have seen his already wafer thin personal prestige destroyed, veers further to the right, attempting to whip up a nationalistic rhetoric blaming immigrants and Europeans for the UKs travails.  Unsurprisingly, this bellicose rhetoric sees an uptick in popular support for the renamed British National Conservative Party but also a similar uptick in popular discontent, manifested in violent attacks against minorities and European symbols.

Negotiations with the EU, at an impasse since Johnson's virulent attacks comparing the EU to the Nazis and the UKs unwillingness to assist the EU on various security matters get no further.  With little left to negotiate on, capital controls and tit for tat border disputes over trade effectively disrupt UK / European trade which falls to levels not seen since the 1970s.  Symbolically, the London market begins to lose large multi-national champions to the Hong Kong and US markets.  HSBC, Vodafone, Glaxo Smithkline, Standard Chartered and various other companies shift head offices and listings away from the London market.

Johnson's intrepid team of free market trade negotiaters endeavour to negotiate with the US and China, however the EU blocks the Chinese leg of negotiations and the egregious demands of the US negotiators, coupled with the lack of authority of the UK negotiators means that negotiations lead nowhere.  Opportunistically, the UK and Russia sign a new deal granting broader access to the UK market for Russian capital and access to the Russian market for UK firms.  The deal increases the presence of Russian capital in the UK and ties the UK ever more closely to the Russian government.  Similar deals with various Arab states, particularly Saudi Arabia, see a further influx of capital to offset the relentless drain of EU sourced capital.

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...?