Data. Everywhere. Loads of it. Stop with the panic guys.

From Bryan Caplan:

The populists of our Golden Age are loud and furious. They’re crying about “monopolies” that deliver firehoses worth of free stuff. They’re bemoaning the “death of competition” in industries (like taxicabs) that governments forcibly monopolized for as long as any living person can remember. They’re insisting that “only the 1% benefit” in an age when half of the high-profile new businesses literally give their services away for free. And they’re lashing out at businesses for “taking our data” – even though five years ago hardly anyone realized that they had data.

Hardly a day passes without some self-appointed guardian of public interest - a media-hungry MP, someone from an anti-competition lobby group, a hand-wringing charity chief executive - telling us that all those nasty tech people are stealing your data. And hinting that, somehow the deal we're getting is a lousy one.

Well it isn't. Most of that data only exists because you chose to co-produce it with one of the tech companies' free sites - because you booked a taxi, used a restaurant app, posted your holiday pictures on Facebook or trolled Twitter for lols. There is data everywhere, piling up in huge mounds and it isn't a problem, it's not stealing your privacy and these companies are not doing anything other than trying to make a bob or two by giving the consumer value (or flogging you some stuff, so to speak).

As Caplan points out about the 'privacy' we claim we want back:

The privacy to not be part of a Big Data Set. The privacy to not have firms try to sell us stuff based on our previous purchases. In short, we have lost the kinds of privacy that no prudent person loses sleep over.

Absolutely.

....

Elsewhere - on why big business doesn't own England

At Conservative Home:

For me, the significance of Shrubsole’s work isn’t the ‘look at all those secret, tax-avoiding businesses owning land’ but, rather, the picture he provides of how land investment is skewed by the UK’s planning system. Without housing land supply being controlled by the Government, there would be no need for land banking and no speculative markets in green belt agricultural land.

Moreover, we now know that corporate land ownership is mostly purposeful rather than speculative – companies like Peel Group own things (the Manchester Ship Canal, John Lennon Airport, the Port of Liverpool) that are actively managed, income generating assets, and the same goes for the land ownerships of water companies and other utilities.

The whole piece is here.

David Lammy is right about Africa (but wrong to make it about skin colour)

David Lammy is the worst sort of politician - lots of sound and fury, avalanches of slogans pretending to be wisdom, and a complete absense of any considered or measured assessment. You only have to watch how he attacked, without any evidence, the police over the Grenfell tower tragedy to understand the basis of Lammy's politics. And at the heart of everything from him is race - it is always (sometimes hilariously) about black or white.

The problem with this is that, when there's an underlying truth in something Lammy says, his painting it black and white means we lose sight of that truth - here's an example in a Tweet:

The world does not need any more white saviours. As I've said before, this just perpetuates tired and unhelpful stereotypes. Let's instead promote voices from across the continent of Africa and have serious debate.

I pretty much agree with what Lammy is saying here - our portrayal of Africa is trapped in images of semi-naked black children, in the memory of Live Aid, and in the pictures drawn by aid charities touting for cash. Through agencies like Oxfam, and our faux-virtuous obsession with international aid we perpetuate the idea that, without our help, Africa will not 'develop'. But it is not about the colour of anyone's skin, its about how we in the developed world perceive Africa.

The problem is that the 'help' we've given Africa has, in large measure, led to the problems people there face. After 100 years of exploitative colonialism we left and gave Africans socialism which when applied in Ghana, Tanzania and Ethiopia resulted in more poverty, starvation and death. In other places it led to hyperinflation and economic collapse. As noble ex-colonialists we then galloped in to the rescue with aid programmes designed to allow subsistence agriculture - the hard, brutish and short life too many Africans endure - to continue. What we didn't do was point Africans at what it was that made us rich (and is making the Koreans, Chinese and Indonesians rich too) - open markets, enterprise, free trade and the idea of business.

Today, despite the best efforts of us in the west, African countries - some of them at least - are turning themselves round in that proven capitalist manner - six of the ten fastest growing economies in the world are in Africa with Ghana and Ethiopia topping the pile. It's true that Africa still faces problems - the persistence of insect-carried disease, the scourge of AIDS - but it's biggest problem is still the stupidity of government:

The number of people paying the tax for sites listed as “Over the Top ” (OTT) – chosen by the government because they offer voice and messaging services – fell by 1.2 million.

The value of mobile money transactions also fell by almost a quarter, to 14.8tn Ugandan shillings (£3.4bn) between June and September.

So I agree with Lammy that, instead of British celebrities (even celebrity investigative journalists) indulging in poverty tourism we should perhaps use the occasion of a national telethon to get Africans to tell their success stories. Step through the marketing-speak here to see that, given a chance, business is thriving - and African business sounds just like business everywhere, driven, exictable, enthusiastic:

3 Wise Pixels (3WP) is a creative technology company dedicated to reimagining Nigeria’s digital landscape through curated technology and bespoke design. Based in Lagos, the company mirrors the ever-evolving landscape of the continent’s largest city – rapid growth, innovation, targeted problem-solving and distinct overtones of a rich cultural identity. 3WP champions innovation and authenticity at its core, resulting in a creative yet highly functional hybrid approach that cuts through the noise and congestion of the modern world.

This is where Africa's future lies and what we should be saying isn't "have some aid money" but rather "how can we help your businesses". Plus, I hope, helping resolve Africa's biggest challenges - set out clearly by the guys from 3WP:

Most of the risks we face come from the unstable political landscape in Nigeria. A lack of proper basic utilities like clean water, steady electricity, and waste management (to name a few) all contribute to a very tough living situation, which affects the physical and mental health of employer and employee alike. Not to mention the lacklustre education system, poor public transport solutions and even poorer roads, and the corruptible government agencies that oversee these things.

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Government wants to control you, business just wants to flog you stuff. I know which I prefer.

 Rich people running large companies don't want you to be poor. Really they don't. Those people want you to be rich because when you're rich you're going to buy more stuff. And when you buy more stuff, these folk can buy yachts, footballs clubs and space programmes helping make the world still more spiffy than it was before we started.

Some of those rich people run technology companies - the dark evil of Facebook, Google and so forth. We're told (mostly by politicians or by people who know there's more book sales in imaginary demons than in truth) that these big technology companies are bad because of algorithms, machine learning, profiling, psychographics and other scary things we don't really understand. The message of these politicians (and the people with books to sell) is that without some controls these tech companies will become the 21st century's robber barons impoverishing us so they can have more power and money. For the answer I refer you to the first paragraph above - rich businessmen and big businesses are really not interested in you being poor.

So, if the motives of businesses are clear ("we want to make money") how is it that we now have an escalating moral panic about tech? This sort of thing from one futurist person on Twitter - "...and if we don't start now, we will be nothing but pawns of large tech companies."

The thing for me with all of this is that the alternative to us being pawns of large tech companies (who essentially want to flog us goods and services) is to be what exactly? It does seem that those riding the moral panic of techno-fear - a sort of 21st century luddism - are proposing that the power is shifted from those terrible people selling us stuff and folded into the caring, sharing arms of government.

This is the government that wants to tax, ban and regulate you into changing your lifestyle to their official prescription (for your health, to protect, for the children). This is the government that demands identification from you for the most mundane of ordinary activities, from voting or opening a bank account to buying some glue to fix the shelf in the den, This is the government that, without democratic authority, is testing face recognition systems and enhanced surveillance. The government that installs cameras to track your every move and introduces Public Space Orders to give them power to arrest and punish you for things that aren't a crime. And this is the government that's introduced new blasphemy laws - supposedly to combat hate crime - allowing them to police our words and punish us for 'wrongthink'.

You should be a lot more scared of government and its agents than of businesses that just want to sell you stuff. Government exists only for the purpose of power and control - some of that is necessary but most of it suits the tidy organised minds of the bureaucrats (who, of course, know so much better what's good for you that you do). And all wrapped up in the hollow reassurance of "if you've done nothing wrong then you've nothing to fear".

As with all actions of government - and so much of it is beyond the scope of democratic accountability as to be essentially beyond control - you have to imagine these tools of  surveillance and restriction in the hands of a more authoritarian government. And we have a little glimpse of it with places like Singapore (how it makes me mad to see supposedly freedom-loving Tories telling us that South East Asia's pseudo-democratic and authoritarian city state is marvellous) and, of course, the ex-communist autocracy of China which is introducing a Social Credit system straight out of Brian Aldiss's "Primal Urge".

You've a choice folks - live in a free consumer society or else run from the imaginary demons conjured up by the great and good to scare you back under their control. For me this is a simple decision - if the price of freedom is me getting ads with my online searches directing me to things I might like to buy then it's a really cheap deal. And the motive of government, in so far as it is clear at all, has always been to control and direct what you do, the very antithesis of freedom.

“Institutions become political weapons, wielded forcefully by those who control them against those who do not. This is how elected autocrats subvert democracy—packing and “weaponizing” the courts and other neutral agencies, buying off the media and the private sector (or bullying them into silence), and rewriting the rules of politics to tilt the playing field against opponents. The tragic paradox of the electoral route to authoritarianism is that democracy’s assassins use the very institutions of democracy—gradually, subtly, and even legally—to kill it.”

Choose freedom.



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Amazon didn't kill the high street and taxing online sales won't save it

We were on Gordon Terrace at Saltaire on Monday to pay a bill, have some lunch and do a little shopping. This street is as close as you'll get anywhere these days to that idea of a 'traditional' high street. Gordon Terrace has a greengrocer, a baker, a butcher and a grocer (OK it's a Co-op) those stalwarts of that high street of old plus a shoe shop, ladies' boutiques, a great menswear store and assorted delis. Even on a Monday lunchtime when rain is promised (and delivered in spades while we were in the greengrocer) the street is buzzing and busy. OK it's not perfect but there was just the one empty shop and a distinct lack of betting shops, tanning parlours, cheque cashing agencies and other such common features of today's high streets. It demonstrates that, given the right demographic and a benign parking regime (free short term on-street parking) the high street can succeed. Let's also note here that the busiest places were the cafes and restaurants - leisure an dpleasure rules the day on the high street. Saltaire is, however, pretty much the exception not the rule when it comes to high streets. And some folk seem to think we can make everywhere like this by the action of government - those folk are wrong.

The reasons for the decline of the traditional high street are many fold and date back a very long time. The first part of the decline came as a result of the success - based on choice, convenience and price - of the supermarket. Back in the days before supermarkets (Ken Morrison opened his first at Girlington in 1961 the year I was born - so that long ago) places like Cullingworth had a myriad of shops providing all the things those supermarkets came to provide, just not with the same range or the same low prices or indeed under one roof. The supermarket with its scale, distribution chains and efficiency resulted in tens of thousands of small grocers, fishmongers, greengrocers and corner shops closing down. They didn't all close suddenly overnight but gradually as folk retired, sold up, cashed in or, sadly, went bust.

At about the same time technology hammered another nail in the high street's coffin as the fridge freezer began to spread. This meant that women didn't have to shop nearly every day (something that helped make it easier for those women to go out to work, have a career) but could stock up for days ahead and, instead, spend their time on something more pleasant than dragging a heavy bag back from the high street. And those families also began to have cars too meaning they didn't have to use the shops in the nearest high street but could scoot down to Mr Morrison's grand store for what was now their weekly shop. The little shop in the village (or on that row of suburban shops at Bywood we used as kids in Shirley) couldn't compete with the car, the freezer and the supermarket so they slowly went from the high street.

By the 1980s the supermarket was joined by other stores in big sheds - category killers they were dubbed as they targeted hardware, gardening, toys, furniture and linen (in the USA books, cars and clothing were on this list too). Instead of going to that slightly intimidating store run by the man in a brown coat to buy some screws, paint or tools, people drove out-of-town to a sharper, cleaner, friendlier (and cheaper) store offering more choice but a bit less personal service. But if what you wanted was a hammer, personal service probably got outvoted by price and choice, so you went to B&Q. And the same went for bedding plants, toys for the kids at Christmas, settees and duvets - out-of-town offered more choice and a better price.

All of this decline, you might call it the decimation of the high street, took place before anyone except a few physicists had access to the Internet. For sure there was mail order but, unlike the USA where distance selling was a boon to remote places, the thing mail order companies offered that wasn't easily got in the British high street was credit - the liberalisation of finance in the 1980s bashed a huge hole in businesses based on the never-never. By the 1990s all the 'big book' mail order businesses were declining (the closing of mills and factories with female workforces didn't help as mail order relied on agents to sell through these places) while more nimble direct-to-customer mail order like Damart was thriving. But these latter weren't affecting the high street as their modus was selling niche products (thermals, outdoor clothing, plastic storage and so forth) - many of these business, Lakeland Plastics being a good example moved from mail order into high street retail.

By the time the Internet arrived most of the traditional local high streets with butcher, baker, greengrocer, grocer and hardware store had gone. Some survived by diversifying - butchers and bakers built businesses that depended as much on selling lunchtime sandwiches as on loaves of bread or gammon joints - but where this wasn't possible the businesses went. And they went most quickly in places where people benefited most from cheapness - poorer communities.

At the same time as all this, the out-of-town shopping centre arrived - Gateshead's Metro Centre, Meadowhall, the Trafford Centre, Lakeside, Bluewater. And these - again - offered a bigger range, more choice, a nicer environment and keener prices than the traditional town centre. The first to lose out here was comparison shopping on that traditional high street - ladies' wear, shoes, children's clothes all began to struggle as people found travelling to the mall more convivial, no less convenient and certainly cheaper.

All of this - and there's a lot more that could be said about how technology changed consumer behaviour, drove down prices and increased choice - is a long-winded way of explaining why Ruth Davidson and others who blame Amazon (and even more daftly, Amazon's tax bill) for the decline in high streets. In the simplest of terms high streets are dying because fewer consumers are frequenting those high streets. And, to make matters worse for small centres, the people who have deserted these high streets fastest have been the people with more money who have more ready access to transport and therefore take advantage of the bigger choice and better price offered by out-of-town shopping.

Unless the sales tax for online sales is so onerous as to force consumers to pay higher prices on the 'traditional' high street (assuming what they want to buy is available on that high street) the effect will be merely to make things a little bit more expensive for everybody without changing what consumers do in any notable way. It's good politics to talk about how it's not "fair" that Amazon doesn't pay high street rents and business rates but this is an argument for reforming business rates not an argument for taxing Amazon (I'm steering clear of the economists' point that business rates are a tax on the landlord not the tenant as it's contested and hard to explain to a retailer with a tax bill). It may also be true that we need to reform corporation taxes to make it harder for the likes of Amazon to use international trading to hide profit (again I'm staying off those pesky economist arguments about how corporation taxes fall on workers, customers and shareholders not the company itself).

Trying to blame a complicated social change like the decline of high street retail on one competitor (and a competitor that didn't even exist for most of the time the high street has been declining) is ridiculous. What we should be asking is why places like Gordon Terrace in Saltaire work so well while other places don't. Perhaps we need to think about which high streets need saving (or have the demographics and current range needed to survive) and which don't. There used to be at least 30 shops in Cullingworth covering everything you might need - there are now just twelve and three of those are hairdressers. Taxing online sales won't save the high street - asking what makes a high street work (the clue is in the second Grimsey Report where, in effect, he says the answer's leisure and pleasure not old-fashioned retail) is a much better question.

We have too many shops and probably too many high streets. I know this is a hard point to make and no comfort when we're talking about the centre of a Lincolnshire market town but it has to be said. There's a case for looking at reforming rents, at a business rates system that more directly falls on landlords, and at further changes to corporation taxes to reduce their burden on small business. There's no case for a tax on sales - over and above VAT - as this is just making things more expensive for us consumers. It may "hit" the bad boys of Amazon but it will also damage thousands of small businesses selling everything from gin and tonic marmalade to classic car parts through online methods. The result of this sales tax wouldn't be salvation for the high street but higher prices, closed businesses and another bundle of cash for government to squander on pet projects in town centres or subsidising failing businesses.

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Not only is business good for society but so are bosses.

Andy is a local businessman. Employs about twenty people. Works hard - pretty much non-stop. Pretty typical of his sort. I want to tell you about his sort by way of response to this piece of Marxist bigotry:

...neoliberal bosses have something in common with child molesters. Both lack restraint in the pursuit of their own self-gratification in situations where they think they can get away with it.

I'm not beating up on Chris Dillow here for the crass correlation of businessmen with paedophiles but rather with his perpetuating the myth that the operation of trade - business - is merely a matter of "the maximal pursuit of money".

Andy had an employee who was diagnosed with cancer. It turned out pretty soon that this young man wasn't going to make it and, more to the point, he wouldn't be able to do the job for which Andy employed him. In Chris Dillow's fantasy of the businessman as an exploitative, MaxU, utilitarian, Andy would see the employee onto sick pay and that's end of it. Let me tell you what actually happened.

The dying young man was kept on the payroll - full wages despite not being able to work - right up to the day he died. When Andy discovered he'd no life insurance, he organised a fundraiser to get some cash for his wife and young kids. And he spent the last days of this man's life helping his family deal with what was happening.

There is a common shtick among left-wing (and not-so-left-wing) commenters that trade - doing business - attracts the worst sort of people and is, you know, just a little mucky and common. Wherever we look - film, TV, literature - business people are portrayed as bad people. Yet the reality is that the typical businessman or woman is no better or worse than the typical social worker, academic or Marxist columnist. And this means that, every day, business people act without consideration of maximising profits because they want to do the right thing. It's not just high profile things like paying for a woman's cancer treatment but a whole host of little things made possible because the business people have made some cash - anybody who has worked raising money for something like building a new village hall know just how businesses, large and small, are willing to help out. As 'Secret Millionaire' showed us, the idea of giving back, of helping, of making a place better is as central to business life as deal-making.

The late Barry Pettman, one of the founders of Emerald publishing, ran his other publishing businesses from his home at Patrington in Holderness. To make sure that the village post office kept open, Barry shipped everything to Patrington to go out through this little post office. For sure, Barry (who was born in a Hull council estate and was an academic economist) liked buying very expensive wine and grand cars (plus second and third homes in the USA and NZ), but his urge to make money was matched by his desire to see that money help the community where he lived. And what Barry did is repeated again and again across the world, business people are not soul-less Randian automata motivated solely by maximising utility but flesh and blood people with strong personal ethics, courage, faith and love. It's time we recognised this and put an end to the narrow "bosses are bad" perspective of people like Chris Dillow.

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Marco, who owns around 150 properties internationally, including six in Preston, said he is willing to give extra support to the winning candidate as well as the keys to the top-floor flat, including footing the council tax bill for as long as necessary.

Read more at: https://www.lep.co.uk/news/millionaire-businessman-is-giving-away-a-flat-in-preston-for-free-1-8358210

Marco, who owns around 150 properties internationally, including six in Preston, said he is willing to give extra support to the winning candidate as well as the keys to the top-floor flat, including footing the council tax bill for as long as necessary.

Read more at: https://www.lep.co.uk/news/millionaire-businessman-is-giving-away-a-flat-in-preston-for-free-1-8358210

Owning robots...

Tyler Cowan at Marginal Revolution responds to this question (with a very interesting consideration of robotised government):

There’s two versions of this.

1. One or a small group of entrepreneurs owns the robots.

2. The government owns the robots.

I see how we get from where we are now to 1. How would we get to 2, and is 2 better than 1?

Leaving aside Cowan's discussion of what government means in a robotised world, isn't there a big issue with the premise of this question? The idea that state ownership of the robots is desirable? And whether 1. accurately describes how those robots will actually be owned?

The first point is that the robots will be an asset either of the business employing them or, assuming some sort of leasing arrangement, of a financial institution. So there may be a 'small group of entrepreneurs' owning the businesses that make the robots but the robots themselves won't be owned by those businesses (except one guesses for the robots that are making the robots that make the robots).

So the question really isn't about who owns the robots in a future economy but rather who owns the businesses that employ the robots to make and do things. This is a very different question. We can, on the basis of historical experience, dismiss the idea that state ownership of the economy is better than other forms of ownership. The Soviet Union tells us this is the case. At the same time, however, we can see that the productivity gains from the robot economy have to arrive in the pockets of regular folk for that robot economy to work.

Partly this distribution of the robot benefits comes through goods and services being cheaper (lots cheaper in some cases) thereby allowing our money to go further. But there is also the consideration that the benefits cannot simply go to a few entrepreneurs if the advantages of robots are to be realised. This is where some advocates of minimum basic income get their shtick - government taxes the robots' added value and shares it with the humans who don't have jobs any more thereby allowing those humans space to go off and do exciting, creative stuff. This does presuppose that government will not crash the robot economy so as to pay the higher basic income they promised in order to get elected. Not a presupposition I'd care to put money on.

Far better would be for us - not the government but us - to own the robots. Or, to put it another way, to own the businesses that employ the robots. And we have the models for this - mutual funds, pensions, investment funds. It would be good if (and Cowan's robot government suggests this might be so) government didn't crowd out investing in business by running huge debts funded by money that might otherwise be invested in the productive economy.

So the robot future could be very different from our presumption. Much smaller (or really much cheaper which isn't quite the same thing) government meaning that money currently taken either in taxes or spent buying government debt is available to invest in businesses that employ the robots. And a whole load of that money will belong to 'we the people' - actually belong rather than belong in some sort of romantic, wistful socialist manner. We get to own the robots.

So it's not how we get from 1. to 2. in the original question but rather how does government help us get to own those robots.

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Tim Montgomerie perhaps needs to learn the difference between business and markets

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Montgomerie is on about Donald Trump and, in the main his little article is pretty much spot on. Except for this bit:

Conservative Brits may look on in amazement — but it’s worth remembering that Trump does have a point. It wasn’t Karl Marx who accused leading business people of being ‘all for themselves, and nothing for other people’. It wasn’t Friedrich Engels who condemned the ‘mean rapacity’ and ‘sneaking arts’ of many merchants and manufacturers. It was Adam Smith. The father of modern economics wasn’t an uncritical defender of free enterprise. He knew that markets could lead to extraordinary selfishness.

Or rather the last bit. Markets, where they are allowed to operate freely, are not selfish because they depend on the mutual benefit to buyer and seller. Nor was Adam Smith against free markets or even critical of free markets. What Adam Smith hated was mercantilism and the cartel, the core economic position of what I call 'business conservatives'. Sometimes this gets called 'crony capitalism' (a term widely used to illustrate what goes on in the US system and in the EU but was first coined to describe the rapacious kleptocracies of Marcos in the Philippines and Suharto in Indonesia).

We should be now have learned the lesson Tony Blair taught conservatives - that the old adage of the business conservative, "what's good for business is good for the nation", doesn't apply. It is what is good for consumers - for the people - that matters and we know that, in economic terms, 'good for the people' almost always equates to free enterprise and free trade. What Smith railed against was that businesses clubbed together to fix markets, that they pressured governments to introduce protectionism, and that they supported regulations that prevented new competition from developing. For Smith free trade and free enterprise were the solution not the problem.

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Bradford Council's anti-business planning policy in action - health fascism edition

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Last year Bradford Council introduced - despite being told by their own Director of Public Health that it was pointless - a draconian planning policy banning new fast food outlets near schools and other places where children gather (churches, mosques, parks, play groups and so forth). The intention of the policy is to reduce levels of childhood obesity.

Yesterday the Deputy Leader of Bradford Council was crowing about the "success" of the policy:

"It is good to see that this new policy is working in blocking takeaways in these areas, as the purpose of this policy is to protect the health of young people in the district.

"When we consulted on the policy, comments were positive, especially from health professionals who recognise the obesity issue in Bradford."

In simple terms the policy bans new takeaways within 400m of schools (and all those other places) - which, if you know Bradford, means every single high street across the district. Except the City Centre because the politicians excluded it from the ban.

The article lists six proposals for new businesses that have fallen foul of the policy. That's six fewer businesses in Bradford each of which might have generated two or three jobs in a city with very high rates of unemployment. All to deliver an unquantifiable objective - there is absolutely no way for Bradford Council to know whether or not stopping these businesses from operating is reducing levels of childhood obesity.

The only quantifiable outcome of the policy is fewer businesses and fewer jobs. So when Cllr Slater says it's not "anti-business" she is lying.
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In which a planner (inadvertently) shows us why lefties shouldn't be allowed to run cities

A town planning chap donned his cloak of leftiness and set about playing Cities: Skylines with the intention of testing "an alternative economic model which challenges the assumption that growth is only good". It didn't end well:

Whole districts are abandoned, public services have been shut down, employment has collapsed and the budget is crippled by Greek magnitudes of debt. There is also no democracy, or I would have been voted out of office long before the lights went out. “Where has everybody gone? #ghosttown” peeps my timeline. I had tried to break the rules of the game, and ended up with a broken city.

Not surprisingly our gamer didn't think that the problem lay with his strategy but, as is common with idiots of a left wing bent, rather 'the rules of the game'. His conclusion was: "what we could really use is a game that helps us develop and test a compelling alternative".

So let's look at his strategy and ask whether there might be some problems - even in the real world:

Jobs are in teaching, healthcare and public service – professions that contribute meaningfully to society and directly improve the quality of our lives. All energy production is renewable. Industrial districts are zoned for agriculture and forestry. There are no offices, no shops, and no landfill sites.

Ah, problem number one - nobody is doing a job that generates value, there is no means of paying for that education, healthcare and 'public service'. And, just as importantly, nowhere for these highly valued teachers, doctors and assorted public servants to spend their high salaries (the result of their high skills of course).

But my citizens are insatiable consumers, infuriated by the boredom of a good quality of life, and it doesn’t take long for them to balk at my pious, dematerialistic policies. I get complaints that “there’s nothing to do at weekends”. The blue bar, showing demand for commercial space, fills to the top. The game lectures me: “People want places to shop and enjoy themselves.” I’m tempted to placate them with a “Statue of Shopping”.

We live to consume and our intrepid lefty gamer has failed to realise this - people want places of leisure and pleasure and, quite frankly, his carefully manicured garden city is dull as dishwater. But instead of responding to what his citizens want the response is to ram more of the same down their throat (plus something they really don't want - very high taxes):

I build high schools, fire stations and bus routes. I plant trees on every street and put public spaces in every district. The logic of the game quantifies the benefits of this public infrastructure through private interests: “Parks and plazas raise the value of land around them, making citizens happy”. It also calculates infrastructure as a liability, which starts adding zeros to the expenses column of my budget. I’m soon pushing taxes up to 14% to balance the books, but this causes people to leave town in droves, shrinking my tax base and leaving behind vacant buildings.

You've noticed another problem - not only do we have a city with no productive workers and no service industry but our brave lefty gamer has failed to notice that the built environment needs looking after and, without income, that looking after falls on his city budget. We've a very expensive city built to provide jobs for public employees but with no shops to browse round, no pubs in which to celebrate, no bowling alleys to take the kids for a birthday treat, no cafes to chill in, and no restaurants for that first date. Plus no money to pay for anything.

And (given there's no momey) it's not surprising that the place is going bust - so our gamer compounds this:

I resist, but eventually have no choice but to take out a troika of loans at unfavourable rates. I’ve now been lured into a dependence on growth to service the public debt. But with no growth forthcoming, the city is on the brink of bankruptcy and I’m forced to accept the terms of a bailout.

What this game tells us (and I'll accept that the game's model may not be a perfect description of reality) is that private business is essential to successful places, that we are consumers before we are producers, and that value is better determined by markets rather than the arbitrary opinions of lefty planners. And we rather know all this - Finn Williams, our gamer, could have created a stable and resilient city if he'd embraced the things that really make cities tick. It's not about growth over all things but rather about generating enough value to sustain the nice things we want like parks, tree-lined boulevards and creative public space. Above all people want pleasure in their consumption, they want lovely things around them and they desire the latest gizmos and gadgets. I'm sure Finn has a top-of-the-range computer, an iPhone, and a snug flat in London lined with all the stuff he loves. So why is it he wants to create a city that can't provide those things and that place?

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Sorry envious lefty folks but entrepreneurs did build that infrastructure

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You'll all be familiar with the "you didn't build that" line directed at wealthy and successful entrepreneurs who have the audacity to use public roads, educated employees and safe communities in managing their business. The most commonly used example - usually in the form of this little Internet poster - is from US Senator Elizabeth Warren.

There is nobody in this country who got rich on his own — nobody. You built a factory out there? Good for you. But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police-forces and fire-forces that the rest of us paid for. You didn't have to worry that marauding bands would come and seize everything at your factory — and hire someone to protect against this — because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea. God bless — keep a big hunk of it. But part of the underlying social contract is, you take a hunk of that and pay forward for the next kid who comes along.

You can hear as the socially aware cheer to the rafters at Liz sticking it to the man - telling those rich, successful business people that they owe all that success to the government and should be jolly grateful that it plans to take most of it away in taxes. And it's true that all those things were done with public money (although it's entirely possible - certainly with roads - that private investment could have delivered just as well). But that's not the point, the point is that the rich and successful entrepreneur added some value that wasn't there before - here's Don Boudreaux:

The government-built road that Smith uses to earn handsome profits by serving consumers might well be absolutely essential to Smith’s success, but this fact doesn’t mean that the road’s contribution at the margin to Smith’s success is significant.  Smith’s profits depend upon what he adds to the road’s services – how Smith himself uses the road to create value for consumers.  If Smith uses the road to ship truckloads of ordinary toothpicks to market, he might earn just enough to continue in that line of work, but he’ll not earn magnificent profits.  If instead Smith uses the road to ship truckloads full of new’n'improved toothpicks – toothpicks that sell at prices only slightly above that of ordinary toothpicks but, in addition to doing what ordinary toothpicks do, also are guaranteed to prevent gum disease, cavities, bad breath, insomnia, and erectile dysfunction – then Smith profits magnificently.  Smith’s “above normal” profits (as economists call them) have nothing to do with the road (or with, say, the private efforts of entrepreneurs who are responsible for the delivery truck Smith uses) and everything to do with Smith’s own innovative efforts.

This is the entire point - the entrepreneur is successful because he gets a small part of the value he has added to society (about 3%), most of that value is enjoyed by the consumers who use the goods or services that entrepreneur creates. Having schools, hospitals, roads and policemen paid for from taxes is not a guarantee that we will get that extra bit of margin - it is entirely down the the entrepreneur, which is why such folk are so rich.

So we have benefited (collectively) from 97% of the value added by the creation of whatever wonderful innovation our entrepreneur has developed. And, since this is how the world works, a pretty juicy chunk of that 97% has gone to the government is taxes, duties, fees, levies and rents - the Elizabeth Warren argument is simply wrong. For sure, the entrepreneur didn't build those roads but the extra tax income the added value from his innovation provides made a big contribution to providing schools and hospitals as well as contributing to the next generation of infrastructure investment.

No-one denies the essentially collective nature of free markets - the idea that they are selfish, individualistic or greedy is utter nonsense - yet the cheerleaders for what we might call the 'envious left' continue to peddle the lie that somehow that billionaire entrepreneur isn't successful from his own intelligence and efforts. Worse still that our entrepreneur should face punitive taxes on income and on the return from investment for the sole reason that he has such a lot of the stuff and we don't like him for that reason.

In the end, the marginal improvements those entrepreneurs got rich from also were what made us all richer and made it possible for government to built that infrastructure so the next generation of creative business people can make the next set of marginal improvements (as well as the rest of us enjoying better roads, schools, hospitals and sundry other infrastructure).

The entrepreneurs did build that...

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If a Marxist can understand the difference between being pro-business and pro-market, why can't many Conservatives?

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I mean it's not hard is it? Here's Chris Dillow:

...we must distinguish between business and markets. Business is about hierarchy and control; markets are about dispersing power. Markets are about competition, whereas business tries to suppress competition and seek monopoly power; the last thing big business wants is creative destruction. A pro-business government would seek to protect incumbents through red tape that strangles small firms; tough copyright laws; generous outsourcing and procurement policies; and tax breaks. A pro-market government would do the exact opposite, and do everything it could to promote competition. Governments can - and should - be anti-business but pro-market.

I'm a marketer. My professional colleagues have a simple job - to assist our clients or employers in creating monopoly (or die trying). Sometimes the marketing budget is used to lobby governments or regulators to change rules to limit competition (agriculture, banking, energy) and sometimes the marketing budget is used to try and persuade consumers that there isn't any alternative to the clients product (food, detergents, beer). Trust me on this folks, the former is a hell of a lot easier than the latter.

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Support your local grant farmer!

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Apparently there is a crisis of support for something called 'green industry'. This thing is our salvation and, of course, the planet's salvation too:

Green businesses and clean tech entrepreneurs are not receiving enough support from government, MPs will warn today, arguing the UK is at risk of missing out on a £3.4 trillion global market opportunity.

The report that has led MPs to "warn" us of dire things talks about the problems that 'green entrepreneurs' face transforming their planet-saving technological wizardry into part of that "£3.4 trillion global market". There is, we're told something called the 'valley of death' that prevents these whizz-kid entrepreneurs from bringing their product to market. Now Psalm 23 aside, this 'valley of death' through which the green innovator must walk seems to me a simple thing really - and indeed the 'entrepreneurs' concerned aren't real entrepreneurs either.

The first clue is from Tim Yeo MP, who (despite his substantial financial interest in so-called 'green industry') chairs the Energy and Climate Change Select Committee:

 "The government should be doing all it can to support innovative UK businesses in their efforts to access the growing global market for low-carbon goods and services."

And, of course, by support what Tim means isn't gentle encouragement but hard cash - the distribution of grants and soft loans. Indeed, the complaint isn't about the non-existence of these grants but that it's hard for budding 'green' business folk to get their mitts on the moolah.  So what MPs want is a simpler and easier way for people to access the cash - the very antithesis of entrepreneurship. It could even be said that any entrepreneur - regardless of hue - that requires government support to make the business work isn't displaying much enterprise or initiative.

The Department for Environment & Climate Change responds to the complaint, not by saying that 'green entrepreneurs' should do what regular entrepreneurs do and sink of swim in the real world of real markets, but by bragging about how much cash is lavished in grants on emerging 'green' technologies:

"...a DECC spokeswoman insisted the Department has beefed up its delivery of innovation programmes since 2010, with initiatives such as the Offshore Wind Accelerator highlighting how industry can pool resources with government support to address common challenges.

She also pointed to a £25m Energy Catalyst fund, which opened in May, to support technology development across the "valley of death" to commercialisation, as well as a Technology Innovation Needs Assessment process that allows LCICG to focus spending on those clean technologies critical to meeting the UK's decarbonisation and energy security objectives at the lowest cost."

We're not talking about real business here but what the Yanks call 'corporate welfare' - the business equivalent of the benefits scrounger. I prefer to use a different term for this activity - it's more evident in the voluntary sector (and what might be called the 'social economy') but what we see here is the extent to which millions of other folks' money is lavished on 'technology' start-ups. There is no 'valley of death' to cross - if the business plan is viable then there are plenty of ways to secure capital without holding out the bowler hat for a government department to fill it with gold.

I call this 'grant farming' - the process whereby ill-formed and barely viable technology projects can be turned into vehicles for attracting grant funding from government (local, regional, national and EU). There is an entire industry dedicated to processing and securing these grants and very little, if any, evidence that they result in new technologies reaching the market more quickly. Or in those technologies proving to be sustainable (in the true financial sense rather than the 'living-in-a-yurt' sense).

The 'green' economy has become the great cash cow for these grant farmers as millions is hosed at a thing called 'decarbonisation' (I'm sure my Dad used to do this to his motorbike once a year). And, since economic success isn't the aim, the resulting grants do not work to create a new 'green economy' but establish and exploit a sector wholly dependent on those grants or subsidies.

In essence Tim Yeo MP isn't urging backing for real business but instead crying out that we should support our local grant farmers. Not surprisingly Mr Yeo is one of those grant farmers himself!

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"Oh them? They're trade." Thoughts on who the Conservative Party is 'for'...

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This post is a bit of a mish-mash - partly it bounces off Chris Dillow's idle considering of who the Tory Party is 'for' and partly it extends on my own musings about the continued disdain - from professionals and increasingly from public servants - for people who make their living running private businesses. A while ago I wrote about my mum having to use the 'tradesman's entrance' to deliver meals-on-wheels to the relicts of vice-admirals:

So mum delivered the dinners to these very posh ladies, so posh that, for one, mum had to go through the kitchen door. The front door was only opened for visitors and mum, for all that she was bringing the only hot meal that lady would get that day, didn't qualify as a visitor. Mum was trade. And trade used the kitchen door.

This was pretty typical of a 'certain sort' - there was something slightly grubby about the mundane business of producing and delivering the goods or services people need. And front doors weren't for that sort of thing. However, we should be more concerned by the constant drip of 'profit is bad' arguments emanating from the publicly-employed middle classes.  Partly this argument is a response to the perceived (wrongly perceived, I would judge) threat to these comfortable public servants that comes from the disruption of public monopoly - either by fiat through outsourcing and competitive tender or else through technology throwing up different approaches to the services those public monopolies deliver.

However, I was struck by this extract from an essay by Don Boudreaux about the work of Deirdre McCloskey on the reasons for capitalism's success:

Until the 17th century, those who earned their living through trade were the Rodney Dangerfields of their eras: they got no respect.  Merchants and other people operating on the supply side of commercial activities and transactions were tolerated.  But they were viewed and spoken of with contempt.  Unlike warriors who dirtied their hands honorably (namely, with blood), traders dirtied their hands dishonorably (namely, with profit).  Unlike the nobility who got their riches honorably (namely, by idly collecting land rents), merchants got their riches dishonorably (namely, by actively trading).  Unlike the clergy who won their rewards honorably (namely, by pondering the eternal), the bourgeoisie won their rewards dishonorably (namely, by responding to what Hayek later called “the particular circumstances of time and place”).

I would suggest the 'profit-is-bad' argument justifying public monopolies (and indeed justifying creating new public monopolies) still echoes what Boudreaux is saying - not simply the view that such a public monopoly in say transport systems is a better way to run those systems but that, by removing profit, the system is morally better regardless of whether the service it provides is improved.

We see, in the ever more shrill and strident verbal assaults on News Corp and the Daily Mail, another echo. Indeed, the attack on free speech implicit in the Leveson witch hunt should remind us that the target wasn't the press in general but the for-profit press and especially the part of the press making profits for Rupert Murdoch. The behaviour of The Guardian (owned by a trust) or the BBC (a public sector body) was not under scrutiny in this process because these are noble undertakings whereas Rupert and Paul are merely trade. Indeed the sneering dismissal of Rebekah Brooks on the basis of her working-class - 'trade' - roots amplifies the echoes of the time when business was grubby. Reading some pieces you can almost hear the shock at hearing Rebekah, the daughter of a 'tug-boat captain', was allowed in through the front door.

So when Chris Dillow observes in stumbling around the target audience of the Conservative party comments that:

Now, you might reply that this merely shows that Tories are the party not of big business but of economically illiterate little Englanders - hence its vulnerability to Ukip.

Even this, though, isn't wholly clear. Austerity has clobbered a lot of traditional Tory voters - older, wealthier people who have suffered from low returns on their savings. This makes me wonder whether our (OK my) longstanding prejudice is actually true. Maybe the Tories are not any longer the party of big vested interests in general.

...I am struck by the realisation that the Conservative party is 'for' (if that means much these days) people who work in the world of making goods and producing services that are sold in markets, some of which might be free and open. And the Conservative Party isn't just 'for' the owners and directors of these free enterprises but it is 'for' all the people who work in those businesses - from the boss to the tea boy, from the financier to the cleaner. In the broadest sense of the word, embracing the sneering meaning 'trade' held for many in the traditional elite and in the professions of law and medicine, the Conservative Party is 'for' trade and 'for' the people who engage in trade.

And I would like to think, against those people who literally or metaphorically make people like my Mum use the kitchen door.

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A glimpse of another Africa

Nairobi

You're all familiar with the Oxfam picture of Africa. The starving children, the smiling farmers kept from death's door by the good work of one or other 'aid programme', the wells dug and the women with bundles on their heads.

This is the Africa of development charity marketing and of the politicians' justification for the international aid budget. It's a rural, poor Africa where food crises are only a dry month away and where fair trade evangelists bring the good news - you can stay on your smallholding barely scraping a living for another year!

And the image is something of an insult - dare I say it, a rather neo-colonial insult. The implication is that, without the expertise of us rich, clever Europeans those Africans are condemned to a life of malnutrition, disease and desolation. It is wrong.

Think back to the terrible events in Kenya back in October - not the terrorism but the target of the terrorists. It was a Westfield shopping mall. Hardly the Oxfam image of Africa. This is another Africa, an urban Africa that isn't filled with subsistence farmers and big-eyed hungry children but with trade, with making, buying and selling things and with entrepreneurs:

I present to you Africa’s brightest young entrepreneurs. These are the ones who are making the most dramatic impact in Africa today in manufacturing, technology, real estate, media & entertainment, financial services, agriculture, fashion and the service industry. They are impatient to explore new possibilities and slowly but surely, they are building empires. 

OK, it's a bit gushing but this is a positive, exciting, growing Africa not the supposed basket case that the likes of Oxfam would have us believe. An Africa with people like Christian Ngan:

After working in financial services in France, first as an analyst at French investment bank Quilvest Group and as an associate at Findercord in Paris, Christian Ngan returned home to Cameroon to start his own business in 2012. With $3,000 of his savings, he founded Madlyn Cazalis, an African hand-made bio cosmetic company that produces body oils, natural lotions, creams, scrubs, masks and soaps. Madlyn Cazalis products are sold and distributed across more than 30 chemist stores, beauty institutes and retail outlets in Cameroon and neighboring countries in Central Africa. 

And with Seth Akumani:

Akumani, 30 is a co-founder of ClaimSync, an end-to-end claims processing software that enables hospitals, clinics and other healthcare facilities all over the world to automate patients’ medical records and to process records electronically. Claimsync’s solution allows these healthcare providers to easily prepare medical claims and send electronically to health insurance companies. In 2013 ClaimSync was the sole African company to participate in the high-profile, IBM, Novartis, GlaxoSmithKline backed Accelerator program HealthXL in Dublin. ClaimSync was recently acquired by GenKey, a Dutch-based biometrics company.

These men and women - more than all the international aid, fair trade campaigns and guilt-tripping charity appeals - are the future hope for Africa. But we never talk about them preferring instead our cosy little colonial myth. Believing it when we're told - again and again - that Africa is filled with poor farmers whose only protection and hope is the caring, kind and white face of Oxfam. That somehow the sort of society we enjoy - of urban wealth rather than rural poverty - is not something Africa can attain.

Africa has a long way to go - it's still too rural and too poor. But the answer isn't propping up poverty with subsidy but rather promoting business, entrepreneurship and trade. Backing the continent's entrepreneurs to do what entrepreneurs did for Europe, Japan and the USA - make us all, compared to today's Africans - rich.

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Why football is better for its millionaire players

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Tom Finney was a great player. I have this on good authority - Stanley Matthews, Matt Busby, Bobby Charlton, Booby Moore all said so. Who am I to argue.

And it was a different age, the grounds were packed, crammed to the rafters with fans of all ages. But the players, for all that we described them as heroes, were treated like corporate chattels:

On a pre-War summer tour with England against Italy, Austria and Switzerland, he was made an astonishing offer by Prince Roberto Lanza di Trabia, millionaire president of Palermo in Sicily, a then astonishing £130 a month, a villa by the shore, a Ferrari, flights for his family whenever wished, and a £10,000 signing-on fee.

With the retain-and-transfer slavery employment of the Football League, by which a player could never leave without his club’s approval, Finney could do no more than quietly make his way home. To the end of his days, he would smile quietly about the memory. 

Because Preston North End wouldn't let Tom Finney go his wages - the maximum wage - were just £20 a week. And there was nothing he, or any other player, could do about this, the clubs - private businesses - were profitable, taking the money from millions through the turnstiles but living under the football league's rules meant they could keep that money. The people who brought the fans in their thousands every Saturday afternoon - Finney, Mortenson, Matthews and so on - they didn't get to see that cash.

Today the biggest chunk of the money the fans pay to watch football goes to pay the wages of the players not the dividends of the clubs' owners. "They're not worth it", we say. "Whatever happened to the working class game" we exclaim. And we are wrong. The game is better for player power, better for so much of the money going to the men who make the product, who provide such glorious entertainment for us and who are the focus of childhood dreams and adult passion.

Football is a better game for its millionaire players.

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Do mutuals scale?

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Charles Moore (among many) comments:

More attention should be paid to the failure of the Co-op Bank. It suggests that an ‘ethical’ motivation does not guarantee that the interests of the customer will be well served.

This may well be true, indeed the 'ethical' argument was always more of a positioning statement than something inherent to mutual organisation models.

My question is more fundamental given the problems with the Co-op (and the banking disaster has taken attention away from its underperformance as a retailer and aggressive behaviour as an undertaker) - can mutuals scale up to be large national organisations and maintain business effectiveness?

It seems to me that the problem is one of accountability - the leaders of large mutual organisations (especially those that are consumer mutuals rather than worker mutuals) are not as accountable to their members as joint stock companies are to shareholders. The business cannot go to its 'owners' for more cash and those owners either cannot or do not act to replace the management when it fails (such as by arriving cap in hand asking for the money to clear up mistakes).

Cullingworth Conservative Club is a mutual organisation - it works because having about 800 members who live in the village and use the club means that the leadership is accountable. A national mutual - the Co-op or one of the big building societies - has a leadership that isn't subject to this attention or scrutiny, that isn't really accountable. Perhaps here lie some of the problems?

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So what is a charity?

We've been used to the debate about defining a 'charity' mostly through discussion of the beneficiaries - should Eton have charitable status? Or the Royal Opera House for that matter?

However there's a different debate - sometimes it might be called the 'sockpuppet' debate - where the organisation with charitable status is, essentially, a delivery agent for the government.

Here's a good example:

The accounts show that St Andrew’s increased its income from £168.7m in 2011/12 to £178m last year. Expenditure rose from £156.2m to £161.2m and the charity increased its funds carried forward from £175.4m in 2011/12 to £192.6m last year.

The charity received donations totalling £22,000 in 2012/13, down from £30,000 in the previous year.

Note that last line. This multi-million pound 'charity' raised just £22,000 in what I would call voluntary income. And the rest?

The charity, which employs about 3,100 people and receives the majority of its income from the NHS...

And, as a result, this organisation:

... has 57 employees on salaries of more than £100,000 a year

Including a chief executive paid £653,000.

It seems to me that this is a large and successful business paying its senior people very well and I'm sure providing fantastic care for its mentally ill clients. But is this what we mean by charity?

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A glimpse of Africa...

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We're always shown the doom and gloom of Africa - the famines, the war, the corruption, wizened old dictators. Here's a glimpse of another - busier, more exciting - Africa. Watch Coutonou in Benin:


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There is no moral basis for taxation...

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This isn't an argument against tax but a simple statement of fact. We pay taxes because we have to and, possibly, because we get some sort of benefit from the payment of those taxes. And in paying those taxes it is entirely proper for us to arrange our affairs so as to pay only the tax that is due and nothing more. I would add that it is for the tax authorities - and no-one else least of all parliament - to assess what we pay and determine whether we have complied with the rules parliament has prescribed.

If parliament believes that I do not pay enough taxes (and assuming that I am not guilty of evading taxes which is a crime) then parliament has it within its power to change the rules that determine how much tax I pay. None of this is about any sort of moral duty or responsibility. Taxation is merely expedient - the means whereby government secures the revenues that government needs to carry out its purpose.

It rather worries me that - for reasons of political opportunity rather than good government - politicians (aided by their friends and relations in the broadcast media) have decided to whip up some sort of mob, to conduct a sort of moral crusade targeted primarily at large corporations.

Why does it worry me? Quite simply because corporations - businesses of one sort or another - are what will lift us out from the ire of recession. It won't be government however much they wish to scatter the magic fairy dust from the basement of the Bank of England across the land. It won't be shiny new value-destroying railways, ridiculous floating airports or delving ever more tunnels under London (there is something wonderfully Swiftian about today's infrastructure schemes) that will provide that elusive growth.

Yet every politician is now dragged into condemnation of tax 'avoidance' - from committees of MPs asking impertinent questions of people who actually contribute to the economy (unlike those MPs) to cabinet ministers writing pleading letters to jurisdictions with tax regimes that have met with disapproval. All to pretend that somehow this attack will help make the economy better and, worse still, accompanied by words like 'evil', 'corrupt' and 'immoral'.

There is no moral basis for taxation - government imposes a levy on our incomes, wealth and expenditure because it can do just that. But this is not a moral act and seeking to reduce how much tax we pay is therefore not immoral. What we see in a ghastly ignorant mob egged on by politicians and other hacks who point at businesses and successful men crying: "look there, wealth and money! We should have more of that for us to spend. These people are moral pygmies for not paying more tax than they owe!"

And the business people are dragged before the media - the court of mob rule - and accused of what? Essentially of complying with the rules set down by parliament, the European Union and contained in solemn treaties between sovereign nations.

Put yourself in the place of those businesses - international in scope and purview. Do you decide to develop your UK business? Or do you go somewhere else? Perhaps China, Brazil or Indonesia - places where the government welcomes your acumen, investment, jobs and wealth.

There is so moral basis for taxation - saying so is stupid and damages our economy.

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