Sunday, 23 October 2016
Saturday, 22 October 2016
For the past few weeks I’ve heard/read several people bemoaning the fact that shops are stocking Christmas goods earlier and earlier. You only need to see a tree and tinsel in the shop window in late October and there will be a mass moan. Here’s what the moaners don’t understand – you cannot really blame the shops for opening earlier and earlier, it isn’t really their fault. If the critics knew about non-linearities and feedback effects they would understand what is happening.
To see why shops are opening earlier, consider this simplified feedback model. Suppose we have M & S, Debenhams, John Lewis and Jarrold’s in the city centre. A long time ago all four shops used to stock their Christmas goods from December 1st. One day M & S try to obtain the advantage over the other three by stocking their Christmas goods a week earlier (from November 24th).
Debenhams, John Lewis and Jarrold’s have three choices; they can do nothing, they can emulate M & S, or they can go one better and stock their Christmas goods earlier (say, from November 17th). If they do nothing they risk losing a week’s vital Christmas trade from opportunist shoppers to M & S; if they emulate M & S then there’s nothing stopping M & S doing the same again, leaving Debenhams, John Lewis and Jarrold’s on the November 24th date and stocking their Christmas goods a week earlier (from November 17th).
So, quite naturally in response they pick the best of the three options by stocking their Christmas goods earlier than M & S. But it doesn’t stop there – what then happens is that each one of their competitors will look to outdo the other by choosing a date earlier than the others. This continues over the years – and if you obtain the statistics you would find a pattern of increased early Christmas stock to match and/or outdo the competition. .
This is what happens when feedback effects occur; the shops are continually under pressure to stock their Christmas goods earlier and earlier to obtain an advantage, which is why you see all these shops beginning their Christmas trading at times that are, to many of you, premature. Their hand has been forced, lest they lose vital trade time to their competitors.
The shops are subject to "feedback" effects – whereby a particular parameter x changes and via a "feedback" route the change in x causes further change in x (thus x is "feeding" back to itself). Feedback systems, depending on the kind of feedback involved, can produce varying "curves" of change when plotted on graph paper – some of which are quite chaotic.
There is a ‘but’ of course – if it were just down to procuring an advantage by trading earlier, then M & S, Debenhams, John Lewis and Jarrold’s would all begin their Christmas trading on January 1st. But, of course, it isn’t like that – there is a balance to be struck, because the shelf room they take up with Christmas stock amounts to a loss of shelf space for other more saleable goods if they are displayed too premature for the festive season.
The decorations, wrapping paper, cards and bumper chocolates would be counter-productive stock if they were displayed in August in the hope of obtaining a festive head start on the rival shops – which is why the balance between being too early and too late in the year is of huge importance.
* This article was first published here at the Adam Smith Institute.
Thursday, 20 October 2016
As I'll explain, and as you won't be surprised to hear, government value is far tinier than you may think. Perhaps the main reason that people think governments provide so much value is because they do not think of alternative providers or the countless ways that the public sector could be improved. That's not to deny that the government is worth having - it's just a very mixed bag.
This principle is easily explained – when you go out tonight and spend £100 in your local supermarket you put up the price of everything else by a net total of £100. If instead you burned the £100 (and of course I wouldn’t advise it) you would decrease the price of everything else by a net total of £100. Naturally those sums are so small that society never notices when we’ve made the economy richer or smaller, but technically we have.
Imagine this as a microcosmic example of a macroscopic state of affairs; the government hikes up my taxes by 13%, which means I have 13% less of my equity to spend. The government gains more roadworkers or local council administrative officers, but my gymnasium loses in the subscription fee from which I withdraw. Then the gymnasium has less money in its bank, which means that bank has less to loan to Sue for starting up her new business, which means Sue’s shelf prices are higher than she planned, which means Mary her customer spends more on a washing machine, which means the curry she was going to have at the weekend is forgone, which means Roshes the Indian restaurateur has less money in his till, and so on.
That is how the economy works – and no government can make us richer on average, they can only shuffle money around from one place to another. There is also the little matter of the futility of governments getting involved in prices. To emphasise this point, you have to realise that prices find their level based on the entirety of human market transactions in the global society. It is literally impossible to make this more efficient by tweaking a few knobs - impossible.
To illustrate this, suppose the government decided to take control of the fruit and veg industry, whereby everything grown, imported and exported is under their management. Everyone in society would still be best off if all fruit and vegetables continued to be priced at its market clearing rate, because any price the government set outside of the market value would either be too high or too low, which means there'll be the wrong amount of fruit and vegetables.
I'd like to draw your attention to this
article from American economist Robert Murphy, who roughly (but soundly) calculates
a $2.6 trillion increase in annual economic output if "the government were to
restrict itself primarily to its classic role of protecting the country's
residents from criminals and invaders".
Wednesday, 19 October 2016
What we actually find, in fact, is that humans tend to oscillate between what we might call "Working out our actions from emotional desire one situation to the next" and what we might call "Having a firm and consistent set of moral values" - and we are frequently trying to find the right balance between the two, which is why you'll often notice that some of our strengths lead to faults, and some of our weaknesses lead to positive qualities. And you'll find in some cases that the two are quite inextricably entangled. Or to paraphrase W.H. Auden, if you take away some of our devils you take away some of our angels too.
There is no real moral philosophy in the equation - most of us are very rarely in positions in which we get to see how we'd react in those age-old moral dilemmas. And most of us are very rarely in positions in which we and are under great pressure to be amazing human beings, or ensnared in a situation in which we are terrible - our lives are played out as a kind of weighted average of the whole spectrum, in which we usually never allow ourselves the self-rebuke or the self-congratulation of extreme badness or extreme goodness.
Sunday, 16 October 2016
Saturday, 15 October 2016
If you are someone to whom the above applies (and ditto the British political equivalent), I have one or two things to say. I've written before (here and here) about how in terms of probability your individual vote in an election or a referendum almost certainly won't make the slightest bit of difference to the outcome.
If you choose y you get less of z, and so on. One is ill-advised to just think of voting as ‘Well everyone should do it!’. Those for whom voting is a beneficial trade off should do it, and those for whom it’s not, should not. As with most things, it’s easy to plug in the numbers and ascertain probability for whether a trade off is beneficial, to yourself and to the wider population.
Thursday, 13 October 2016
I also pointed out on Facebook the other day the sharp contrast between thin-skinned second rate MPs wanting sexism to be a hate crime, and women on the front line in Syria courageously doing battle with the sanguinary thugs of Islamic State.
It's not for me to tell others how they should fight their battles, but I can, I think, make a couple of suggestions on how all this is being perceived in some quarters, and on whether there may actually be a method of handling these situations that's possibly a teensy weensy bit better.
In a blog a few weeks ago I made a point about how exposed modern day socialists are when they shout in anger about issues in which free market economics has claimed victory long ago. This got me thinking about whether, just possibly, the same might be starting to be true in the
As a consequence, women’s liberation has certainly been a necessary and laudable part of history. But now that brains are the key to a successful career, not brawn, and that from the years up to 40 women are now out-earning men, is it perhaps worth considering that in some cases women’s liberation is beginning to send its artillery into battles that have already been won?
Sunday, 9 October 2016
I'm going to finish with is only a rough approximation from my own sparse and
scattered data studies in life in general - it is just something for you to
ponder - but in terms of the entire global economy, based on what I've been
reading in the past ten years or so, the global imbalance between trading in
the supply and demand market is probably somewhere between 65% and 75% of the
total size of financial transactions in the world. Just to be clear, that 35%
to 25% excess doesn't include public sector industry, that is purely the excess
created from all the extraneous credits and debits from things like increasing
money supplies, price controls, debt interest, and so forth. On the global
balance sheet, that amounts to literally trillions of pounds of an imbalance -
the vast majority of which is caused by interference in a market that primarily
need only rely on the price signals of supply and demand.
Thursday, 6 October 2016
What needs to be understood is that the term 'trickle down' would never be uttered by a credible economist, because credible economists know that the trickling fallacy is a garbled label thought up by the left, having no real bearing on how things actually work. In short, if we don't claim it, it's silly to attempt to counterclaim it against us.