Sunday, 31 July 2016

What's The Best Essay Ever Written? Here's My Favourite...

What's the best essay ever written? Let me ask you to pretend there is such a thing. I like George Orwell's Politics and the English Language a lot. Oscar Wilde's The Soul of Man Under Socialism is very good. Isaiah Berlin's The Hedgehog and the Fox is probably better still. A great many of the essays by Ralph Waldo Emerson, GK Chesterton, Virginia Woolf, and Graham Greene are excellent, and there are quite a few I like by Mark Twain, Francis Bacon and C.S Lewis.

But I think my favourite of all is Leonard E. Read's seminal essay I Pencil (reprinted below), which once read should change the life of any reader that digests it. The basic outline of the essay Leonard E. Read illustrates is that nobody in the world knows how to make a pencil, because once you factor in the loggers, transporters, ore and graphite miners, steel manufacturers, lacquer appliers, and countless others in the production process, it literally took millions of people to make a pencil.

The truths behind it are far more beautiful and astounding than words can really capture. What makes it so beautiful is the sheer scope of what’s contained within – the years of different trials and errors, the innovations, the data-sharing, and the knowledge, information, and labour of millions of people spread out over the expanse of centuries required to make that pencil you hold in your hand.
 
 
The pencil, just like every object in front of you – your desk, the coffee cup, your chair, the wallpaper, carpet, light, plaster for the ceiling, and the electronic device on which you’re reading this blog post were produced by a collective effort that began hundreds (in some cases thousands) of years prior to your being born, by a cooperative of people that mostly never met each other.
 
That’s a story of the utmost elegance, but there’s another element to it: the end result of all those millions of units of collective effort has resulted in a pencil that costs a mere few pence to purchase – probably about 1% of the current UK hourly minimum wage. It’s a picture that’s really quite ineffable – a whole history of people giving their labour so that people of modern days could hold that pencil in their hand for a few pence.
 
Once you extend that picture to every good and service in the world, and every consumer, it shows the story of the free market as being quite a stupendous narrative. All of human history working together, each individual simply looking after their own needs (and their family), most absolute strangers to one another, in different geographical locations, at different times, and all comprising small elements in one gigantic progression explosion.
 
Please do consider all that when people tell you that capitalism is all about greed, selfishness and individualism. It is not, it is the opposite - it is about diversity, cooperation and being mindful of other people's wants and needs, as this tremendous essay illustrates better than any other I've read. Hope you enjoy...
 
I Pencil, Leonard E. Read
I am a lead pencil—the ordinary wooden pencil familiar to all boys and girls and adults who can read and write.
 
Writing is both my vocation and my avocation; that's all I do.
 
You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery—more so than a tree or a sunset or even a flash of lightning. But, sadly, I am taken for granted by those who use me, as if I were a mere incident and without background. This supercilious attitude relegates me to the level of the commonplace. This is a species of the grievous error in which mankind cannot too long persist without peril. For, the wise G. K. Chesterton observed, “We are perishing for want of wonder, not for want of wonders."
 
I, Pencil, simple though I appear to be, merit your wonder and awe, a claim I shall attempt to prove. In fact, if you can understand me—no, that's too much to ask of anyone—if you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing. I have a profound lesson to teach. And I can teach this lesson better than can an automobile or an airplane or a mechanical dishwasher because—well, because I am seemingly so simple.
 
Simple? Yet, not a single person on the face of this earth knows how to make me. This sounds fantastic, doesn't it? Especially when it is realized that there are about one and one-half billion of my kind produced in the U.S.A. each year.
 
Pick me up and look me over. What do you see? Not much meets the eye—there's some wood, lacquer, the printed labeling, graphite lead, a bit of metal, and an eraser.
 
Innumerable Antecedents
Just as you cannot trace your family tree back very far, so is it impossible for me to name and explain all my antecedents. But I would like to suggest enough of them to impress upon you the richness and complexity of my background.
 
My family tree begins with what in fact is a tree, a cedar of straight grain that grows in Northern California and Oregon. Now contemplate all the saws and trucks and rope and the countless other gear used in harvesting and carting the cedar logs to the railroad siding. Think of all the persons and the numberless skills that went into their fabrication: the mining of ore, the making of steel and its refinement into saws, axes, motors; the growing of hemp and bringing it through all the stages to heavy and strong rope; the logging camps with their beds and mess halls, the cookery and the raising of all the foods. Why, untold thousands of persons had a hand in every cup of coffee the loggers drink!
 
The logs are shipped to a mill in San Leandro, California. Can you imagine the individuals who make flat cars and rails and railroad engines and who construct and install the communication systems incidental thereto? These legions are among my antecedents.
 
Consider the millwork in San Leandro. The cedar logs are cut into small, pencil-length slats less than one-fourth of an inch in thickness. These are kiln dried and then tinted for the same reason women put rouge on their faces. People prefer that I look pretty, not a pallid white. The slats are waxed and kiln dried again. How many skills went into the making of the tint and the kilns, into supplying the heat, the light and power, the belts, motors, and all the other things a mill requires? Sweepers in the mill among my ancestors? Yes, and included are the men who poured the concrete for the dam of a Pacific Gas & Electric Company hydroplant which supplies the mill's power!
 
Don't overlook the ancestors present and distant who have a hand in transporting sixty carloads of slats across the nation.
 
Once in the pencil factory—$4,000,000 in machinery and building, all capital accumulated by thrifty and saving parents of mine—each slat is given eight grooves by a complex machine, after which another machine lays leads in every other slat, applies glue, and places another slat atop—a lead sandwich, so to speak. Seven brothers and I are mechanically carved from this “wood-clinched” sandwich.
 
My “lead” itself—it contains no lead at all—is complex. The graphite is mined in Ceylon. Consider these miners and those who make their many tools and the makers of the paper sacks in which the graphite is shipped and those who make the string that ties the sacks and those who put them aboard ships and those who make the ships. Even the lighthouse keepers along the way assisted in my birth—and the harbor pilots.
 
The graphite is mixed with clay from Mississippi in which ammonium hydroxide is used in the refining process. Then wetting agents are added such as sulfonated tallow—animal fats chemically reacted with sulfuric acid. After passing through numerous machines, the mixture finally appears as endless extrusions—as from a sausage grinder-cut to size, dried, and baked for several hours at 1,850 degrees Fahrenheit. To increase their strength and smoothness the leads are then treated with a hot mixture which includes candelilla wax from Mexico, paraffin wax, and hydrogenated natural fats.
 
My cedar receives six coats of lacquer. Do you know all the ingredients of lacquer? Who would think that the growers of castor beans and the refiners of castor oil are a part of it? They are. Why, even the processes by which the lacquer is made a beautiful yellow involve the skills of more persons than one can enumerate!
 
Observe the labelling. That's a film formed by applying heat to carbon black mixed with resins. How do you make resins and what, pray, is carbon black?
 
My bit of metal—the ferrule—is brass. Think of all the persons who mine zinc and copper and those who have the skills to make shiny sheet brass from these products of nature. Those black rings on my ferrule are black nickel. What is black nickel and how is it applied? The complete story of why the center of my ferrule has no black nickel on it would take pages to explain.
 
Then there's my crowning glory, inelegantly referred to in the trade as “the plug,” the part man uses to erase the errors he makes with me. An ingredient called “factice” is what does the erasing. It is a rubber-like product made by reacting rape-seed oil from the Dutch East Indies with sulfur chloride. Rubber, contrary to the common notion, is only for binding purposes. Then, too, there are numerous vulcanizing and accelerating agents. The pumice comes from Italy; and the pigment which gives “the plug” its color is cadmium sulfide.
 
No One Knows
Does anyone wish to challenge my earlier assertion that no single person on the face of this earth knows how to make me?
 
Actually, millions of human beings have had a hand in my creation, no one of whom even knows more than a very few of the others. Now, you may say that I go too far in relating the picker of a coffee berry in far off Brazil and food growers elsewhere to my creation; that this is an extreme position. I shall stand by my claim. There isn't a single person in all these millions, including the president of the pencil company, who contributes more than a tiny, infinitesimal bit of know-how. From the standpoint of know-how the only difference between the miner of graphite in Ceylon and the logger in Oregon is in the type of know-how. Neither the miner nor the logger can be dispensed with, any more than can the chemist at the factory or the worker in the oil field—paraffin being a by-product of petroleum.
 
Here is an astounding fact: Neither the worker in the oil field nor the chemist nor the digger of graphite or clay nor any who mans or makes the ships or trains or trucks nor the one who runs the machine that does the knurling on my bit of metal nor the president of the company performs his singular task because he wants me. Each one wants me less, perhaps, than does a child in the first grade. Indeed, there are some among this vast multitude who never saw a pencil nor would they know how to use one. Their motivation is other than me. Perhaps it is something like this: Each of these millions sees that he can thus exchange his tiny know-how for the goods and services he needs or wants. I may or may not be among these items.
 
No Master Mind
There is a fact still more astounding: the absence of a master mind, of anyone dictating or forcibly directing these countless actions which bring me into being. No trace of such a person can be found. Instead, we find the Invisible Hand at work. This is the mystery to which I earlier referred.
 
It has been said that “only God can make a tree.” Why do we agree with this? Isn't it because we realize that we ourselves could not make one? Indeed, can we even describe a tree? We cannot, except in superficial terms. We can say, for instance, that a certain molecular configuration manifests itself as a tree. But what mind is there among men that could even record, let alone direct, the constant changes in molecules that transpire in the life span of a tree? Such a feat is utterly unthinkable!
 
I, Pencil, am a complex combination of miracles: a tree, zinc, copper, graphite, and so on. But to these miracles which manifest themselves in Nature an even more extraordinary miracle has been added: the configuration of creative human energies—millions of tiny know-hows configurating naturally and spontaneously in response to human necessity and desire and in the absence of any human master-minding! Since only God can make a tree, I insist that only God could make me. Man can no more direct these millions of know-hows to bring me into being than he can put molecules together to create a tree.
 
The above is what I meant when writing, “If you can become aware of the miraculousness which I symbolize, you can help save the freedom mankind is so unhappily losing.” For, if one is aware that these know-hows will naturally, yes, automatically, arrange themselves into creative and productive patterns in response to human necessity and demand—that is, in the absence of governmental or any other coercive masterminding—then one will possess an absolutely essential ingredient for freedom: a faith in free people. Freedom is impossible without this faith.
 
Once government has had a monopoly of a creative activity such, for instance, as the delivery of the mails, most individuals will believe that the mails could not be efficiently delivered by men acting freely. And here is the reason: Each one acknowledges that he himself doesn't know how to do all the things incident to mail delivery. He also recognizes that no other individual could do it. These assumptions are correct. No individual possesses enough know-how to perform a nation's mail delivery any more than any individual possesses enough know-how to make a pencil. Now, in the absence of faith in free people—in the unawareness that millions of tiny know-hows would naturally and miraculously form and cooperate to satisfy this necessity—the individual cannot help but reach the erroneous conclusion that mail can be delivered only by governmental “master-minding.”
 
Testimony Galore
If I, Pencil, were the only item that could offer testimony on what men and women can accomplish when free to try, then those with little faith would have a fair case. However, there is testimony galore; it's all about us and on every hand. Mail delivery is exceedingly simple when compared, for instance, to the making of an automobile or a calculating machine or a grain combine or a milling machine or to tens of thousands of other things. Delivery? Why, in this area where men have been left free to try, they deliver the human voice around the world in less than one second; they deliver an event visually and in motion to any person's home when it is happening; they deliver 150 passengers from Seattle to Baltimore in less than four hours; they deliver gas from Texas to one's range or furnace in New York at unbelievably low rates and without subsidy; they deliver each four pounds of oil from the Persian Gulf to our Eastern Seaboard—halfway around the world—for less money than the government charges for delivering a one-ounce letter across the street!
 
The lesson I have to teach is this: Leave all creative energies uninhibited. Merely organize society to act in harmony with this lesson. Let society's legal apparatus remove all obstacles the best it can. Permit these creative know-hows freely to flow. Have faith that free men and women will respond to the Invisible Hand. This faith will be confirmed. I, Pencil, seemingly simple though I am, offer the miracle of my creation as testimony that this is a practical faith, as practical as the sun, the rain, a cedar tree, the good earth.
 
 
 

Friday, 29 July 2016

There's Something You Should Know About The Rise Of These Prominent Figures


The Corbyn phenomenon and Farage phenomenon in Britain, the Sanders phenomenon and the Trump phenomenon in the USA, the Le Pen phenomenon in France, the Wilders phenomenon in the Netherlands, and the Tsipras phenomenon in Greece are all very different in various ways. But they have a couple of notable things in common.

Firstly, they constitute a movement of people based on the personality, character and views of a single leader who titillates them ideologically and publically vocalises the beliefs they have. And secondly, they are groups of people, often the least well educated in society (though there are, of course, plenty of exceptions), that feel let down by other politicians’ fabrications, past and present.

These movements consist predominantly of people who’ve fallen for the half-truths and falsehoods that politicians have told them, and the misjudged promises they’ve made, about how our citizens will be well off in terms of jobs, education and well-being.

The mass disappointment that turns people onto the coattails of the figureheads above is based largely on the ubiquitous embellishments of economics that fail to account for how global trade and competition penalises uncompetitive domestic industries, and that domestically we were never going to continue to have the lion's share on the manufacturing we once had.

Because the reality is, a large proportion of the lost domestic industry that's lamented, the declining social mobility, the high levels of youth unemployment in some parts and the widening levels of income inequality are all the result of masses of people in the developing nations starting to prosper by becoming more involved in the global market.

Just like with science, economics goes through its own Kuhnian paradigm shifts as well. People are quite used to seeing how new technology changes the labour market landscape, and they embrace it because they see the tangible benefits of having better technological sophistication, and also that the economic pie isn't fixed, meaning better technology doesn't mean fewer jobs.

What they don't see anything like as well, hence the misguided hope they place in the aforementioned political icons, is that things like the lost domestic industry and the widening levels of income inequality are a natural process of people in poorer countries becoming better off through trade - they are not things that our domestic politicians can do very much about, and nor should they.

As I've mentioned before in this blog, the benefits of global trade are rather similar to the innovations of new technology in that on the whole everyone is being made better off by it.

Consequently, then, the Corbyns, the Trumps and the Le Pens of this world find themselves being hailed as the antidote to the laments and so-called injustices of large groups that feel left behind and not listened to by the establishment, when in reality what they want done for them, and what is promised will be done for them by these leaders, either cannot be done, or when it can, would actually make them far worse off than they currently are.



Thursday, 28 July 2016

On The Nature Of Real Life & Online Friendships


Having just had my 40th birthday, I was thinking about the friends I’ve had in life. They can be divided roughly into three groups:

Group 1: Childhood and teenage years (including school)

Group 2: Post-teen until the present day

Group 3: Internet friends

Maybe I’m not the most typical example, because I go out socialising less frequently than the average person, but in the present day just about everyone I’d call a friend belongs in either group 2 or group 3. I have not retained any of my friends from group 1, except one or two who I’ve caught up with online who are now group 3 friends.

All my closest real life friends are in group 2, and I love them all dearly. But the people I spend most time interacting with are those in group 3, my Internet friends. That’s in part because the online world has become (for many of us) such a prominent medium of interaction, but also because the Internet brings to our lives interesting, intelligent, diverse, curious and imaginative minds all over the world that we probably wouldn't otherwise meet.

The Internet also enables conversations to take shape in a more a la carte way. If at a particular time no one in your pub crowd wants to talk about event horizons, epigenetics, the theories of Thomas Malthus or the music of David Bowie, then starting conversations about those things will be met with lukewarm reaction. Whereas online, you can just throw these things out there, and anyone who wants to join conversations will do so, and anyone that does not can sit out.

Real life friends give you the opportunity to look into each other's eyes, which is one of the most powerful things two people can do. But there's this strange aspect to it, where there are things you may well tell a complete stranger (embarrassing things or medical things perhaps) that you wouldn't necessarily tell a close friend, while at the same time there are special things you have with close friends that you only have with those friends. Perhaps that's a little part of what Ralph Waldo Emerson meant when he once remarked that "A friend may well be reckoned the masterpiece of nature".
 
A wife is a man's best friend
 

Tuesday, 26 July 2016

Compulsory Voting Is A Terrible Idea


With all the excitement surrounding the EU referendum recently, some people have been using it as a platform to campaign for compulsory voting in the UK in the hope that it will force encourage people into political interest.

It should be far more obvious than it apparently is, but compulsory voting is a foolish idea, not to mention repressive. Even if we ignore the latter part, that forcing people to vote is a horrid infringement of personal liberty, compelling people to vote that otherwise have complete apathy towards politics is going to have the effect of lowering the quality of the voter pool by adding more uninformed people into the mix*.

To prove the point, the places in which compulsory voting has been introduced has raised voting turnout by around 20 percentage points, but it has also raised left wing votes by roughly the same amount.

Compulsory voting would also lower the quality of politicians too, as an increasingly uninformed forced electorate would be more likely to vote for incompetent politicians and not understand the full extent of their ineptness.

Forced voters are also more likely to be the kind of people to vote in people who seduce them with headline-grabbing inflammatory rhetoric, or deliberately vote for an extreme person in protest at being made to go into the polling booth.

The sooner people grow out of this crazy idea of forcing people to vote, the better.

* I'm all for trying to get more people interested in politics - interested enough so that they make informed decisions, but that is something altogether different from forcing uninformed citizens to vote for something or someone they have no interest in or no clue about.

Monday, 25 July 2016

Why Do People Get A Proposition When It's Expressed One Way, But Totally Fail To Get The Exact Same Proposition When It's Expressed Another Way?


There was once a selection task devised by psychologist Peter Wason to show that people don't naturally think well when logical symbols are required. According to statistics over 90% of you will get this wrong.

You are shown a set of four cards placed on a table, which must conform to the rule "If P then Q". That means that whenever there is a card with P on one side, the reverse side of the card must show Q. The visible faces of the cards show as follows:

CARD 1 - P

CARD 2 - not-P

CARD 3 - Q

CARD 4 - not-Q

Wason asks which card(s) must you definitely turn over in order to test the truth of the proposition that "If P then Q" holds? Have a think about it for a few seconds. 

If you're one of the 90+% you've probably reasoned that you need card 1 and card 3. You want to make sure that P has a Q on the other side, and equally you want to make sure that Q has a P on the other side.

But that's not right - the cards you need to choose are cards 1 and 4. Here's why. Because the rule is "If P then Q" you need to check card 1 (P) to ensure there's a Q on the back, but you also need to check card 4 (not-Q) to ensure there is 'no' P on the back. If there is a P on the other side of card 4, then the rule "If P then Q" has been disobeyed. Cards 2 and 3 don't need to be touched.

Now what's strange, Wason found, is that although people struggle in this task when using logical symbols, they don't when those symbols are changed to more familiar real life situations, despite the logical connection between facts being exactly the same. For example, if instead of "If P then Q" the rule used is "If you come into my pub and drink alcohol you must be 18 or over" people get that one right. The visible faces of the cards show as follows:

CARD 1 - Age 15

CARD 2 - Drinking coke

CARD 3 - Age 18

CARD 4 - Drinking vodka

When presented with the task in the social context of under age drinking, virtually nobody has any trouble choosing cards 1 and 4, even though the logical connection is exactly the same as the "If P then Q" proposition a moment ago.

Alas, such inconsistent thinking extends far into our everyday lives too - a good example being Ricardo's phenomenon of comparative advantage, which basically means that the agent that can do something with the least amount of opportunity cost should do that thing.

For example, if Gina can make 4 brownies every 10 minutes and decorate 9 cupcakes every 10 minutes, and Lisa can make 2 brownies every 10 minutes and decorate 6 cupcakes every 10 minutes, Lisa should be decorating cupcakes even though Gina can do it faster, because comparative advantage says that Lisa ought to be decorating cupcakes because she is less bad at it than making brownies.

Comparative advantage is one of the essential tenets of a free market, and it is terrific in its simplicity and efficiency, yet so many people (politicians and the general public) alike misunderstand it.

Donald Trump is currently the person most publically misunderstanding it - his daily spouting of economic nonsense concerning America and trade is one of the most disturbing exhibitions of political confusion I think I've ever seen in a Presidential candidate (and that's saying something).

Perhaps rather like the Wason selection tests people can see a proposition clearly if it's expressed one way yet miss completely exactly the same proposition when it is expressed another way.

Take imports and exports as a good example. The world is a better place when one country, say Britain, export goods in which it has the comparative advantage, and imports goods in which the importing country, say China, has the comparative advantage. The logic is simple: Brits produce more of the things we are good at producing, and other countries produce more of the things they are good at producing.

Doubtless almost everyone can understand and agree with comparative advantage when we say that it's Lisa, not Gina, who should be decorating cupcakes, but a lot of people stop understanding this very same principle when we tell them that if non-UK countries are more efficient at producing some goods than we are, we should be buying those goods from abroad not protecting our own less-efficient industries.

The mystery as to why Paul McCartney wasn't the drummer in the Beatles is no mystery at all - he may have supposedly been better at drums than Ringo, but he was also much better at playing other instruments and writing songs with them than Ringo, so it made perfect sense to have the much better songwriter writing songs on guitar and piano than the slightly better drummer playing drums.  

Once again, everyone understands why Ringo played drums, not Paul, just as everyone understands why we buy our wine from France, Spain and Italy and not Scotland, Finland and Norway - it's just a pity they cannot carry on following the logic to international trade (take note Donald Trump supporters).

Friday, 22 July 2016

NHS Shocks & Stocks


This week we saw confirmation in the media of something that those of us with market-friendly sexual charisma have been envisioning for ages - that the NHS has been hugely criticised for the bad health of its finances (including, for local readers, our own N + N hospital which has been placed in financial special measures).

By now everyone knows that the future of the NHS is very precarious - thanks to a number of factors (which I blogged about here). But what I didn't know until reading some stats by one of the Adam Smith Institute think tank members is just how much clinical negligence there is, and how shockingly costly it is proving to be.

Apparently just in the 2011-2012 financial year alone, the total cost for the NHS in clinical negligence claims exceeded £1 billion, with a further £50+ million in non-medical compensation claims. However much does this add up to if we factored in every year, even for just the past decade? Several billion pounds I'd suggest.

It's easy to see that this situation would improve in all sorts of ways with greater market efficiency (one wouldn't imagine so much negligence if the costs are picked up by the companies themselves, not British taxpayers). But there is another positive benefit to more private companies in our health service - we'll pay less tax and National Insurance, keep more of our money, and find generally better associations between actions (lifestyle choices, eating and drinking habits, smoking, etc) and consequences (poor health, obesity, liver failure, lung cancer).

By having a taxpayer funded health service we do not incentivise people to look after themselves as much as they would if they picked up the costs of their actions. I don't, of course, mean people whose illnesses are not self-inflicted - but there is a whole scope of work to be done in terms of accountability - whether it is incentivising the public to be in charge of finances that match actions to consequences, or improving the internal spending structure (like the case of Hitchingbrooke hospital where significant savings were made by spending more wisely on things like stationery in a competitive market).

Thursday, 21 July 2016

The Unintended Consequences Of Trying To Help Tenants


New London mayor and arch-socialist Sadiq Khan is attempting to shore up his solutions to the London housing problem by re-loading his regulatory pistol. Part of his ammunition includes giving tenants in London properties a mandatory 6 months' notice law to protect them from expeditious landlords (it's currently 2 months, I believe), as well as bending the leader of the opposition's ear about favouring radical measures for rent controls, and even the possibility of legislating on who can buy property in London.

Regular readers will know my views on the latter two proposals, (if you're in even the slightest bit of doubt about them you can read my views in the 'Housing' tab to the right), but even the law that says landlords must give a six month notice period before evicting a tenant is not as obviously beneficial as it may first appear.

You may be under the impression that it sounds good because it protects tenants against unexpected short-term evictions. This is true, but on the other side it prohibits landlords from evicting problem tenants in quick time, so it's as broad as it is long.

But it's quite possible that the law makes both parties worse off. Suppose the law of six months' notice is equivalent to a £15 per month loss for landlords and a £7.50 per month cost for tenants (when prices have adjusted to reach their equilibrium). If a landlord has no preference as to whether he has to give six months' notice or pay a £15 per month surcharge on each apartment rented, the supply curve for flats shifts up by £15.

The extra guarantee is worth £7.50 to tenants, but a tenant generally has no preference for paying £450 per month for a flat without six months' security or £457.50 for one with additional guarantee. The demand curve will shift up by £7.50.

Consequently, then, changes in supply and demand curves mean the new price is higher than the old by more than £7.50 but less than £15. Given that this state-enforced guarantee increases landlords' costs more than it increases their rents, and since it increases the rent of the flat by more than it increases the value to the tenant, then both landlords and tenants are worse off.

It's true that there are additional varying factors in the landlord-tenant relationship that could be written about here, but the general point holds - that it is possible for a government interference implemented to protect one party to actually make both parties worse off.

In most cases a free contract between two mutually willing signatories is better than a state-enforced restriction that seeks to act on behalf of one party, because they often end up making both parties worse off. This is because, despite popular opinion, the real quintessence of business is to engender exchanges that maximise both parties' gains in the transaction.

Wednesday, 20 July 2016

It Doesn't Matter Who Said It, Neither Party Believes In It Or Cares About It


Theresa May, our new Prime Minister, has decided to accompany her opening few days in office with the Ed Miliband-esque slogan of a system that "works for everyone, not just the privileged few". Her doubters are already asserting that these are empty promises and that the leader of the opposition, Jeremy Corbyn, is the only one who really cares about fulfilling such a promise.

Those making such assertions are quite right that Theresa May is making empty promises, but they are wrong in their belief that Jeremy Corbyn cares about fulfilling such a promise. The reality is, Corbyn's policies are a lot further from offering something that "works for everyone, not just the privileged few" than those of Theresa May, it's just that you have to understand the process behind why this is the case. I'll explain.

I am a libertarian because I care about the poorest people in the world - and because I understand that trade and competition (either in a distal or in a proximal sense) are the main drivers of increased prosperity and well-being in the world. Everything else to which you might ascribe progress - government programs, welfare, aid, charity - are such because of the trade and competition going on (it's because of money earned from trade that government programs, welfare, aid and charity can be funded at all).

Conversely, Jeremy Corbyn and his supporters are socialists because they don’t understand that trade and competition are the main drivers of increased prosperity and well-being in the world. Socialists, whether knowingly or unknowingly, promote ideas that are inimical to the system that “works for everyone, not just the privileged few", because the policies of the socialists are policies that stifle trade and competition.

With their demands to protect domestic industries at the expense of foreign ones, to pay people above the marginal value of their labour, and to disincentivise entrepreneurial enterprises by uncompetitive levels of taxation, they favour a system that works for the privileged few (that is, a large proportion of the world privileged enough to be born in a rich place like the UK) and works against the poorest people in the world. Corbyn and his supporters proudly advocate systems of control that ensure those already winning in the global lottery of life win some more, while those already losing lose even more.

But it goes even deeper than that, because trade works for everyone who partakes in it, so not only would poor foreigners lose out thanks to Corbyn’s policies, a large proportion of fellow Brits would lose out too. When British solar panel manufacturers lose their £25 an hour jobs so that solar panels can be manufactured for £15 an hour abroad, the losers are the Brits whose wages have fallen, but the winners are all the other Brits who can now afford solar panels, and all the workers abroad who can now earn a living producing solar panels.

What's astounding is that when exactly the same logic of the trade off occurs in most other contexts, no one has any trouble with it. When Frank plays ten pin bowling with Dave instead of going to play snooker with Fred, both Fred and the owner of the snooker hall lose out. But everyone understands that trade off. When Lisa chooses to marry Pete because she thinks he'll be a better husband than Jim, everyone understands that trade off as well.

But when it is pointed out that trading with more efficient foreigners at the expense of less efficient British firms is a good thing to do, a large swathe of the population forget everything they understand about trade offs and instead declare their support for a man who wants to make us worse off and artificially interfere in this process on the basis of a misguided, insular Anglocentricity.

For those who still don't get it, I've prepared a little rationality test to examine your consistency.

1) When the polio vaccine was developed and sold over 50 years ago, the beneficiaries were everyone involved in the pharmaceutical industry that got to produce polio vaccines, and most importantly everyone who was saved from the risk of disability or death from polio. As a result of the success of the polio vaccine, there were far fewer crutches, wheel chairs, and iron-lung machines sold to polio victims. The development of polio came at a cost to everyone who made money from supplying medical aids to polio victims, but it benefited everyone else.

2) When solar panels were manufactured abroad at a more competitive rate than in the UK, the beneficiaries were everyone abroad who can now sell their solar panels and everyone at home who can now afford them. As a result of the success of foreign solar panels, there were fewer of them being produced in the UK. The development of foreign solar panels came at a cost to all the suppliers who made money from providing them less efficiently, but it benefited everyone else.

If you can see that both those scenarios amount to a considerable net benefit for human beings - fine, you are thinking clearly. If you cannot see that both those scenarios amount to a considerable net benefit for human beings, you either have a funny take on the world, or you have some brushing up to do.

I can, however, see absolutely no grounds on which someone could argue that scenario 1 brings about a considerable net benefit for human beings but scenario 2 does not, because they are both self-evidently scenarios in which humans are easily seen to be better off.

Alas, Corbynomics, with its favouritism towards artificially supplementing UK industries at the expense of foreign ones takes this very position - both he and his supporters would have no trouble seeing that scenario 1 is considerable net benefit for human beings, but they act as though scenario 2 should be treated differently.

This leads me to conclude that they are either too ill-informed to see how alike the two above scenarios are in terms of general human improvement, or that in actual fact they know how alike those scenarios are but yet they ignore that fact because they know that going against this wisdom and favouring UK industries gets them popularity and votes.

Whichever is the case, foolishness or cunningness, it is preposterous of them to try to take the moral high ground over Theresa May and her party - because not a single one of them seems to care about the letter of the statement a system "that works for everyone, not just the privileged few".

Libertarianism has the only genuine regard for a system that works for everyone, because it cares about all the people in the world, it understands that trade and competition are the main determiners of what works for human beings, and it is unbound by geographical borders and nationalistic preferences.

Tuesday, 19 July 2016

Oops! Someone Doesn't Quite Get This Human Progress Thing


Oh dear! I'm afraid this bit of research from the Pew Research Centre, telling us that for most people there has been stagnation in the past 50 years, because "real wages have barely budged for decades", is wide of the mark. It was written by someone who sees a very incomplete picture. We see this kind of absurd claim made time and time again, but it's facile, not so much in the speck of truth it asserts, but in the plank of truths it omits.

It is too lightweight an analysis to forget just how our earnings are linked to the substantial changes in the quality of life we've seen over the past five decades. The number of hours it would have taken to acquire many of today's basic luxuries 50 years ago far exceeds that of today. Equally, there are countless luxuries available today that weren't available to people 50 years ago, not to mention increased knowledge and connectivity, scientific and medical capabilities, amount of leisure time and increased life expectancy.

To use but one example by way of illustration - consider the Smartphone you own, and on which you may even be reading this blog post. Depending on how much you earn, it probably costs you at most one, two or three hours' wages per month. Now try to imagine how many hours' wages it would have cost you 50 years ago to enjoy even some of the benefits your Smartphone brings to your life - you could have worked for a year in 1966 and not acquired even a third of all the things you could acquire at the touch of a button while waiting at the bus stop for your ride home.

Even putting aside the immeasurable increase in convenience to your life that the instant phone calls, texts, camera and video-camera, music, movies, flashlight, calculator and sat-nav provide, imagine how many people and hours it would take to get you information on the nearest Thai restaurant, tomorrow's weather in London, the price of mattresses cost in John Lewis, whether it's currently safe to travel to Tunisia, and the countless other things you may like to know. And all that's nothing compared with the thousands of lorries that would be required to transport all the books, magazines and newspapers' worth of information available to you on your Smartphone.

Further, ask yourself questions like, would you rather live in a 1966 apartment or a 2016 one? Would you rather drive in a 1966 car or a 2016 one? Would you rather make Sunday lunch in a 1966 kitchen or a 2016 one? Would you rather be treated for cancer with the medical technology of a 1966 hospital or a 2016 one? To those questions, and many more like them, you would always choose the 2016 option.

The upshot is, only a very sub-standard enquirer looks to compare real incomes over several decades and tries to insinuate that we've been stagnating. Pick a dozen goods from a catalogue in 1966 and do the same with a catalogue in 2016 and, as well as the improved quality, figure out how long you would have to work to purchase those dozen items in respective years. The answer will be, longer in 1966. And that, along with the things aforementioned, is what constitutes the improvement, and blows the idea of 'stagnation' out the water.

One final hypothetical, purely for the fun of it: Who would be more astonished: Isaac Newton being shown the technology of Roger Penrose in 1966, or Roger Penrose in 1966 being shown the technology of Roger Penrose in 2016? It's probably a closer call than you might initially imagine.

Monday, 18 July 2016

The Philosophical Muser Goes Nuclear


MPs are set to decide on whether to renew Britain's nuclear weapons program (Trident) in a Commons vote. Jeremy Corbyn, the Green Party, the SNP and quite a few MPs scattered across the Commons are against the renewal, whereas everyone else in Parliament is for it.

It’s obvious that the world is a much less safe place with the existence of nuclear weapons – so obvious, that in actual fact it is probably untrue. When we consider which groups of people are most likely to commit mass harm with nuclear weapons, it seems fairly obvious to me that the existence of nuclear weapons in the hands of countries that are least likely to want to commit mass harm with them (Britain, America, France, China, India) are a significant deterrent against those groups that could one day want to commit mass harm with them (Pakistan, North Korea).

And that's not to mention the harm that numerous dictatorships and terrorist organisations would be able to cause with nuclear capability. Europe is still mourning the damage that one maniac did with a lorry on the streets of Nice. You just wouldn't wish to contemplate how much devastation he and his fellow terrorists would love to cause with the world's most powerful weapons. It doesn't bear thinking about.

On the issue of the world being safer with nuclear weapons - some will be eager to remind me that the only time nuclear weapons have been deployed was by America against two cities in Japan in the Second World War. This is true, but although it was a hugely devastating attack, it probably catalysed the reality we’ve seen in every subsequent decade since, that the last thing the world needs is any more nuclear attacks. To put it another way, Hiroshima and Nagasaki were probably the genies that kept the rest of the world’s nuclear war potential well and truly lodged in the bottle.

Nuclear weapons are relatively expensive, but not as expensive as the 500 years’ worth of time, effort, money and natural resources that went into creating all the world’s peaceful democracies. If there is one thing about which we can positively, definitely be risk-averse, it is this. While nuclear weapons aren’t without their problems, it is insensible to risk their discontinuation, given the cost if it all goes wrong.

We cannot prove that the existence of nuclear weapons in the hands of the world’s most stable democracies is the main reason why there have been no nuclear attacks in the past 70 years, but it’s a hypothesis we cannot afford to risk being wrong about.

Arms as the cause of war as well as the tools for war?
Last September I went away to an interesting festival in London where one of the speakers was the distinguished writer Alan Storkey. He's an interesting and very nice chap, and his basic thesis is that the market effect of arms sales, and propaganda, are the biggest drivers of war, and that excessive supply and excessive sales benefits self-interested groups like arms manufacturers, which leads to creating propaganda-based distrust between nations.

This then has the dual effect of enriching arms suppliers and creating tension between nations that makes war more probable, and consequently means the market for arms plays a huge part in creating wars and engendering mass loss of lives.

I think a lot of what he has to say in that thesis is correct, but what I think it doesn't consider is that the high-end market for arms trading (particularly the kind of sophisticated technology that can cause mass loss of life) is a fairly recent thing - only a few hundred years old - yet humans in their tribal and national groups have been warring and causing mass deaths for centuries, way before they had the sophistication to trade arms or do each other harm on a global scale.

So while it could be argued that the injection of market incentives thanks to self-interested arms manufacturers certainly has added a lot more woe to the situation, history makes it quite clear that humans have pretty much always had a tendency to be in conflict.

What about gradual multilateral disarmament?
In his book War or Peace (a play on words of War and Peace) Alan Storkey also propounds an idea for a world of peace through the vehicle of a gradual ten year, 10% per year, disarmament process involving all nations. After mobilising nations worldwide, what would follow would be UN legislation for full multilateral disarmament over a ten year period, with a 10% cut in military expenditure each year for a decade.

I’m afraid, though, that while it sounds like a nice idea, and may in fact be something that could be implemented in the future, I see many problems with this kind of idealism in the current climate, not least the fact that the chances of all nations multilaterally signing up to this project are slim. Moreover, how are we supposed to enforce it except by the means Mr Storkey is trying to diminish – by nuclear deterrent? I’m not sure it would be as straightforward as Mr Storkey imagines.  

I personally think there are too many nations that do not share this goal and are too unstable and have too much sectarianism for this to be realistically achieved. You have to remember that it took us several hundred years to get to go from feudalism to the advanced, stable, prosperous nation we are now, and it's quite understandable that the risk-aversion to even slight dangers are prominently part of a nation's national defence (plus I don't think the Americans would make it very easy for us to unilaterally decommission our nuclear capabilities, although that's a whole other complex issue).

I think a common goal of not having nuclear weapons in the world is a noble one, and not entirely unrealistic as we might evolve over the next century or so to a position where nuclear threats are a thing of the past. But it's one we are not currently ready to pursue in the manner that our anti-Trident friends wish us to.

Wednesday, 13 July 2016

Let's Face It, We're A Multi-Class Society Now


Economic growth has meant that in the developed world there are now more classes of people. Take Britain and America as prime cases in point. While the majority of the population were once easily categorised as either upper or lower class (with middle coming later), nowadays the elite and the upper class have split, as have the middle class, where we now have the traditional group and a new group that extends all the way into numerous tenets of the white collar groups.
 
Then there is a large group of factory workers and service-industry workers, and an even larger group of low-skilled workers whose wages need to be topped up with government in-work benefits. Lastly, there is a large group of the very poorest in society - those relying on welfare, and those for whom the prospect of a job is pretty narrow.

The reason we have more class groups (if it's even helpful to use the word 'class') is because we have more levels of industry and an increased range of working groups with varying skill requirements. This has a twofold bearing (or should do) on people in terms of progress. In the first place, the brightest, most talented and most aspirational in any group can more easily ascend upwards to the next most desirable group.

And in the second place, despite popular perceptions to the contrary, the people to be most concerned about are not the people several groups up from you, but the people competing with you in your group.

In other words, if you're in the low-skilled group your biggest rivals in the labour market are other people in your group. If a low-skilled immigrant comes into the UK and joins the job market, he doesn't disadvantage Alan Sugar or James Dyson, he disadvantages fellow immigrants and low-skilled British people.

The other factor beneficial to growth is that this new look economy has a lot more competition as businesses from all groups are competing with one another to improve the goods and services they provide.

The other system of demarcation is found in a natural caste system of establishment power. It used to be that the hierarchy consisted of military power, government power (most notably, the civil service), business power, and then cascading down to civilian power.

Given that the civilian group is always the largest group, there needs to be either a force of oppression to maintain the power, or in the case of a more modern parliamentary system a voluntary delegation of power.
 
The main change in order over the centuries is that while military power used to have leadership over government (and in some cases be the same thing), now elected governments have more authority than the military. In many prosperous countries the role of business is becoming ever-more influential in the state of affairs too.

You'll find that while in places like Europe and America this system has been well established for many decades (nearly three centuries in Europe, about half that time in America) other places throughout the world don't have such stability, as military dominance and (often corrupt) political governance are two wings of the same oppression.
 
For example, in places like Burma and North Korea and Pakistan the military oppression of its citizens is concomitant with governmental powers, as is the case in some African countries. In other African and Middle Eastern countries, the military/government duality of rule is underpinned by theocratic influences too, making the situation even more oppressive and totalitarian for the majority of its citizens.

The emergence of a multi-class society goes hand in hand with an emergent economy, where economic growth has engendered increased prosperity (in absolute gains) for almost everybody in this country. A couple of hundred years ago, almost everybody in the country was desperately poor. Now almost nobody is desperately poor.
 
It is because fewer and fewer people are desperately poor that we have a multi-class society, with at least two tiers of the middle class, and emergent services workers and an affluent working class group all doing better than ever. There's still a lot of hardship in society, but a multi-class society is one of those human constructs of demarcation to illustrate how life has got so much better for large proportions of society.
/>