Quotulatiousness

June 11, 2014

Winter damage to vineyards in Niagara and on the Bench

Filed under: Business, Cancon, Wine — Tags: , , — Nicholas @ 08:20

The first — and probably not the last — definite sign of how bad this winter was for the wineries comes from today’s newsletter from Featherstone, where Louise Engel says they’ve suffered severe damage to some of the vines:

Every season is an adventure in weather here in Niagara. Every year since we bought the vineyard fifteen years ago, Dave and I have looked at each other at some point during the grape growing season, sighed deeply, and said:

“Hmm … well, never seen that before.”

This past year we added ‘polar vortex’ to our table talk. However, we were optimistic that the vines would come through relatively unscathed from the punishing winter temperatures. Our optimism was misplaced. Both the Merlot and Sauvignon Blanc vines have been badly damaged and will need extensive re-planting.

The Gewürztraminer has been virtually wiped out. We are considering replanting that entire field with a hardier variety, like Riesling. The Riesling field that was planted in 1998 is sixteen, going on seventeen, and still thrives. So it may be so long, farewell, auf Wiedersehen, goodbye Gewürztraminer.

Does this mean that prices will increase? No, it doesn’t. But if you are a fan of our Gewürztraminer, I suggest you climb ev’ry mountain to get here before it’s all gone. Forever.

If you’re not familiar with the Niagara Escarpment sub-appellations, Featherstone is in the Twenty Mile Bench: most of my favourite wineries are in this sub-appellation.

June 8, 2014

Regulating cosmetics

Filed under: Business, Government, Health — Tags: , , — Nicholas @ 11:43

Jeffrey Tucker discusses the coming crash in the world of make-up:

The organization Campaign for Safe Cosmetics doesn’t just want you to be able to have new choices about the makeup or other products you buy. It wants the FDA to be able to ban and recall products. It will decide for you what is and isn’t safe.

And it is prevailing against the industry itself, which has no interest whatsoever in selling unsafe products, but precisely the opposite. The industry is already ridiculously overregulated.

What’s the excuse? The usual nonsense about safety and security and health, along with predictable headlines about how your shampoo is giving you cancer. There is a crowd of lobbyists backed by regulators who seem to believe that all of modernity is corrupting and horrible and must be reversed until we are living in the most-primitive state of being, sans makeup, of course.

In other words, cosmetics are going the way of everything else. The quality of the product will be depleted by regulations, just as with indoor plumbing, electricity, cars, light bulbs, soaps and gas-powered tools. Entrepreneurship will be hindered and truncated. Innovation will stop. In a few years, you will wonder: Whatever happened to makeup and deodorant and hair spray that actually works? Prepare: The end is near!

Already, I’ve heard many women complain that cosmetics today are far worse than they were 10 years ago. The colors don’t behave they way they should, and color is mainly what the FDA currently controls. I don’t doubt that whatever problems exist are due to government regulations. Whenever you see consumer products that decline in quality to the point that you have to pay vastly more for something of good quality, or that high quality suddenly becomes completely unavailable, you will find the hand of government if you look hard enough.

June 7, 2014

“30, 40 or 50 years ago, a year the quality of 2013 Bordeaux would have been a complete disaster”

Filed under: Business, Europe, France, Wine — Tags: — Nicholas @ 00:01

Even in a good year, I don’t have the money to invest in Bordeaux futures, so I rarely bother to read much about them. Even so, I’d heard that the 2013 vintage was not going to be a good one given the weather that year in the region. The price for Bordeaux wines, however, didn’t do the rational thing and drop below previous (good) years: prices went up. The Wine Cellar Insider explains what happened next:

2013 Bordeaux is not the vintage of the century. The growing season, with its cold, damp character made sure of that. 30, 40 or 50 years ago, a year the quality of 2013 Bordeaux would have been a complete disaster.

But that is not what took place with 2013 Bordeaux. With the willingness to sacrifice quantity for quality, the best producers, with the financial ability to do what needed to be done made some fine wine. 2013 Bordeaux is not an exciting, sexy vintage. But having tasted close to 400 different 2013 Bordeaux wines, clearly, there are some nice wines worth drinking.

So, what’s the problem? When it comes to the wine, none. The average scores from the majority of wine writers and critics show the wines at an average of 89/90 Pts for perhaps the top 100 – 200 wines. Clearly, those are the not the scores for a bad vintage.

[…]

Had the wines been priced in proportion to consumer demand, while 2013 Bordeaux was never going to be an easy sell, it would not have been an impossible sale. I am all for the open, free market when it comes to pricing. Producers can and should price their wine for what they think the market will bear. But 2013 Bordeaux wines remain unsold. Selling the wines to a negociant is not selling the wine. Merchants need to buy and consumers need to purchase as well for it to be a true sale. For some odd reason, in the great vintages, Bordeaux has a knack for pricing the wines correctly. They might seem expensive to mature collectors that are used to paying lower prices, but for the next generation of wine lovers, the wines seem fairly priced.

I get it. On the one hand, due to the excessive unflattering and at times, unfair press, 2013 Bordeaux was never going to receive a warm reception in the marketplace. Perhaps the price the market was actually willing to pay was unappetizing to the chateau owners. But it would have been nice to see an effort. It is difficult for 2013 Bordeaux to sell through to consumers when other recent, and more successful vintages are available in the market for less money.

Bordeaux map

H/T to Brendan for the link.

June 4, 2014

A real-life experiment – does a higher minimum wage cause job losses?

Filed under: Business, Economics, USA — Tags: , , , — Nicholas @ 00:01

Seattle just changed their minimum wage to $15 per hour (that’s the city, but not the surrounding suburbs). Tim Worstall outlines what we may see in this handy real world economic experiment:

The first and most obvious effect of a $15 an hour minimum is that there are going to be job losses. Don’t forget that the message from the academic literature is that “modest” increases in the minimum don’t seem to have “much” effect on employment levels. And we’d all agree that a $100 minimum would have rather large effects. So our puzzle here is to try to decide what is the definition of “modest”. Clearly $100 an hour isn’t. But also we can dismiss something like $1 an hour as being problematic. Since no one at all gets paid a sum that small making the minimum $1, or $1.50, has no effect on anything whatsoever.

The best result we have from the academic literature is that a minimum wage in the 40-45% region of the median wage has little to no effect on unemployment. The reason being similar to that of a $1 one. So few people get paid so little that it just doesn’t affect the wages of anyone very much. The same research tells us that once we get to 45-50% of the median wage then we do start to see significant unemployment effects.

This $15 an hour in Seattle will be around 60% of the local median wage. We would therefore expect to see reasonably large unemployment effects.

We would also expect to see unemployment among high school graduates rise very much more than the rate in general. For this minimum applies only inside the City of Seattle: it doesn’t apply to the surrounding counties or suburbs that aren’t part of that political jurisdiction. Imagine that you were a college graduate having to do some basic work to make ends meet while you were waiting for that career opening. If you’re going to get $7.25 outside Seattle and $15 inside it you’d probably be willing to make the trip each day to earn that extra. Of course, as a high school graduate you would too. But now think of yourself as the employer. You’ve got the choice of a college graduate or a high school graduate, both willing to do the same job at the same price. Who are you going to hire? Logically, the higher grade worker, that college grad.

So we would expect minimum wage jobs within Seattle to be colonised by those college grads at the expense of those high school ones. We would therefore expect to see a much larger rise in the unemployment rate of those high school grads as against the general unemployment rate. In fact, we’d expect to see this happening so strongly that we’d take the empirical evidence of that widening unemployment gap to be evidence that it was this minimum wage rise causing it.

June 3, 2014

QotD: Parkinson’s Law

Filed under: Bureaucracy, Business, Humour, Quotations — Tags: , — Nicholas @ 19:32

Work expands so as to fill the time available for its completion. General recognition of this fact is shown in the proverbial phrase “It is the busiest man who has time to spare.” Thus, an elderly lady of leisure can spend the entire day in writing and dispatching a postcard to her niece at Bognor Regis. An hour will be spent in finding the postcard, another in hunting for spectacles, half an hour in a search for the address, an hour and a quarter in composition, and twenty minutes in deciding whether or not to take an umbrella when going to the mailbox in the next street. The total effort that would occupy a busy man for three minutes all told may in this fashion leave another person prostrate after a day of doubt, anxiety, and toil.

C. Northcote Parkinson, “Parkinson’s Law, or the rising pyramid”, Parkinson’s Law (and other studies in administration), 1957.

“Fairtrade [is] a Western vanity project that impoverishes those it’s meant to benefit”

Filed under: Africa, Business, Media — Tags: , , , , , — Nicholas @ 00:01

Rossa Minogue on the image and reality of Fairtrade:

The world’s ethical shoppers are still reeling this week after a report revealed that Fairtrade programmes are of little benefit to those working on farms in the developing world.

The government-funded study published by SOAS, a part of the University of London, was conducted over a four-year period in Uganda and Ethiopia. It showed that labourers on farms that are part of Fairtrade programmes are usually paid less and are subject to worse working conditions than their peers on large commercial farms, and even other small farms that are not part of Fairtrade programmes. Professor Christopher Cramer, the study’s main author, said: ‘Fairtrade has not been an effective mechanism for improving the lives of wage workers, the poorest rural people.’

The study also found that the ‘social premium’ incorporated into the price of Fairtrade products, which is meant to be used to improve infrastructure in poor communities, is often misspent. In one instance, researchers found that modern toilets built with this premium were in fact for the use of senior farm managers only. The report also documented examples of health clinics and schools set up with social-premium funds that charged fees that were too high for the labourers they were intended to benefit.

Of course, nobody needed the clever people at SOAS to tell us all this. From its very inception, the concept of Fairtrade was rooted in maintaining low ‘sustainable’ horizons for the poor by those who consider people in Africa and other parts of the Third World to be intrinsically different to the rest of us. The movement did not originate with the poor farmers of the developing world, but with Western NGOs and their army of gap-year do-gooders intent on imposing their reactionary ‘small is beautiful’ values on an Africa desperate for change.

June 2, 2014

Amazon, Barnes & Noble, Random Penguin and other publishing Monopoly players

Filed under: Books, Business — Tags: , , , — Nicholas @ 07:32

A quite contrarian take on the upheavals in the publishing world by Hugh Howey:

A similar game is being played in the book industry today, as it has been played in many other industries. Here at BEA, I’m hearing a lot about monopolies. (And monopsonies, for those who prefer to quibble semantically rather than understand what is meant and forge ahead in productive conversation.) Practically everyone here at the book expo believes that Amazon has gotten too big, that they wield a disproportionate amount of power, and that they must be reigned in or defeated.

I am told, without exaggeration and in all seriousness, that Amazon wants to “crush their competition.” I hear that they want to “put everyone else out of business.” Two things are true, both of which make these statements ridiculous: The first is that Amazon most certainly doesn’t want all of their competitors to go out of business, because then they’d be the only game in town and the government would have no choice but to break them up. The second is that of course they are acting as if they want to put their competitors out of business. That’s how you improve your business practices. You try to out-do your competition.

Unless … you don’t understand at all what it means to compete. Which I think explains the righteous indignation. But I’ll get to that in a minute.

[…]

Ironically, the biggest losers in this shift have been yesterday’s villains. The massive brick and mortar discounters — who once were blamed for literature’s downfall, who sold “loss leaders,” who roughed up publishers in negotiations — have become the bulwark behind which all legacy hopes now hunker. Little explored is the possibility that Amazon is helping independent bookstores by clearing out these former predators.

When it comes to discounting and selection, B&N can’t compete with Amazon. When it comes to book browsing, Amazon can’t compete with curated independent bookstores. If you line the three sales models up from small indie stores to big discounters to Amazon, you’ll see that neighbors compete with and harm one another. Concurrent with the shuttering of Borders and the shrinking of B&N, we are also seeing a rise of indie shops. Coincidence? Or are we heading toward a future where Amazon and indie bookstores coexist because they provide two very different shopping experiences and fulfill quite separate needs?

Best estimates give Amazon roughly half of the book market. With the shutter of Borders, B&N now has a more disproportionate control of brick and mortar shelfspace than Amazon does of online book sales. This is especially powerful as the rest of the smaller bookstores have less leverage for bargaining with publishers. Who is the monopoly?

QotD: Realtors

Filed under: Business, Humour, Quotations — Tags: , , — Nicholas @ 07:04

I talked a few times with the realtor, and they were as helpful as realtors usually are: not helpful. They couldn’t answer any important questions for me, because realtors don’t know anything important about the properties they sell. Well, that’s not entirely true. They often know very important things about the properties they sell. Those are invariably the things they’re hiding from you, hoping to entice you into standing in the decrepit shack they’re listing while they perform their Svengali perorations about its potential. Weave a tapestry of possibilities in the air that’ll have you frisking yourself in no time, looking for your checkbook before that handyman that’s interested in the property snatches it from under your nose.

Oh, I know that handyman. That guy gets around. I never learned his name, but he seemed to be interested in every property I was interested in Maine. No matter where I went — Turner, Cornish, Peru, Livermore Falls, Norway, Rumford…

Anyway, that polymath handyman with the lead foot and the nose for diamonds in the rough was always one step ahead of us, ready to stuff our defeat into the jaws of his victory. He was very interested in Turner, I hear.

Sippican Cottage, “I’m Fixing A Hole Where The Intertunnel Gets In “, Sippican Cottage, 2013-11-13

June 1, 2014

In the Progressive Era, “big business led the struggle for the federal regulation of the economy”

Filed under: Business, Government, History, USA — Tags: , , , , , — Nicholas @ 11:00

Timothy Carney says we should know much more about socialist historian Gabriel Kolko and his careful debunking of the “Teddy Roosevelt as trust-buster” myth:

Every American knows the fable of the Progressive Era and that “trust buster” Teddy Roosevelt wielding the big stick of federal power to battle the greedy corporations. We would be better off if more people knew the work of the man who dismantled this myth: historian Gabriel Kolko, who died this month at age 81.

Kolko was a self-described socialist and a Harvard-educated historian, but he had little use for the liberal political establishment’s pious regard for the Progressive Era of 1900 to 1916. And he was never credulous enough to believe that government intervention in the economy was generally in the public interest.

For today’s politics, Kolko’s most important book was The Triumph of Conservatism, published in 1967. His thesis: “The dominant fact of American political life” in the Progressive Period “was that big business led the struggle for the federal regulation of the economy.”

The standard history of the Progressive Period — which painted Teddy and the Feds as the scourge of Big Business — relied too much on the public rhetoric of TR and his cohorts. Kolko dug deeper to show how Big Business truly felt about Big Government, and how the Progressives truly felt about Big Business.

Many corporate titans in the early 20th Century, buying into the pervasive hubris of the day, believed that a state-managed economy was the inevitable end of a rational society — the conclusion of what Standard Oil’s top lobbyist Samuel Dodd called the “march of civilization.” Competition, in their eyes, was destructive redundancy.

[…]

Liberal scholar William Galston at the Brookings Institution explains the economics at play. “Corporations have sizeable cash flows and access to credit markets, which gives them a cushion against adversity and added costs,” he wrote in 2013, explaining why the big guys often welcome regulation. “[S]mall businesses often operate much closer to the margin and are acutely sensitive to policies that threaten to drive up costs.” Also, “CEOs can hire experts to help them cope with added regulatory burdens and can spread the costs over a large workforce.”

Kolko’s research smashed the favorite tales of the Progressive myth. When Upton Sinclair wrote The Jungle, which included descriptions of rancid meat-packing plants, Roosevelt saw Sinclair as personally despicable, but a useful asset in his quest to impose federal meat inspection. Sinclair opposed Roosevelt’s regulation, and Kolko relates that “the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors.”

By “conservatism,” Kolko meant “stability,” and preservation of the status quo. This is often the aim of corporate giants. It is consistently the consequence of federal action. And it is reliably the enemy of entrepreneurship, economic growth and free choice.

May 31, 2014

Shock, horror! Ezra Levant’s publisher took government grants!

Filed under: Books, Business, Cancon, Media — Tags: , , , , , — Nicholas @ 09:21

In the Globe and Mail, Simon Houpt looks at the rise and rise of Ezra Levant and finishes with what he clearly thinks is a “gotcha” moment:

… for a man who seems to have studied his American forebears so extensively, he has failed utterly to learn how to mimic the persuasive charms of a Bill O’Reilly or the wackadoodle authenticity of a Glenn Beck. He has a genuinely nasty streak that flares up in his attacks – on the Roma people, for example – that have landed him in hot water with the Canadian Broadcast Standards Council.

He seems less interested in free speech than in listening to his own speech. Perhaps fatally, he has no visible sense of humour about himself.

In Groundswell, he has great fun mocking one of his favourite targets: Hollywood stars, whom he accuses of gross hypocrisy for promoting environmental causes while flying around in private jets. He points to Matt Damon’s anti-fracking drama Promised Land, which was backed in part by financing from the United Arab Emirates. And he mocks Josh Fox, the director of the anti-fracking documentaries Gasland and Gasland 2, for being a one-time New York-based actor.

Yet there is more than enough hypocrisy to go around: Levant is a critic of government support whose books have been published by a company that took plenty of government money until a recent change in ownership precluded the practice; a free-marketeer who works for a network that spent months last year trying to convince regulators to let it extract a monthly payment from every TV subscriber in the land.

At one point in Groundswell, Levant suggests activists are primarily driven by the salaries they receive. It’s a worldview that is so breathtakingly cynical that we’re left to wonder if Levant himself would blithely change his position for a fatter paycheque. If true, what kind of free-speech champion is that?

As far as the publisher collecting government money … most of the Canadian publishing business does that. It’s an unusual publishing company that manages to avoid suckling at that particular teat. Sun TV’s campaign for a better placement in cable TV packages certainly didn’t show the company in a good light, but the regulators have deliberately created a two-class system for cable, with the favoured channels required in each cable offering (a subsidy-by-another-name) and the disfavoured ones excluded. Sun TV could have taken the high road, but they’d have gone out of business for no purpose, and it wouldn’t have changed the system at all. (Full disclosure: I don’t watch Sun TV, although I have read a couple of Levant’s books.)

May 29, 2014

QotD: Formula for measuring the importance of managers

Filed under: Bureaucracy, Business, Humour, Quotations — Tags: , , — Nicholas @ 00:01

Every student of human institutions is familiar with the standard test by which the importance of the individual may be assessed. The number of doors to be passed, the number of his personal assistants, the number of his telephone receivers — these three figures, taken with the depth of his carpet in centimeters, have given us a simple formula that is reliable for most parts of the world.

C. Northcote Parkinson, “Plans And Plants, or the Administration Block”, Parkinson’s Law (and other studies in administration), 1957.

May 27, 2014

Internet privacy advice for kids (who are not “Digital Natives”)

Filed under: Business, Media, Technology — Tags: , , , , , — Nicholas @ 13:15

Cory Doctorow sympathizes with young people who have literally grown up with the internet:

The problem with being a “digital native” is that it transforms all of your screw-ups into revealed deep truths about how humans are supposed to use the Internet. So if you make mistakes with your Internet privacy, not only do the companies who set the stage for those mistakes (and profited from them) get off Scot-free, but everyone else who raises privacy concerns is dismissed out of hand. After all, if the “digital natives” supposedly don’t care about their privacy, then anyone who does is a laughable, dinosauric idiot, who isn’t Down With the Kids.

“Privacy” doesn’t mean that no one in the world knows about your business. It means that you get to choose who knows about your business.

It’s difficult to explain to people just how open their online “secrets” really are … and that’s not even covering the folks who are specifically targets of active surveillance … just being on Facebook or other social media sites hands over a lot of your personal details without your direct knowledge or (informed) consent. But you can start to take back some of your own privacy online:

If you start using computers when you’re a little kid, you’ll have a certain fluency with them that older people have to work harder to attain. As Douglas Adams wrote:

  1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.
  2. Anything that’s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.
  3. Anything invented after you’re thirty-five is against the natural order of things.

If I was a kid today, I’d be all about the opsec — the operational security. I’d learn how to use tools that kept my business between me and the people I explicitly shared it with. I’d make it my habit, and get my friends into the habit too (after all, it doesn’t matter if all your email is encrypted if you send it to some dorkface who keeps it all on Google’s servers in unscrambled form where the NSA can snaffle it up).

Here’s some opsec links to get you started:

  • First of all, get a copy of Tails, AKA “The Amnesic Incognito Live System.” This is an operating system that you can use to boot up your computer so that you don’t have to trust the OS it came with to be free from viruses and keyloggers and spyware. It comes with a ton of secure communications tools, as well as everything you need to make the media you want to send out into the world.
  • Next, get a copy of The Tor Browser Bundle, a special version of Firefox that automatically sends your traffic through something called TOR (The Onion Router, not to be confused with Tor Books, who publish my novels). This lets you browse the Web with a much greater degree of privacy and anonymity than you would otherwise get.
  • Learn to use GPG, which is a great way to encrypt (scramble) your emails. There’s a Chrome plugin for using GPG with Gmail, and another version for Firefox
  • If you like chatting, get OTR, AKA “Off the Record,” a very secure private chat tool that has exciting features like “perfect forward secrecy” (this being a cool way of saying, even if someone breaks this tomorrow, they won’t be able to read the chats they captured today).

Once you’ve mastered that stuff, start to think about your phone. Android phones are much, much easier to secure than Apple’s iPhones (Apple tries to lock their phones so you can’t install software except through their store, and because of a 1998 law called the DMCA, it’s illegal to make a tool to unlock them). There are lots of alternative operating systems for Android, of varying degrees of security. The best place to start is Cyanogenmod, which makes it much easier to use privacy tools with your mobile device.

WSJ – “…the Canadian government is paying almost 80% of his developers’ salaries”

Filed under: Business, Cancon, Economics, Government, Technology — Tags: , , — Nicholas @ 07:32

Stephen Gordon linked to this rather boggling Wall Street Journal article that outlines how the Canadian and provincial governments are attempting to lure start-up technology businesses to locate in Canada with vast bribes of taxpayer money:

Imagine you are launching or running a startup and there’s a place where all of your developers — the biggest expense for most tech companies — cost one quarter what they do in Silicon Valley. Sure, it’s cold there, but talent is plentiful and the locals are friendly. Would you trade your hash browns for poutine?

Adam Adelman, co-founder of Mighty Cast, a startup working on a new kind of wearable technology, recently told me the Canadian government is paying almost 80% of his developers’ salaries. And that’s not a tax credit. It’s a rebate, a check he gets from the government whether or not his startup makes money.

Even at Mighty Cast, a two-year-old hardware startup, salaries have been 80% of expenses. Combine that with the lower salaries demanded by engineers in Montreal, where Mighty Cast moved its headquarters after its genesis in Silicon Valley, and Mr. Adelman says he’s able to stretch his angel round of investment four times as far.

So the federal government is literally giving away money to start-up tech companies to compete at a huge advantage against actual Canadian companies? Nearly 80% of the payroll is funded from taxes, partly collected from the domestic competition? Does this seem like a good idea to anyone who isn’t already drawing 100% of their income from Ottawa?

The government is particularly badly suited to picking technology winners, and this program sounds like a vast give-away for the well-connected few, literally at the expense of everyone else. Maple-flavoured crony capitalism, with the official stamp of approval of Stephen Harper’s “conservative” government.

QotD: What capitalism should do now

Filed under: Business, Economics, Quotations — Tags: , , , , — Nicholas @ 07:13

Just as democracy can be corrupted by repressive populism, so can capitalism be perverted by “rent-seeking” — when people seek to gain more than the goods and services they produce are worth to others.

Sometimes they use political influence to sustain monopolies or to prevent new entrants and innovators from competing for custom. Sometimes they use governments to provide subsidies from taxpayers, or to prohibit cheaper imports.

Sometimes they do deals with governments that provide taxpayer funds to cushion losses derived from incompetence or recklessness. These forms of crony capitalism detract from capitalism’s real benefits and achievements.

What capitalism should now do is to free itself from these rent-seeking perversions and spread its benefits as widely as possible.

It should act against anti-competitive practices to give people instead the power of free choices between competing goods and services. It should spread ownership of capital and investment as widely as possible through such things as personal pensions and individual savings accounts.

It should lower the barriers to entry so that everyone can aspire to start up a business to bring goods and services to others. It should seek a tax system that rewards success rather than punishing it.

Capitalism should become inclusive, making it as easy and as attractive as possible for as many as possible to set aside some part of present consumption in order to invest some of their resources and their time in providing goods and services that others will want. It should become true capitalism.

Dr. Madsen Pirie, contributing to “Viewpoints: What should capitalism do?”, BBC News, 2014-05-26.

May 25, 2014

QotD: Free markets and quality

Filed under: Business, Economics, Food, Quotations — Tags: , — Nicholas @ 00:01

“It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest.” Adam Smith, The Wealth of Nations

A tender medallion of steak, a foaming pint of bitter and a crusty roll still hot from the oven — no wonder that Adam Smith chose an alliterative trio of artisanal food providers to make his point about the benefits of capitalism. If he had chosen a junk bond salesman, a fund manager, and a quantitative analyst, wielding a Gaussian copula in an effort to price a synthetic credit derivative, his defence of the market mechanism might not have resonated down the centuries in quite the same way.

Smith’s point was a good one. We are unlikely to give our custom to butchers who poison us, brewers who serve foul beer or bakers who overcharge; food sellers find it profitable to serve decent food at reasonable prices. The system needs some oversight — hygiene inspectors, trading standards officers, the Competition Commission — but the main engine of quality is the market mechanism. People prefer cheap and delicious food to food that is pricey and tastes horrid — and that fact alone delivers more than regulators ever could.

Tim Harford, “Why can’t banking be more like baking?”, TimHarford.com, 2013-11-05

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