Quotulatiousness

October 1, 2020

Far from being in trouble, Canadian film and TV investment has nearly doubled in the last 10 years

Filed under: Business, Cancon, Government, Media — Tags: , , , , , , , — Nicholas @ 03:00

The Canadian government — particularly Canadian Heritage minister Steven Guilbeault — is eager to pass legislation to “get money from the web giants” and their primary justification is the claim that Canadian TV and movie funding has been shrinking. As Michael Geist explains, that’s a pants-on-fire lie:

CMPA Profile – Financing, Sources: CMPA Profile 2019, 2016, 2013

Canadian Heritage Minister Steven Guilbeault has said that his top legislative priority is to “get money from web giants.” While much of the attention has focused on his ill-advised plan to require Facebook to obtain licences for linking to news articles, his first legislative step is likely to target Internet streamers such as Netflix, Amazon and Disney with new requirements to fund Canadian content and to increase its “discoverability” by making it more prominent for subscribers. Based on his comments at several town halls, Guilbeault is likely to also create new incentives for supporting indigenous and persons of colour in the sector with a bonus for those investments (potentially treating $1 of investment as $1.50 for the purposes of meeting Cancon spending requirements). Much of the actual implementation will fall to the CRTC, which will be granted significant new regulatory powers and targeted with a policy direction.

Guilbeault’s case for establishing new mandated payments is premised on the claim that support for the film and television sector is declining due to the emergence of Internet streaming services, which have resulted in decreased revenues for the conventional broadcast sector and therefore lower contributions to Cancon creation. In fact, Guilbeault recently told Le Devoir that without taking action there would be a billion dollar deficit in support in the next three years. He says that his objective is to actually generate a few hundred million more per year in local production by the Internet streamers. In other words, he’s expecting roughly $2 billion in new investment over three years in Cancon from U.S. entities due to his planned regulations (moving from a billion dollar deficit to a billion dollars in extra spending).

While Guilbeault frames these regulatory requirements as a matter of fairness and “rebalancing”, industry data over the past decade tell a much different story. Indeed, there has been record setting film and television production in recent years, much of it supported by companies such as Netflix. CRTC chair Ian Scott last year said that Netflix is “probably the biggest single contributor to the [Canadian] production sector today.” While that is not entirely true – the data suggests that Canadian taxpayers are the biggest contributor with federal and provincial tax credits consistently the largest source of financing – the claim that there is a billion dollar deficit coming or that foreign streamers do not contribute to film and television production in Canada without a regulatory requirement is simply false.

September 26, 2020

QotD: A visit to Pyongyang Department Store Number 1

Filed under: Asia, Business, History, Quotations — Tags: , , , — Nicholas @ 01:00

He [Anthony Daniels] sees throughout these Marxist backwaters a physical infrastructure comprising perhaps the most ugly and dehumanizing architecture known to man. The cavernous emptiness of all public spaces and the gigantism of the buildings are designed to intimidate, to belittle and to discourage insurrection by making every crowd seem small. Any pre-Communist architecture not destroyed to make way for these monstrosities is charming only because it is preserved by a lack of economic development, which also, however, ensures its eventual degradation.

What few consumer products he finds are of the very worst quality, with packaging that provides as little information as possible and that destroys all confidence in its contents. Even the material shortage of these products has its uses to the state, however, as they remind the comrade that it is only by the good grace of their leaders that they eat, and when one spends all afternoon queuing for an item that turns out to be unavailable, there is little time or energy left for revolution. Besides, isn’t the desire for consumer goods artificially created by capitalists to enslave the proletariat?

Nowhere is the dishonesty of this last belief (as well as the sheer insanity of modern North Korea) better illustrated than in Daniels’ description of his visit to the creatively-named Pyongyang Department Store Number 1. He wanders into the store without a minder and is dumbstruck by his eventual realization: the entire store is a fake. Although it is a frenzy of activity and is filled with beautifully packaged and artfully arranged consumer goods, no one is actually buying anything. Daniels watches individual “shoppers” go up and down the escalators or exit and re-enter the store in a continuous loop of simulated shopping. At the line for a cash register, cashiers and customers stare aimlessly past each other, unmoving. Under Daniels’ gaze some of them realize they are found out and cast about nervously, wondering what to do next. “I did not know whether to laugh or explode with anger or weep,” he says. “But I knew I was seeing one of the most extraordinary sights of the twentieth century.”

Arnold Beichman, “The Wilder Shores of Marx: Journeys in a Vanishing World”, National Review, 1991-10-21.

September 20, 2020

The CBC’s latest bit of “mission creep”

Filed under: Business, Cancon, Media — Tags: , , , — Nicholas @ 05:00

At The Line, Jen Gerson wonders what the hell the CBC thinks it’s doing with this move:

Let us take a moment to leverage a little credibility under the CBC’s ass.

What the fuck is the CBC playing at, here? The corporation receives a cool $1 billion in public funding per year and it’s using taxpayer funds to, yet again, horn into the revenue streams of private communications outlets. No one — literally not a single Canadian taxpayer who isn’t already employed by the CBC — wants to throw money at a public broadcaster so that it can: “Help Canada’s strongest brands shape and share inspiring stories across our platforms and across the country.” Vomit.

No one asked for a taxpayer-funded advertising firm, you goddamn loons.

This is yet another classic example of one of the most dysfunctional habits of the MotherCorp: mission creep. A massive and rudderless operation unfettered from the practical limitations of profit-seeking has proven itself unable to restrain its own boneheaded impulses.

We, at The Line, can hear the pitiable defences already: “Oh, but they’re already underfunded. Of course they need to, uh, use their incredible taxpayer-funded competitive advantage to eat into the dwindling revenue streams of failing private media outlets just to survive!”

No. No. No they do not.

When faced with a dysfunctional hydra-headed cultural behemoth that is demonstrably incapable of keeping its mandate in its pants, the first impulse should not be to shovel ever-more taxpayer funds into the ever-widening maw. The CBC could respond to *cough* “inadequate funding” by narrowing its scope and focus to the things that make it most necessary to the Canadian public that it serves — radio, news, documentary, serving regions and topics that the private sector cannot adequately penetrate. Instead it goes off and does weird shit like this, and CBC Comedy, and CBC Music.

CBC. Guys.

You cannot be everything to everyone. You shouldn’t be everything to everyone. Canadians are not well served by a monopolistic government-funded one-stop #content communications shop. Figure out what you do best and stick to it. Focus on supplementing — rather than crushing — private-sector journalism. Maybe even consider ways to support private-sector start ups and independents, especially in local markets. “Revenue generation” is not the place where a public broadcaster should demonstrate self-defeating, industry-following innovation.

September 16, 2020

QotD: Firearms apocrypha

Filed under: Business, History, Quotations, USA, Weapons — Tags: , , — Nicholas @ 01:00

Certain models of Smith & Wesson have bits of apocryphal lore that become permanently entwined with them. You can’t see a top-break .44 Russian without someone telling you that the weird hook on the trigger guard was to parry saber slashes.

People like to repeat the myth that the tiny M-frame .22 “Ladysmith” was discontinued because a puritanical D.B. Wesson heard that it was popular with “ladies of the night”, because that’s sexier than the fact that it was selling poorly, expensive to make, and constantly broke when people ran the then-new .22 Long Rifle cartridges through the fragile little guns.

Similarly, there’s a legend involving Mr. Wesson that’s attached to the final iteration of the .38 Double Action […] In this case, the story goes, D.B. heard the tale of a police officer who, while arresting a miscreant, had the offender reach over and pop the latch on his top-break Smith, dumping the rounds on the ground, like Jet Li with the slide of a movie prop Beretta. The officer, goes the legend as it was told to yours truly, was killed in the ensuing struggle.

Moved by the fate of the dead officer, the apocryphal tale has Mr. Wesson designing the Perfected Model top-break. This model features a Hand-Ejector style cylinder latch that must be operated in conjunction with the more normal “T”-shaped barrel toggle in order to break the revolver open.

This origin myth is almost certainly, to use the technical term, a load of hooey.

Tamara Keel, “Sunday Smith #60: .38 Double Action Perfected Model”, The Arms Room, 2020-06-14.

September 11, 2020

Canadian government heading toward “the worst of all worlds on Internet regulation”

Filed under: Business, Cancon, Government, Media — Tags: , , , , — Nicholas @ 05:00

Michael Geist on the bull-headed determination of the Canadian federal government — and specifically Heritage Minister Steven Guilbeault — to “solve” a problem by introducing savagely anti-consumer internet regulations:

Canadian Heritage Minister Steven Guilbeault, 3 February 2020.
Screencapure from CPAC video.

The harm that will come from these policy choices is difficult to overstate. By focusing the tax burden on sales taxes rather than technology company revenues, consumer costs will go up and the company profits will be left untouched. The CRTC powers will lead to years of hearings and follow-on litigation, yielding few tangible benefits for creators. The mandated Cancon contributions will spark trade wars and make Canada a less attractive market for new services leading to fewer choices and less competition, while the link licensing requirement will result in blocked sharing of news articles on social media sites that hurts both Canadians and media organizations. All the while, the issues that really matter – privacy, anti-competitive behaviour, online hate, misinformation, a fair share of tech corporate profits – are left largely untouched.

How did the government end up with the worst of all worlds on Internet regulation?

The starting point was the 2015 election in which it committed to no new Netflix taxes (prompted by a Conservative pledge on the issue) and subsequent consultations on everything from copyright to digital cultural policy. The result was then-Heritage Minister Melanie Joly struggling to honour the no-tax commitment, while satisfying increasingly vocal demands from some stakeholders for one. Those calls increased after the results of her cultural policy consultation were released, which largely focused on a rejection of new Internet taxes and support for net neutrality.

In the aftermath of the Cambridge Analytica scandal, worries about Russian election interference, and Christchurch massacre broadcast live online, the policy winds shifted and the government was clearly looking to become more active on the Internet regulation file. That led to Election Act provisions that were generally viewed as successful. It also paved the way for a 2019 election platform that was far aggressive on social media and the Internet, with commitments to address everything from privacy to hate speech online.

[…]

If the government were to address the real concerns, there would be long-overdue privacy reforms, a more aggressive approach on competition issues, measures to address online hate and misinformation, and pursuit of a global agreement on fair taxation of technology company revenues. If it wants to support increased film production from indigenous groups or help the news sector, it can make those policy choices and use general tax revenues without creating a massive regulatory infrastructure.

Instead, it is turning to the harmful policies noted above that raise consumer costs (digital sales taxes), regulate online Cancon with mandated spending requirements (even though the industry has record production led by Netflix), dispense with any pretense of maintaining net neutrality, lead to blocked sharing of news articles (mandated licence for social media sites merely for linking to news content), and result in services avoiding the Canadian market (market interference in payments from services such as Spotify). Much of this will be overseen by the newly empowered CRTC, leading to lengthy hearings that primarily benefit lawyers. After having badly mishandled Canadian digital policy, the government now seems content to take a pass on the important issues and leave the controversial non-issues to the regulator and the courts.

September 4, 2020

“They have insurance”

Filed under: Business, Economics, Government, Politics, USA — Tags: , , , — Nicholas @ 03:00

Brad Polumbo debunks the notion that it’s somehow “okay” to loot and vandalize businesses “because they have insurance” and that somehow means that nobody suffers.

A building burning in Minneapolis following the death of George Floyd.
Photo by Hungryogrephotos via Wikipedia.

Since the death of George Floyd in late May, violent riots and looting have broken out in many major cities, eventually overshadowing peaceful protests and calls for criminal justice reform. From Portland to Chicago to Kenosha, rioters have smashed windows, lit fires, attacked government properties, assaulted people in the streets, and looted storefronts.

In Minneapolis alone, vandals have destroyed at least 1,500 properties, many of them minority-owned businesses, and caused billions of dollars in property damage. Many people have been injured or killed during the chaos.

[…]

Even if all the affected property was fully insured — and it wasn’t — rioting has taken a vast human toll as well.

Consider that at least 15 people were killed during the initial riots after Floyd’s death, and that more have died in the unrest since. When arson and looting consume the streets, people inevitably get hurt and caught in the crossfire. That’s why the Minneapolis police found a burnt corpse in a pawn shop days after arsonists had passed through.

Insurance might fund that property’s restoration, but it can’t bring a dead man back to life.

[…]

Big companies like Walmart and Target generally have expensive, premium insurance plans. But many of the mom-and-pop enterprises and small businesses targeted in the riots didn’t have expensive insurance plans. In some cases, their more modest plans don’t cover damage from riots or don’t cover it in full.

“Situations where there’s a lot of devastation like this, a lot of times people find they’re underinsured and don’t have enough coverage,” Illinois Insurance Association Hotline President Janet Patrick told CBS Minnesota. “And so once the damage has been done, it’s too late. You can’t buy more coverage.”

According to Insurance Journal, 75 percent of US businesses are under-insured. And according to the New York Times, about 40 percent of small businesses have no insurance at all.

September 3, 2020

Fallen Flag — The Great Northern Railway

Filed under: Business, Cancon, History, Railways, USA — Tags: , , , , , , , — Nicholas @ 05:00

This month’s Classic Trains featured fallen flag is an American railway that definitely deserved to call itself “great”, James J. Hill’s Great Northern Railway. Hill was noteworthy as the only “Robber Baron” of that era who was scrupulous in avoiding government entanglements (including grants, loans, subsidies, and other forms of money-with-political-strings-attached), building his entire railway system using private funds and rational profit-oriented economic decision-making (the other transcontinental lines often over-built to claim higher subsidies or added money-losing branch lines to please powerful politicians). The result was that when economic hard times hit the railway business, his was the only transcontinental that never needed to declare bankruptcy.

In an earlier post, Dane Stuhlsatz summarized the GN’s engineering:

Hill’s line […] was methodically surveyed and built, on the shortest routes possible, with the least gradient possible, and using the best steel and other materials on the market at the time. Rather than political largess, Hill made his decisions based on profit and loss. But, for all the efficiency that Hill built into his line — he was able to transport across the country faster, cheaper, and with less maintenance costs than could the UP and CP — arguably the most important aspect for the viability of his business was the freedom to conduct business untethered by the strings that accompanied government subsidies.

Route map of the Great Northern Railway, circa 1920. Red lines are Great Northern trackage; dotted lines are other railroads.
Map by Elkman via Wikimedia Commons.

George Drury outlines the origins of the railway:

In 1857, the Minnesota & Pacific Railroad was chartered to build a line from Stillwater, Minnesota, on the St. Croix River, through St. Paul and St. Cloud to St. Vincent, in the northwest corner of the state. The company defaulted after completing a roadbed between St. Paul and St. Cloud, Minnesota, and its charter was taken over by the St. Paul & Pacific Railroad, which ran its first train between St. Paul and St. Anthony (now Minneapolis) in 1862.

For financial reasons the railroads were reorganized as the First Division of the St. Paul & Pacific. Both StP&P companies were soon in receivership, and Northern Pacific, with which the StP&P was allied, went bankrupt in the Panic of 1873.

Canadian-born “Robber Baron” James J. Hill (1838-1916) in 1914.

In 1878 James J. Hill and an associate, George Stephen, acquired the two St. Paul & Pacific companies and reorganized them as the St. Paul, Minneapolis & Manitoba Railway (“the Manitoba”). By 1885 the company had 1,470 miles of railroad and extended west to Devils Lake, North Dakota. In 1886 Hill organized the Montana Central Railway to build from Great Falls, Montana, through Helena to Butte, and in 1888 the line was opened, creating in conjunction with the StPM&M a railroad from St. Paul to Butte.

In 1881 Hill took over the 1856 charter of the Minneapolis & St. Cloud Railroad. He first used its franchises to build the Eastern Railway of Minnesota from Hinckley, Minnesota, to Superior, Wisconsin, and Duluth. Its charter was liberal enough that he chose it as the vehicle for his line to the Pacific. He renamed the road the Great Northern Railway; it then leased the Manitoba and assumed its operation.

[…]

Even before completion of the route from St. Paul, the Great Northern opened a line along the shore of Puget Sound between Seattle and Vancouver, British Columbia, in 1891. In the years that followed, Hill pushed a number of lines north across the international boundary into the mining area of southern British Columbia in a running battle with Canadian Pacific. In 1912 GN traded its line along the Fraser River east of Vancouver to Canadian Northern for trackage rights into Winnipeg.

Great Northern gradually withdrew from British Columbia after Hill’s death. In 1909 the Manitoba Great Northern Railway purchased most of the property of the Midland Railway of Manitoba (lines from the U.S. border to Portage la Prairie and to Morden), leaving the Midland, which was jointly controlled by GN and NP, with terminal properties in Winnipeg. The Manitoba Great Northern disposed of its rail lines in 1927. They were later abandoned.

Postcard photo of the Great Northern Railway’s “Empire Builder” streamliner between Everett and Seattle, Washington, circa 1963.
Great Northern Railway postcard via Wikimedia Commons.

The Great Northern and Northern Pacific lines agreed to a merger in 1901 (both lines were controlled by Hill) but the plan was vetoed by the Interstate Commerce Commission. A second attempt in the 1920s after Hill’s death was again turned down by the regulator unless the combined company divested ownership of the Chicago, Burlington & Quincy which was both railways’ connection from Minneapolis to Chicago. It was only on the final attempt in 1970 that the deal gained the government’s grudging approval and the Great Northern, Northern Pacific, and CB&Q merged to form the Burlington Northern.

September 2, 2020

Trust – the limiting factor on Chinese tech firms’ growth

Filed under: Business, China, Government, India, Media, Technology, USA — Tags: , , , , — Nicholas @ 05:00

Henrik Tiemroth on the “glass ceiling” that Chinese technology companies are struggling with:

The rise of Chinese technology firms has been one of the major developments of the last decade. As some of those companies expand their operations overseas, some observers see China laying the groundwork for a broader imperial project, using their growing digital might to project power and influence. By 2030, will we all be sending messages on WeChat, searching on Baidu, and shopping on Alibaba?

Probably not. As China’s major tech firms attempt to expand to global markets, they are running into a glass ceiling of their government’s own making: people don’t trust them. The recent ban on ByteDance’s popular social media app TikTok in the United States demonstrates the extent – and the limits – of China’s digital ambitions.

TikTok was the first Chinese internet product to have a mass following in the United States. As of 2020, the app has 100 million active users in the US – about a third of the population. But the popular and seemingly innocuous app for making, viewing and sharing quippy homemade music videos has been declared a national security threat.

In August, President Trump signed an executive order effectively banning the app, along with WeChat, unless their US operations are taken over by a domestic company. Given the close links between Chinese companies like ByteDance and the government, they argue, the data collected on American users of the app could be used by the Chinese state for espionage or other nefarious purposes.

The Trump administration is not the first government to take this step. In July, India banned TikTok, along with 59 other Chinese apps, amid rising tensions with China. The government cited similar concerns about the potential for mining and misuse of private data. Indonesia temporarily banned the platform in 2018, and Japan is reportedly considering following the US’s lead.

Across the world, people are becoming warier of who uses their data and how. Lawmakers are perking up, as the implications of data for national security are becoming more clear. In 2018, the European Union implemented landmark data privacy laws. In the US, tech CEOs are regularly dragged before congressional committees and a bipartisan movement for regulation is building.

Chinese internet companies face those same concerns and then some. It’s one thing to have your personal data used to promote conspicuous consumption. It’s another entirely to have it weaponized by a sophisticated digital surveillance state at the cutting edge of data-driven totalitarianism.

August 30, 2020

QotD: Capitalism

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

It’s entirely possible to muse on whether the cut has to be different to contain the dab dabs or summat but that’s not what is going on at all. Women will pay more for their t-shirts therefore the capitalists, the bastards, charge women more for their t-shirts. Just because they can.

The women who significantly object to this are already buying men’s version and so the bastards get to market segment. Between those who care more about money than cut – they’re paying the same as the men – and those who care more about the cut than the money are paying more. If all women cared more about the money then they wouldn’t be able to do this.

It’s exactly the same reason that causes pink razors to cost more than blue. People will pay the extra so why the hell not try it on?

Yes, this really is insisting that its women’s own fault. If some significant portion didn’t pay the extra then no one would try to charge it.

Capitalism really is very simple.

Tim Worstall, “Why Do Women Pay More For T-Shirts? Because Women Will Pay More For T-Shirts”, Continental Telegraph, 2018-05-25.

August 29, 2020

Recreating British Railways?

Filed under: Britain, Business, Economics, Government, Railways — Tags: , , , , — Nicholas @ 05:00

Adrian Quine looks at the long-term results of the partial privatization of British Railways, and the current British government’s options to address some of the problems:

Wikimedia caption – “This is the Bring Back British Rail, a reverse image of the old BR logo, (now used by the TOC’s) to show we are heading the wrong way with Rail in the UK”

If there is one thing free marketeers and large state socialists agree on, it would be the terrible state/private hybrid ownership structure of our railways currently supported by the government. While large state socialists won’t be happy until the private sector is squeezed out of the system, market liberals view the Conservative government’s actions as creeping renationalisation.

The private-sector entrepreneurs that built many of Britain’s railways in the 19th century had – through a process of market discovery – settled on vertical integration, with the same firm owning the track and operating the trains. But, when railways were returned to private sector in the late 1990s, the government created one national infrastructure company (Railtrack), 25 train-operating companies (TOCs), 3 freight operating companies, 3 rolling-stock leasing companies, 13 infrastructure service companies and other support organisations. The Office of Passenger Rail Franchising was tasked with selling franchises to the TOCs, while the Office of the Rail Regulator (ORR) regulated the infrastructure. This artificial and fragmented structure was designed to give the impression of competition.

Despite these constraints, in the early days of John Major’s flawed privatisation some of the more enterprising private train operators managed to bring innovation to the sector, including improved marketing and very low-cost “yield managed” advance fares. Where allowed, competition between different operators brought improved customer service, additional direct trains and lower ticket prices. However, the flaws in the initial privatisation soon became apparent with failed franchises leading to increased government intervention and renationalisation by subsequent governments.

While attempts were made to downplay the significance of July’s decision by the Office of National Statistics to put train operators on the public balance sheet, it is in fact only the latest in a worrying string of signals about the direction in which the railway and Boris Johnson’s government are headed. In June, the transport secretary Grant Shapps announced to a parliamentary select committee plans to introduce concessions across the rail network. Private operators will simply be paid a set fee to provide a basic service – another nail in the coffin for commercial investment or innovation.

Attention is now turning to what the government will do when the current “Emergency Measures Agreements” – hastily put in place to ensure trains kept running when passenger numbers nosedived by 95% as lockdown began – comes to an end in September.

An InterCity 125 power car in British Rail livery at Manchester Piccadilly in October 1976.
Photo by Dave Hitchborne via Wikimedia Commons.

August 28, 2020

National “cheater density” for popular online games

Filed under: Business, China, Gaming, Technology — Tags: , — Nicholas @ 05:00

Richard Currie summarizes the findings of Ruby Fortune’s cheater research (note that there’s no data on China because reasons):

Ever torn your keyboard from the desk and flung it across the room, vowing to find the “scrub cheater” who ended your run of video-gaming success? Uh, yeah, us neither, but a study into the crooked practice might help narrow down the hypothetical search.

The research, carried out by casino games outfit Ruby Fortune, has produced a global heatmap of supposed cheater density.

According to the website, this was done by analysing “search trend and search volume data to reveal where in the world is most likely to cheat while playing online multiplayer video games”. The report looks at the frequency of search engine queries for the most-played video games and measures them against searches for related cheat codes, hacks and bots, to show which country has the highest density of cheaters, and which cheat categories are the most popular in each location.

[…]

There is a massive hole in the data, however, thanks to the Great Firewall of China, which has a terrible reputation for ruining the experience of online games.

If there was any doubt that the Middle Kingdom would otherwise take Brazil’s crown, consider that Dell once advertised a laptop for the market by saying it was especially good for running PUBG plugins to “win more at Chicken Dinner”, a reference to the “Winner winner chicken dinner” message that comes up on a victory screen.

Data from the Battle Royale granddad’s anti-cheat tech provider, BattlEye, has also suggested that at one point 99 per cent of banned cheaters were from China.

August 27, 2020

QotD: Racism and the minimum wage

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

Minimum-wage laws can even affect the level of racial discrimination. In an earlier era, when racial discrimination was both legally and socially accepted, minimum-wage laws were often used openly to price minorities out of the job market.

In 1925, a minimum-wage law was passed in the Canadian province of British Columbia, with the intent and effect of pricing Japanese immigrants out of jobs in the lumbering industry.

A Harvard professor of that era referred approvingly to Australia’s minimum wage law as a means to “protect the white Australian’s standard of living from the invidious competition of the colored races, particularly of the Chinese” who were willing to work for less.

In South Africa during the era of apartheid, white labor unions urged that a minimum-wage law be applied to all races, to keep black workers from taking jobs away from white unionized workers by working for less than the union pay scale.

Some supporters of the first federal minimum-wage law in the United States — the Davis-Bacon Act of 1931 — used exactly the same rationale, citing the fact that Southern construction companies, using non-union black workers, were able to come north and underbid construction companies using unionized white labor.

These supporters of minimum-wage laws understood long ago something that today’s supporters of such laws seem not to have bothered to think through. People whose wages are raised by law do not necessarily benefit, because they are often less likely to be hired at the imposed minimum-wage rate.

Thomas Sowell, “Why racists love the minimum wage laws”, New York Post, 2013-09-17.

August 25, 2020

Berlin’s experiment with rent control has already made huge changes in the housing market

Filed under: Business, Economics, Germany — Tags: , , , — Nicholas @ 05:00

Sadly, for advocates of rent control in other cities, the changes are not positive for renters or landlords:

In the beginning of this year, the city government of Berlin brought in a rent freeze, a particularly crude form of rent control. Predictably, this led to calls from certain quarters for introducing similar measures here in London. I had several discussions about this, making the standard economic case against rent controls, but to no avail. I was told that I was blinded by neoliberal dogma, that the world is not as simple as my Econ 101 textbook, and that this was a brilliant and necessary measure to rein in the power of greedy landlords and speculators.

The first results are already in now, and they can be interpreted as the revenge of Econ 101. In Berlin, the supply of new rental properties coming on the market has fallen by a quarter compared to last year. No, this is not because of the virus: in other big cities such as Hamburg, Munich and Cologne, supply has increased by a third over the same period.

In fact, the one subsector of Berlin’s rental market which is exempt from the rent cap, namely new-built properties, is not that different from the rental markets of other big cities. In this subsector, the number of new rental properties coming on the market has increased by a quarter. Yet in the main market, where the cap does apply, supply has fallen by almost half – a drastic reduction, which more than cancels out any gains made elsewhere.

There has also been an increase in the number of properties that are up for sale, rather than rent, because while rents have been capped, sales prices have not.

So whether you compare the rent-capped part of Berlin’s rental property market to its counterpart in other cities, to its cap-exempt counterpart in Berlin itself, or to the owner-occupier sector – the result is always the same. The rent cap clearly is having a negative impact on supply, and this is happening astonishingly quickly: even I was not expecting to see any impact in this year, or the next.

None of the arguments against rent controls are new. You can already find them all in Verdict on Rent Control, a book which the IEA published in 1972. The book is actually a collection of papers on the subject, some of which are much older than that. It contains one paper by Milton Friedman and George Stigler on wartime rent controls in the US, which were still lingering after the war had ended. It was first published in 1946, but they were already having the same arguments then that we are still having today.

How we used to “dine out” (and someday might be able to again)

Filed under: Books, Britain, Business, Europe, Food, France, History — Tags: , , , , , — Nicholas @ 03:00

In The Critic, Alexander Larman reviews The Restaurant: A history of eating out by William Sitwell:

The recent enforced lockdown closure was a potential death blow to the entire [restaurant] industry. Which makes William Sitwell’s luxurious book both a celebration and an unintentional requiem for what may be a bygone time.

His central thesis is clear: the history of dining out is also a social history of evolving cultures and tastes. This means that the subjects he writes about range from ancient Pompeii to the growth of the sushi conveyor belt restaurant, encompassing everything from medieval taverns and the French Revolution to the rise of Anglo-Indian cuisine.

It is a broad and impressive spectrum, but perhaps Sitwell has, like some of the less fortunate people he describes, bitten off more than he can chew. His opening chapter about Pompeii is rich in surprising detail (graffiti uncovered outside one tavern when it was excavated ranged from the poetic — “Lovers are like bees in that they lead a honeyed life” — to the crude — “I screwed the barmaid”) and an insightful evocation of the dining culture in Ancient Rome.

He is then, unfortunately, faced with the insurmountable difficulty that the restaurant, as we know it today, did not exist until the late eighteenth century, meaning that his definition of “eating out” has to do some extremely heavy lifting.

There is as much padding in the early chapters as there is around some of his subjects’ waistlines. Much of what he writes is very interesting and often amusing, such as the way in which coffee, first drunk in London around the time of the Restoration, became associated both with health-giving properties and reportedly making men impotent, withered “cock-sparrows”. Yet there are also lengthy sections that have little or nothing to do with restaurants, such as a potted history of the Industrial Revolution.

Nevertheless, when Sitwell finally gets into his stride and begins to write about eateries proper, his authority and enthusiasm are palpable. He describes the dawn of fine dining in Paris in the nineteenth century evocatively. London lagged behind, although gentlemen’s clubs such as the Athenaeum and Reform offered some delights for the wealthy thanks to chefs (French, naturally) such as Alexis Soyer who implemented what one biographer called “the most famous and influential working kitchen in Europe” in 1841, complete with gas-fired stoves, butcher’s rooms and a fireplace devoted to the roasting of game and poultry.

August 22, 2020

John Cabot’s patent monopoly grant and the rise of the modern corporation

Filed under: Britain, Business, Government, History, Law — Tags: , , , , — Nicholas @ 03:00

In the latest Age of Invention newsletter, Anton Howes traces the line of descent of modern corporate structures from the patent granted to John Cabot to explore (and exploit) a trade route to China:

The replica of John Cabot’s ship Matthew in Bristol harbour, adjacent to the SS Great Britain.
Photo by Chris McKenna via Wikimedia Commons.

I discussed last time [linked here] how the use of patent monopolies came to England in the sixteenth century. Since then, however, I’ve developed a strong hunch that the introduction of patent monopolies may also have played a crucial role in the birth of the business corporation. I happened to be reading Ron Harris’s new book, Going the Distance, in which he stresses the unprecedented constitutions of the Dutch and English East India Companies — both of which began to emerge in the closing years of the sixteenth century. Yet the first joint-stock corporation, albeit experimental, was actually founded decades earlier, in the 1550s. Harris mentions it as a sort of obscure precursor, and it wasn’t terribly successful, but it stood out to me because its founder and first governor was also one of the key introducers of patent monopolies to England: the explorer Sebastian Cabot.

As I mentioned last time, Cabot was named on one of England’s very first patents for invention — though we’d now say it was for “discovery” — in 1496. An Italian who spent much of his career serving Spain, he was coaxed back to England in the late 1540s to pursue new voyages of exploration. Indeed, he reappeared in England at the exact time that patent monopolies for invention began to re-emerge, after a hiatus of about half a century. In 1550, Cabot obtained a certified copy of his original 1496 patent and within a couple of years English policymakers began regularly granting other patents for invention. It started as just a trickle, with one 1552 patent granted to to some enterprising merchant for introducing Norman glass-making techniques, and a 1554 patent to the German alchemist Burchard Kranich, and in the 1560s had developed into a steady stream.

Yet Cabot’s re-certification of his patent is never included in this narrative. It’s a scarcely-noted detail, perhaps because he appears not to have exploited it. Or did he? I think the fact of his re-certification — a bit of trivia that’s usually overlooked — helps explain the origins of the world’s first joint-stock corporation.

Corporations themselves, of course, were nothing new. Corporate organisations had existed for centuries in England, and indeed throughout Europe and the rest of the world: officially-recognised legal “persons” that might outlive each and any member, and which might act as a unit in terms of buying, selling, owning, and contracting. Cities, guilds, charities, universities, and various religious organisations were usually corporations. But they were not joint-stock business corporations, in the sense of their members purchasing shares and delegating commercial decision-making to a centralised management to conduct trade on their behalves. Instead, the vast majority of trade and industry was conducted by partnerships of individuals who pooled their capital without forming any legally distinct corporation. Shares might be bought in a physical ship, or even in particular trading voyages, but not in a legal entity that was both ongoing and intangible. There were many joint-stock associations, but they were not corporations.

And to the extent that some corporations in England were related to trade, such as the Company of Merchant Adventurers of London, or the Company of Merchants of the Staple, they were not joint-stock businesses at all. They were instead regulatory bodies. These corporations were granted monopolies over the trade with certain areas, or in certain commodities, to which their members then bought licenses to trade on their own account. Membership fees went towards supporting regulatory or charitable functions — resolving disputes between members, perhaps supporting members who had fallen on hard times, and representing the interests of members as a lobby group both at home and abroad — but not towards pooling capital for commercial ventures. The regulated companies were thus more akin to guilds, or to modern trade unions or professional associations, rather than firms. Members were not shareholders, but licensees who used their own capital and were subject to their own profits and losses.

Before the 1550s, then, there had been plenty of unincorporated business associations that were joint-stock, and even more unincorporated associations that were not joint-stock. There had also been a few trade-related corporations that were not joint-stock. Sebastian Cabot’s innovation was thus to fill the last quadrant of that matrix: he created a corporation that would be joint-stock, in which a wide range of shareholders could invest, entrusting their capital to managers who would conduct repeated voyages of exploration and trade on their behalves.

« Newer Posts — Older Posts »

Powered by WordPress