Quotulatiousness

July 24, 2020

Orchestras encouraged to ditch blind auditions for reasons of diversity

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

Tal Bachman responds to a recent New York Times article by Tony Tommasini demanding that musical organizations ignore the relative quality of a potential musician’s play in order to ensure more visible minority players get hired:

The New York Philharmonic Orchestra, detail from a group portrait in 2018.
Photo from the New York Philharmonic Orchestra website.

Tommasini begins his piece, entitled “To Make Orchestras More Diverse, End Blind Auditions”, by decrying the racism and sexism which, he claims, kept the orchestras of yesteryear predominantly white and male. He then pays tribute to the simple practice that helped erase that racism and sexism from orchestra hiring procedures: the blind audition. Starting in the late 1960s, orchestras began ditching traditional face-to-face auditions in favour of auditions that took place behind screens. With orchestra administrators no longer able to see the race or sex of the orchestra applicant, conscious and unconscious bias in hiring choices became impossible. Musical skill became the sole criterion for winning one of those prized professional playing positions.

This meritocratic turn, Tommasini argues, proved especially beneficial to female players. Whereas in 1970, women made up only 6% of orchestras, they now make up somewhere between a third and half of an average orchestra.

I add that audiences also benefited from meritocratic hiring processes as orchestras played increasingly brilliant renditions of the classics. Those improved performances also showed greater reverence for the original composers themselves. In short, the blind audition was a big win for all lovers of musical excellence – players, living composers, and fans alike.

So why on earth would anyone now call for their abolition?

Tommasini answers this way:

    Blind auditions changed the face of American orchestras. But not enough. American orchestras remain among the nation’s least racially diverse institutions, especially in regard to black and Latino artists … Ensembles must be able to take proactive steps to address the appalling racial imbalance that remains in their ranks. Blind auditions are no longer tenable.

In other words, the low number of black and Latino classical musicians means orchestras need to re-institute the old-time racial discrimination Tommasini began his article by decrying. Orchestras need to know which applicants are white and Asian precisely so they can refuse to hire them on that basis, no matter how skilled they are. Blind auditions make racial discrimination impossible, so they must be scrapped. American orchestras, writes Tommasini, should stop “passively waiting for representation to emerge from behind the audition screen”. Instead, they must realize that “removing the screen is a crucial step”.

To summarize: For Tommasini, it’s not just that justice requires injustice. It’s that justice is injustice (injustice in the form of racial discrimination). And if that reminds you of the official slogan of Orwell’s Ministry of Truth in 1984 – war is peace, freedom is slavery, ignorance is strength – you’re not alone.

July 23, 2020

QotD: Herbert Hoover in Australia and China

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

Hoover graduates Stanford in 1895 with a Geology degree. He plans to work for the US Geological Survey, but the Panic of 1895 devastates government finances and his job is cancelled. Hoover hikes up and down the Sierra Nevadas looking for work as a mining engineer. When none materializes, he takes a job an ordinary miner, hoping to work his way up from the bottom […]

After a few months, he finds a position as a clerk at a top Bay Area mining firm. One year later, he is a senior mining engineer. He is moving up rapidly – but not rapidly enough for his purposes. An opportunity arises: London company Berwick Moreing is looking for someone to supervise their mines in the Australian Outback. Their only requirement is that he be at least 35 years old, experienced, and an engineer. Hoover (22 years old, <1 year experience, geology degree only) travels to Britain, strides into their office, and declares himself their man. The executives “professed astonishment at Americans’ ability to maintain their youthful appearance” (Hoover had told them he was 36), but hire him and send him on an ocean liner to Australia.

[…]

After a year, Hoover is the most hated person in Australia, and also doing amazing. His mines are producing more ore than ever before, at phenomenally low prices. He scouts out a run-down out-of-the-way gold mine, realized its potential before anyone else, bought it for a song, and raked in cash when it ended up the richest mine in Australia. He received promotion after promotion.

Success goes to his head and makes him paranoid. He starts plotting against his immediate boss, Berwick Moreing’s Australia chief Ernest Williams. Though Williams didn’t originally bear him any ill will, all the plotting eventually gets to him, and he arranges for Hoover to be transferred to China. Hoover is on board with this, since China is a lucrative market and the transfer feels like a promotion. He travels first back to Stanford – where he marries his college sweetheart Lou Henry – and then the two of them head to China.

China is Australia 2.0. Hoover hates everyone in the country and they hate him back […] The same conflicts are playing itself out on the world stage, as Chinese resentment at their would-be-colonizers boils over into the Boxer Rebellion. A cult with a great name – “Society Of Righteous And Harmonious Fists” – takes over the government and encourages angry mobs to go around killing Westerners. Thousands of Europeans, including Herbert and Lou, barricade themselves in the partly-Europeanized city of Tientsin to make a final last stand.

In between dodging artillery shells, Hoover furiously negotiates property deals with his fellow besiegees. He argues that if any of them survive, it will probably because Western powers invade China to save them. That means they will soon be operating under Western law, and people who had already sold their mines to Western companies would be ahead of the game and avoid involuntary confiscation. Somehow, everything comes up exactly how Hoover predicts. US Marines arrived in Tientsin to liberate the city (Hoover marches with them as their local guide) and he is ready to collect his winnings.

Problem: it turns out that “Whatever, sure, you can have my gold mine, we’re all going to die anyway” is not legally ironclad. Hoover, enraged as he watches apparently done deals slip through his fingers, reaches new levels of moral turpitude. He offers the Chinese great verbal deals, then gives them contracts with terrible deals, saying that this is some kind of quaint foreign custom and if they just sign the contract then the verbal deal will be the legally binding one (this is totally false). At one point, he literally holds up a property office with a gun to get the deed to a mine he wants. Somehow, after consecutively scamming half the population of China, he ends up with the rights to millions of dollars worth of mines. Berwick Moreing congratulates him and promotes him to managing director. He and Lou sail for London to live the lives of British corporate bigshots.

As you might also predict, Hoover manages to offend everyone in Britain. Soon he is signing off on a “mutually agreeable”, “amicable” dismissal from Berwick Moreing. They agree to let him go on the condition that he does not compete with them – a promise he breaks basically instantly. He goes into banking, and his “bank” funds mining operations in a way indistinguishable from being a mining conglomerate. Eventually he abandons even this fig leaf, and just does the mining directly.

In other ways, his tens of millions of dollars are mellowing him out. Over his years in London, he develops hobbies besides making money and crushing people. He starts a family; he and Lou have two sons, Herbert Jr and Allen. He even hosts dinner parties, very gradually working on the skill of getting through an entire meal without mortally offending any guest…

Scott Alexander, “Book Review: Hoover”, Slate Star Codex, 2020-03-17.

July 22, 2020

QotD: Urban decline

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

At the heart of big-city exoduses is a process that I call accumulative decay. When schools are rotten and unsafe, neighborhoods become run-down and unsafe, and city services decline, the first people to leave are those who care the most about good schools and neighborhood amenities and have the resources to move. As a result, cities lose their best and ablest people first. Those who leave the city for greener pastures tend to be replaced by people who don’t care so much about schools and neighborhood amenities or people who do care but don’t have the means to move anywhere else. Because the “best” people — those who put more into the city’s coffer than they take out in services — leave, politicians must raise taxes and/or permit city services to deteriorate. This sets up the conditions for the next round of people who can do better to leave. Businesses — which depend on these people, either as employees or as customers — also begin to leave. The typical political response to a declining tax base is to raise taxes even more and hence create incentives for more businesses and residents to leave. Of course, there’s also mayoral begging for federal and state bailouts. Once started, there is little to stop the city’s downward spiral.

Intelligent mayors could prevent, halt and perhaps reverse their city decline by paying more attention to efficiency than equity. That might be politically difficult. Regardless of any other goal, mayors must recognize that their first order of business is to retain what economists call net positive fiscal residue. That’s a fancy term for keeping those people in the city who put more into the city’s coffers, in the form of taxes, than they take out in services. To do that might require discrimination in the provision of city services — e.g., providing better street lighting, greater safety, nicer libraries, better schools and other amenities in more affluent neighborhoods.

As one example, many middle-class families leave cities because of poor school quality. Mayors and others who care about the viability of a city should support school vouchers. That way, parents who stay — and put a high premium on the education of their children — wouldn’t be faced with paying twice in order for their kids to get a good education, through property taxes and private school tuition. Some might protest that city service discrimination is unfair. I might agree, but it’s even more unfair for cities, once the magnets of opportunities for low-income people, to become economic wastelands.

Walter E. Williams, “A Mayor’s Most Important Job”, Townhall, 2018-04-18.

July 16, 2020

QotD: The young Herbert Hoover

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

Herbert Hoover was born in 1874 to poor parents in the tiny Quaker farming community of West Branch, Iowa. His father was a blacksmith, his mother a schoolteacher. His childhood was strict. Magazines and novels were banned; acceptable reading material included the Bible and Prohibitionist pamphlets. His hobby was collecting oddly shaped sticks.

His father died when he is 6, his mother when he is 10. The orphaned Hoover and his two siblings are shuttled from relative to relative. He spends one summer on the Osage Indian Reservation in Oklahoma, living with an uncle who worked for the Department of Indian Affairs. Another year passes on a pig farm with his Uncle Allen. In 1885, he is more permanently adopted by his Uncle John, a doctor and businessman helping found a Quaker colony in Oregon. Hoover’s various guardians are dutiful but distant; they never abuse or neglect him, but treat him more as an extra pair of hands around the house than as someone to be loved and cherished. Hoover reciprocates in kind, doing what is expected of him but excelling neither in school nor anywhere else.

In his early teens, Hoover gets his first job, as an office boy at a local real estate company. He loves it! He has spent his whole life doing chores for no pay, and working for pay is so much better! He has spent his whole life sullenly following orders, and now he’s expected to be proactive and figure things out for himself! Hoover the mediocre student and all-around unexceptional kid does a complete 180 and accepts Capitalism as the father he never had.

His first task is to write some newspaper ads for Oregon real estate. He writes brilliant ads, ads that draw people to Oregon from every corner of the country. But he learns some out-of-towners read his ads, come to town, stay at hotels, and are intercepted by competitors before they negotiate with his company. Of his own initiative, he rents several houses around town and turns them into boarding houses for out-of-towners coming to buy real estate, then doesn’t tell his competitors where they are. Then he marks up rent on the boarding houses and makes a tidy profit on the side. Everything he does is like this. When an especially acrimonious board meeting threatens to split the company, a quick-thinking Hoover sneaks out and turns off the gas to the building, plunging the meeting into darknes. Everyone else has to adjourn, the extra time gives cooler heads a change to prevail, and the company is saved. Everything he does is like this.

(on the other hand, he has zero friends and only one acquaintance his own age, who later describes him to biographers as “about as much excitement as a china egg”.)

Hoover meets all sorts of people passing through the Oregon frontier. One is a mining engineer. He regales young Herbert with his stories of traveling through the mountains, opening up new sources of minerals to feed the voracious appetite of Progress. This is the age of steamships, skyscrapers, and railroads, and to the young idealistic Hoover, engineering has an irresistible romance. He wants to leave home and go to college. But he worries a poor frontier boy like him would never fit in at Harvard or Yale. He gets a tip – a new, tuition-free university might be opening in Palo Alto, California. If he heads down right away, he might make it in time for the entrance exam. Hoover fails the entrance exam, but the new university is short on students and decides to take him anyway.

Herbert Hoover is the first student at Stanford. Not just a member of the first graduating class. Literally the first student. He arrives at the dorms two months early to get a head start on various money-making schemes, including distributing newspapers, delivering laundry, tending livestock, and helping other students register. He would later sell some of these businesses to other students and start more, operating a constant churn of enterprises throughout his college career. His academics remain mediocre, and he continues to have few friends – until he tries out for the football team in sophomore year. He has zero athletic talent and fails miserably, but the coach (whose eye for talent apparently transcends athletics) spots potential in Hoover and asks him to come on as team manager. In this role, Hoover is an unqualified success. He turns the team’s debt into a surplus, and starts the Big Game – a UC Berkeley vs. Stanford football match played on Thanksgiving which remains a beloved Stanford football tradition.

Scott Alexander, “Book Review: Hoover”, Slate Star Codex, 2020-03-17.

July 15, 2020

Donald Shoup, the “Sir Isaac Newton of parking” or an “‘academic bottom-feeder’ who found a wonderful, rich ecological niche down there in the depths”

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

Colby Cosh, after taunting Ontarians yet again over our just-barely-past-Prohibition views on alcohol in public places, goes on to praise the work of UCLA economist Donald Shoup and his insights into the economics of parking:

Parking — boring topic, ain’t it? Shoup latched onto it as a young-ish man because he was a follower of Henry George (1839-1897), the intriguing “single tax” economic theorist of the 19th century. George favoured a tax on the unimproved value of land parcels as a way of socializing pure rent (the value earned from occupying a mere location) and encouraging development. It is a concept that many economists still like, although it is potentially difficult to apply at scale. The widely used concept of tax increment financing is one example of Georgism in practice.

Shoup started out trying to fit parking spaces into the Georgist picture, but the boring topic was so underexamined that he found himself having to build a general theory of parking. He quantified the relationship between parking and traffic, finding that people “cruising” for parking spots were more destructive than anyone had imagined, and he inspired waves of research into the hidden market values of parking spots, which are rarely bought or sold in their own right. He happily describes himself as an “academic bottom-feeder” who found a wonderful, rich ecological niche down there in the depths.

Shoup has spent decades travelling the world and preaching against the concept of free parking, often meeting with bad-tempered resistance. Nevertheless, he has made a lot of headway in the world of urban planning. Any economist can see immediately how bundling a “free” parking space with an apartment or a job might be inefficient. The renter or homeowner has to pay a hidden extra cost for an amenity he might not choose to use, and the commuter is being given an incentive to drive to work — an incentive whose cash value he might prefer to keep. Shoup soon found, on empirical investigation, that most urban parking lots show signs of less-than-optimum use.

[…]

Of course, too little parking is as much of an efficiency problem as too much, which is why Shoup and his followers want parking to be priced wherever possible: if more is really needed, let a market create it. (To my eyes he has at least as much Hayek in him as Henry George.) In the era of Uber and smartphones, it is a lot easier to imagine a fully Shoupista world in which prices for parking spots update in real time and drivers look up prices at or near their destination before setting out.

When The Dutch Ruled The World: Rise and Fall of the Dutch East India Company

Filed under: Asia, Business, Europe, History, India — Tags: , , , , , , — Nicholas @ 02:00

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July 8, 2020

QotD: Telecommuting in the post-Wuhan Coronavirus era

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

People are being stampeded into telecommuting. The thing is, dear media, once that happens, you can’t put it back in the bottle.

For two decades now, telecommuting and distance learning have been perfectly possible and even, frankly, beneficial. What has held it back is managers afraid they don’t know how to manage at a distance, corporations who think mega cubicle farms are a great way to be “important” and a general sense that only us, ne’er do wells, work in our pajamas on the sofa (I’ll have you know I’m wearing a sweatshirt and yoga pants. Never mind.)

If the panic lasts even two months (and the press will ensure it does before it collapses under its own weight) that reluctance to telecommute is going to be blown to hell. For one, once workers taste of THAT fruit, just anecdotally, 90% of them LOVE it. (The other 10% have very annoying children or spouses.)

And in the wake of the financial panic and wobbles, corporations are going to notice that they spend a lot less money when most of the workers work from home. At some point, they’ll also realize that they need much smaller facilities if they need facilities at all. And hey, money.

This will cause all sorts of other things, which I think will lead within two years to an exodus from the big cities everyone has crammed into because it’s where the jobs are. I think in turn this will lead to a world the social engineers really don’t like.

Sarah Hoyt, “Unintended Consequences”, According to Hoyt, 2020-03-12.

July 3, 2020

Birth, rapid growth, profitable stasis, bureausclerosis, decline, death – typical tech firm lifecycle

Filed under: Bureaucracy, Business, Technology — Tags: , , , — Nicholas @ 03:00

In the Continental Telegraph, what looks to be a pretty solid characterization of the corporate life-cycle for technology firms:

There are generally, 6 stages in the life of a tech company:

  1. Inception. A couple of smart kids start something in a garage. Massive innovation.
  2. Fast growth. The business moves to some good offices, number of staff increases. They take on smart, fast moving people who are innovating big. A few people know them.
  3. Steady growth. The business is now something of a household name. They get their own small head office. Staff are more like normal business. Innovation continues, but the bureaucracy starts to grow.
  4. Bureaucracy. The business is a household name. They have multiple offices, or something designed by a smart-ass architect. There’s still staff coming in, but they’re mostly seeing it as a nice warm place to sit and be bureaucrats. The innovators start leaving as it’s just not interesting. They might even be making lots of money, but it’s mostly just living off what was built in earlier phases, or large dumb wasteful projects that go nowhere for years.
  5. Decline. A new disruptor arrives on the scene. They innovate in a field you’re involved in. You can’t keep up because in the previous phase, you replaced the innovators with bureaucrats. You’re outsmarted.
  6. Terminal decline and death. You slowly or quickly disappear, maybe holding onto a few customers who habitually use you.

I think there might also be something about when government starts taking an interest in you, and I think it’s quite some time into stage 4. Google are already there. Firing James Damore is very much bureaucracy state behaviour. They wouldn’t have cared when it was a tiny number of staff in an office. And how much have they really innovated in the last decade?

July 1, 2020

Parler, pro and con

Filed under: Business, Liberty, Media, Politics, Technology, USA — Tags: , , , — Nicholas @ 05:00

The latest social media challenger to Twitter has been getting a fair bit of attention over the last couple of weeks, as many British and American conservative Twitter users have announced they’ll be relocating to the newer service due to their concerns over Twitter’s progressive bias and very uneven-handed moderation. In The Critic, David Scullion points out that Parler may not be the dream social network for the unwoke:

The avowedly “unbiased” social media site based in Nevada has been around for two years but has rapidly gained traction amongst Trump supporters in the US, Brexit and Conservative supporters in the UK, and pro-monarchists in Saudi Arabia. (Yes really).

The raison d’être is free speech and in its “Declaration of Independence” Parler outlined the injustices, as they see it, of the existing big tech firms:

    They manipulate their platform to hide information. They shadow ban, trick and deceive. They have become enablers, and often leaders, of the vicious cancel-culture mob who goose-step through our online communities and scream down those who dare to disagree.

The document ends by calling on users to “#Twexit to Parler” – i.e. leave Twitter and join them.

But will they succeed?

[…]

It seems like Parler’s popularity is a symptom of censorship in big tech, but building a rival “free speech” network has its own problems.

For a start, Parler will throw you to the wolves if they get sued over your posts.

Parler requires users to “agree to defend and indemnify Parler, as well as any of its officers, directors, employees, and agents, from and against any and all claims, actions, damages, obligations, losses, liabilities, costs or debt, and expenses (including but not limited to all attorneys fees) arising from or relating to your access to and use of the Services.”

And in order to use Parler, individuals must also forfeit their right to sue it in court or join a class-action claim. Instead they must settle disputes in arbitration.

It’s also worth pointing out that Twitter once branded itself as “the free speech wing of the free speech party” and said it took a “neutral” view of tweets posted by users because of the company’s founding principles. Those principles are now gone, gradually removed in response to a need to protect their bottom line.

June 28, 2020

Why is the British government buying part of OneWeb?

Filed under: Britain, Business, Economics, Europe, Space — Tags: , — Nicholas @ 03:00

As Tim Worstall points out, the British government’s decision to buy 20% of the satellite company OneWeb doesn’t actually make any economic sense:

… OneWeb – in which the UK will own a 20% stake following the investment – currently operates a completely different type of satellite network from that typically used to run such navigation systems.

“The fundamental starting point is, yes, we’ve bought the wrong satellites,” said Dr Bleddyn Bowen, a space policy expert at the University of Leicester. “OneWeb is working on basically the same idea as Elon Musk’s Starlink: a mega-constellation of satellites in low Earth orbit, which are used to connect people on the ground to the internet.

The actual answer is that we don’t need to buy into anyone’s system at all. Just as we shouldn’t have into [EU satellite system] Galileo in the first place.

For, d’ye see, GPS is a public good. The US allows anyone to use the signals. Not that they can really stop people doing so either. Not unless they take the whole system down.

So, there’s the US system, free for all to use. A global public good – this means it doesn’t matter who provides it, it is there. It also means we don’t need our own. Which, in turn, means we don’t and didn’t need the Galileo system, let alone another one after we’ve left that.

As I said, politics not even asking the right question. They’re asking “which new system should we have?” when the correct questions is “why do we need a new system?” and given that the answer to the second is we don’t therefore the first is entirely moot.

Even setting aside the question of what the satellite system will be capable of, as the market is already in the process of developing and deploying the equipment, why does the British government think its investment is necessary?

June 27, 2020

QotD: The cost of military equipment

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

Major military hardware is produced in only limited quantities and involves a massive amount of research, development, and engineering before the first unit goes into service. Because of this, the companies that build it are rarely willing to take the risk of paying for the development themselves and recovering the cost from the units that they sell. What if the customer suddenly decides to cut their buy in half? To avoid this problem, development is paid for by the customer separately from procurement of each item. Well, more or less. The actual answer varies with each particular system, accounting method, and time of the month. But in general, costs break down that way.

So why does this cause so much confusion? Well, it all has to do with what gets reported. Someone who is trying to make the case that some program is outrageously expensive and should be cancelled is going to lump together development and procurement, divide by the number of systems involved, and then publish the resulting number. But, particularly when we’re discussing the cost of a system about to enter production, that’s very different from the actual numbers. To give a well-known example, the B-2 is generally reputed to have cost about $2 billion/plane in the 90s. However, this is the total program cost divided by the 21 airframes. If we’d decided to buy 22 B-2s instead of the 21 we did buy, the extra plane would have cost only $700 million or so. Admittedly, the B-2 is a rather extreme case, and usually the share of R&D cost is less than the procurement (flyaway) cost, but it’s illustrative of the power of this kind of framing.

“bean”, “Military Procurement – Pricing”, Naval Gazing, 2018-03-09.

June 24, 2020

Trudeau government wants to introduce an Internet “link tax”

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

Michael Geist on the Trudeau government’s latest indications of support for a tax grab to benefit certain favoured groups and organizations:

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

Last week, Canadian Heritage Minister Steven Guilbeault called into question his own government’s policies on supporting news media, suggesting that those programs should be replaced by copyright rules that would open the door to payments from internet companies such as Google and Facebook. Mr. Guilbeault indicated that a legislative package was being prepared for the fall that would include new powers for Canada’s communications regulator and what are commonly referred to as Netflix taxes and internet linking taxes.

My Globe and Mail op-ed notes the government’s support for new internet taxes should not come as a surprise. There were strong signals that the spring budget – postponed indefinitely due to the current public health crisis – was going to include expanding sales taxes to capture digital sales such as Netflix or Spotify subscriptions.

[…]

It is Mr. Guilbeault’s plans for a link tax that should spark the most concern, however. The government has long promoted its policies designed to support the Canadian media sector, including direct funding for local journalism as well as labour and subscription tax credits. The taxpayer cost runs into the hundreds of millions of dollars, but is justified on the grounds that journalism is an essential service that requires public support.

Yet Mr. Guilbeault now says that government should not be funding media, characterizing the policies as short term measures aimed at mitigating a media emergency. Instead, Mr. Guilbeault supports a controversial copyright reform measure that would establish a news publisher’s right to demand payment for services that link to their content.

This payment – effectively a tax on linking – raises a host of concerns, not the least of which is that the proposal was not recommended by the government’s own copyright review last year. Copyright reform in Canada is always complicated, particularly given that responsibility for it is shared with Innovation, Science and Economic Development Minister Navdeep Bains, but delving into reforms that sparked protests in Europe could be politically risky for a minority government.

News organizations already benefit from large platforms linking to their content since the links generate visitors that increase advertising revenues and paying subscribers. Organizations that do not want the links can easily opt-out of appearing in services such as Google News or Facebook. In fact, after Google shut down its Google News service in Spain, studies found publisher website traffic dropped by 10 per cent.

June 19, 2020

The economy isn’t all huge corporations and government

Filed under: Britain, Business, Economics — Tags: , , , — Nicholas @ 03:00

Paul Sellers reminds us that the economy is far more than just the big names that get mentioned in the financial pages:

An example of the kind of one-man businesses Paul is talking about.

Independents in micro-businesses are few and far between and often hard to discover, despite the internet’s ever-increasing web of enterprises. The backbone of British industry is made up of small, independent people striving to retain a measure of individualism, independence and entrepreneurialism in their lives. Statistics from 2019 show that in Britain there were 5.82 million small businesses responsible for 99.3% of the total business output in the UK.

Small businesses here comprise those with 0-49 employees and digging deeper still into what might at first seem more irrelevant than relevant is that the niche that small businesses fill in the real world of enterprise. Over 76% of businesses are operated by one-man bands; single-person enterprises who operate alone comprise almost 4.5 million men and women. With an additional 1.15 million micro-business (1-9 employees) around 95% of businesses here operate on a strength of under just 10 people. So over 99% of small to medium business enterprises, that’s zero to 249 employees, but only 0.6% have a workforce of 50-249 employees. Less than 4% are small businesses with 10-49 staff members and get this, over 95% operate as micro-businesses with 0-9 employees. What does this tell you about businesses output? What it tells me is how little of this is newsworthy by the mass media manufacturing companies (Like BBC News and ITV, Sky and so on) who constantly tell us about how many this massive company or that massive company is laying off and how little this really affects our economy because the little guys still get out into their little micro-shops and make what cannot work work.

June 11, 2020

In 1929, the warning sign was getting stock tips from shoeshine boys and elevator operators

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

In 2020, as Jay Currie suggests, the warning sign might be robinhood.com:

“Jay Gould’s Private Bowling Alley.” Financier and stock speculator Jay Gould is depicted on Wall Street, using bowling balls titled “trickery,” “false reports,” “private press” and “general unscrupulousness” to knock down bowling pins labeled as “operator,” “broker,” “banker,” “inexperienced investor,” etc. A slate shows Gould’s controlling holdings in various corporations, including Western Union, Missouri Pacific Railroad, and the Wabash Railroad.
From the cover of Puck magazine Vol. XI, No 264 via Wikimedia Commons.

In the winter of 1928 Joe Kennedy, father of JFK and major stock market player, stopped to get his shoes shined. The shoeshine boy leaned in and said, “Buy Hindenburg”. Kennedy began unwinding his positions saying, “You know it’s time to sell when shoeshine boys give you stock tips. This bull market is over.”

I had a similar experience in late 1999 when a friend took out a mortgage on her condo to buy shares in the billion dollar online copy paper empire. She had a perfectly good job in retail garden supplies. Remembering Kennedy, I advised another friend that her Nortel was looking a bit overbought. As it happened she sold quite near the peak.

The 2020 equivalent of the shoeshine boy is the perfect storm is the free trading platform, robinhood.com. This is a nicely designed site where you can trade shares on your computer or phone. It has become very, very popular with younger, new investors. My late 1990’s day trading pals would have killed for this sort of interface and no brokers fees. It has spawned a whole host of reddit chats, twitter streams and countless YouTube videos on the excitement of swing trading. (One fun spot to watch Robinhood is the https://robintrack.net/leaderboard which shows which stocks the people on Robinhood are buying. It is a bit slow and buggy but a great front row seat.)

What is striking about the robinhood.com world is that it revolves around trading rather than any sort of “investing”. You hop into APPL in the morning, see if you can make a couple of bucks by noon and move onto the next thing. And Apple is a real, solvent, company.

Robinhood has been in the news recently because the herd has charged into the shares of a number of companies which are either in or near bankruptcy. Hertz Rent-a-Car dropped from $20 to $0.50 in three months as the market realized that with no travelers there would be no car rentals. Interestingly, we learn from robintrack.net that at $20 there were a little over 1000 users holding, as Hertz crashed the Robinhood users piled in, at $0.55 there were 44,000 and there are now 158,000. And many will have made money, lots of money, trading the gyrating price from $0.50 to back up to $5.00.

In the run up to the crash of October 1929, long after Joe Kennedy had pulled his money from the market, retail traders were coining it trading the “swings” on margin accounts. It didn’t matter what the company actually did, it was going up. The same “irrational exuberance” was a big feature in the dot com bubble.

The “Fearless Girl” statue faces the Arturo Di Modica “Charging Bull” on Wall Street (Wikipedia)

The lessons of the 1929 crash and the 2000 dot com bust were simple – get out early and be in no hurry to get back in. Right now the dinosaurs like Buffet and Ichan are sitting on stacks of cash. Just like Joe Kennedy was when Wall Street swan dived in October 1929. They got that cash by selling their shares to shoeshine boys and the bright lights at Robinhood.

June 8, 2020

Andrew Sullivan can’t write about the riots or he’ll lose his job

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

I’d wondered why he hadn’t directly addressed the biggest news item in the United States over the last week:

What has happened to New York media? Just as the New York Times was experiencing its own Inner Mongolia Moment over the now notorious Sen. Tom Cotton “Send in the Troops” op-ed, the Maoists at New York magazine were going after their best columnist, Andrew Sullivan.

Sullivan revealed on Twitter yesterday that his column wouldn’t be appearing. The reason? His editors are not allowing him to write about the riots.

Presumably Sullivan’s editors are frightened that he might make the radically bourgeois point that looting and violence are wrong.

Cockburn understands that Sullivan is not just forbidden from writing for the New York magazine about the riots; his contract means he cannot write on the topic for another publication. He is therefore legally unable to write anything about the protests without losing his job — at the magazine that, in 1970, published Radical Chic, Tom Wolfe’s brilliant and controversial excoriation of progressive piety. It’s the bonfire of the liberals!

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