Quotulatiousness

November 19, 2024

The state and society

Filed under: China, Europe, Government, History, Technology — Tags: , , , — Nicholas @ 04:00

Lorenzo Warby explains why Karl Marx was wrong about the origins of what he called “the three great inventions” and therefore also mistaken about the societal impact of those inventions:

    Gunpowder, the compass, and the printing press were the 3 great inventions which ushered in bourgeois society. Gunpowder blew up the knightly class, the compass discovered the world market and founded the colonies, and the printing press was the instrument of Protestantism and the regeneration of science in general; the most powerful lever for creating the intellectual prerequisites.

    Karl Marx, “Division of Labour and Mechanical Workshop. Tool and Machinery” in Economic Manuscripts of 1861-63, Part 3) Relative Surplus Value.

With this quote we can see what is wrong both with Marx’s notion of the role of technology in social causation and with a very common notion of the relationship between state and society.

The false — but very common — view of the relationship of state and society is that the state is a product of its society, that the state emanates from its society. This gets the dominant relationship almost entirely the wrong way around. It is far more true to say that the state is a fundamental structuring element of the social dynamics of the territory it rules rather than the reverse.

It is perhaps easiest to see this by noting the glaring flaw in Marx’s reasoning. The gunpowder, the compass and the printing press were all originally Chinese inventions. Indeed, Europe acquired — via intermediaries — gunpowder and the compass from China. (Gutenberg’s printing press appears to have been an independent invention.)

Source: Nova Reperta Frontispiece, 1588.

Yet, as Marx was very well aware, China did not develop a bourgeoisie in his sense. Indeed, Marx’s notion of the Asiatic mode of production grappled with precisely that lack.1

In 1620, Sir Francis Bacon wrote in his Instauratio magna that

    … printing, gunpowder, and the nautical compass … have altered the face and state of the world: first, in literary matters; second, in warfare; third, in navigation …

This was true of the effect of these inventions in European, but not Chinese, hands.

Why were these inventions globally transformative in European, but not Chinese hands? Because of the differences in the structure of European state(s) compared to the Chinese state.

Unified China …

The first difference is that the European states were states, plural. Europe had competitive jurisdictions, it had centuries of often intense inter-state conflict. From the Sui (re)unification (581) onwards China was, with brief interruptions, a single polity.2 What the evidence — both Chinese and Roman — shows quite clearly is that civilisational unity in a single polity is bad for institutional, technological and intellectual development.

The second difference is with the internal structure of European states compared to the Chinese state. The Sui dynasty, by introducing the Keju, the imperial examination — refining the use of appointment by exam that went back to the Warring States period — created a structure that directed Chinese human capital to the service of the Emperor.

There were three tiers of examinations (local, provincial, palace). You could sit for them as often as you wished. So a significant proportion of Chinese males devoted decades of their lives to attempting to pass the exams. Over time, the exams became more narrowly Confucian — probably because it required a high level of detailed mastery, so had more of a sorting effect — thereby promoting intellectual conformism.

[…]

… and divided Europe

Conversely, when gunpowder, the compass and the printing press came to Europe, European states already had a military aristocracy; self-governing cities; an armed mercantile elite; organised religious structures; so a rich array of cooperative institutions. Moreover, kin-groups had been suppressed across manorial Europe, forcing — or giving the social space for — alternative mechanisms for social cooperation to evolve.3, 4 In particular, due [to] its self-governing cities with armed militias, medieval Europe had an (effectively) armed mercantile elite before gunpowder, the compass or printing reached Europe.

Alfonso IX of Leon and Galicia (r.1188-1230) first summoned the Cortes of Leon in 1188. This became the start of the first institutionalised use of merchant representatives in deliberative assemblies. Emperor Frederick Barbarossa (r.1155-1190) had tried something similar earlier, but the mercantile elites of North Italy preferred de facto independence, defeating him at the Battle of Legnano in 1176.

The first European reference to the compass is in a text written some time between 1187 and 1202, with its use appearing to expand over the 1200s. The first reference to gunpowder in Europe is not until 1267 and it took centuries before gunpowder played a major role in European warfare.

Both the compass and gunpowder really only have transformative effects from the late C15th onwards, which is also when the printing press is spreading across Latin Europe. By that time, medieval Europe has already become a machine culture and it had been for centuries the civilisation with the most powerful mercantile elite. A reality driven by competitive jurisdictions, a rural-based military aristocracy, law that was not based on revelation (so it could entrench social bargains), suppression of kin-groups, and self-governing cities.

Competition between European states was a powerful driver of the transformative use of technologies. But so was the level of striving within such states: adventurers able to mobilise resources — and seeking wealth, power, prestige — had far more room to operate (and receive official sanction) in Europe than in China.

In other words, the differences in the development and use of technology — and in social dynamics and formations — between China and medieval Europe was fundamentally driven by the differences in state structures, in how the relevant polities worked.

    1. Marx was not an honest intellectual reasoner:

    As to the Delhi affair, it seems to me that the English ought to begin their retreat as soon as the rainy season has set in in real earnest. Being obliged for the present to hold the fort for you as the Tribune’s military correspondent I have taken it upon myself to put this forward. NB, on the supposition that the reports to date have been true. It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way.
    Marx to Engels, [London,] 15 August 1857, (emphasis in the original).

    2. The Song (960-1279) failed to fully unify China, but they were the only significant Han polity. That the Song were effectively within a mini-state system does seem to have affected their policies, including the unusually — for a Chinese imperial dynasty — strong focus on trade and technological development.

    3. Kin-groups had already been suppressed in the city-states of the Classical world, including Rome. They re-emerged with the incoming Germanic peoples, and then were suppressed again by the Church and the manorial elite, remaining in the agro-pastoralist Celtic fringe and Balkan uplands.

    4. Economists Avner Greif and Guido Tabellini define clan (i.e. kin-group) as “a kin-based organization consisting of patrilineal households that trace their origin to a (self-proclaimed) common male ancestor“. They contrast this with a corporation: “a voluntary association between unrelated individuals established to pursue common interests“. They note they perform similar functions: “they sustained cooperation among members, regulated interactions with non-members, provided local public or club goods, and coordinated interactions with the market and with the state“. Triads, tongs and cults can also perform these functions.

October 8, 2024

QotD: The competitive instinct

Filed under: Gaming, Quotations, Soccer, Sports, USA — Tags: , , , , , , — Nicholas @ 01:00

I once saw an interview with basketball player Charles Barkley, in which he discussed his retirement. Barkley was a Hall of Fame player, and like most of those guys, he hung on a few seasons too long. Even having lost a step or three, Sir Charles was still a decent player, but that’s all he was — a decent player, but getting paid like a superstar and with a superstar’s reputation. A few seasons after retiring, he admitted as much. He said something like (from memory) “I’d guard a guy and think, ‘this is going to be easy, this guy is terrible’. And then he’d beat me, and I’d realize I just got beat by some guy who’s terrible, and then I knew it was time to hang it up.”

One thing chicks of both sexes and all however-many-we’re-up-to genders don’t realize these days is how competitive men — actual biological males — are hardwired to be. Things like World of Warcraft and fantasy football only exist because the genius who invented those figured out a way to tap into that heretofore-unexpressed male competitiveness. And indeed, it’s the guy who’d never even dream of putting on shoulder pads who’s the most insanely competitive guy in a fantasy football league or (I’m certain) a whatever-they’re-called in World of Warcraft. Even the uber-dorks in the Math Club and the Speech and Debate Society went after each other like Mickey Ward and Arturo Gatti. It’s just how guys are … or, at least, how guys used to be.

[…]

When it comes right down to it, that’s why men of a certain age simply don’t get “women’s sports”. Few will be as crustily chauvinistic as yer ‘umble narrator, and come right out and say it, but here goes: Women’s “sports” are just a shoddy knockoff of the real thing, because women just aren’t wired that way. That’s not to say that there aren’t competitive women, or athletic women — obviously there are, some very athletic and very competitive — but the female of the species just isn’t wired to put in the work the way males are. When faced with the prospect of three straight hours in the batting cage, swinging at curve after curve until your blisters have blisters and your shoulders feel like they’re falling out of their sockets, most women will quite sensibly ask “why bother?” Competition-for-competition’s-sake, even when it’s only against yourself in those long, long, looooong hours in the cage, just doesn’t motivate them the way it does us.

Which is why a person’s reaction to Simone Biles, or the USA Women’s soccer team, or the WNBA, or what have you is an almost perfect predictor of their age, not just their “gender”. I judge sports as sports. I don’t care about soccer, but if I did, I’d care about it as soccer — meaning, I’d want to see the best possible players, playing at the highest possible level. Women’s Olympic teams — that is to say, all star teams, the very best players — routinely get smoked by teams of 15 year old boys. Sir Charles is pushing sixty, but he could dominate the WNBA right now, in street clothes. Obviously this doesn’t apply to Pee Wee or rec leagues, but if you’re going to take a paycheck for doing it, then I want to see exactly what I paid for.

In estrogen-drenched, synchronized-ovulation Clown World, it’s all about appearances. Sure, she let her team down and wussed out (while still talking up how great she is), but can’t you see that it gave her the sadz? Sure, Megan Rapinoe et al keep getting smoked by 14 year old boys, then choking in international competition, but can’t you see her out there, with her pink hair and her tats and her Strong, Confident Empowerment? The “competition”, such as it is, is an excuse for the display. Michael Jordan ought to give baseball another shot. We know he can cry. These days, that’d get him a first-class ticket to Cooperstown.

Severian, “On Competition”, Rotten Chestnuts, 2021-08-02.

July 29, 2024

QotD: Football

Filed under: Football, Quotations, Sports — Tags: , , , — Nicholas @ 01:00

It’s often said that football games are taken as metaphors for the success or failure of groups; that if a football team wins, those who root for the team think this is an omen their lives will go well, while a loss is seen as a bad portent. But why are football games seen as omens? Because so many people are involved. It is impossible to field a football team without a lot of people working together cooperatively. In that, football is like real life and engages emotions in a way other sports do not. A basketball team can win if one star throws in 50 points; a baseball team can win if one slugger hits two home runs; a football team simply cannot win unless everyone cooperates. This makes football a metaphor of the larger world, where for the typical person, everyday life is a cooperative effort.

Gregg Easterbrook, “Why football is the most emotional sport, and there she is, Miss Cue!”, NFL.com, 2005-01-11.

May 29, 2024

Ontario’s long and winding (and subsidy-strewn) road to beer in convenience stores

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

Apparently I’ll have a little bit more to celebrate on my birthday this year as the Ontario government’s glacially slow-to-change alcohol sales rules are being liberalized as of September 5th to allow all the province’s convenience stores to begin selling beer and wine:

“The Beer Store” by Like_the_Grand_Canyon is licensed under CC BY-NC 2.0

Premier Doug Ford promised Ontarians beer in corner stores, supermarkets and big-box stores, and by God he has delivered. As of Sept. 5, all Ontario convenience stores meeting eligibility criteria will be allowed to sell beer, wine, cider and pre-mixed drinks. As of Oct. 31, the privilege will be extended to all grocery and big-box stores. The province says it expects as many as 8,500 new booze-procurement sites to come online under the new regime. By Ontario standards, it’s absolutely revolutionary.

The new regime is also, of course, hilariously complicated. And absurdly, offensively expensive.

It is fair to describe the new regime as somewhat more competitive, and certainly more convenient. In addition to offering potentially thousands of new locations, supermarkets (including the roughly 450 already licensed) will be able to offer volume discounts on beer — i.e., a 24-pack will cost less per bottle than a six-pack. This was a privilege hitherto reserved for The Beer Store, the American-, Belgian- and Japanese-owned conglomerate that dominated beer sales in Ontario from the end of Prohibition until fairly recently.

Private retailers will even be able to set their own prices, which until now has been considered blasphemy.

It is not fair to describe the new regime, as the government does, as an “open” market.

Near as I can tell, Ontario will by 2026 have the following retail environments in place:

  • The Beer Store. Smelly, surly, and the best-available value. Only beer — no cider or mixed drinks. It’s in the name.
  • LCBO locations. Government-run liquor stores retain their near-absolute monopoly on hard liquor sales, in addition to selling beer (especially craft beer, in which The Beer Store’s owners aren’t so interested), wine and everything else.
  • LCBO- and/or The Beer Store-branded “agency stores” in rural areas, which sell everything the LCBO does, but operate inside of convenience stores, small supermarkets and other local businesses, and are staffed by non-government employees.
  • The existing supermarkets licensed to sell beer, cider and wine (and in rare cases all three!), plus scores of new outlets — the new 8,500 new locations.

The Beer Store maintains a monopoly (in urban areas) on wholesale for bars and restaurants and on refunding cans and bottles, although its new “master framework agreement” (MFA) doesn’t even oblige it to maintain its current number of locations — which in urban areas have been dwindling rapidly. I’m a 17-minute walk from my nearest Beer Store. The house I grew up in, in the heart of midtown Toronto, is a 45-minute walk. I’m not schlepping a leaky garbage bag full of empty cans either distance.

May 20, 2024

The economic distortions of government subsidies

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

The Canadian federal and provincial governments are no strangers to the (political) attractions of picking winners and losers in the market by providing subsidies to some favoured companies at the expense not only of their competitors but almost always of the economy as a whole, because the subsidies almost never produce the kind of economic return promised. The current British government has also been seduced by the subsidies game, as Tim Congdon writes:

Former British Conservative Prime Minister Margaret Thatcher in 1983. She was in office from May 1979 to November 1990.
Photo via Wikimedia Commons.

Why do so many economists support a free market? By the phrase they mean a market, or even an economy dominated by such markets, where the government leaves companies and industries alone, and does not try to interfere by “picking winners” and subsidising them. Two of the economists’ arguments deserve to be highlighted.

The first is about the good use — the productivity — of resources. To earn a decent profit, most companies have to achieve a certain level of output to attract enough customers and to secure high enough revenue per worker.

If the government decides to give money to a favoured group of companies, these companies can survive even if they produce less, and obtain lower revenue per worker, than the others. The subsidisation of a favoured group of companies therefore lowers aggregate productivity relative to a free market situation.

In this column last month I compared the economically successful 1979–97 Conservative government with the economically unsuccessful 2010–2024 Conservative government, which is now coming to an end. In the context it is worth mentioning that Margaret Thatcher and her economic ministers had a strong aversion to government subsidies of any kind.

According to Professor Colin Wren of Newcastle University’s 1996 study, Industrial Subsidies: the UK Experience, subsidies were slashed from £5 billion (in 1980 prices) in 1979 to £0.3 billion in 1990. (In today’s prices that is from £23 billion to under £1.5 billion.)

Thatcher is controversial, and she always will be. All the same, the improvement in manufacturing productivity in the 1980s was faster than before in the post-war period and much higher than it has been since 2010. Further, one of Thatcher’s beliefs was that if the private sector refuses to pursue a supposed commercial opportunity, the public sector most certainly should not try to do so.

Such schemes as HS2 and the Hinkley Point nuclear boondoggle could not have happened in the 1980s or 1990s. They will result in pure social loss into the tens of billions of pounds and will undoubtedly reduce the UK’s productivity.

But there is a second, and also persuasive, general argument against subsidies and government intervention in industry. An attractive feature of a free market policy is its political neutrality. Because market forces are to determine commercial outcomes, businessmen are wasting their time if they lobby ministers and parliamentarians for financial aid.

Honest and straightforward tax-paying companies with British shareholders are rightly furious if they see the government channelling revenues towards other companies who have access to the right politicians and friendly civil servants. By definition, the damage to the UK’s interests is greatest if the recipients of government largesse are foreign.

March 11, 2024

Google’s “wild success and monopolistic position has made it grow fat, lazy, and worst of all, stupid”

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

Google has long been the 500lb gorilla in the room as far as search engine dominance is concerned, despite a significant and steady drop in the quality of the search results it returns. Niccolo Soldo suggests that Google has gotten fat and lazy in the interval since the release of its last huge success — Gmail — and the utter catastrophe of Gemini:

It’s become passé to complain about Google’s search engine these days, because it’s been horrible for years. We all recall its early era when its minimalist presentation effectively destroyed its competition overnight. Only us olds remember AltaVista‘s search engine, for example. So ubiquitous is its core function that the word “google” entered our lexicon.

Roughly 85-90% of the readers who have subscribed to this Substack have used a gmail address to do so. It’s a great product, although it could be better. Like many of you, I have several gmail addresses, and use email services from other providers like Protonmail. Gmail is incredibly easy to use, and works very well on all the devices that we operate on a daily basis.

Google is a tech behemoth, and is in a monopolistic position when it comes to both of these services. It has used this position to hoover up an insane amount of cash, taking a battering ram to many other businesses in the process, especially news media outlets that rely on advertising revenue. Yet it has not scored any big victories since its rollout of gmail all those years ago. Pirate Wires says that it hasn’t had to for some time … until now. The explosion of AI tech means that its core business is now at threat of extinction unless it can win the AI arms race. Its first foray into this war via its rollout of Gemini has been an absolute disaster. Mike Solana chalks it up to many factors, primarily the “culture of fear” that seems to permeate the tech giant.

The summary:

    Last week, following Google’s Gemini disaster, it quickly became clear the $1.7 trillion-dollar giant had bigger problems than its hotly anticipated generative AI tool erasing white people from human history. Separate from the mortifying clownishness of this specific and egregious breach of public trust, Gemini was obviously — at its absolute best — still grossly inferior to its largest competitors. This failure signaled, for the first time in Google’s life, real vulnerability to its core business, and terrified investors fled, shaving over $70 billion off the kraken’s market cap. Now, the industry is left with a startling question: how is it even possible for an initiative so important, at a company so dominant, to fail so completely?

The product rollout was so incredibly botched that mainstream media outlets friendly to Google (and its cash) are doing damage control on its behalf.

Gemini’s ultra-woke responses to requests quickly became a staple of social media postings.

Multiple issues:

    This is Google, an invincible search monopoly printing $80 billion a year in net income, sitting on something like $120 billion in cash, employing over 150,000 people, with close to 30,000 engineers. Could the story really be so simple as out-of-control DEI-brained management? To a certain extent, and on a few teams far more than most, this does appear to be true. But on closer examination it seems woke lunacy is only a symptom of the company’s far greater problems. First, Google is now facing the classic Innovator’s Dilemma, in which the development of a new and important technology well within its capability undermines its present business model. Second, and probably more importantly, nobody’s in charge.

It’s human nature to want to boil issues down to one single cause of factor, when it’s usually several all at once. We humans also have a strong tendency to zoom in on one factor when presented with many, mainly because the one that we focus on is something that we know and/or are passionate about.

Of course, Google’s engineers didn’t do this accidentally. They’ve been very intently observed by the most woke of all, the HR department:

As we all know, HR Departments are the Political Commissars of the Corporate West.

Stupid stuff:

    Before the pernicious or the insidious, we of course begin with the deeply, hilariously stupid: from screenshots I’ve obtained, an insistence engineers no longer use phrases like “build ninja” (cultural appropriation), “nuke the old cache” (military metaphor), “sanity check” (disparages mental illness), or “dummy variable” (disparages disabilities). One engineer was “strongly encouraged” to use one of 15 different crazed pronoun combinations on his corporate bio (including “zie/hir”, “ey/em”, “xe/xem”, and “ve/vir”), which he did against his wishes for fear of retribution. Per a January 9 email, the Greyglers, an affinity group for people over 40, is changing its name because not all people over 40 have gray hair, thus constituting lack of “inclusivity” (Google has hired an external consultant to rename the group). There’s no shortage of DEI groups, of course, or affinity groups, including any number of working groups populated by radical political zealots with whom product managers are meant to consult on new tools and products.

February 4, 2024

QotD: American railroads and the Interstate Commerce Commission

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

The railroads [in the decades immediately following the U.S. civil war] saw advantages to regulation. Unstable prices, disliked by rail customers, could also be detrimental to the railroads. A recession in 1884 led to the failure of a number of railroads, and the railroads wanted to undertake pooling arrangements for their mutual profitability. Thus, the railroad industry, which was very competitive, wanted the ICC [Interstate Commerce Commission] to stabilize rates, regulate routes, and protect their profitability. Essentially, the ICC cartelized the industry, allowing it to be more profitable than it could have been in a more competitive unregulated environment.

Randy Holcombe, Liberty in Peril: Democracy and Power in American History, (2019).

December 17, 2023

Justapedia, the latest “new Wikipedia“

Filed under: Media, Technology — Tags: , , , — Nicholas @ 03:00

At Quillette, Shuichi Tezuka introduces the latest challenger to the ever-more-biased free online encyclopedia Wikipedia:

In the aftermath of Elon Musk’s purchase of Twitter late last year, the journalist Jon Levine asked him: “I wonder how much Wikipedia would cost?” Musk had recently complained that Wikipedia has a “non-trivial left-wing bias”, and a few months earlier, had commented that “Wikipedia is losing its objectivity.” But regardless of whether Musk would have liked to purchase the site, there never was any real possibility of that happening, as stated by Wikipedia’s symbolic leader Jimmy Wales: “Wikipedia is not for sale”.

Following this exchange, there were several discussions on Twitter (as it was called at the time) about whether Musk might create his own alternative to Wikipedia. In the end Musk did not make such an attempt, but approximately eight months later, someone else did.

This new online encyclopedia, known as Justapedia, is the latest in a long series of attempts by various individuals to create a competitor to Wikipedia. So far all previous attempts have either been unsuccessful, or morphed into something so unlike Wikipedia that they could no longer be considered a competitor. However, one thing working in Justapedia’s favor is that the need for such a competitor is stronger now than it has been in past years, due to several recent controversies revolving around the manipulation and/or politicization of Wikipedia, along with a widespread perception that Wikipedia has not done enough to prevent this type of problem.

Justapedia was recently publicized by Larry Sanger, who co-founded Wikipedia alongside Wales, during an interview with Russell Brand and in a subsequent blog post. This article will present a more detailed examination of Justapedia’s background, including some of the recent controversies that demonstrate why it is needed, as well as the poor record of success other Wikipedia alternatives have had up to this point. Will Justapedia succeed where most other Wikipedia competitors have failed?

September 24, 2023

A sliver of hope for Indigo?

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

In the latest SHuSH newsletter, Ken Whyte relays some new-ish rumours in the book business that may provide a bit of help for the struggling Indigo chain:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

So what do we make of Heather Reisman’s return as CEO of the Indigo bookselling chain after her unceremonious removal from that role just two months ago?

The short answer is I have no idea, but SHuSH has never shied away from delivering irresponsible speculation on happenings at Indigo. I heard this week from a reasonably reliable source that Indigo is in discussions with Elliott Management Corp., owners of Barnes & Noble and the world’s only buyer of distressed bookselling chains.

This conflicts with some chatter I reported last spring suggesting that Elliott Management was uninterested in Indigo. If what I’m now hearing is true, it’s great news.

I have to emphasize, I have no idea. But if a deal were imminent, it would make sense to bring Heather back to see it through. Indigo wouldn’t want the bother of recruiting a new leader simply to effect the handover, and who would want the job on those terms?

And another thing …

In last week’s piece about Indigo, I noted that the company’s staff, “with exceptions, were young, inexpert, and disinterested”. Amal, clearly one of the exceptions, left an interesting comment:

    No. We became disinterested simply because a) we were all book lovers and had zero interest in selling crap and b) just like the author of this piece, head office and management were beyond dismissive of our knowledge, our book expertise, our genuine love of the written word. I worked at Chapters/Indigo starting in 2006 all the way until 2019, a couple of days a week, simply for my love of books. I am incredibly proud of my time there — especially when I was able to introduce new authors or genres to readers. My staff picks would sell out because I would hand sell them to people with my joy. It certainly wasn’t for the stellar pay or the people who treat retail employees like we are “inexpert”. Fun fact: you were asked in the job interview what your favourite books/genres were.

September 17, 2023

Why Indigo’s struggles are far from over

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

Following up from last week, in this week’s SHuSH newsletter Ken Whyte explains why Indigo went in the direction it chose and why it seemed like the thing to do at that time:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

Bookselling is a difficult business and it’s been especially difficult over the last twenty years. The Internet captured a lot of the used book business and shifted it online. Amazon captured a lot of the new book business and shifted it online (and bought Abebooks.com, one of the largest used book sites).

Former Indigo CEO Heather Reisman tried and failed to convince the federal government to keep Amazon south of the border back around 2002. She went so far as to sue the feds on the grounds that Amazon, as a cultural entity, was not majority-owned by Canadians and therefore operating in contravention of the Investment Canada Act. The suit went nowhere because Amazon then had no physical presence in Canada; it operated primarily through Canada Post. By the time Amazon did announce its intention to build a warehouse north of the border, early in 2010, the government had given up enforcing the Investment Canada Act. It was happy to have Amazon create new jobs.

It was when Amazon opened its Canadian warehouse that Heather began backing Indigo out of the book business. She cursed Amazon for its anticompetitive practices, not least its habit of selling books below cost to destroy competitors, and adopted the term “cultural department store” as a pivot from bookstores.

I’ve made it clear in newsletter after newsletter that I don’t like the direction Heather took Indigo but it’s only fair to look back at prevailing circumstances in 2010 and wonder if she really had a choice.

I’m sure she had stacks of research and hordes of people telling her that abandoning books was the only move. Attempting to compete with Amazon’s enormous scale and superior logistics would have struck many as a fool’s errand. Amazon would always have the largest selection, the best price, and the fastest delivery.

There was also a widespread belief that print was dead. E-books, e-readers, and tablets were the future, along with the “one very, very, very large single text“. Global e-reader sales were growing like this:

They were expected to keep growing. So were sales of e-books. In 2012, the Financial Post quoted data from Indigo predicting that e-books would capture 50 percent of the market in five years.

So, having played the Canadian Nationalist card and discovering that the government was willing to bluster but not to meaningfully act, Heather Reisman took the advice of her consultants and diversified away from books and into all the utter crap that currently befoul at least half of the retail space in every Indigo store. After all, the big box bookstores in the United States were clearly failing in the face of Amazon, with Borders filing for bankruptcy and Barnes & Noble staggering in the same direction. From 1999 to 2019, fully half of all the bookstores in the country disappeared.

The story isn’t as bleak as it looked in 2019, as Barnes & Noble is staging quite a comeback by concentrating on the book business. It’s a radical move, but Indigo could do far worse than cooking up a maple-flavoured version of the Barnes & Noble strategy. It might fail, but they’ll definitely fail if they keep on pretending to be a department gift store that also has a few books.

August 13, 2023

“It makes [Canada] look like some cheap, politically petty little kleptocracy run by a collection of self-serving narcissists”

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

Canada became a parody of itself so slowly that the legacy media barely even noticed:

There was a time when politicians steered very carefully around saying anything that could be construed as an attempt to influence a decision by one of Canada’s independent agencies.

Honest, there was.

There was also a time when, should a politician so much as nod or wink publicly to indicate a preferred outcome by, say, the office of the Commissioner for Competition, the nation’s leading media organizations would see this as a big story. Sixteen dollar orange juice big. Heads would roll.

Seriously, there was.

The reasons people like Francois-Phillipe Champagne, Minister of Innovation, Science and Economic Development are supposed to keep their yaps shut are pretty straightforward. Businesses, citizens, consumers, and investors need to know the processes at law enforcement agencies and regulators — such as the Competition Bureau and the CRTC respectively — are independent of the sordid manipulations of partisanship. They need to be able to trust that the rules are clear, their application is consistent and that they can have faith that the institution involved views matters before it in an objective fashion.

It’s Rule of Law 101 stuff and messing with it makes Canada look like something less than a first world country. It makes us look like some cheap, politically petty little kleptocracy run by a collection of self-serving narcissists.

Shortly after the CBC, the Canadian Association of Broadcasters and News Media Canada filed a complaint with the Competition Bureau over Meta’s decision to no longer carry news in Canada, Champagne seized the opportunity to show Big Tech who their daddy is.

“I am determined to use every tool at our disposal to ensure that Canadians can have access to reliable news — across all platforms,” Champagne posted on X (the platform formerly known as Twitter). “I fully support the complaint made to the Competition Bureau by Cnd media groups against Meta in their effort to promote a free & independent press.”

I don’t expect that many readers have hung around with cabinet appointees. But I have, and I’ve been one. And I can tell you that most of them — particularly the ones whose conditions of appointment mean they serve “at pleasure” as Competition Commissioner Matthew Boswell does — pay attention when the minister through whom their agency reports to Parliament, says anything, let alone things like that.

June 12, 2023

“The more recent four or five years at Indigo have been a disastrophe”

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

In the latest SHuSH newsletter, Ken Whyte outlines the rise and fall of Canada’s biggest bookstore chain that stopped trying to be a bookstore chain and now appears to be looking for a new identity to assume in the wake of several board resignations and the announced resignation of Heather Reisman, the founder and public face of the chain:

“Indigo Books and Music” by Open Grid Scheduler / Grid Engine is licensed under CC0 1.0

Indigo opened its first bookstore in Burlington in 1997 and quickly expanded across the country in competition with the Chapters chain, which it bought in 2001. Heather’s husband, Gerry Schwartz, provided much of the financing in these years. Gerry is the controlling shareholder of Onex, a private equity firm that now has about $50 billion in assets under management.

Influential in Ottawa, the Schwartz-Reismans managed to convince the federal government to approve Indigo’s purchase of Chapters and also keep the US book chain Borders from moving north into Canada — a double play that cleared the field of meaningful competition and wouldn’t have happened in a country with serious antitrust enforcement.

Heather, as Indigo CEO, cast herself as the queen of Canadian literature, making personal selections of books to her customers, hosting book launches, interviewing celebrity authors, etc.

From a financial perspective, Indigo took about five years to get rolling after the Chapters acquisition. It looked steady through the late aughts and into the teens when Amazon showed up in force. Indigo’s share price caved. Unable to convince Ottawa to push Amazon back across the border, Heather adopted a new strategy, backing out of books and recasting Indigo as a general merchandiser selling cheeseboards, candles, blankets, and a lot of other crap to thirtyish women. “We built a wonderful connection with our customers in the book business,” she famously said. “Then, organically, certain products became less relevant and others were opportunities.” This charmed investors, if not the book community, and Indigo’s share price hit a high of $20 a share in 2018. By then, books, as a share of revenue, had fallen from 80 percent of revenue to below 60 percent (they are now 46 percent).

The more recent four or five years at Indigo have been a disastrophe. With its eighty-eight superstores and eighty-five small-format stores, the company lost $37 million in 2019, $185 million in 2020, and $57 million in 2021. Things looked somewhat better in 2022 with a $3 million profit, but its first three quarters of 2023 (Indigo has a March 28 year-end) resulted in an $8 million loss and its fourth quarter featured one of the most spectacular cyberhacks in Canadian commercial history. The company’s website was breached and its employment records held for ransom, resulting in a ten-day blackout for all of the company’s payment systems and a month-long outage in online sales. The share price is now $2.00 or one tenth the 2018 high.

ANALYSIS AND IRRESPONSIBLE SPECULATION

Given everything Indigo has been through over the last several years, and especially the last several months, it’s not surprising that Heather wants to pack it in. She’s seventy-four and super wealthy. There’s nothing but a desperately hard slog ahead for her money-losing company. Why stay?

Still, this has the feel of something that blew up at a board meeting, or in advance of a board meeting. It’s highly irregular for a company to lose almost half its directors in a single day. If these changes had been approached in conventional fashion, there would have been more in the way of messaging and positioning, especially regarding Heather. For all intents and purposes, she is Indigo. It wouldn’t exist without her. They ought to be throwing her a retirement parade and presenting her with a golden cheeseboard. Instead, all she’s getting, for now, are a few cliches in a terse press release.

It’s also weird that this all happened days before we get the company’s year-end results (they were out by this time last year). My guess is that the board got a preview, that the picture is ugly, that there are big changes afoot, and that the directors were nudged out as the start of a major retrenchment or given the option of sticking around for a bloodbath and chose instead to exit.

May 27, 2023

The true purpose of the Great Exhibition of 1851

Filed under: Britain, History, Technology — Tags: , , , , — Nicholas @ 05:00

In the latest Age of Invention newsletter, Anton Howes considers the “why” of the 1851 Great Exhibition:

The Crystal Palace from the northeast during the Great Exhibition of 1851, image from the 1852 book Dickinsons’ comprehensive pictures of the Great Exhibition of 1851
Wikimedia Commons.

Ever since researching my book on the history of the Royal Society of Arts, I’ve been fascinated by the Great Exhibition of 1851, which they initiated. Like most people, I had once assumed that the exhibition was just a big celebration of Victorian technological superiority — a brash excuse to rub the British Industrial Revolution in the rest of the world’s faces. But my research into the origins of the event revealed that it was almost the opposite. Far from being a jingoistic expression of superiority, it was actually motivated by a worry that Britain was rapidly losing its place. It was an attempt to prevent decline by learning from other countries. It was largely about not falling behind.

Industrial exhibitions already had a long history in 1851, as a crucial weapon in other countries’ innovation policy arsenals. They were used by countries like France in particular — which held an exhibition every few years from 1798 — as a means of catching up with Britain’s technology. This sounds strange nowadays, when the closest apparent parallels are vanity projects like the Millennium Experience, the recent controversial “Festival of Brexit” that ended up just being a bunch of temporary visitor attractions all over the country, and glitzy mega-events like the World’s Fairs. But the World’s Fairs, albeit notional successors to the Great Exhibition, have strayed very far from the original vision and purpose. They’re now more about celebration, infotainment and national branding, whereas the original industrial exhibitions had concrete economic aims.

Industrial exhibitions were originally much more akin to specialist industry fairs, with producers showing off their latest products, sort of combined with academic conferences, with scientists demonstrating their latest advances. Unlike modern industry fairs and conferences, however, which tend to be highly specialised, appealing to just a few people with niche interests, industrial exhibitions showed everything, altogether, all at once. They achieved a more widespread appeal to the public by being a gigantic event that was so much more than the sum of its parts — often helped along by the impressive edifices that housed them. The closest parallel is perhaps the Consumer Electronics Show, held since 1967 in the United States. But even this only focuses on particular categories of industry, and is largely catered towards attendees already interested in “tech”. Industrial exhibitions were like the CES, but for everything.

The point of all this, rather than just being an event for its own sake, was to actually improve the things on display. This happened in a number of ways, each of them complementing the other.

Concentration generated serendipity. By having such a vast variety of industries and discoveries presented at the same event, exhibitions greatly raised the chances of serendipitous discovery. A manufacturer exhibiting textiles might come across a new material from an unfamiliar region, prompting them to import it for the first time. An inventor working on a niche problem might see the scientific demonstration of a concept that had not occurred to them, providing a solution.

Comparison bred emulation. Producers, by seeing their competitors’ products physically alongside their own, would see how things could be done better. They could learn from their competitors, with the laggards being embarrassed into improving their products for next time. And this could take place at a much broader, country-wide level, revealing the places that were outperforming others and giving would-be reformers the evidence they needed to discover and adopt policies from elsewhere.

Exposure shattered complacency. The visiting public, as users and buyers of the things on display, would be exposed to superior products. This was especially effective for international exhibitions of industry, of which the Great Exhibition was the first, and simulated an effect that had only ever really been achieved through expensive foreign travel — by being exposed to things they hadn’t realised could already be so much better than what they were accustomed to, consumers raised their standards. They forced the usual suppliers of their products to either raise their game or lose out to foreign ones.

May 6, 2023

History Summarized: Chicago’s Tribune Tower

Filed under: Architecture, History, Humour, USA — Tags: , , , , , — Nicholas @ 02:00

Overly Sarcastic Productions
Published 20 Jan 2023

It’s not a Dome, but it’s still pretty darn good.
(more…)

March 4, 2023

QotD: Profit margins in the restaurant trade

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

This is an old rule of thumb, no more, from an experienced waitron unit.

The table that orders a starter, main and a bottle of wine – that just about breaks even for the restaurant. You can mix and match this a bit. Dessert instead of the starter, that sorta thing. But the costs of the building, the staff, the electricity, the stock that goes off, the cost of capital itself, all those things, mean that the basic restaurant experience just about covers its costs.

It’s the having the one thing extra that makes the money, the profit. A drink before the meal, having both a starter and a dessert to add to the main. The second bottle of wine, or the digestif with the coffee. This is why the waiter is so eager for you to have any one or more of these “extras”. The margin over food costs – food costs usually being around 30% of menu price – on those additions is exactly what provides a profit to the business that is the restaurant.

As to why, well, it’s the same reason that the menu prices of some well known item are going to be roughly the same across restaurants. Competition is fierce in the business. That means headline prices are pushed down to where they only just, if even that, cover costs. On exactly the same basis as Ryanair charging you spit for the seat and then a fortune for the air you breathe onboard. You get the punter in with the £20 for two steak dinners then hope like Hell they order the vanilla soup and also the vegetable ice cream in order to make your nut.

Tim Worstall, “Bar Owner Complains Of People Drinking Tap Water – Oi! Where’s My Profits?”, Continental Telegraph, 2019-05-27.

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