Quotulatiousness

July 19, 2022

Drawing the proper lessons from the massive Rogers outage earlier this month

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

In The Line, Matt Gurney explains the really important lesson that seems to have escaped a lot of the critics who covered the Rogers internet/cell/TV outage that took a third of the country offline for 24 hours or more:

Most of the conclusions reached after the Rogers telecommunication outage two weeks ago are wrong. Millions of people lost home internet, television and cellphone service for the better part of a day (some for much longer). For those who had all their services bundled with Rogers, this meant being entirely cut off, including from access to emergency services. It was a big deal, both in terms of lost economic productivity and for those Canadians who needed help and could not access it.

The problem isn’t with Rogers, though. The problem is with everyone else.

I don’t want to be misunderstood. Rogers is bad. It did have a big problem. I am not a fan. Their customer service is generally awful. Their reliability and performance is decidedly meh and the meh costs a fortune. So don’t take this column as some sort of apologia for Rogers. I am one of their customers, but I’m only one of their customers because none of the other options are much better.

But still. The lesson of two Fridays ago shouldn’t be that Rogers is bad. It also shouldn’t be that the CRTC is bad or that our politicians are spineless and that our regulators are thoroughly captured. All of those things are true, but they’re not the lesson. That wasn’t the failure of two Fridays ago. The failure of two Fridays ago was that when one of our telecom companies went down, a pretty horrifying cross-section of Canadian society had no back-up plan.

Let’s imagine an alternate universe where things in Canada simply functioned better. Close your eyes and just dream it up. You’re in a different Canada now. The CRTC is awesome. Our politicians are terrific. Rogers is an incredibly good company that is masterful at delivering services that are overwhelmingly reliable and affordably priced. Even in this increasingly far-fetched parallel timeline, no telecom company is going to bat a thousand. You will never have 100 per cent service reliability. This alternate Canada still has outages — maybe they’re rare and brief, but they’re not unheard of or impossible.

And that’s why we can’t look at what happened two weeks ago as a failure at Rogers. Obviously Rogers failed. But the real failure was a failure of imagination and planning on the behalf of millions of individuals, and a worryingly diverse set of institutions, that did not have a back-up plan.

July 11, 2022

Canadians deserve better than “core network maintenance problems” for critical cell phone and internet services

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

Our internet service provider, Rogers, suffered a major network failure early on Friday morning, taking down not just wired internet services, but also cable TV, and cell phone services and causing knock-on issues that utterly disrupted many emergency 911 services, government websites, banks (including ATM and point-of-sale terminals) and many more. I subscribe to both Rogers internet and Rogers cell phone services, but fortunately my wife has a different wireless phone provider so we weren’t completely offline all of Friday and most of Saturday. Michael Geist and his family weren’t as lucky:

Like many Canadians, I spent most of the massive Rogers outage completely offline. With the benefit of hindsight, my family made a big mistake by relying on a single provider for everything: broadband, home phone, cable, and wireless services on a family plan. When everything went down, everything really went down. No dial tone, no channels, no connectivity. Work was challenging and contact with the kids shut off. It was disorienting and a reminder of our reliance on communications networks for virtually every aspect of our daily lives.

So what comes next? We cannot let this become nothing more than a “what did you do” memory alongside some nominal credit from Rogers for the inconvenience. Canada obviously has a competition problem when it comes to communications services resulting in some of the highest wireless and broadband pricing in the developed world. Purchasing more of those services as a backup – whether an extra broadband or cellphone connection – will be unaffordable to most and only exacerbate the problem. Even distributing the services among providers likely means that consumers take a financial hit as they walk away from the benefits from a market that has incentivized bundling discounts. Consumers always pay the price in these circumstances, but there are policy solutions that could reduce the risk of catastrophic outages and our reliance on a single provider for so many essential services.

First, there is a need to better understand what happened and why. Rogers CEO says the problem lies with maintenance to the core network, which caused some routers to malfunction. But that’s just tech talk. Canadians deserve answers that explain not only how this happened, but how we find ourselves in a position where malfunctioning routers at one company cause a nationwide payment system to go down, government services to be taken offline, and emergency services to be rendered inaccessible. It is one thing for my household to make a mistake, but another for Interac to do so. That means conducting an open CRTC process into this outage alongside a Parliamentary hearing on the broader issues since this is a matter that requires both regulatory and political response. There is no need to wait: these hearings must happen this month with the goal of identifying the scope and source of the problem along with potential policies that might mitigate future harms.

Neither the CRTC nor the current government has shown much inclination to challenge the big telcos. CRTC Chair Ian Scott has reversed years of a consumer-focused Commission into one more comfortable supporting the big providers, while the government has been far more interested in sabre rattling or shaking down Internet companies than taking on big telecom. Yet as we were reminded on Friday, the linkage to the availability of essential services – payments, health care, government services – runs through the telcos, not the Internet companies.

This is the second object lesson in concentrated power in a small number of government-approved hands this year. Our first wake-up call was when the government prompted chartered Canadian banks to cut off some of their customers from all financial services even though no crimes had been committed and no charges were laid. It’s not clear how many people were affected, but arbitrarily denying people access to their bank accounts and credit cards should have rung alarm bells for many people. Now, we’ve been shown how dangerous it can be to allow a very small number of companies to divide the mobile phone and internet service market between them and use the power of government to keep out potential competitors. Will enough Canadians notice?

May 29, 2022

Approaching the “Chekhov’s gun” denouement in the Random Penguin-Simon & Schuster play

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

In the latest SHuSH newsletter, Kenneth Whyte updates us on the state of play in the long-running drama in the publishing world:

SHuSH readers know that back in November 2020, the fattest of the world’s five big publishing companies, Penguin Random House, outbid the second fattest, Rupert Murdoch’s HarperCollins, to acquire a listless third member of that group, Simon & Schuster.

Regulators in the UK, Canada, and the USA immediately began studying the $2.1-billion cash deal to determine if it would result in too much concentration of ownership and not enough competitiveness in the big leagues of book publishing. Last November, the US department of justice decided it would and sued to block it. A trial is expected this summer. Penguin Random House has until November to close the deal or it expires (with PRH owing S&S a dead-deal fee of $200-million).

For those of you who think in literary terms, the deal is Chekhov’s gun, and we’re coming in hard on the third act. Either S&S gets shot (acquired) or the play ends in an anticlimax (although whoever has been stewarding the deal at PRH may get shot by its parent company, Bertelsmann.)

If the deal fails, we’re in for a sequel because the current owner of S&S, Paramount (formerly ViacomCBS) won’t want it back. It is a motion picture/television company in the process of selling everything it owns not directly related to screen entertainment. It hopes to cement its status as a fourth-rate streaming service. S&S no longer fits, if it ever did.

Our view of the PRH-S&S deal is that the department of justice suit will fail to block the merger and S&S will be swallowed whole. It will be difficult to present the merger as the end of competition in the book industry when there are still four large publishers operating in the US, and a shitload of mid-size and smaller publishers. Combined, PRH&S&S may amount to less than a third of the American trade book market, and as little as 20 per cent, depending on how you do the math. That’s a long way from monopoly.

The DOJ, moreover, has chosen to fight its battle on low ground. It’s saying that the deal is bad for competition in books generally, but it is particularly concerned that the merger will result in less competition for the services of writers of anticipated top-selling books, loosely defined as authors commanding huge advances. You read that right: the DOJ is seeking justice for the .001% of the literary world. We argued all this at length, and destroyed the government’s case back in SHuSH 123.

May 28, 2022

“… the only thing that is history are any immediate hopes for a more competitive communications marketplace in Canada”

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

Michael Geist pans the latest official misinformation from the federal government on telecommunications legislation:

Innovation, Science and Industry François-Philippe Champagne unveiled the government’s proposed new telecom policy directive yesterday, hailing it as a “historic step”. However, a closer look at the policy suggests that the only thing that is history are any immediate hopes for a more competitive communications marketplace in Canada. Once again, the government has shown itself unwilling to take a strong stand in favour of consumers and competition, instead releasing a directive that largely retains the status quo and sends the message to CRTC Chair Ian Scott to stay the course. Indeed, the primary purpose behind the announcement would appear to be an attempt to shield the government from criticism over its decision to leave the controversial CRTC decision on wholesale Internet access intact, thereby denying consumers the prospect of lower costs for Internet services.

While the new proposed policy directive features much needed details and helpfully replaces the 2006 and 2019 directives that often conflicted and enabled the CRTC to pay little more than lip service to the issue, it sends a strong signal that it is happy with the Commission’s current approach. For example, the directive’s summary on measures to address wholesale Internet access are all about the status quo: “requiring large companies to continue to give access to competitors” or “directing the CRTC not to phase out the existing model for wholesale access.” These are not instructions to change.

The same is true for mobile wireless competition. Rather that using the opportunity to accelerate competition through mobile virtual network operators, the CRTC is instead to directed to improve its hybrid MVNO model “as necessary”. A full MVNO model? The government says it is prepared to support it “if needed”. Based on the current market, it apparently believes it isn’t needed.

May 12, 2022

Too many cannabis retailers? “… a scrappy band of politicians is coming together to save main street from the excesses of the free market”

Steve Lafleur points out that the temporary surplus of cannabis stores will inevitably self-correct, as most retail situations tend to do on their own without needing the “helpful” hand of government to intervene:

Lately there has been a moral panic brewing in Toronto about the number of marijuana stores in Toronto. Take this New York Times article, for example, which captures the mood with the quotes from various Torontonians. Or this BlogTO piece. And here is a link to a story about two city councilors (including my own) pushing for a moratorium on new pot shops.

At least on its face, the panic hasn’t been about the availability of cannabis products or any kind of (unsupported) claims about pot shops attracting crime. Rather, the concern is that there is simply an unsustainable number of shops that may be cannibalizing other retail opportunities. So a scrappy band of politicians is coming together to save main street from the excesses of the free market.

What could possibly go wrong?

The boom in pot shops is real. Legal marijuana retailing is a new phenomenon, and there has been a gold rush in the sector. This was first evident in financial markets during the 2018-19 weed stock boom (which went bust) as investors sought to capitalize on the rollout of legal marijuana sales in Canada. There are now nearly 2,000 pot shops in Ontario, and it’s not hard to find two on the same block. People aren’t wrong to point out that there has been a rapid buildout of marijuana retailers. Hence the push by City Council and now the Ontario Liberal Party, to restrict clustering of pot shops.

To be sure, new trends can push out old trends. And this can be frustrating. For instance, one insidious trend recently replaced two of my two favourite hole-in-the-wall restaurants: poke bowls. The trendy Hawaiian rice bowls have taken cities by storm. Businesses, understandably, want to capitalize on the trend. If people want it, businesses will sell it.

Trends can create dislocations. No one knows in advance how many poke restaurants — or pot shops — the market will bear, where they should locate, or what their operating hours should be. But through a process of trial and error, retailers and consumers will figure this out. And if it is just a flash in the pan trend, many will fail.

But that’s okay. That’s just the creative destruction of the market at work. It’s not always pretty, but it’s how we get new products and services. It’s a process. Sometimes the market rewards annoying things. But trying any effort to plan these things in a way that avoids over-saturation of short-lived trendy businesses would be rife with unintended consequences.

April 30, 2022

“The NFL Draft is not socialism. It’s capitalism on steroids”

Filed under: Business, Football, History, Sports, USA — Tags: , , , , — Nicholas @ 03:00

Peter Jacobsen refutes the claim that the NFL Draft is like socialism:

Once we recognize that teams aren’t really business competitors, and insofar as there is athletic competition it’s tempered to maximize profit, the claim that the draft is socialism rings pretty hollow.

But, as if this weren’t enough, history also debunks the claim that the draft is a socialist institution.

In 1934, Minnesota Gophers’ senior running back, Stan Kostka, led his team to an undefeated season and made himself the top prospect for professional teams. As a result, teams engaged in a bidding war which ended in Stan going to the (no longer existing) Brooklyn Dodgers.

As a result of the bidding war, Kostka became the highest paid player in the NFL (with a $5,000 contract).

The owner of the Philadelphia Eagles was so mad about losing the bidding war that he proposed the idea of the draft to the NFL the following year.

So, in other words, the NFL draft started as a way for team owners to cooperate to keep player wages below where they would be if bidding wars were allowed.

To be fair, I haven’t read everything Marx wrote. But something tells me a system where capital owners cooperate to keep employer bidding wars from occurring isn’t praised in some obscure work he and Engels published. In fact, this is about as opposite to Marx as you can get.

In the modern day, players have formed unions to combat owner cooperation, but the point remains the same. The NFL is a highly sophisticated organizational structure that allows athletic competitors to cooperate in the goal of making money.

So, insofar as Americans enjoy the exciting games created by the draft system, they don’t have socialism to thank. Instead they should thank the cooperation facilitated by self-interest channeled through the free market.

The NFL Draft is not socialism. It’s capitalism on steroids.

April 27, 2022

QotD: Competition

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

In a normal industry (e.g., restaurant ownership) competition should drive profit margins close to zero. Want to open an Indian restaurant in Mountain View? There will be another on the same street, and two more just down the way. If you automate every process that can be automated, mercilessly pursue efficiency, and work yourself and your employees to the bone – then you can just barely compete on price. You can earn enough money to live, and to not immediately give up in disgust and go into another line of business (after all, if you didn’t earn that much, your competitors would already have given up in disgust and gone into another line of business, and your task would be easier). But the average Indian restaurant is in an economic state of nature, and its life will be nasty, brutish, and short.

This was the promise of the classical economists: capitalism will optimize for consumer convenience, while keeping businesses themselves lean and hungry. And it was Marx’s warning: businesses will compete so viciously that nobody will get any money, and eventually even the capitalists themselves will long for something better. Neither the promise nor the warning has been borne out: business owners are often comfortable and sometimes rich. Why? Thiel says it’s because they have escaped competition and become at least a little monopoly-like.

Thiel hates having to describe how businesses succeed, because he thinks it’s too anti-inductive to reduce to a formula:

    Tolstoy opens Anna Karenina by observing “All happy families are alike; each unhappy family is unhappy in its own way.” Business is the opposite. All happy companies are different: each one earns a monopoly by solving a unique problem. All failed companies are the same: they failed to escape competition.

Scott Alexander, “Book Review: Zero to One”, Slate Star Codex, 2019-01-31.

January 16, 2022

Library borrowing versus book store sales

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

I used to be a regular library user, but tapered off substantially after a few unhappy visits to the Toronto Reference Library on Yonge Street in the late ’80s (I’m now fully a believer in some of the wilder tales of disruptive and even criminal behaviour within libraries). I had my doubts about the direction most western library systems chose to concentrate on “popular” books and to get rid of “old” or infrequently borrowed books. It seemed to me that this was an attempt to set up libraries in direct competition with bookstores, and a deliberate act of neglect toward the function of libraries as repositories of valuable but less popular media. In the latest SHuSH newsletter, Kenneth Whyte details a fascinating natural experiment we’ve all be involved in over the last two years that seems to prove that library systems have been, in effect, taking money away from book sellers:

“Toronto Public Library” by Jim of JimOnLight is licensed under CC BY-NC-ND 2.0

Those of you who have been reading SHuSH for a while know that I suspect public libraries are doing harm to the publishing industry and author incomes.

Before the shooting starts, my standard qualifiers: I love libraries; they do a lot of fine work and are crucial civic institutions, running many outstanding programs and providing many necessary services, including the lending of books to children and people who genuinely can’t afford to buy them; I am always in libraries for research and to borrow and read hard-to-find books; I don’t want libraries to go away; I don’t want them harmed; I want their lending practices adjusted before they swallow what’s left of commercial publishing, book retailing, and, along with it, what’s left of author incomes.

By way of background, I’ve written at length in previous newsletters about how public libraries in the last decades of the last century abandoned their traditional role as gatekeepers of the culture, responsible for the moral, intellectual, and aesthetic growth of the public, choosing instead to pander to their patrons. They began pimping the likes of Mickey Spillane and Jacqueline Susann to goose the foot traffic and circulation stats they habitually use to demand of their political masters more funding and better buildings.

Over time, librarians have trained people who can afford to buy books for their own entertainment — the vast majority of library reading is for entertainment — to borrow them instead. Today, three out of four books read in the US and four out of five read in Canada are borrowed, not bought. That is bad for publishing, bookselling, and author incomes.

And then the Winged Hussars Wuhan Coronavirus arrived:

I believe it is self-evident that spending loads of taxpayer money to make the most popular books available at no charge at dozens of points around a city (as well as online) undermines retail sales of books, as it would if the same were done for coffee, running shoes, or Leafs’ tickets.

I have to admit, at the same time, that I’ve lacked hard evidence showing a portion of book borrowing represents lost sales. Nobody has thoroughly researched the question (it certainly isn’t in the interests of libraries to do so). The absence of a smoking gun has made it easy for library defenders to throw up their hands: maybe there’s a relationship, maybe not. People love free shit and will cheerfully strangle good faith to retain access to it.

I’ve tried to devise ways to prove conclusively that libraries are seriously undermining book sales. Maybe some huge experiment where we closed the public libraries in a large jurisdiction and studied what happened to retail book sales. But who was going to organize that? It seemed impossible until COVID-19 stepped up.

Libraries across North America and, indeed, around the world, have been closed, semi-closed, or otherwise limited in their borrowing activities throughout the two-year course of the pandemic. According to Library Journal, total circulation of library materials collapsed by 25.7% in 2020 (notwithstanding a huge spike in e-book borrowing). It looks like physical borrowing fell by roughly half. The 2021 numbers aren’t out yet but individual library reports suggest they will look a lot like 2020.

Meanwhile, over in publishing land, the champagne corks are flying. US book sales, which grew healthily in the first pandemic year 2020, grew again in 2021 and are now 19% ahead of the pre-pandemic year, 2019. All the major publishers have reported smashing sales (attributing the increase to their own genius). All categories are up, including adult fiction (31% over 2019) and adult non-fiction (10% over 2019).

Going by these numbers, it appears that a roughly 25% reduction in library borrowing leads over a two-year period to an increase of 19% in bookselling. I wouldn’t bank on those numbers, or even on the rough proportions, but I think the data demonstrates that when you make books more difficult to borrow for free, people turn more frequently to booksellers.

January 14, 2022

Industry with 1% profit margins accused of earning “record profits”

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

Joe Lancaster on Senator Elizabeth Warren’s renewed assault on the top-hatted, monocle-wearing robber barons of the grocery business:

“Piggly Wiggly” by afiler is licensed under CC BY-SA 2.0

… Warren could hardly have picked a worse industry to use as an example: Grocery stores consistently have among the lowest profit margins of any economic sector. According to data compiled this month by New York University finance professor Aswath Damodaran, the entire retail grocery industry currently averages barely more than 1 percent in net profit. In its most recent quarter, Kroger reported a profit margin of 0.75 percent, during a time in which Warren claims that the chain was “expanding profits” due to its “market dominance.”

In actuality, for much of the last year, grocery stores have seen enormous boosts in revenue, but not increased profitability, for the simple reason that everything has been costing more: not just products, but transportation, employee compensation, and all the extra logistical steps needed to adapt to shopping during a pandemic. Couple that with persistent inflation — which Warren also recently blamed on “price gouging” — and it is no wonder that things seem a bit out of balance.

Warren has had an itchy trigger finger for antitrust laws for some time. In 2019, as part of her presidential platform, she called for using the laws to forbid retailers from selling their own products. This would affect industry leaders like Amazon and Walmart, but ironically, it would have a devastating impact on grocery stores as well: Grocers increasingly rely on their own proprietary goods to stock cheaper alternatives alongside name brands. This provides not only less expensive options for consumers, but lower costs to the stores themselves. Store brands also help fill gaps created by external supply shortages.

December 22, 2021

QotD: Sibling rivalry

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

It’s only natural to feel competitive with your siblings. I recall all of those Christmas mornings, as my brother and sister and I compared gifts to figure out which one of us was the least beloved. This was important information because we adjusted our levels of misbehavior to match the rewards. There’s no point in being extra good if the presents are just okay.

Mealtime was competitive too. The winner was the one who moved the greatest percentage of my father’s income through his or her digestive system. I was in my thirties before someone told me that eating is not a speed sport.

Scott Adams, Dilbert Newsletter 61.0, 2005-10-25.

November 7, 2021

Apparently we need to block the “Random Penguin & Schuster” merger to protect the 0.001%

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

In the most recent SHuSH newsletter from Kenneth Whyte, the US Department of Justice case against allowing the proposed merger of Penguin Random House and Simon & Schuster is examined in some detail:

On Tuesday, the US Justice Department (DOJ) filed suit to block Penguin Random House from purchasing its rival, Simon & Schuster, for $2.18 billion. It promises to be a fascinating case, in part because there’s so much at stake for the two firms involved, and also because of the unusual angle from which the DOJ is attacking the file.

As one of two US agencies responsible for enforcing antitrust law (the other is the Federal Trade Commission), the DOJ believes the proposed deal, struck last year, would leave Penguin Random House, already the world’s largest publisher of consumer books, “towering over its rivals”. The combined entity would have revenues more than twice its next closest competitor, and “outsized influence over who and what is published, and how much authors are paid for their work”.

Bertelsmann, owner of Penguin Random House, and Viacom, owner of Simon & Schuster, promise to fight the DOJ in court. They acknowledge that the Big Five Publishers, a grouping that also includes Hachette, HarperCollins, and Macmillan, will be a Big Four after the merger, but maintain that these firms plus new publishing entrants, such as Amazon, and an abundance of small and midsize publishers will provide sufficient competition for authors and books. “The publishing industry is, and following this transaction will remain, a vibrant and highly competitive environment,” they said in a joint statement.

So far, so ordinary corporate behaviour. Who or what do we need to protect, beyond hoping to maintain something vaguely resembling a competitive marketplace for books? A tiny sub-set of authors:

With this suit, the DOJ is taking a narrower approach. One test of whether a merger results in illegal market dominance is spelled out in the Horizontal Merger Guidelines jointly issued by the DOJ and the FTC: it asks if the combined firm would be in a position to increase its profits by imposing a price cut — a small but significant and lasting price cut — on one of its suppliers. In other words, if the new and enlarged Penguin Random House is better able than the old Penguin Random House to squeeze one supplier on one product line, the merger is illegal.

To apply this test to the deal, the DOJ needs to identify which supplier and which product line is vulnerable if the firms are allowed to merge. It has a range of options. Book publishing is a complicated marketplace, with many suppliers and product lines. Publishers sell books to retailers, and market books to consumers; they buy distribution services, printing, advertising, editorial services, and so on. The DOJ might have argued that a merged Penguin Random House-Simon & Schuster would have the muscle to make its printers or copyeditors reduce their rates. Or that it could force retailers to accept smaller cuts of sales revenue.

Instead, the DOJ put its chips on the discreet line of business in which authors supply manuscripts to publishing houses. Its complaint says that the combined firm would have the power to improve its profits by significantly and permanently lowering the advances it pays to authors for the rights to publish their books.

Advances, notes the DOJ, provide the bulk of author income at the Big Five publishing houses (few authors earn out their advances and collect further royalties). Were Penguin Random House and Simon & Schuster to combine, there would be nothing to deter it “from imposing a small, but significant, and non-transitory decrease in advances”. And if it did so, the complaint maintains, authors would have nowhere to turn. The DOJ ignores the existence of the other three members of the Big Five. It admits that the US has 3,000 small and mid-size houses but, these, according to the complaint, are economically irrelevant, mere “farm teams” for the big houses. Self-publishing, it adds, is not a serious alternative.

That may sound like the DOJ is suing to stop this merger on behalf of the writing community, a heartwarming notion, but it’s not. The lawsuit is primarily concerned with a small subset of writers: those who produce “anticipated top-selling books”. According to the complaint, there exists a small but definable market for “anticipated top-selling books”. It represents a distinct line of commerce, as required under the Clayton Act, and that is the real focus of the complaint.

The DOJ is going to war for sellers of “anticipated top-selling books”, the .001% of the publishing world.

Its lawyers foresee a time when Penguin Random House-Simon & Schuster will target John Grisham and his ilk with lower advances, and John Grisham will have no choice but to accept. So far as the DOJ is concerned, that is how this merger fails the Horizontal Merger Guidelines, and why it is illegal. The phrase “anticipated top-selling books” appears 29 times in a 26-page document.

October 5, 2021

QotD: Entrepreneurship

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

If entrepreneurs see value in the […] economic landscape, and perceive there are rich profits to be made in turning around businesses and then flogging them off, it is very good news indeed for the country’s economy. By releasing capital from uneconomic areas and focussing it on lucrative new bits, the overall pie gets bigger, jobs get created, and productivity is also increased.

In fact, one could almost create a new economic law: the amount of abuse raining down on entrepreneurs is directly proportional to the good they do. I haven’t seen much reason to doubt this law yet.

Johnathan Pearce, “Gordon Gekko goes to Germany”, Samizdata.net, 2005-05-05.

August 29, 2021

The competing English and Dutch East India companies

In his latest Age of Invention newsletter, Anton Howes considers the odd fact that although the Dutch were the last major seafaring power to extend to the East Indies, they quickly became the most powerful European traders and colonialists in the region:

By the mid-seventeenth century, although the trans-Atlantic trades were still almost entirely in the hands of the Spanish, the European trade to the Indian Ocean had come to be dominated by the Dutch — which is quite surprising, as they had arrived so late. The high-value exports of the Indian Ocean — particularly pepper — had anciently arrived via the Red Sea, the Persian Gulf, or overland, and then been bought up in Egypt or Syria by the Venetians and Genoese, who then sold them on to the rest of Europe. It was then the Portuguese who had supplanted that trade in the late fifteenth century by discovering the direct route to the Indian Ocean around the Cape of Good Hope. The Portuguese monopolised the new sea route around Africa for a century, almost totally undisturbed by other Europeans, entrenching their position by building forts — occasionally with the permission of local rulers, but often without.

The Portuguese seem to have spread the rumour in Europe that they had effectively conquered the entire region, presumably to dissuade others from even trying to break their monopoly. Even as late as the 1630s, when other nations were already regularly trading there, foreign writers took the time to mock such assertions. As the Welsh-born merchant Lewes Roberts put it, the Portuguese “brag of the conquest of the whole country, which they are in no more possibility entirely to conquer and possess, than the French were to subdue Spain when they possessed of the fort of Perpignan, or the English to be masters of France when they were only sovereigns of Calais.” Quite.

[…]

But for all their tardiness, the Dutch arrival in the Indian Ocean was dramatic. The English may have been the first to threaten the Portuguese monopoly, but in the whole of the 1590s they sent a mere two expeditions out east, and in 1600-10 sent only a further eight (seven by the newly-chartered East India Company (EIC), with a monopoly over English trade with the region, and another voyage licensed to break that monopoly in 1604 by the king, which unhelpfully spoiled the company’s relations with local rulers by turning pirate and plundering Indian and Chinese ships). What the English sent out over the course of twenty years, the Dutch exceeded in just five. Between just 1598 and 1603, after the successful return of de Houtman’s first voyage, they sent out a whopping thirteen fleets — and this despite their merchants not even pooling their efforts like the English had until the very end of that period, when in 1602 the various small and city-based Dutch companies were merged to form a single, national joint-stock monopoly, the Verenigde Oost-Indische Compagnie (VOC). The founding of the VOC accelerated the divergence. Between 1613 and 1622 the EIC sent out a paltry 82 ships compared to the VOC’s 201.

The sheer quantity of Dutch ships heading for the Indian Ocean meant that they were soon dominant amongst the European merchants there, capturing forts from the Portuguese, founding further bases of their own, and able to forcibly keep the English out — sometimes by attacking the English directly, other times by simply threatening any of their would-be trading partners. The steady stream of Dutch ships also allowed them to resupply and maintain their factors — the key infrastructure of long-distance commerce, as I explained in last week’s post for subscribers. They were able to have a presence, and project force, in a way that the English could not. By 1638, Lewes Roberts, despite often lauding England’s commercial achievements, and being an EIC official himself, had to concede that in the Indian Ocean “the English nation are the last and least”.

That English weakness was reflected in how EIC merchants had to comport themselves in the region so as to have any share in the trade at all. Despite the EIC’s later reputation for bloodthirsty rapaciousness, in the early seventeenth century they were highly reliant on good relations with the locals. Whereas the Dutch could often afford to use force and bear the repercussions, the English more or less only held on in the early days by ingratiating themselves with local rulers — often by finding common cause against the aggressive and domineering Dutch. The infrequently-supplied English factors were often heavily indebted to local merchants too, including the Indo-Portuguese — a group that they often married into, for access to social networks and support. As the historian David Veevers argues in a new overview of the early EIC (a relatively pricey academic book, but compellingly argued and juicy with detail), the English often went further than just friendliness or integration, subordinating themselves to local rulers too. Of the few early forts that the English managed to establish, for example, that at Madras in 1640 was only built because the local ruler encouraged it, treating the English there as his vassals.

May 29, 2021

QotD: Academia and capitalism

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

It is pretty well-established that the American academic community is disproportionately of the Left, and in fact tilts pretty strongly in many cases to the far Left / progressive side. People debate a lot about why this should be, but I think one contributing factor (but certainly not the only one) that I have never heard anyone discuss is the zero-sum game these academics must play in their own careers. I think that many of them incorrectly assume that all professions, and all of the economy and capitalism, is dominated by this same dog-eat-dog zero sum-game — remember, for most, academia is the only industry they have ever experienced from the inside. And once you assume that the whole economy is zero-sum, it is small step from there to overly-narrow focus on distribution of wealth and income.

One of the mistakes folks on the Left make about capitalism is to describe capitalism as mostly about competition. In fact, capitalism is mostly about cooperation, it’s a self-organizing process where people who don’t even know each other cooperate to deliver products and services, facilitated by markets and the magic of prices. Sure, competition exists but it is not the fundamental feature, but an enabler that makes sure the cooperation occurs as efficiently as possible. Capitalism in fact is about zillions of voluntary trades and transactions every day that each make both parties better off — or else both sides would not have agreed to it. Capitalism in fact is a giant positive sum game, a fact that many on the Left simply do not grasp.

Warren Meyer, “Does the Zero-Sum Nature of Academic Success Contribute to the Left-wards Bias of Academia?”, Coyote Blog, 2018-11-09.

May 18, 2021

QotD: The imaginary problem of having “too much” choice

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

In the early 20th century critics attacked product variety as being wasteful — a sign that markets were less efficient than central planning. Hence, the Chinese wore Mao suits, Americans got uniformly round automobile headlights and British authorities “rationalized” furniture designs.

A famous scene in the film Moscow on the Hudson has Robin Williams as a Soviet immigrant collapsing at the sight of an American coffee aisle, circa 1984. Imagine what would happen in Starbucks.

A free economy multiplies variety, the better to serve buyers with different tastes and different needs and to give people the chance to experience different goods at different times. Arguing that this plenitude is inefficient went out decades ago. The problem with markets, the detractors now say, is that all these choices make us unhappy.

Virginia Postrel, “I’m Pro-Choice”, Forbes, 2005-03-28.

« Newer PostsOlder Posts »

Powered by WordPress