Quotulatiousness

August 24, 2018

From Software-as-a-Service to emerging Techno-Feudalism

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

The shift from selling software to selling software subscriptions was a major sea-change in the technology world. Here’s a bit of historical perspective from The Z Man to explain why this could be a very bad thing indeed for the average user:

Feudalism only works when a small elite controls the source of wealth. Then they can control the exploitation of it. In Europe, as Christianity spread, the Church acquired lands, becoming one of the most powerful forces in society. The warrior elite was exclusively Catholic, thus they had a loyalty to the Pope, as God’s representative on earth. Therefore, the system of controlling wealth not only had a direct financial benefit to the people at the top, it had the blessing of God’s representative, who sat atop the whole system.

That’s something to keep in mind as we see technology evolve into a feudal system, where a small elite controls the resources and grants permission to users. The software oligopolies are now shifting all of their licensing to a subscription model. It’s not just the mobile platforms. Developers of enterprise software for business are adopting the same model. The users have no ownership rights. Instead they are renters, subject to terms and conditions imposed by the developer or platform holder. The user is literally a tenant.

The main reason developers are shifting to this model is that they cannot charge high fees for their software, due to the mass of software on the market. Competition has drive down prices. Further, customers are not inclined to pay high maintenance fees, when they can buy new systems at competitive rates. The solution is stop selling the stuff and start renting it. This fits the oligopoly scheme as it ultimately puts them in control of the developers. Apple and Google are now running protection rackets for developers.

It also means the end of any useful development. Take a look at the situation Stefan Molyneux faces. A band of religious fanatics has declared him a heretic and wants him burned. The Great Church of Technology is now in the process of having him expelled from the internet. As he wrote in a post, he invests 12 years building his business on-line, only to find out he owns none of it. He was always just a tenant farmer, who foolishly invested millions in YouTube. Like a peasant, he is now about to be evicted.

How long before someone like this monster discovers that Google and Apple will no longer allow him to use any apps on his phone? Or maybe he is denied access to his accounting system? How long before his insurer cuts off his business insurance, claiming the threat from homosexual terrorists poses too high of a risk? Federal law prevents the electric company from shutting off his power due to politics, but Federal law used to prevent secret courts and secret warrants. Things change as the people in charge change.

June 4, 2018

The economic damage of tariffs

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

Tim Worstall fisks a recent Pat Buchanan brain fart article on the glories of erecting tariff walls against foreign trade:

Pat Buchanan has been going on for decades about how wondrous tariffs are and if only they were brought back then things would be just peachy. Sadly, this all seems to be based on his not understanding trade, tariffs, nor apparently even history. That’s not a good set of recommendations for a policy about trade and tariffs, one that has been tried many a time in history.

Now, it is entirely true that if we returned to a more Hamiltonian policy era then we’d all be richer. But that wouldn’t be because we had tariffs which paid for government rather than an income or corporate tax. It’s because government would be confiscating a very much smaller portion of what we all produce to pay for itself. If the Feds took 3% of everything we do instead of the current 18% or so then sure, we’d all be richer. But that’s true however that tax is raised.

[…]

His argument is that, protected from foreign competition, American business was able to develop and grow into being world beaters. No, I don’t think this is true – I insist that behind tariff barriers companies stagnate. Indeed it’s standard economics that the medium to long term effects of trade are that the competition from foreigners is what makes the domestic companies stronger and more productive. But put that argument to one side. Assume that Buchanan is correct.

For his conclusion to be correct then it must have been true that the total costs of trade were rising in that time period. Total costs being tariffs plus transport. Only if the total costs were rising was protection rising. The tariffs are only part of the story. And as it happens total protection was falling over this time period. The falls in the costs of transport – for the US externally primarily the steam ship – were greater than the rises in the tariffs. Thus the US was becoming more open to trade at this time when industry was booming and growing to world class levels.

That’s not an argument in favour of trade protection now, is it?

    The U.S. relied on tariffs to convert from an agricultural economy in 1800 to the mightiest manufacturing power on earth by 1900.

Well, it’s also true that what the US was inside those tariff barriers was the largest free trade area in the world. I’m the guy insisting that free trade makes places grow, Pat the opposite. And the place with more free trade among more people than anywhere else grows fastest? That’s a point in my favour, no, not Pat’s? Remember, the US Constitution expressly forbids the individual states from having tariffs between them…..that regulation is left to the Feds who have never imposed them.

    How have EU nations run up endless trade surpluses with America? By imposing a value-added tax, or VAT, on imports from the U.S., while rebating the VAT on exports to the USA. Works just like a tariff.

No, a VAT does not work like a tariff. In no manner at all does it do so in fact. As every economist keeps trying to point out. Within the EU all goods and services, no matter where they’re made, pay the exact same rate of VAT. Well, OK, ladies unmentionables pay a lower rate than motor cars, that’s true, but all unmentionables pay the same rate, all cars. There is no difference made between domestic and foreign production. It’s entirely unlike a tariff therefore, the crucial component of which is that distinction made between home and foreign production.

Stuff made in the EU and sold in the US pays no VAT. Stuff made in the US and sold in the US pays no VAT. Again, we’ve no distinction by source or origin, this is entirely and completely unlike a tariff.

April 21, 2018

QotD: “Pitiless” globalism

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

Kathleen Parker rightly criticizes Republicans for becoming a party of angry, fear-lathered excluders (“The GOP is becoming the party of exclusion,” July 31). But when she laments “the pitiless evolutionary march of globalization” not only does she reveal her own misunderstanding of the economy, she gives aid and comfort both to GOP excluders and to Sandersnistas who suffer many of the same misunderstandings.

In what way is globalization “pitiless”? Is it because it creates an ever-growing abundance of new goods and services that consumers choose to buy? Is it in the fact that it lowers the prices of food, clothing, furniture, electronics, communications, and (for example, by expanding the sizes of pharmaceutical-companies’ markets) medicines?

Is globalization “pitiless” because it allows many desperately poor workers in the developing world to earn incomes that enable them and their families to live above subsistence? Or perhaps globalization is “pitiless” because it obliges entrepreneurs and workers in the developed world – nearly all of whom are multiple times richer (thanks to globalization!) than are the foreigners about whom they complain they must compete – to adjust their actions to the choices of the consumers whom they serve?

Globalization is no more or less pitiless than is economic competition generally and what Deirdre McCloskey calls “market-tested innovation” – the same competition and innovation that over the past few centuries crafted our current high standard of living. So unless Ms. Parker believes that it is gentle and just for rich first-world workers to prevent poor third-world workers from improving their lives – unless Ms. Parker thinks it humane for consumers to be forced to accept whatever products are offered, and at whatever prices are demanded, by existing producers rather than motivate producers to work hard and creatively to please consumers – she should not describe globalization as “pitiless.”

Donald J. Boudreaux, letter to the Washington Post, 2016-07-31.

April 7, 2018

Car rental agencies look to government to quash upstart “personal vehicle sharing” companies

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

Steven Greenhut discusses yet another entrenched industry trying to get the government to protect them from disruptive competitors:

Real capitalism is a tough sport where entrepreneurs risk their capital in hopes of winning customers.

The “crony” version of it involves politicians rigging the rules to assure that the “right” people are winners. We see this ugly process on high-profile national issues, such as when Donald Trump promotes tariffs to boost steel makers at the expense of companies that use steel products. But most of this nonsense proceeds quietly in legislative committees, without garnering any headlines or vocal opposition.

One awful but illustrative example popped up recently in the California state Capitol. Assembly Bill 2246, by Assemblywoman Laura Friedman, D-Glendale, apparently is part of a national effort by rental-car companies to snuff out a burgeoning industry that just happens to be threatening its business model. The bill would redefine “personal vehicle sharing” companies as “car rental companies” — and then slam them with reams of new regulations. Similar measures have been proposed in Idaho, New Hampshire, Maryland and Maine.

Rental-car companies are facing the same challenges as other established business models in this internet and app-based age. Capitalism — the real sort — is defined by “creative destruction,” as economist Joseph Schumpeter called it. New companies are free to offer better products and services that appeal to customers. This is creative as new ideas flourish and consumers get a broader choice and lower prices thanks to competition. But it’s also destructive. Complacent old companies suddenly are forced to improve their offerings or shut their doors. The consumer is king.

For example, I recently grabbed a taxicab rather than my usual Uber and noticed the oddest thing. The cabbie had a modern app-based system for taking my credit-card payment. Until recently, paying by credit card was a hassle because cab services didn’t really want to take your card. I’ve also noticed a fleet of nice new cabs around my city. And the cab I took even sent an email with a receipt and a rating system. Sound familiar?

January 13, 2018

The common factor of the Net Neutrality fight and the EpiPen price gouging scandal

Filed under: Bureaucracy, Economics, Government, Health, Technology, USA — Tags: , , , , — Nicholas @ 05:00

Lili Carneglia explains what these two examples of “capitalist excess” are actually the result of regulatory failures:

Without net neutrality, regulations that prevent internet service providers (ISPs) from charging more for priority speeds and higher bandwidth-use sites would disappear. Most Americans are pretty confused by the revised rules but highly skeptical that this action could have any benefits. Many people, especially those living in the rural south where choices are limited, feel like these companies have been taking advantage of their customers for years, and loosening regulatory constraints on these companies seems like a terrible idea.

Net neutrality was a regulatory policy set under the Obama administration in 2015 that mandated ISPs to treat the internet like other utilities, such as highways and railroads, under laws established before most people had TVs. Under these rules, companies must act as neutral gateways to the internet without controlling the content or the speed of the content that passes through that gateway. Supporters of the rule argue that these regulations ensure the free flow of information, while those against the policy see net neutrality as a misapplication that stifles an industry that is more dynamic than other public utilities.

[…]

Yes, a handful of industry giants can and have abused their market power. Most consumers have limited ISPs to choose from in a given area, and options are more limited outside of big cities, where “three-quarters of American homes have no competitive choice for the essential infrastructure for 21st-century economics and democracy,” according to the former FCC chairman Tom Wheeler. It is important to consider how these circumstances came about before deciding that federal regulation might help consumers.

Governments, by and large, prefer to have fewer players in a given market as it makes that market easier to regulate, and the easiest market to regulate is a monopoly. When cable networks were beginning to spread across North America, many local governments were persuaded that a single cable provider would be the best option for their jurisdiction and the broadband internet market that came later was heavily shaped by the already carved-up markets for cable TV. For many, there were no competitive options because the local government had precluded the chance of competition for their already entrenched cable monopoly (or, in a few cases, tight oligopoly).

Competition is the best answer to monopolistic abuse of customers … if you get shitty service from the Blue Cable Company, you’ll be more likely to switch to the Red Cable Company. If you only have Red and Blue to choose from, your leverage is small, but if you have a full rainbow of competing options, Red and Blue are forced to make their services at least comparable to what Orange and Pink and Magenta are offering, or they lose too many customers. If there’s no threat of a competitor scooping up unhappy customers, there’s no incentive for the existing company to do more than the absolute minimum to keep customer complaints down to a dull roar. The customer’s only recourse — other than giving up the service or moving to a different jurisdiction — is to complain to the regulator.

The base problem with Mylan’s EpiPen price gouging is the same: an effective monopoly supported by the government:

The arguments against net neutrality repeals center around fears about what producers will do without regulation since they have significant market power and the ability to raise prices to levels that would not be sustainable under more competitive conditions. The concern about increased internet prices is similar to what happened in 2016 when a pharmaceutical company with market power, Mylan, increased the price of life-saving EpiPens by about 400 percent.

The “greedy” pharmaceutical companies were hung out to dry as Congress berated Mylan representatives in hearing after hearing. There were similar cries of outrage and demands that the federal government do something to prevent such selfish price-gouging, similar to what many consumers fear ISPs will do absent regulations.

Even (supposed) free-market advocates started supporting further regulation during the EpiPen debate. Most notably, then fiscal hawk representative and now Trump budget director Mick Mulvaney, defended further market intervention on the condition that, “If you want to come to the state capitols and lobby us to make us buy your stuff, this is what you get. You get a level of scrutiny and a level of treatment that would ordinarily curl my hair.”

However, in all of those hearings, almost no one bothered to unearth the problem that Mulvaney hinted at: Why was Mylan able to increase that price in the first place? Government intervention. Burdensome FDA regulations and other laws pressuring public schools to buy the drug essentially granted Mylan a monopoly. It was as misguided then as it is now to think that these same institutions can be trusted to clean up the mess they created.

Mylan had no effective competition, so there was nothing to stop the price gouging until it got so bad that even the regulator had to pay attention. If there were other pharmaceutical companies allowed to compete, do you think Mylan would have risked jacking up the price only to watch their competitors gaining market share?

Scott Alexander explained the Mylan monopoly quite expansively in 2016.

December 11, 2017

QotD: Occupational licensing

Filed under: Bureaucracy, Government, Law, Liberty, Quotations — Tags: , , , — Nicholas @ 01:00

… occupational licensing laws and Competitor’s Veto laws exclude would-be entrepreneurs from the marketplace — with disproportionately negative consequences for members of minority groups — […] Congress could act today to protect the fundamental human right of economic liberty against unjust state interference.

Licensing laws tend to have particularly harsh consequences on members of minority groups for a couple reasons. First, if a law requires a person to have, say, a college degree to practice the trade of interior design (which is the law in Florida), people who have less money and time to spend in college will find that avenue of opportunity closed to them. Since black and Hispanic Floridians are about 30 percent less likely to have a college degree, they will suffer more from this absurd licensing requirement than others will. Competitor’s Veto laws that forbid a person from practicing a trade unless they get permission from the businesses already operating in that industry are also very likely to create a sort of Old Boys Network, and to exclude entrepreneurs who lack political connections. Second, in a more general sense, any law that restricts economic opportunity for some to benefit others — as licensing laws tend to do — are likely to benefit those who have more political influence and can therefore get the government to regulate in ways favorable to them. Since members of minority groups have less political influence, they tend to be the ones excluded.

Timothy Sandefur, “Testifying to the U.S. Senate Oversight Subcommittee Tuesday about economic liberty and minorities”, Freespace, 2015-09-30.

November 12, 2017

QotD: Why politicians are all the same kind of people

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

Why is it, then, that the virtues and decencies that we generally expect people to have in their private life are so manifestly absent in the people who succeed best in politics and government? The answer lies in the nature of government itself — at least, government as we currently know it all over the world, a system of imposed, involuntary, monopoly rule whereby the system’s kingpins use military and police power along with ideological enchantment to plunder and bully innocent people — and to get away with doing so year after year. Just as only physically tough, fearless, aggressive persons succeed as prize fighters, so only dishonest, slick, evasive, power-hungry, unscrupulous, and vicious persons have what it takes to succeed in a system whose very foundations — violence, aggression, extortion, and misrepresentation — are completely at odds with private standards of just and virtuous conduct.

If someone like me — elderly, small, weak, timid, and untrained — were put in the ring to fight for the heavyweight boxing championship, you would not expect me to survive more than a few seconds. Likewise, if someone like me — someone who respects other persons’ natural rights to life, liberty, and property and who abhors dishonesty, extortion, aggression, and unnecessary violence — were thrown into the political or governmental arena, I would scarcely last much longer. There’s a reason why today’s leading campaigners are such morally ugly individuals: they have a comparative advantage in taking the kinds of actions one must take in order to reach the pinnacle of government power.

Robert Higgs, “Why the Worst Get on Top: Comparative Advantage”, The Beacon, 2016-03-16.

November 5, 2017

QotD: Explaining comparative advantage

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

Actually, it’s dead easy. No math, no arithmetic. It is in fact the soul of common sense. But you have to understand that comparative advantage is the principle of cooperation, as against competition. The word “advantage” gets us thinking of competition, which is perfectly reasonable in our own individual lives — we do compete with other businesses or other writers or whomever. But the system as a whole, whatever it is, does well of course by cooperating, in business or science or family life. It’s not all we do, admittedly. We also compete. But within a household or a company or a world economy the job is to produce a result in the best way, cooperatively. If you are running a household or a sports team or a world economy, you would want to assign roles to the various contributors to the common purpose sensibly. It turns out to be precisely on grounds of comparative advantage.

Consider Mum and 12-year old Oliver, who are to spend Saturday morning tidying up the garage. Oliver is incompetent in everything compared with Mum. He cannot sweep the floor as quickly as she can, and he is truly hopeless in sorting through the masses of rubbish that garages grow spontaneously. Mum, that is, has an absolute advantage in every sub-task in tidying up the garage. Oliver is like Bangladesh, which is poor because it makes everything — knit goods and medical reactors — with more labor and capital than Britain does. Its output per person is 8.4 percent of what it is in Britain. So too Oliver.

What to do? Let Mum do everything? No, of course not. That would not produce the most tidied garage in a morning’s work. Oliver should obviously be assigned to the broom, in which his disadvantage compared with Mum is comparatively least — hence “comparative advantage.” An omniscient central planner of the garage-tidying would assign Mum and Oliver just that way. So would an omniscient central planner of world production and trade. In the event, there’s no need for an international planner. The market, if Trump does not wreck it, does the correct assignment of tasks worldwide. Bangladesh does not sit down and let Britain make everything merely because Britain is “competitive” absolutely in everything. And in fact Bangladesh’s real income has been rising smartly in recent years precisely because it has specialized in knit goods. It has closed its ears to the siren song of protecting its medical reactor industry. It gets the equipment for cancer treatment from Britain.

Comparative advantage means assigning resources of labor and capital to the right jobs, whatever the absolute productivity of the economy. It applies within a single family, or within a single company, or within Britain, or within the world economy, all of which are made better off by such obvious efficiencies. Following comparative advantage enriches us all, because it gets the job done best. Policies commonly alleged to achieve absolute advantage lead to protection — that is, extortion, crony capitalism, and the rest in aid of “competitiveness.”

Dierdre N. McCloskey, “A Punter’s Guide to a True but Non-Obvious Proposition in Economics”, 2017-10-16.

October 7, 2017

Why We Should Privatize the Postal Service

Filed under: Bureaucracy, Business, Government, USA — Tags: , , — Nicholas @ 04:00

ReasonTV
Published on 6 Oct 2017

What’s the best way to make the Post Office faster and cheaper? Pull the government’s tendrils out of it and let it loose in the private sector.

October 1, 2017

Deirdre McCloskey on the rise of economic liberty

Filed under: Economics, History, Liberty — Tags: , , , , , , — Nicholas @ 03:00

Samizdata‘s Johnathan Pearce linked to this Deirdre McCloskey article I hadn’t seen yet:

Since the rise during the late 1800s of socialism, New Liberalism, and Progressivism it has been conventional to scorn economic liberty as vulgar and optional — something only fat cats care about. But the original liberalism during the 1700s of Voltaire, Adam Smith, Tom Paine, and Mary Wollstonecraft recommended an economic liberty for rich and poor understood as not messing with other peoples’ stuff.

Indeed, economic liberty is the liberty about which most ordinary people care.

Adam Smith spoke of “the liberal plan of [social] equality, [economic] liberty, and [legal] justice.” It was a good idea, new in 1776. And in the next two centuries, the liberal idea proved to be astonishingly productive of good and rich people, formerly desperate and poor. Let’s not lose it.

Well into the 1800s most thinking people, such as Henry David Thoreau, were economic liberals. Thoreau around 1840 invented procedures for his father’s little factory making pencils, which elevated Thoreau and Son for a decade or so to the leading maker of pencils in America. He was a businessman as much as an environmentalist and civil disobeyer. When imports of high-quality pencils finally overtook the head start, Thoreau and Son graciously gave way, turning instead to making graphite for the printing of engravings.

That’s the economic liberal deal. You get to offer in the first act a betterment to customers, but you don’t get to arrange for protection later from competitors. After making your bundle in the first act, you suffer from competition in the second. Too bad.

In On Liberty (1859) the economist and philosopher John Stuart Mill declared that “society admits no right, either legal or moral, in the disappointed competitors to immunity from this kind of suffering; and feels called on to interfere only when means of success have been employed which it is contrary to the general interest to permit — namely, fraud or treachery, and force.” No protectionism. No economic nationalism. The customers, prominent among them the poor, are enabled in the first through third acts to buy better and cheaper pencils.

[…]

Indeed, economic liberty is the liberty about which most ordinary people care. True, liberty of speech, the press, assembly, petitioning the government, and voting for a new government are in the long run essential protections for all liberty, including the economic right to buy and sell. But the lofty liberties are cherished mainly by an educated minority. Most people — in the long run foolishly, true — don’t give a fig about liberty of speech, so long as they can open a shop when they want and drive to a job paying decent wages. A majority of Turks voted in favour of the rapid slide of Turkey after 2013 into neo-fascism under Erdoğan. Mussolini and Hitler won elections and were popular, while vigorously abridging liberties. Even a few communist governments have been elected — witness Venezuela under Chavez.

September 3, 2017

QotD: Picketty’s misunderstanding of the supply and demand curves

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

The technical flaws in Piketty’s argument are pervasive. When you dig, you find them. The fundamental problem is that Piketty does not understand how markets work. In keeping with his position as a man of the left, he has a vague and confused idea about how supply responds to higher prices. Startling evidence of Piketty’s miseducation occurs as early as page 6.

He begins by seeming to concede to his neoclassical opponents: “To be sure, there exists in principle a quite simple economic mechanism that should restore equilibrium to the process: the mechanism of supply and demand. If the supply of any good is insufficient, and its price is too high, then demand for that good should decrease, which would lead to a decline in its price.” The words I italicize clearly mix up movement along a demand curve with movement of the entire curve, an error of first-term college students. The correct analysis is that if the price is “too high” it is not the whole demand curve that “restores equilibrium,” but an eventually outward-moving supply curve. The supply curve moves out because entry is induced by the smell of super-normal profits.

Piketty does not acknowledge that each wave of inventors, entrepreneurs, and even routine capitalists find their rewards taken from them by entry. Look at the history of fortunes in department stores. The income from department stores in the late 19th century, in Le Bon Marché, Marshall Field, and Selfridge’s, was entrepreneurial. The model was then copied all over the rich world. In the late 20th century the model was challenged by a wave of discounters, and they then in turn by the internet. What happens is that the profit going to the profiteers is more or less quickly undermined by outward-shifting supply. The original accumulation dissipates. The economist William Nordhaus has calculated that the inventors and entrepreneurs nowadays earn in profit only 2 percent of the social value of their inventions. If you are Sam Walton the 2 percent gives you personally a great deal of money from introducing bar codes into stocking of supermarket shelves. But 98 percent at the cost of 2 percent is nonetheless a pretty good deal for the rest of us. The gain from macadamized roads or vulcanized rubber, then modern universities, structural concrete, and the airplane, has enriched even the poorest among us.

Deirdre N. McCloskey, “How Piketty Misses the Point”, Cato Policy Report, 2015-07.

August 7, 2017

QotD: Communism, competition, and the socialist calculation problem

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

Competition turns out not to be so wasteful; it makes a system resilient. That misunderstanding was a symptom of a larger issue called the socialist calculation problem. We think of prices largely in reference to ourselves, or other individuals, which is to say that we mostly see them as the highest barrier to getting something we want. But as we pull back to look at society, or the globe, we see that they are in fact an incredibly elegant way to allocate scarce resources.

This was best explained by Friedrich Hayek in his essay “The Use of Knowledge in Society.” Some good like tin becomes scarce, perhaps because a large tin mine has failed, or perhaps because there is a new and very profitable use for tin that is soaking up much of the supply. The price rises, and all over the world, people begin to economize on tin. Most of them have no idea why the price of tin is rising, and if they did, they wouldn’t care; they just switch to another metal, or start recycling old tin, finding a way to bring global demand closer in line to global supply. A lot of that is possible only because of price competition.

You can think of this as something like a distributed computer network: You get millions of people devoting some portion of their effort to aligning consumption with production. This system is constantly churning, making billions of decisions a day. Communism tried to replace this with a bunch of guys sitting around in offices, who occasionally negotiated with guys sitting around in other offices. It was a doomed effort from the start. Don’t get me wrong; the incentive problems were real and large. But even if they could have been solved, the calculation problem would have remained. And the more complex an economy you are trying to manage, the worse a job you will do.

The socialist calculation problem is not fundamentally an issue of calculating how to produce the most stuff, but of calculating what should be produced. Computers can’t solve that, at least until they develop sufficient intelligence that they’ll probably render the issue moot by ordering our toasters to kill us so that they can use our bodies for mulch.

Megan McArdle, “Yes, Computers Have Improved. No, Communism Hasn’t”, Bloomberg View, 2015-09-02.

July 12, 2017

The real newspaper problem is not Facebook and Google … it’s their monopolistic heritage

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

Tim Worstall argues against allowing US newspapers to have an anti-trust exemption to fight Facebook and Google:

The first thing to note is the influence of geography and transport. By definition a newspaper needs to arrive daily — in physical format least — meaning that there’s a useful radius around a printing plant which can be served. What then happened is exactly what is happening with Google and Facebook, network effects come into play. Each urban area effectively became the monopoly of just the one newspaper. Sure, there were more than that in New York City for example, SF supported two majors later than many other places. But even in such large and rich places we did really only ever end up with one “serious” newspaper.

The network effects stem from the revenue sources. Roughly speaking, you understand, one third came from subscription revenues, one third from display advertising and one third from classifieds. Classifieds are a classic case of said network effects. Everyone advertises where they know everyone reads. Everyone reads the ads where they know everyone advertises those used baby bassinets. Whoever can get ahead in the collection of either then almost always wins the race. Classifieds are also hugely, vastly, profitable.

The way that American newspapers are sold, on subscriptions with a local paper boy, also contains elements of such network effects.

The effect of this economic structure was that each major urban area really had the one monopolist newspaper. This is where that famed “objectivity” comes from too. If there’s going to be the one newspaper then it’s going to try to make sure there’s no room for another by steadily occupying the middle ground on anything and everything. This is just the Hotelling problem all over again. Swing too viciously left or right (on any issue, political, social, whatever) and there might be room for someone to sneak in from the borderlands. Thus the very milquetoast indeed political views at most of these newspapers.

[…]

And that, I insist, is what is really happening to US newspapers. Most certainly, their problems stem from the internet. for the internet broke that monopoly imposed by economic geography and all else stems from that. They got fat and happy within those monopolistic areas and their pain is coming from the adjustments necessary to deal with that. The likely outcome I would expect to be many fewer first line newspapers staffed by many fewer people in much the way that the UK market has worked for near a century now. I would also expect to see them using political stance as a differentiator just as in Britain.

July 6, 2017

Words & Numbers: Let Amazon Play Monopoly

Filed under: Business, Economics, Food — Tags: , , , — Nicholas @ 04:00

Published on 5 Jul 2017

Amazon’s offer to buy Whole Foods for $13.7 billion sounds pretty great to both parties, but it seems that isn’t good enough. The proposal has a lot of people worried about Amazon becoming an indestructible monopoly, and the government is all too happy to step in and settle the issue. But this concern ignores consumers’ own preferences as well as business and entrepreneurial history. This week in Words and Numbers, Antony Davies and James R. Harrigan discuss the probable future of the Amazon-Whole Foods merger, what it could mean for us, and what it could mean for another once-equally feared corporation: Wal-Mart.

June 30, 2017

“No one is bending over backwards to be fair to McEnroe here, and — well, he is John McEnroe”

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

Colby Cosh on the tempest-in-a-teapot over John McEnroe’s rating of Serena Williams’ tennis skills:

McEnroe is in a familiar, mostly consequence-free sort of trouble for an interview he gave to National Public Radio that aired this past Sunday. McEnroe is flogging a book, and NPR’s Lulu Garcia-Navarro read a quote from it, asking him why he had described Serena Williams as “the best female player” ever. Maybe, Garcia-Navarro suggested, Serena is just “the best player in the world.” “Why say female player?”

McEnroe immediately answered that if Williams played tennis on the men’s tour “she’d be, like, (number) 700 in the world.” He added that “That doesn’t mean I don’t think Serena is an incredible player: I do.” He specified that “700” was not an exact guess — “perhaps it’d be a little higher, perhaps it’d be a little lower.” And he noted that Williams’s supreme mental rigour would enable unexpected victories over male pros.

[…]

It so happens that when Serena was 16 and participating in the 1998 Australian Open, she and her sister Venus boasted that they could probably beat the 200th-best men’s player in the world. A German named Karsten Braasch, once number 38 in the men’s ranking, but by then a bit dissipated, stood 203rd at that moment. He got word of the Williams challenge. Indulging in his trademark habit of smoking cigarettes during breaks in play, Braasch beat Serena 6-1 and Venus 6-2.

The sisters revised their claim to superiority over men outside the top 350 before deciding not to speak of the match again, nor to repeat it with a different male opponent. Braasch was quoted as saying “500 and above: no chance.”

It might be objected that Serena was “only” 16 at the time, assuming anyone had dared to mention Karsten Braasch at all this week, but female tennis players seem to experience pretty much the earliest chronological peak of playing ability outside gymnastics or thoroughbred horseracing. Being 35 years old, as Serena is now, doesn’t help anybody win in a sport involving strength and speed. McEnroe has clear justification for his belief that Serena would not be one of the 500 best players in a world of wide-open, all-genders tennis.

Megan McArdle agrees it takes nothing at all away from Serena Williams to say she’s not the best tennis player in the world:

“Best” is a relative value of course, not an absolute; Tyrannosaurus rex was one of the best in its field, 65 million years ago, but when conditions changed, poor T. rex went from industry leader to the ash heap of history. When we say that someone or something is “the best,” we always have to acknowledge that this judgment is highly dependent on the criteria we’re using to define excellence.

This is approximately the argument many of McEnroe’s critics seem to be making. Unable to refute his core point — that Serena Williams could not be a world champion if she were regularly competing against men — instead they’re asking why he would make that the standard for judging whether she’s the world’s best tennis player.

This leaves me just as confused as McEnroe was when the NPR interviewer asked him essentially the same question. Tennis, after all, is a court, a moderate amount of equipment, and some highly detailed rules for determining who wins. The best tennis player is the person who can most regularly defeat the other players under those rules. Unless some sort of terrible plague wipes out hundreds of top men’s tennis players, that person will never be Serena Williams.

[…]

We should all applaud Serena Williams for becoming the world’s best female tennis player. That’s a stunning achievement — a testament to her physical gifts and how hard she has worked to develop as a player. Williams has earned her titles, her money and her fame, and she deserves to bask in all of it. It is a compliment, and a true statement, to call her the best female tennis player. We won’t add anything to her achievement by subtracting “female” and turning the true accolade into false flattery.

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