Quotulatiousness

November 20, 2025

Military necessity and the “right to repair”

Filed under: Bureaucracy, Business, Military, USA, Weapons — Tags: , , , , — Nicholas @ 03:00

Over the last few decades, more and more companies have been discovering the financial wonders available to them if they separate the items they sell from the ability to repair those items … so you buy a widget but if it breaks, you have to pay the manufacturer to get it fixed. You have no option to fix it yourself — even if you have the technical know-how and the necessary tools — nor can you find a cheaper alternative, because the manufacturer has blocked any possible competition to their often highly profitable scam revenue stream. It’s bad enough in the civilian marketplace, where consumers are demanding the “right to repair” from legislators because the cost and inconvenience are far too high.

Now imagine you are onboard a US Navy ship in the western Pacific and some critical piece of technology breaks down … but you can’t fix it yourself because the manufacturer sells repair services and will have to be paid to send out a civilian repair crew with the necessary tools and parts. No need to imagine it: it’s the situation the US military is finding itself in more and more often:

If you want to get an otherwise reserved and laconic farmer to get excited and talkative about a subject, ask them about the issue of “right to repair“.

    … Wilson and others accuse John Deere of blocking farmers and everyday mechanics from fixing equipment without going through John Deere dealers. Although the company doesn’t prohibit users from fixing equipment themselves, the lawsuit claims it locks users out of repairs because of the limited access to software that only dealerships can access. The lawsuit says that makes most fixes nearly impossible. A lot like cars, the farming equipment is equipped with sensors. The John Deere tractors, for instance, run on firmware that is necessary for basic functions, according to the lawsuit. If something is wrong with the equipment, a code will appear on a display monitor inside the machine. The suit says interpreting the error codes on tractors, for instance, requires software that “Deere refuses to make available to farmers”.

    Right-to-repair advocates say the digitization of agricultural equipment — with its various computers and sensors — has made self-repair almost impossible, forcing farmers to depend on the manufacturers. Wilson, for example, said he has to rely on his local John Deere dealership, which he said takes longer and charges more than an independent repair worker.

    … a pending lawsuit the Federal Trade Commission filed Jan. 15 claims the company falls short of that promise. The complaint accuses it of unlawful business practices that have “inflated farmers’ repair costs and degraded farmers’ ability to obtain timely repairs”.

    “I would have some farmers close to tears recalling the time they lost a whole harvest because they weren’t able to fix their own tractor and weren’t able to go to a local repair shop,” said former FTC Chair Lina Khan, who helped launch the suit.

OK, it is bad enough to have to wait as through time and experiencing a degrading quality of harvest to repair your tractor … but what if instead of Mother Nature, you have to deal with 50,000 screaming Chinamen?

Senator Tim Sheehy (R-MT) is trying to get ahead of this problem.

    U.S. defense contractors have launched a lobbying and public relations blitz to defeat a provision in the Senate-passed NDAA that would set strict new rules for how the Pentagon accesses their intellectual property.

    The issue is among the last unresolved matters facing House and Senate negotiators who aim to reconcile before December the House and Senate fiscal 2026 NDAAs.

    The Senate’s so-called right-to-repair provision states that the Pentagon may not, with certain exceptions, enter into a contract unless the deal requires the company to provide the government with the data needed to operate and sustain the equipment.

    That data means a lot to the contractors because it is worth many billions of dollars over time. To a servicemember it also means a lot: Being able to fix a weapon can mean the difference between life and death. And the cost of such repairs is a major driver of defense budget growth, experts have long said.

These are the same defense primes who are spending billions of dollars on stock buybacks, and already have a track record of contract maintenance that is not impressive.

Update, 21 November: Welcome, Instapundit readers! Please do have a look around at some of my other posts you may find of interest. I send out a daily summary of posts here through my Substack – https://substack.com/@nicholasrusson that you can subscribe to if you’d like to be informed of new posts in the future.

August 26, 2025

Table saws, technological patents, and rent-seeking

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

Tom Knighton, who I’ve “met” on my favourite woodworking forum, celebrates a small victory in the never-ending battle against the rent-seekers of the corporate world:

“SawStop” by Comfr is licensed under CC BY-SA 4.0 .

What does this have to do with rent-seeking?

Well, there’s a company called SawStop. They make really great table saws with a unique safety feature. They’re equipped with a brake and sensor that, when it detects moisture such as one might find in a human finger, it locks the saw and drops the blade down into the saw’s body.

It’s a really great bit of technology, and the saws happen to be really good saws, too, so the company has done well for itself.

However, it started out as a company seeking to license the technology, only no one wanted it at the time.

SawStop decided to try and press the United States government to mandate their technology on all new table saws, and the government was going to.

Was.

This video has a good rundown of the whole thing. (I’d embed it, but the channel doesn’t allow it for some reason.)

The short of it is that the rule that was being considered has now been tossed because it would specifically give SawStop a monopoly on table saw sales in the United States, legally. Yes, they were going to offer up a patent for the public domain, but it wouldn’t be enough to replicate the technology in and of itself.

Plus, at a time when woodworking isn’t the biggest hobby in the world, even if it had been enough, driving up the cost for a central piece of tooling that most consider essential for woodworkers ain’t the way to change that.

For example, Skil makes a jobsite saw that typically runs under $300. SawStop’s equivalent is around three times that much, and that’s a lot of money to spend on something you’re not sure you’ll even enjoy.

Especially since just being careful can prevent the need for the brake in the first place, to say nothing of the fact that if you cut wet wood, it’ll trigger the brake, which is a pain for a lot of people, especially building contractors whose lumber isn’t super dry to begin with.

Seeing the rug pulled out from under SawStop is great, but the real issue here is that it doesn’t happen often enough. Rent-seeking is all too common and all too often works.

August 7, 2025

“The Beer Store seems to be going down faster than, well, a nice, cold beer”

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

In The Line Scott Stinson discusses the precipitous fall in the fortunes of Ontario’s former beer retail behemoth now that beer is available in — shock! horror! — grocery stores and even (gasp!) convenience stores:

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

A major Ontario retailer announced last month that it would permanently close 20 locations in August. This follows the closure of 10 of its stores just over a week before that, and precedes the planned shuttering of 10 more locations in September.

What business could possibly be swooning this much? A general retailer pummelled by Amazon? An exporter battered by Trump’s tariffs?

Nope: Beer. Seriously. The Beer Store seems to be going down faster than, well, a nice, cold beer.

Welcome to the uniquely weird world of alcohol sales in the province of Ontario, where somehow selling beer has become a struggling business.

Some background is probably required, for those who, understandably, must think by this point that I am full of shit.

For ages the vast majority of Ontario’s beer sales ran through The Beer Store, a chain of 450-ish outlets that was co-owned by Canada’s largest brewers. You could also get beer at the provincially owned LCBO, but the largest size available there was a six-pack. That was it. This system was exceedingly unfriendly to consumers, but owing to our puritan roots and the fact that the brewers had excellent lobbyists at Queen’s Park, it remained that way through decades — and governments of all three major parties.

About a decade ago, the Toronto Star got its hands on one of the agreements between The Beer Store and the province, which revealed what a sweetheart deal it was getting. Among other things, the deal greatly restricted the degree to which the LCBO could compete in beer retail, which caused much frothing over the fact that The Beer Store, long since owned by multinational conglomerates, was getting preferential treatment over the province’s own booze outlet.

The Liberal government of the day responded by loosening The Beer Store’s stranglehold on beer retail, but just a little: allowing it to be sold at a limited number of grocery stores, a hilariously small step but one that in Ontario was nevertheless a great leap forward.

Doug Ford’s Conservative government had long wanted to expand alcohol sales much further, but always stumbled over the fact that The Beer Store had a deal that prohibited such expansion until 2026. But then Ford wanted to hold an election last spring and he convinced The Beer Store to let him break that deal a year early for $225 million, which always seemed like an awfully steep price to move up that expansion by what amounted to a number of months.

It’s only in recently, though, that it has become clear how spectacularly dumb that giant payment was in the first place.

July 7, 2025

QotD: The mythological “perfect market” and “perfect competition”

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

In modern neoclassical economics, the benchmark of analysis from which real-world markets are judged is the model of perfect competition, in which a homogenous good is bought and sold by a large group of buyers and sellers, respectively, none of whom have an influence on the price. Moreover, under such conditions, there exists free entry and exit of sellers in the marketplace, defined by perfect information.

The narrative that is constructed and logically follows from this model is that observed deviations from perfect competition in the marketplace are indicative of imperfections, also known as “market failures”, associated with the existence of monopoly power, pervasive externalities, the provision of public goods, and macroeconomic instability. According to this narrative, government intervention is the deus ex machina that saves the market from its own “imperfections” through regulations, taxes, subsides, and other public policy measures. Why? To use a quote from Frank Knight often used by James Buchanan, “to call a situation hopeless is to call it ideal”. The narrative that is constructed is one in which, outside the conditions of the ideal of perfect competition, there is no hope but for government intervention to save the market from itself. Anyone who has taken an economics course is well aware of what I’ve stated thus far, and therefore this should not be surprising.

But what is the implicit meaning of the word “imperfect” that is baked into the narrative, which is constructed into the model of perfect competition? What is implied when we postulate that markets are “imperfect” in comparison to the benchmark of perfect competition is that markets are flawed, non-ideal, or otherwise sub-optimal, and therefore in need of correction through government intervention. Who could dispute the logic of this narrative?

However, if we simply reinterpret our understanding of the word “imperfect”, not only will it reframe the narrative being told about the marketplace, but also the public policy implications that flow from this narrative. If we analyze the etymology of the word imperfect, breaking it down from its Latin origins, you will learn that “im” expresses the negation, “per” comes from the Latin word meaning “thoroughly” and “fect” comes from the Latin verb “facere“, meaning “to do”. Thus, rather than saying that something, or some state of affairs, is flawed, suboptimal, or non-ideal, another way to interpret the meaning of “imperfect” is an act or process that is not thoroughly done, or incomplete. In fact, from a quick perusal of the Merriam Webster’s Dictionary, you will find a similar definition of the word imperfect: “constituting a verb tense used to designate a continuing state or an incomplete action” (emphasis added).

Rather than regarding the market as a flawed or sub-optimal state of affairs, a better understanding of an “imperfect market” reveals that the market is a process of continuous tendency towards perfection, or completion, where are all the gains from trade are exhausted and all plans between buyers and sellers are perfectly coordinated. As Ludwig von Mises states in his magnum opus, Human Action, the “market process is the adjustment of the individual actions of the various members of the market society to the requirements of mutual cooperation” (1949 [2007]: 258).

Thus, markets will always be imperfect, but that is precisely why markets exist in the first place! Markets never conform to the “ideal” of perfect competition, but this is completely irrelevant, since under such state of affairs, markets are unnecessary and redundant, since all resources are already perfectly allocated to their most valued uses. Market processes exist precisely because to generate the information necessary to better coordinate the plans and purposes of individuals in a peaceful and productive manner. The entrepreneurial lure for profit and the discipline of loss is what guides such imperfect processes in a tendency towards the creation of more complete information between buyers and sellers.

Rosolino Candela, “Are Markets Imperfect? Of Course, But That’s The Point!”, Econlib.org, 2020-05-18.

January 23, 2025

The Google of the early modern era

Filed under: Britain, Business, History, India — Tags: , , , , , — Nicholas @ 04:00

Ted Gioia compares the modern market power of the Google behemoth to the only commercial enterprise in human history to control half of the world’s trade — Britain’s “John Company”, or formally, the East India Company which lasted over 250 years growing from an also-ran to Dutch and Portuguese EICs to the biggest ever to sail the seas:

No business ever matched the power of the East India Company. It dominated global trade routes, and used that power to control entire nations. Yet it eventually collapsed — ruined by the consequences of its own extreme ambitions.

Anybody who wants to understand how big businesses destroy themselves through greed and overreaching needs to know this case study. And that’s especially true right now — because huge web platforms are trying to do the exact same thing in the digital economy that the East India Company did in the real world.

Google is the closest thing I’ve ever seen to the East India Company. And it will encounter the exact same problems, and perhaps meet the same fate.

The concept is simple. If you control how people connect to the economy, you have enormous power over them.

You don’t even need to run factories or set up retail stores. You don’t need to manufacture anything, or create any object with intrinsic value.

You just control the links between buyers and sellers — and then you squeeze them as hard as you can.

That’s why the East India Company focused on trade routes. They were the hyperlinks of that era.

So it needed ships the way Google needs servers.

The launch of the massive East India merchant ship, the Edinburgh — which brought tea from China.

The seeds for this rapacious business were planted when the British captured a huge Portuguese ship in 1592. The boat, called the Madre de Deus, was three times larger than anything the Brits had ever built.

But it was NOT a military vessel. The Portuguese ship was filled with cargo.

The sailors couldn’t believe what they had captured. They found chests of gold and silver coins, diamond-set jewelry, pearls as big as your thumb, all sorts of silks and tapestries, and 15 tons of ebony.

The spices alone weighed a staggering 50 tons — cinnamon, nutmeg, cloves, pepper, and other magical substances rarely seen in British kitchens.

This one cargo ship represented as much wealth as half of the entire English treasury.

And it raised an obvious question. Why should the English worry about military ships — or anything else, really — when you could make so much money trading all this stuff?

Not long after, a group of merchants and explorers started hatching plans to launch a trading company — and finally received a charter from Queen Elizabeth in 1600.

The East India Company was now a reality, but it needed to play catchup. The Dutch and the Portuguese were already established in the merchant shipping business.

By 1603, the East India Company had three ships. A decade later that had grown to eight. But the bigger it got, the more ambitious it became.

The rates of return were enormous — an average of 138% on the first dozen voyages. So the management was obsessed with expanding as rapidly as possible.

They call it scalability nowadays.

But even if they dominated and oppressed like bullies, these corporate bosses still craved a veneer of respectability and legitimacy — just like Google’s CEO at the innauguration yesterday. So the company got a Coat of Arms, playacting as if it were a royal family or noble clan.

As a royally chartered company, I believe the EIC was automatically entitled to create and use a coat of arms. Here’s the original from the reign of Queen Elizabeth I:

July 14, 2024

When the Ontario Progressive Conservatives backed away from LCBO privatization

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

In the National Post, Terence Corcoran posts an excerpt from last year’s The Harris Legacy: Reflections on a Transformational Premier edited by Alister Campbell:

“LCBO at Parkway Mall” by Xander Wu is licensed under CC BY-SA 4.0 .

Almost 30 years ago, in 1995, the Ontario Progressive Conservative government led by Mike Harris promised to privatize the Liquor Control Board of Ontario (LCBO). “We will sell off some assets, such as the LCBO,” said the party’s famed election document, the Common Sense Revolution (CSR). The LCBO could have been a true privatization — a full-fledged divestiture of a government monopoly into a new open and competitive market, but it never happened.

The failure to privatize the LCBO, lamentable from a consumer and economic perspective, remains a significant lost opportunity to demonstrate the benefits of privatization. If Harris had successfully de-monopolized the alcohol market, the whole concept of privatization would have been given a major boost. Instead, the government backed away from privatization of the alcohol market, preferring instead to allow the corporation to substitute modern marketing and retail razzle-dazzle to give the false impression it was offering the public the best of all worlds.

The LCBO failure is also a demonstration of the degree to which the Common Sense Revolution’s starting principles fell short in grasping the essential benefits of private versus public ownership and control. Neo-liberalism isn’t exactly a fine science. The Wikipedia entry on “Neo-liberalism” is a 30-page effort (including 400 footnote links to hundreds of warring academic papers), reflecting an economic and ideological scramble that dates back more than a century. But when the Harris government came to power, major elements of the free-market model were often overshadowed by fiscal policy objectives. With the LCBO, the Harris government veered off the neo-liberal course in pursuit of standard political objectives.

In 1995, the LCBO was a government owned and operated province-wide corporation that controlled liquor and wine wholesale and retail markets. Another private monopoly player, the Beer Store chain, while owned and operated by the brewing industry, was also essentially a government-sanctioned beer monopoly. The CSR neo-liberal objective should have been to privatize the alcohol market by selling the LCBO, deregulating the Beer Store monopoly and allowing beer sales through supermarkets and even corner stores. More importantly, dismantling the LCBO would allow other corporations to enter the alcohol retail business and provide consumers much more choice, which has been the Alberta experience. Notably, Alberta achieved a successful and deregulated approach without sacrificing provincial revenues.

The neo-liberal objective of privatization is to benefit consumers and enhance economic productivity through competition. Instead, the Harris government fell into the fiscal policy trap that routinely captures politicians, bureaucrats and corporate insiders. Instead of aiming to benefit consumers, the objective soon became how to maximize the fiscal return to government. Never mind the consumer and the market. The objective became preserving — and enhancing — government revenues.

At the time, anti-privatization advocates frantically pointed at the Alberta experience of privatization of their provincial liquor monopoly, which (briefly) generated a lot of retail horror stories that Ontario newspapers gleefully republished (and, likely, emphasized out of proportion to the actual Alberta market). You can still hear Ontarians casting aspersions on the Alberta market as if nothing at all had changed after the initial rough patch. From what I’ve heard from Albertans, they have far wider choices of alcoholic beverages in stores much more conveniently sited with better open hours than anyone in Ontario enjoys. The Alberta government still gets at least as much in tax revenues from alcohol sales without needing to be in the distribution or retail business. It doesn’t seem to be the utter disaster that Ontario media portrays it to be … rather the contrary.

June 30, 2024

The medieval salt trade in the Baltic

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

In the long-awaited third part of his series on salt, Anton Howes discusses how the extremely low salt level of water in the Baltic Sea helped create a vast salt trade dominated by the merchant cities of the Hanseatic League:

The extent of the Hanseatic League in 1400.
Plate 28 of Professor G. Droysen’s Allgemeiner Historischer Handatlas, published by R. Andrée, 1886, via Wikimedia Commons.

It’s difficult to appreciate salt’s historical significance because it’s now so abundant. Societies used to worry about salt supplies — for preparing and preserving food — as a matter of basic survival. Now we use the vast majority of it for making chemicals or chucking on our roads to keep them from getting icy, while many salt-making plants don’t even operate at full capacity. Yet the story of how we came to achieve salt superabundance is a long and complicated one.

In Part I of this series we looked at salt as a kind of general-purpose technology for the improvement of food, as well as a major revenue-raiser for empires — especially when salt-producing coastal areas could dominate salt-less places inland. In Part II we then looked at a couple of places that were all the more interesting for being both coastal and remarkably salt-less: the coast of Bengal and the Baltic Sea. One was to be exploited by the English East India Company, which needlessly propped up a Bengalese salt industry at great human cost. The other, however, was to prove a more contested prize — and ultimately the place that catalysed the emergence of salt superabundance.

It’s worth a brief recap of where we left the Baltic. Whereas the ocean is on average 3.5% salt, along the Baltic coast it’s at just 0.3% or lower, which would require about twelve times as much time and fuel to produce a given quantity of salt. Although there are a few salt springs near the coast, they were nowhere near large enough to supply the whole region. So from the thirteenth century the Baltic’s salt largely came from the inland salt springs at Lüneburg, supplied via the cities of Lübeck and Hamburg downstream. These two cities had a common interest against the kingdom of Denmark, which controlled the straits between the North and Baltic seas, and created a coalition of trading cities that came to be known as the Hanseatic League. The League resoundingly defeated the Danes in the 1360s and 1430s so that their trade in salt — and the fish they preserved with it — could remain free.

But Lüneburg salt — and by extension the League itself — was soon to face competition.

Lüneburg could simply not keep up with the growth of Baltic demand, as the region’s population became larger and wealthier. And so more and more salt had to come from farther afield, from the Bay of Biscay off France’s western coast, as well as from Setúbal in Portugal and from southern Spain.1 This “bay salt” — originally referring to just the Bay of Bourgneuf, but then extended to the entire Bay of Biscay, and often to all Atlantic solar-evaporated salt — was made by the sun and the wind slowly evaporated the seawater from a series of shallow coastal pools, with the salt forming in coarse, large-grained pieces that were skimmed off the top. Bay salt, however, inevitably ended up mixed with some of the sand and dirt from the bottoms of the pools in which it was held, while the seawater was never filtered, meaning that the salt was often brown, green, grey or black depending on the skill of the person doing the skimming — only the most skilled could create a bay salt that was white. And it often still contained lots of other chemicals found in seawater, like magnesium chloride and sulphate, calcium carbonate and sulphate, potassium chloride and so on, known as bitterns.2

Bay or “black” salt, made with the heat of the sun, was thus of a lower quality than the white salt boiled and refined from inland salt springs or mined as rock. Its dirt discoloured and adulterated food. Its large grains meant it dissolved slowly and unevenly, slowing the rate at which it started to penetrate and preserve the meat and fish — an especially big problem in warmer climates where flesh spoiled quickly. And its bitterns gave it a bitter, gall taste, affecting the texture of the flesh too. Bay salt, thanks to the bitterns, would “draw forth oil and moisture, leading to dryness and hardness”, as well as consuming “the goodness or nutrimental part of the meat, as moisture, gravy, etc.”3 The resulting meat or fish was often left shrunken and tough, while bitterns also slowed the rate at which salt penetrated them too. Bay-salted meat or fish could often end up rotten inside.

But for all these downsides, bay salt required little labour and no fuel. Its main advantage was that it was extremely cheap — as little as half the price of white Lüneburg salt in the Baltic, despite having to be brought from so much farther away.4 Its taste and colour made it unsuitable for use in butter, cheese, or on the table, which was largely reserved for the more expensive white salts. But bay salt’s downsides in terms of preserving meat and fish could be partially offset by simply applying it in excessive quantities — every three barrels of herring, for example, required about a barrel of bay salt to be properly preserved.5

By 1400, Hanseatic merchants were importing bay salt to the Baltic in large and growing quantities, quickly outgrowing the traditional supplies. No other commodity was as necessary or popular: over 70% of the ships arriving to Reval (modern-day Tallinn in Estonia) in the late fifteenth century carried salt, most of it from France. But Hanseatic ships alone proved insufficient to meet the demand. The Danes, Swedes, and even the Hanseatic towns of the eastern Baltic, having so long been under the thumb of Lübeck’s monopoly over salt from Lüneburg, were increasingly happy to accept bay salt brought by ships from the Low Countries — modern-day Belgium and the Netherlands. Indeed, when these interloping Dutch ships were attacked by Lübeck in 1438, most of the rest of the Hanseatic League refused Lübeck’s call to arms. When even the Hanseatic-installed king of Denmark sided with the Dutch as well, Lübeck decided to back down and save face. The 1441 peace treaty allowed the Dutch into the Baltic on equal terms.6 Hanseatic hegemony in the Baltic was officially over.

The Dutch, by the 1440s, had thus gained a share of the carrying trade, exchanging Atlantic bay salt for the Baltic’s grain, timber, and various naval stores like hemp for rope and pitch for caulking. But this was just the beginning.

    1. Philippe Dollinger, The German Hansa, trans. D. S. Ault and S. H. Steinberg, The Emergence of International Business, 1200-1800 (Macmillan and Co Ltd, 1970), pp.219-220, 253-4.

    2. L. Gittins, “Salt, Salt Making, and the Rise of Cheshire”, Transactions of the Newcomen Society 75, no. 1 (January 2005), pp.139–59; L. G. M. Bass-Becking, “Historical Notes on Salt and Salt-Manufacture”, The Scientific Monthly 32, no. 5 (1931), pp.434–46; A. R. Bridbury, England and the Salt Trade in the Later Middle Ages (Clarendon Press, 1955), pp.46-52. Incidentally, some historians, like Jonathan I. Israel, Dutch Primacy in World Trade, 1585-1740 (Clarendon Press, 1989) p.223, note occasional reports of French bay salt having been worse than the Portuguese or Spanish due to its high magnesium content, “which imparted an unattractive, blackish colour”. This must be based on a misunderstanding, however, as the salts would have been identical other than in terms of the amount of dirt taken up with the salt from the pans. At certain points in the seventeenth century the French workers skimming the salt must simply have been relatively careless compared to those of Iberia.

    3. John Collins, Salt and fishery a discourse thereof (1682), pp.17, 54-5, 66-8.

    4. Bridbury, pp.94-7 for estimates.

    5. Karl-Gustaf Hildebrand, “Salt and Cloth in Swedish Economic History”, Scandinavian Economic History Review 2, no. 2 (1 July 1954), pp.81, 86, 91.

    6. For this section see: Dollinger, pp.194-5, 201, 236, 254, 300.

June 21, 2024

“Neoliberal ideology is antidemocratic at its very core. Its aim is to give free-reign over our societies to corporations, not citizens”

Filed under: Economics, Government, Liberty, Media, Politics — Tags: , , , , , , — Nicholas @ 03:00

Tim Worstall responds to a recent Medium essay by Julia Steinberger which illustrates that “neoliberal” has joined “fascist” as a generic term to indicate strong disapproval of a person, organization, or idea:

The idea that an adult woman can believe these things is just amazeballs. But here we are. A tweet from Julia Steinberger leads to her Medium essay about what’s wrong with the world.

An upheaval in 10 chapters:

    1. The cause. We know the climate crisis is brought to us by highly unequal and undemocratic economic systems.

Err, no? Emissions are emissions. 100 people emitting one tonne each is exactly the same as 1 person emitting 100 tonnes. Sure, it’s true that a more unequal society will have more people emitting those 100 tonne personal amounts. But a more equal society will have more people able to emit another 1 tonne each. For, more equality is by definition the movement of some of those assets of the richer to those poorer — the economic assets which either allow or do the emitting. Sure, Jim Ratcliffe’s £50,000 private jet flight emits more than my £100 Easyjet one. But if we take the £50k off Jim and give it to 500 folk like me then all 500 of us might spend the marginal income on an Easyjet flight each — which would be more emissions than Jim’s spending of the money.

It simply is not true that economic inequality is the heart, the core or the cause of climate change. It’s idiocy to think it is too.

Of course, we know what’s happening here. Climate Change is Bad, M’Kay? Which it is, obviously. Economic inequality is Bad, M’Kay? Well, there the evidence is a great deal more mixed but whatever. But in the minds of the stupid all bad things have the same cause. So, if inequality is bad, climate change is bad, then they must be the same thing because they’re Bad, M’Kay?

    2. The rise. The recent history of these economic systems, in the Americas and Eurasia, is dominated by the ascendance of neoliberal ideology.

Oh, that is good. Given that I am a neoliberal — a fully paid up one, Senior Fellow at the Adam Smith Institute and all — that’s very good. Given HS2, looming wealth taxation, the increased bite of idiot regulation and all that I can’t say that I see neoliberalism as winning right now but that might depend upon your starting point. If you’re a socialist — or an idiot but I repeat myself — you might well regard the plenitude of bananas in the supermarket as neoliberal. After all, that is something that socialism never did achieve.

    3. The threat. Neoliberal ideology is antidemocratic at its very core. Its aim is to give free-reign over our societies to corporations, not citizens.

And, well, you know, bollocks. The very beating heart of neoliberalism is that corporations need to be controlled and they’re best controlled by the citizens. In the form of free markets rather than voting on which bureaucrats get the gold plated pension, true. But neoliberals are between indifferent and actually against capitalist power. The whole nub of the idea is that markets do the job of controlling capitalists better than bureaucrats, politicians or, obviously, capitalists.

There’s not really any way for her thesis to survive after getting so much of the basics wrong, is there?

But just one more tidbit:

    Hayek and his neoliberal colleagues now needed another, antidemocratic way, to organise society. They didn’t want democracy, but they wanted some kind of self-maintaining organisation — by which they meant hierarchy. Organisation was supposed to be supplied by the market, and hierarchy by competition within markets. (It’s worth noting that neoliberals in the 1950s did not, although they should have, predict that unfettered markets lead to concentrations in monopolies or cartels. They would arguably disapprove of the vast corporations running our current economies, even though their market-above-democracy policies predictably brought them into being.)

Well, that wasn’t actually the last tidbit. But the idea that Friedman, Mises, Menger, Hayek and the rest didn’t worry about monopolies? Jesu C is really bouncin’ on that pogo stick right now. And then the idea that democracy will be better bulwark against monopolies than markets? Can you actually do backflips on a pogo stick?

June 14, 2024

QotD: European “megacorporations” in the east

Filed under: Asia, Britain, Europe, History, India, Quotations — Tags: , , , , , , — Nicholas @ 01:00

The great (and terrible) chartered trading companies offer a more promising historical parallel for the megacorporation, with much larger scope. The largest of these were the British East India Company (EIC, 1600-1874) and the Dutch East India Company (the Vereenigde Oostindische Compagnie or VOC, 1594-1800). The EIC at one point accounted for something close to half of the the world’s trade and the VOC at points had total or near-total monopolies on the trade of important and valuable spices. Both companies were absolutely massive and exercised direct, state-like authority over territory and people.

And the structure of these massive trading companies mirrors some of the elements of a megacorp. While both companies were, in theory, shipping companies, in practice they were massive vertically integrated conglomerates. Conquering the production areas (particularly India for the EIC and Java for the VOC), they essentially controlled the production chain from start to finish. That complete vertical integration meant that the companies also had to supply employees and colonial subjects, which in turn meant controlling trade and production in everything from food and clothes to weapons. Both companies had their own armies and fleets (the EIC boasted more than 25,000 company soldiers at its height, the VOC more than 10,000) and controlled and administered territory.

In short, they were the colonial Dutch and British governments for many millions of colonial subjects. For the people living in territory dominated by these companies, they really would have resembled the megacorps of speculative fiction, operating with effectively impunity and using their vast profits to field armies and navies capable of defeating local states and compelling them to follow the interests of the company (which remained profit-oriented).

(I feel the need to stop and note that “company rule” in India and even more so in the Dutch East Indies was brutally exploitative, living up to – and in many cases quite surpassing – the normal dystopian billing of science fiction megacorporations. At the same time, it seems equally worth noting that the shift to direct colonial rule by the state was not always much better.)

So in one sense, the speculative fiction megacorp has already existed, but in the other, the limits of these historical entities are informative too. First, it seems relevant that none of these companies were creatures of the markets, rather, they were created by state action – they were chartered companies, state monopolies, or both. These massive imperial trading companies (of which the EIC and VOC were the most successful, but not the only ones) were all created by their respective governments, armed with substantial privileges and typically given exclusive rights to certain trade – they were state-sanctioned monopolies (echoes of this also in the Japanese Zaibatsu state-sanctioned vertical monopolies; note that the Roman publicani [tax-farming “companies” of the middle and late Republic] were also state-sanctioned monopolies) whose monopolies were backed by state power to the point that their states (that is, Britain, the Dutch Republic, France and so on) would and did go to war to protect the trading rights of their monopoly trading companies.

Second, these megacorporations, far from being in a position to usurp the states that formed them (as fictional megacorporations often do), turn out to be extremely vulnerable to those states. The EIC was effectively nationalized by an act of parliament in 1858 (after the Indian Mutiny of 1857 discredited company rule in the eyes of the British government) and disbanded in 1874. The VOC was likewise nationalized by its parent government in 1796 and then dissolved in 1799. No effort was made by either company to resist being disbanded with any sort of force; it would have been a pointless gesture in any case. While the resources of the EIC were vast, the military capabilities of the British Empire were far greater. Moreover, the companies simply didn’t have the legitimacy to operate absent their state backing.

This is of course also true for the not-quite-megacorporations, like the great trusts of America’s gilded age (Standard Oil, U.S. Steel, etc.), or the Japanese zaibatsu or even modern super-sized corporate entities. Of the 10 largest companies in the world, four are straight up state-owned enterprises. Even for the private modern massive company, by and large when they try to fight their “home” state, they lose, or at least are badly damaged without seriously inconveniencing the far greater power of the state (just ask AT&T or Microsoft).

Bret Devereaux, “Fireside Friday: January 1, 2021”, A Collection of Unmitigated Pedantry, 2021-01-01.

June 9, 2024

QotD: The biological importance of salt to humans

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

… regardless of whether it was used in agriculture, for preservation, or for cooking, salt was also essential. The human body is constantly losing salt through sweat, and to a certain extent urine, but it tries to keep the blood’s salt concentrations maintained at a certain level. So as the blood loses salt, the body also ejects water to adjust. Ironically, as you lose salt your body responds by drying you out. Without constantly replacing the salt in your body — which is only ever stored for a couple of days at a time — you will at first feel fatigued and a little breathless, but increasingly weak and debilitated, as though sapped of all energy. The slightest exertion would start to bring on cramps, then problems with your heart and lungs, as your body continually shed water. If these did not kill you — and they probably would — you would essentially die through desiccation. The process would be all the faster if you became ill, rendering even the slightest dehydrating fever or bout of diarrhoea utterly lethal.1

A population deprived of salt was thus one that was weaker and more prone to disease — and at a time when the vast majority of the economy’s energy supply came from the straining of muscle, both human and animal, that weakness in effect meant a severe energy shortage. Although the main fuels for muscle power were carb-heavy grains like wheat, rye, oats, and rice, the indispensable ingredient to getting the most out of these grains was salt — just as how nuclear power uses uranium as its fuel, but also requires a suitable neutron moderator. A population deprived of salt would quite literally be more lethargic and sluggish, making it less productive and poorer too.

Salt’s unique properties made it a serious tool of state. In 1633 king Charles I’s newly-appointed Lord Deputy for Ireland, Baron Wentworth, advised controlling its salt supply as a way to make the Irish utterly economically dependent on England. Given salt was “that which preserves and gives value to all their native staple commodities” — herrings, butter and beef — then “how can they depart from us without nakedness and beggary?” Salt would be a method of control, and a profitable one too, being “of so absolute necessity” that it could be sold to the Irish at inflated prices without much dampening demand: salt “must be had whether they will or no, and may at all times be raised in price”.2 Much like economists today, Wentworth saw revenue-raising potential in taxing goods with such unresponsive or “inelastic” demand.

Wentworth’s scheme to control the Irish never came to be. But a great many other countries did choose to tax it. Given a minimum amount of salt had to be consumed by absolutely everyone, monopolising its sale — and levying what was effectively a tax by inflating the price well above the costs of importing or producing it — could function as kind of indirect poll tax, levied more or less per head of both people and livestock, but without any of the administrative hassle of taking and maintaining an accurate census in order to impose such a tax directly.

When compared to other necessities like grain, salt did not need to be traded in especially large quantities either, meaning that its supply could be monopolised with relative ease. And it could not be produced everywhere. Salt tended to be lacking the further you got from the sea coast, unless there happened to be some relatively rare inland sources like salt lakes, brine springs, or rock salt mines. And it could even be lacking on the sea coast where it was either too humid or too cold to get salt cheaply by evaporating seawater using the sun, or where there was insufficient fuel for boiling the brine. These places were thus prone to being charged inflated prices, while the states that controlled places where the costs of production were low — in warmer and drier climes where the salty water of coastal marshes could cheaply be evaporated using only the heat of the summer sun — could extract especially large monopoly profits from the difference. The revenue from controlling solar salt thus became the basis of many kingdoms, some unusually powerful republics, and even empires.

Anton Howes, “The Second Soul”, Age of Invention, 2024-03-08.

    1. Roy Moxham, “Salt Starvation in British India: Consequences of High Salt Taxation in Bengal Presidency, 1765 to 1878”, Economic and Political Weekly 36, no. 25 (2001): p.2270–74.

    2. George O’Brien, The Economic History of Ireland in the Seventeenth Century (Maunsel and Company Limited, 1919), p.244, which has the transcription of Wentworth’s proposal

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.

March 9, 2024

Salt – mundane, boring … and utterly essential

Filed under: Books, Economics, Food, Health, History — Tags: , , , , , , — Nicholas @ 05:00

In the latest Age of Invention newsletter, Anton Howes looks at the importance of salt in history:

There was a product in the seventeenth century that was universally considered a necessity as important as grain and fuel. Controlling the source of this product was one of the first priorities for many a military campaign, and sometimes even a motivation for starting a war. Improvements to the preparation and uses of this product would have increased population size and would have had a general and noticeable impact on people’s living standards. And this product underwent dramatic changes in the seventeenth and eighteenth centuries, becoming an obsession for many inventors and industrialists, while seemingly not featuring in many estimates of historical economic output or growth at all.

The product is salt.

Making salt does not seem, at first glance, all that interesting as an industry. Even ninety years ago, when salt was proportionately a much larger industry in terms of employment, consumption, and economic output, the author of a book on the history salt-making noted how a friend had advised keeping the word salt out of the title, “for people won’t believe it can ever have been important”.1 The bestselling Salt: A World History by Mark Kurlansky, published over twenty years ago, actively leaned into the idea that salt was boring, becoming so popular because it created such a surprisingly compelling narrative around an article that most people consider commonplace. (Kurlansky, it turns out, is behind essentially all of those one-word titles on the seemingly prosaic: cod, milk, paper, and even oysters).

But salt used to be important in a way that’s almost impossible to fully appreciate today.

Try to consider what life was like just a few hundred years ago, when food and drink alone accounted for 75-85% of the typical household’s spending — compared to just 10-15%, in much of the developed world today, and under 50% in all but a handful of even the very poorest countries. Anything that improved food and drink, even a little bit, was thus a very big deal. This might be said for all sorts of things — sugar, spices, herbs, new cooking methods — but salt was more like a general-purpose technology: something that enhances the natural flavours of all and any foods. Using salt, and using it well, is what makes all the difference to cooking, whether that’s judging the perfect amount for pasta water, or remembering to massage it into the turkey the night before Christmas. As chef Samin Nosrat puts it, “salt has a greater impact on flavour than any other ingredient. Learn to use it well, and food will taste good”. Or to quote the anonymous 1612 author of A Theological and Philosophical Treatise of the Nature and Goodness of Salt, salt is that which “gives all things their own true taste and perfect relish”. Salt is not just salty, like sugar is sweet or lemon is sour. Salt is the universal flavour enhancer, or as our 1612 author put it, “the seasoner of all things”.

Making food taste better was thus an especially big deal for people’s living standards, but I’ve never seen any attempt to chart salt’s historical effects on them. To put it in unsentimental economic terms, better access to salt effectively increased the productivity of agriculture — adding salt improved the eventual value of farmers’ and fishers’ produce — at a time when agriculture made up the vast majority of economic activity and employment. Before 1600, agriculture alone employed about two thirds of the English workforce, not to mention the millers, butchers, bakers, brewers and assorted others who transformed seeds into sustenance. Any improvements to the treatment or processing of food and drink would have been hugely significant — something difficult to fathom when agriculture accounts for barely 1% of economic activity in most developed economies today. (Where are all the innovative bakers in our history books?! They existed, but have been largely forgotten.)

And so far we’ve only mentioned salt’s direct effects on the tongue. It also increased the efficiency of agriculture by making food last longer. Properly salted flesh and fish could last for many months, sometimes even years. Salting reduced food waste — again consider just how much bigger a deal this used to be — and extended the range at which food could be transported, providing a whole host of other advantages. Salted provisions allowed sailors to cross oceans, cities to outlast sieges, and armies to go on longer campaigns. Salt’s preservative properties bordered on the necromantic: “it delivers dead bodies from corruption, and as a second soul enters into them and preserves them … from putrefaction, as the soul did when they were alive”.2

Because of salt’s preservative properties, many believed that salt had a crucial connection with life itself. The fluids associated with life — blood, sweat and tears — are all salty. And nowhere seemed to be more teeming with life as the open ocean. At a time when many believed in the spontaneous generation of many animals from inanimate matter, like mice from wheat or maggots from meat, this seemed a more convincing point. No house was said to generate as many rats as a ship passing over the salty sea, while no ship was said to have more rats than one whose cargo was salt.3 Salt seemed to have a kind of multiplying effect on life: something that could be applied not only to seasoning and preserving food, but to growing it.

Livestock, for example, were often fed salt: in Poland, thanks to the Wieliczka salt mines, great stones of salt lay all through the streets of Krakow and the surrounding villages so that “the cattle, passing to and fro, lick of those salt-stones”.4 Cheshire in north-west England, with salt springs at Nantwich, Middlewich and Northwich, has been known for at least half a millennium for its cheese: salt was an essential dietary supplement for the milch cows, also making it (less famously) one of the major production centres for England’s butter, too. In 1790s Bengal, where the East India Company monopolised salt and thereby suppressed its supply, one of the company’s own officials commented on the major effect this had on the region’s agricultural output: “I know nothing in which the rural economy of this country appears more defective than in the care and breed of cattle destined for tillage. Were the people able to give them a proper quantity of salt, they would … probably acquire greater strength and a larger size.”5 And to anyone keeping pigeons, great lumps of baked salt were placed in dovecotes to attract them and keep them coming back, while the dung of salt-eating pigeons, chickens, and other kept birds were considered excellent fertilisers.6

    1. Edward Hughes, Studies in Administration and Finance 1558 – 1825, with Special Reference to the History of Salt Taxation in England (Manchester University Press, 1934), p.2

    2. Anon., Theological and philosophical treatise of the nature and goodness of salt (1612), p.12

    3. Blaise de Vigenère (trans. Edward Stephens), A Discovrse of Fire and Salt, discovering many secret mysteries, as well philosophical, as theological (1649), p.161

    4. “A relation, concerning the Sal-Gemme-Mines in Poland”, Philosophical Transactions of the Royal Society of London 5, 61 (July 1670), p.2001

    5. Quoted in H. R. C. Wright, “Reforms in the Bengal Salt Monopoly, 1786-95”, Studies in Romanticism 1, no. 3 (1962), p.151

    6. Gervase Markam, Markhams farwell to husbandry or, The inriching of all sorts of barren and sterill grounds in our kingdome (1620), p.22

February 27, 2024

The Company that Broke Canada

Filed under: Business, Cancon, Economics, Government, History, Technology, USA — Tags: , , , , , , , — Nicholas @ 02:00

BobbyBroccoli
Published Nov 4, 2023

For a brief moment, Nortel Networks was on top of the world. Let’s enjoy that moment while we can. Part 1 of 2.

00:00 This is John Roth
02:04 The Elephant and the Mouse
12:47 Pa without Ma
26:27 Made in Amerada
42:15 Right Turns are Hard
57:43 Silicon Valley North
1:07:37 The Toronto Stock Explosion
(more…)

February 8, 2024

North American newspaper economics

Filed under: Business, Cancon, Economics, History, Media, Railways, USA — Tags: , , , , , — Nicholas @ 04:00

Tim Worstall discusses some of the issues ailing Canadian and American newspapers which are not easily solvable (government subsidies, as attempted in Canada, just turn the recipients into an underpaid PR branch of the governing party … not a good look in a democratic nation):

“Newseum newspaper headlines” by m01229 is licensed under CC BY 2.0 .

So, as a little corrective, a quick jaunt through what actually ails American journalism. The concentration is upon the big newspapers because that’s where the problem is worst. The conclusion is that it’s gonna get a lot, lot, lot, worse too. Because the industry is facing a base economic problem that it’s not willing to actually face up to. Or, at least, all the journalists writing about it aren’t — there’s the occasional sign that some of the business side of the equation grasp it.

[…]

Before Y2K American newspapers were segmented along geographic lines. The size of the country, the lack of a long distance passenger railroad network, meant that this was just so. If you’re printing a daily paper then you’ve got to deliver it daily. On the day it’s meant to refer to as well. If Chicago is 1,100 miles (no, I’ve not looked it up but that’s within an order of magnitude of being right, which is better than many newspapers manage with numbers) from New Orleans then the same newspaper is going to find it difficult to print and deliver to both markets. Add in the fact that trains take a week to traverse that distance, passenger trains – anyone who has ever travelled Amtrak will say it feels that long at least — included.

You could not and therefore did not have national newspaper (USA Today, with satellite printing plants, was an attempt to deal with this and slightly earlier than our cut off date but doesn’t change the basic story) distributions. What you had was a series of local and regional monopolies. Each one centred on a large population centre and serving the area around it that could be reasonably reached by truck overnight. Chicago and Cincinnati, not 1,100 miles away from each other, did have entirely different newspapers.

By contrast, and just as an example, the British newspaper market was national from pre-WWI. We simply did have overnight at worst passenger rail that covered the country. Partly it’s a much, much, smaller place, partly the passenger rail system was just different. So, printing overnight (and some maintained separate Scottish editions and plants) meant that those papers that came off the press in London at 8pm were on sale in Glasgow at 8 am, those that came off the press in London at 4 am were on sale in London at 8am. That’s not exact but it’s a good enough pencil sketch.

Cincinnati newspaper(s) served Cincinnati. Chicago, Chicago and New Orleans the area of New Orleans. There simply wasn’t a “national press” in the US in that British sense.

OK. But this also meant that American newspapers were much more like a monopoly in their local area than anything else. Network effects still exist even before computer networks after all. The most important of which was the classifieds.

As with Facebook, we’re all on Facebook because everyone else is on Facebook. So, if we’re to join a social network we’re going to be on Facebook where everyone else is — except those three hipsters who are where it isn’t cool yet. This applies to classifieds sections. Folk advertise in the one with the most readers, the widest market. Readers buy the one with the most ads in it, the widest market. You advertise the bronzed baby shoes, unused, where there are the most people looking for bronzed baby shoes, unused.

So, the dominant paper will suck up the classifieds in any particular market. Classifieds, fairly obviously back in the days of prams, cheap used cars, waiters’ jobs and so on being geographically based.

No, this is important. A useful pencil sketch of American newspaper revenues pre-Y2K was that subscriptions produced some one third of revenues. They also, around and about, covered print costs and distribution. They were, roughly you understand, about a face wash in fact.

Display ads produced another one third and classifieds the final one third. Classifieds were also wildly profitable — no expensive journalists to pay, no bureaux, just a few women waiting to get married on the end of the phone line.

January 20, 2024

The British Empire would have failed a proper cost-benefit analysis

Filed under: Africa, Asia, Britain, Economics, History, India — Tags: , , , , — Nicholas @ 05:00

At the Institute of Economic Affairs, Kristian Niemietz is working on a paper on the economics of empire that, as he shows in this article, indicates that the empire was never a winning economic proposition for Britain as a whole, no matter how well certain well-connected individuals and companies benefitted:

The British Empire in 1914 (via antiquaprintgallery.com)

But is it actually true that imperialism makes countries richer? Does imperialism make economic sense?

This question was already hotly debated at the heyday of imperialism. Adam Smith believed that the British Empire would not pass a cost-benefit test:

    The pretended purpose of it was to encourage the manufactures, and to increase the commerce of Great Britain. But its real effect has been to raise the rate of mercantile profit, and to enable our merchants to turn into a branch of trade, of which the returns are more slow and distant than those of the greater part of other trades, a greater proportion of their capital than they otherwise would have done […]

    Great Britain derives nothing but loss from the dominion which she assumes over her colonies.

He believed that Britain would be better off if it dissolved its Empire:

    Great Britain would not only be immediately freed from the whole annual expense of the peace establishment of the colonies, but might settle with them such a treaty of commerce as would effectually secure to her a free trade, more advantageous to the great body of the people, though less so to the merchants, than the monopoly which she at present enjoys.

The liberal free-trade campaigner Richard Cobden agreed:

    [O]ur naval force, on the West India station […], amounted to 29 vessels, carrying 474 guns, to protect a commerce just exceeding two millions per annum. This is not all. A considerable military force is kept up in those islands […]

    Add to which, our civil expenditure, and the charges at the Colonial Office […]; and we find […] that our whole expenditure, in governing and protecting the trade of those islands, exceeds, considerably, the total amount of their imports of our produce and manufactures.

If imperialism was a loss-making activity – why did Britain and other European colonial empires engage in it for so long?

Smith and Cobden explained it in terms of clientele politics (or Public Choice Economics, as we would say today). Somebody obviously benefited, even if the nation as a whole did not. And the beneficiaries were politically better organised than those who footed the bill.

This proto-Public Choice case against imperialism was not limited to political liberals. Otto von Bismarck, the Minister President of Prussia and future Chancellor of the German Empire, hated liberals in the Smith-Cobden tradition, but he rejected colonialism in terms that almost make him sound like one of them:

    The supposed benefits of colonies for the trade and industry of the mother country are, for the most part, illusory. The costs involved in founding, supporting and especially maintaining colonies […] very often exceed the benefits that the mother country derives from them, quite apart from the fact that it is difficult to justify imposing a considerable tax burden on the whole nation for the benefit of individual branches of trade and industry [translation mine].

In his writing about the economics of imperialism, even Michael Parenti, a Marxist-Leninist political scientist (who is, for obvious reasons, popular among Twitter hipsters), sounds almost like a Public Choice economist:

    [E]mpires are not losing propositions for everyone. […] [T]he people who reap the benefits are not the same ones who foot the bill. […]

    The transnationals monopolize the private returns of empire while carrying little, if any, of the public cost. The expenditures needed […] are paid […] by the taxpayers.

    So it was with the British empire in India, the costs of which […] far exceeded what came back into the British treasury. […]

    [T]here is nothing irrational about spending three dollars of public money to protect one dollar of private investment – at least not from the perspective of the investors.”

This leads us to a curious situation. Today’s woke progressives disagree with their comrade Parenti on the economics of empire, but they do agree with Britain’s old imperialists, who argued that the Empire was vital for Britain’s prosperity.

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