Monday, 30 July 2012

In Praise of Losers



In sport either you win or you lose. The Olympic Games reminds us of that with the constant reiteration of the Gold medallist above the also rans of bronze & silver, the rest of the losers tidily out of the way.

Competition encourages & rewards excellence. Citius, altius, fortius takes effort & application. Achievement has a price: for top level athletes a life dedicated to excellence. That is a price worth paying for Usain Bolt, it may be a horrendous waste for many who will never be top tier.

Life is not sport. While there are no simple metrics to allow us see except in extremes, what might amount to gold medal success, there are multiple winners. Competition does not mean elimination but sharpening, a delivery of improved goods & services to all of us.

As the Olympics progresses there will be an orgy of publicity surrounding the winners. Chest thumping patriotic fervour will break out. Countries that have spent vast amount of wealth on elite athletics & sports programmes need to trumpet victory lest the ordinary people whose wealth was stolen might question the theft. Losers will go home to silence, just glad to have competed.

We should be glad they competed too. Also rans won't be shamed with revelations of cheating. They compete to thee best of their ability & get on with their lives. Too many gold medals are tarnished with syringes. The good sports that never stand on that podium, never hear an anthem play for them, won't have to dilute urine samples with whisky or tranquillise a horse brutalised by banned training methods either. 

It may be with that vast army of good sports that real victory lies.


A Rally for the Rotten




Last night several thousand people turned out in support of Sean Quinn & his family in Cavan. In the light of that support, an endorsement of Quinn family's efforts to put a billion euros beyond the reach of Anglo, it is worth remembering Justice Peter Kelly's excoriation those efforts.

Worse than any national and international fraud, sharp practice, chicanery and dishonesty” that he had seen in court, the Quinns “had deliberately created and operated a scheme of mesmeric complexity, reeking of dishonesty and sharp practice, for the two-fold objective of putting assets beyond the bank's reach and to feather this own nests” was how Peter Kelly described their actions. Any supporter of Quinn should be asked whether they think Justice Kelly dishonest or merely insane.

Nothing the Quinns say can excuse them this damming by an honest man.  Anglo/IBRC  is a bogie man but that status was earned by the Anglo Irish Bank that operated under Sean Fitzpatrick: efforts by Quinn & his family to portray themselves as martyrs are the typical bullies ploy of pretending to be the victim. 


Quinn claims to be a job creator : he now wants other job creators to pay back the money he so carelessly borrowed. The cost of allowing the Quinn family to put their property portfolio beyond the reach of Anglo/IBRC s must be borne by ordinary Irish people, their businesses & their jobs. This would be an unacceptable transfer of wealth from all of us to the Quinn family.

Quinn attempted to take over Anglo Irish Bank by the back door. I have asked questions elsewhere about the help, tacit & otherwise that Sean Quinn recieved in this effort (see here). He had picked the wrong bank, the wrong time & the wrong method. He lost a huge amount of money borrowed from Anglo.

Quinn's main money maker was Quinn Insurance which was run not as an insurance company but a cash cow for the Quinn empire. Instead of using premiums to build reserves for future cases, money was drained from the company to finance Quinn's own debt. The Government insisted drivers have insurance, Sean Quinn saw this as merely a reason for drivers to pay him money.

The looting of Quinn Insurance under the noses of a compliant regualtory authority is costing every driver in the form of a levy to make up the shortfall. Quinn & regulatory failure has made us all poorer. The same compliant regulatory authorities allowed and maybe even encouraged Anglo to illegally finance Quinn's purchase of Anglo shares to unwind his CDF bet.

Quinn has developed a nice line in straw men, continously defending himself against charges that no one has made. He is not accused of breaking Anglo or causing the property /credit bubble that broke the country. He is merely asked to return the securities pledged for loans he can never repay.  

Quinn has his supportors including the celebrity priest, the appalling Fr Brian Darcy, a humourless teller of fibs best known for his campaign to ban Monty Python's Life of Brian, and a group of criminal thugs that have intimidated & terrorised management in the seized enterprises. 


It is clear there is a tribalist, welfare, dependency mentality at work in Cavan aided by the thugs of which Quinn claims he has no knowledge. Every rally, every statement from Sean Quinn further reveals the lies he is prepared to tell & the L'Oreal-because-I'm-worth-it sense of entitlement he has developed. Nothing emphasises the Quinn's utter sneering disregard for the Irish people & laws as the the photograph of Sean Quinn with his fugitive nephew at a GAA match over the weekend. 

Irish people owe Quinn nothing.  He and his family owe us to stop costing us any more money than he already has. 

Sunday, 29 July 2012

Maths for Rats & Dog Swaps: Why Only Free Markets Work

Rats cannot count. Intelligent as they are (repulsive but maybe that is because they are just that little bit too like us?) this means not alone can they not do maths, they don't know that maths exists. We may have other such unknown unknowables but we can count & as a result, calculate.


Dogs don't swap. Adam Smith pointed out "Man is an animal that makes bargains: no other animal does this - no dog exchanges bones with another". Social relations between dogs are based on power hierarchies & immediate kinship. Our subjective value judgements allow both parties in a trade to walk away better off. We swap & our social relations are governed, not by power but by trade. 


We evolved as modern man not when we choose to create art, that is merely the signifier of our modernity: it was the construction of social groups that allowed time for art to emerge that made us made us truly human. Those social groupings happened because we can calculate & trade. Art was valued so art could be made.


Long chains of trade, each link made up of single win-win subjective value swaps  put beads from the Bay of Biscay in ice age villages in Siberia show that we evolved & survived through trade. Trade cooperation between humans & human groups. was fundamental to the emergence of society. The emergence of commodity money allowed full scope for our calculation ability, prices were & are central to working out future advantage of current actions.


Price is a continual exploration of value: the market never rests, there is no equilibrium outside of economists fantasy examples. Entrepreneurs continually calculate, on the basis of an ever changing price structure, where reward can be extracted. That means goods are produced & traded to supply our needs by all the vast shimmering army of humanity.


Marx & his adherents saw us as stuck between the rat & the dog & their fundamental inability to realise that value is subjective & prices are a common calculation meant that they utterly missed the both the role of the entrepreneur & the role of profit. Profit is the reward of efficient service, not theft. Under capitalism money is earned for giving value, self appointed "fairness" operatives from politicians, motivated by votes to sound compassionate, to left-wing ideologues believe it is their job to steal that money & equalise the rewards between those who give value & those that do not.


Our abilities mean we do not live in a zero sum paradigm: humans, because of our abilities, increase our resources with population. Only in a free market can we use our human capabilities properly, every effort to move from the free market just turns us in to dogs & rats & leads to poverty.

Friday, 27 July 2012

Shovels, Spoons & Internet Banking


Larry Broderick of the Irish Bank Officials Union was on the Radio speaking on economics with the practised fluency of an atheist talking about transubstantiation.  Mr Broderick declared that there was a need to “maximise” the amount of people employed in AIB & because he was being interviewed by State owned radio this outrageous nonsense was not challenged.

The opposite is the case, not just for AIB but for every single business that exists. Employment must be minimised as far as possible, not just for the sake of the business but for the economy too.
There is a story, repeated to the point of cliché, about Milton Friedman (The story is most likely apocryphal & the original words belong to William Aberhart of Alberta). Friedman (the story goes) was in China in the 1960s & saw a large group of men digging a canal. When he asked why no earth moving machinery was being used, his hosts told him that this was a Job Creation Project. Friedman told them if they were really serious about Job Creation they would take the shovels & give the men spoons…..

No business can successfully work on spoons instead of JCBs. Every worker employed in a business is a cost, a bigger cost because we tax employment but a cost nonetheless. Every cost has to be charged to the consumers of the business’s products or services. Customers may pay but they may just also go elsewhere.

Competition enforces frugality & that frugality is good for all of us. Every resource is scarce, every input, every good, is not only scarce but has alternative uses. You want more turkeys? Then we have less chickens & hens or more grain consumed & poultry houses built. 

Labour, for all the best efforts of Trades Unions & Governments to obscure the truth, is no different. More people employed in banks mean less to work in other areas. Doing more business online does not just reduce AIB’s costs, it reduces costs & frees up resources for the rest of the economy. Internet banking, by reducing bank costs, benefits the entire economy.

Flint knappers went out of business but were employed by the tin smelters, once the only way to dig a canal was with picks & shovels & a lot of men. Each improvement, each displacement makes people available to satisfy our needs in other ways & our needs are insatiable.

Competition making us all better off can only happen in a free market. Broderick & his septic economics have no power but Broderick & a few politicians might have a disastrous effect on our economy: history is littered with examples of efforts to protect employment in some industry at the cost to the general good. Reagan famously cost America billions by protecting the six thousand jobs in the steel industry with tariffs, losing an estimated twenty six thousand jobs in industries forced to buy more expensive steel  (Thomas Sowell).

We need AIB back to profitability & off the governments hands quickly. Banks are not social services, they are companies in a capitalist economy. The less efficient the economy works, the poorer we all are. Poorer is fine for those that start out with plenty, deeper poverty for the already badly off is disastrous. 

Free trade & small Government make us all better off, it is important never to let go that in favour of old fashioned economic error dressed up as compassion & masquerading as a social concern.

Thursday, 26 July 2012

The Nun & The Letter from Nigeria


My Aunt Cathleen was too kind for her own good. She was a tiny woman, thin, a TB survivor & badly dressed because she gave away money instead of buying clothes. Oxfam was her boutique of choice, she liked the prices. We knew her both by her religious name of Sr (Mary) Aloysius and as Aunt Cate. 

That was a different Ireland, you had Aunts in convents & brothers and sisters in classes with your cousin's brothers & sisters: an Ireland not yet used to low child mortality or the cool of modernity. Despite having five aunts nuns, two bachelor uncles and one childless married aunt we had seventy one first cousins. All now dead but one, the nun-aunts, swept away, Salve Regina sung in old womens' fading, cracking voices by their Sisters, my father & his brothers crying. The Batchelor uncles too, gone. The price of a wonderful childhood is an adulthood burying those you loved.

Cate was a Mercy Sister and lived was the poverty-vowed life of a nun in a small Yorkshire convent. She elected by her sisters as Mother of the small community in brass-band Barnsley. Her clothes were so bad they were a shame to my parents. My mother tells the story that she & Dad decided to buy her a coat one year she arrived home without one, my mother suspecting she had given it away. Aloysius demurred, she could buy a coat much cheaper in England if she had a little money. Next year she return in what my mother described as " a black rag so old it had faded green that you wouldn't put under the dog". Clothes were not her priority.

With few or no novices coming from the developed world the Sisters of Mercy were not alone in advertising for them in the developing world. Did Sr Aloysius place the advertisements or was it the organised by the order? An ad that ended with "If you would like to be a Sister of Mercy, write to the Convent of Mercy, Barnsley" was published in a Missionary Magazine distributed in Nigeria.

That was before email, before email scams. A letter arrived, from a boy, desperate for an education but too poor to continue at school. My Aunt sent ten shillings. The correspondence continued between the boy and the tiny nun, encouragement to continue despite the hardships, and, when she could small sums of money. 

Aunt Cate kept her own council on the correspondence. In the last years of her life I think she suffered from the dementia that has haunted my father and his siblings but I do not think she would have spoken about her charity."When you give to the needy, do not let your left hand know what your right hand is doing."

The good is oft interred with their bones….

The boy, yes there was a boy, Boniface Ezaegu, is now the Barrister General of the Ebonyi State in Nigeria. In memory of the woman who helped him he is helping others: he financed and built the Sr Mary Aloysius High School in his home district.  There are Four hundred & fifty students and a staff of twenty. A red bus is proudly marked in my Aunt’s name. Her religious sisters are justifiably proud. So am I.

There may be morals to be drawn here but I don’t want them. Aunt Cate was kind; the memory of that kindness lives on far from home, in a country she never visited.  Somehow I get pepper behind my eyes when I read that the anniversary of the death this tiny quiet woman, January 19, is a school holiday and the students have mass in her memory. I picture them, bored, distracted as children often are, thinking of other things, at mass, in a small town in Nigeria, very far away.

In The Name of The People, The Hive Mind Delusion


There is a delusion, common amongst left-wing politicians & those who believe them, that we share a hive mind. They speak of a need for “us” to control some aspect of commercial life: “we must decide” is spoken as if this mythical hive mind had a moral compulsion.

Mr Boyd-Barrett of the wonderfully named “People before Profit” regularly speaks of the need for this “we” to control banking decisions & loan capital allocations but he is just the exhibitionist in this particular brothel, all politicians hint & nod at the idea of this hive mind, this fictional “We” who could do things better than crude anarchic markets. They want us to believe that there is a common consciousness, replete with our total collective wisdom which could allocate resources better, make better commercial decisions,  create a better world.

In their world we are ants, worker ants striving for some goal, not of our choosing but of theirs. We, as ants, are too stupid, too short-sighted to know what is good for us. Our individual decisions are the mere whims of children. The adults in the form of Government will make the decisions for us. Our labour, the resources we generate will be taken & used for "us". 

There is no hive mind, no shared consciousness, no “We” taking decisions. There are only politicians making grand plans & at the level of foot soldiers, bureaucrats in offices making decisions for on the basis of rules laid down rather than customer desires, bureaucrats obeying their own rules & ideas but with no stake in the outcomes.

"We" does not exist.

Decisions made by non-stakeholders are invariably bad decisions. 
Government decisions are always made by people who will suffer no loss or financial pain for that decision. By contrast decisions made by privately owned companies always have direct consequences for the people involved. With no tax payer to pillage & competitors willing to serve customers, fear is a constant accompaniment & goad. Serve the public or die!

What we as individuals want matters to the economy. We each take decisions every day about our spending, guiding businesses to our needs by our purchases & investments. The We-speakers would absolve business from that guidance substituting their goals for our individual goals, their priorities for ours. That is not we, that is them.

Every cent we spend guides resources into fulfilling our needs for cheaper, better different products & services. Enterprises that fail that guidance, that do not serve us, die & in a biological analogy, resources of labour, capital, land they held are salvaged for use in enterprises attempting to satisfy us. In a free market resources are allocated not where a few hundred politicians & a few thousand bureaucrats want but to satisfy the wants of all of us. That efficient resource allocation makes us all richer.

Private property is not some middle class illusion but a fundamental essential to that process. Mr Boyd Barret & ultimately every politician that speaks of “us” controlling some aspect of commercial life, must abandon private property rights & its role in economic calculations.

Limiting the government’s role in the economic life of the nation is the easiest best road to prosperity. Private property is the basis of that limitation. 

Ants don't own anything.

Wednesday, 25 July 2012

CIE, Making Us All Poorer, With Government Help


Yesterday the Government announced they were "giving" CIE* another €36 million.

Nothing says so much about our thoughtless, intellectually torpid time as the silence with which the theft of €36 million extra from the country was greeted. No outrage was voiced, no economist excoriated the government and no taxpayers rioted at the waste. Have we become inured to waste because of the colossal figures Government has burnt on the banks?

Let me translate the news story from offialese into some semblance of truth:
“Yesterday the Grand Panjandrum of Transport, Leo Varadkar, announced that in addition to the €242 million that the loss making Government “transport company” was to receive this year, another €36 million would be robbed as a gift to this waste-wealth.”

That €278 million must be robbed from wealth producing parts of the economy to subsidise commercial operations that customers do not want, that have no reason to exist & are merely waste of wealth to satisfy the political urges of the powerful.

How do we know this? Not just because passenger numbers are falling, and they are plummeting, but because of the losses. Economies are run on money prices. In a normal commercial operation, say a real transport company, declines in sales are the signal that something is seriously wrong. Losses are a signal disaster. The product is not attracting enough buyers to be viable.

Prices are pain, guiding resources into the best use. The market, not the Government, is the ultimate democracy as people guide the market with their power as consumers. Taking decisions over & over again consumers preferences guide resource to their most efficient use, making all of us richer. Government uses its coercive powers to buck that democracy, to force us to spend our money on something we clearly do not want. Instead of the decisions taken over and over again of ordinary people, CIE obeys the decisions of Trades Unions & bureaucrats in an unholy marriage of destruction.

The Social Engineers & know-betters insist they do know better how to organise the economy. They will say that there are “non-economic” values to be taken into account. What the mean by this is that THEIR issues are much higher in priority than everyone else’s, they are entitled to distort the economy, steal wealth and ultimately make us all poorer EVERY year in pursuit of their goals. 


 Economics is just the ONLY way of measuring the cost of various values. As the great Thomas Sowell said “There are, of course, noneconomic values. Indeed, there are only noneconomic values. Economics is not a value itself but merely a method of trading off one value against another. If statements about "noneconomic values" (or, more specifically, "social values" or "human values") are meant to deny the inherent reality of trade-offs, or to exempt some particular value from the trade-off process, then such propositions need to be made explicit and confronted.”

The KnowBetters have no intention of making anything explicit. By shovelling vast amounts of stolen wealth into CIE, some of it stolen from companies that compete with CIE, the Government distorts the economy, refusing to let the decisions of ordinary people have effect. What we are watching is the expensive fetishisation of some types of transport & their public ownership. Public transportation does not need to be publically owned or controlled: markets will provide a better & more flexible system than any the bureaucrats could design & do it without robbing the public.

Population densities in most urban centres are far too low for mass transit systems & this is especially the case in Ireland. Instead of thinking up schemes which require enormous transfers of wealth we would do much better to allow markets to solve those parts of the transport system that are seen as having problems. Every single task that CIE does could be done better, cheaper & with no theft from us all by private operators. CIE is a wealth waste that Ireland, particularly Ireland’s poorest people, cannot afford. Instead of stealing money on its behalf Mr Varadkar should be announcing its demise, break up & sale. Sadly a man who was elected for being an economic realist has signed off on nightmarish waste of wealth.

*CIE is Ireland's Publically owned Transport Company, operating the monopoly rail network & Dublin Bus among other transport interests.

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