Monday, September 30, 2013

Oh Noz! OMG!

Apparently the USDA website is shut down due to the government funding crisis.

This prompts two responses from me:

1. Oh no! How will we ever possibly survive without whatever the hell it is the USDA website is meant to do. It will seriously impact the ability of the USDA to deliver key services in...er...um...

2. These people apparently have such a low opinion of your intelligence that they think you aren't aware that it doesn't actually cost any money to leave a web page in the same state it was in. Quite the contrary - it costs money to change the web page. If the web server were shut down due to lack of money, you wouldn't get any page at all.

I can scarcely think of a better advertisement for firing everybody who signed off on this absurd stunt. Or, you know, just fire the whole USDA. Be honest, do you even know what these clowns do? Have you noticed the lack of services from them in your life recently? If US farmers stopped making milk, I wager you'd notice that pretty quickly. If the USDA stopped interfering in this process, it's far less obvious that you'd miss it.

Thanks to Hector Lopez for the pointer.

Friday, September 27, 2013

Time-Inconsistent Male Hairstyle Preferences

In the world of male hairstyles, hair length functions something like a cross between mercury poisoning and a syphilis infection. Initially you have a small amount of hair, and you periodically treat the problem with scissors, as applied by a trained expert. You look around at the madmen in their ponytails, appearing like an obscene cross between the crying game and a manga appreciation society. "Ha!", you think. "I'll never look like those fools". And you don't. The hair keeps getting cut, the antibiotics get ingested, the madness is kept at bay, and everything goes on as normal.

But then some time in college, you get lazy and don't take your medicine. You start looking at your shaggy mop in the mirror, and the madness slowly takes hold. "Hey", you now reflect, "this actually looks pretty good! Luxuriant, even. Maybe I'll just let it grow for a while". What you don't count on is the fact that the hair itself is poisoning your ability to recognise what a clown you look like.

This is evidenced by the fact that more and more alarming warnings get completely ignored. Suddenly you need to wear a visor all the time to keep it out of your face. Next you're thinking of buying a headband. Finally, when none of that works, you convince yourself  that it would actually look good to have a full on pony tail. Chicks dig it, yo!

At this point, you have become the madman who doesn't realise he's gone mad. Friends and family gingerly try to intervene, but know it's a lost cause. They just have to wait until one day, you get sick of it and finally get a haircut.

And then, the mysterious cycle completes, in that within a few days you get used to it being short again. And after about a month or so, you look back on the long haired photos and reflect, "Wow, that really did look awful. I wonder why I let it grow for so long? I won't do that again".

But you might, reader. Like all time inconsistent preferences, when not poisoned by mercury you will struggle to forecast how you'll feel when in the throes of madness.

Monday, September 23, 2013

Shining, flickering into that good night

From 30,000 feet in the air, the early evening displays a curious inversion of light. The ground beneath me is a dark purplish grey. I sometimes strain my eyes to try to make out any possible distinct shapes, but the earth does not divulge its secrets. If not for my trust in where the plane is taking me, it would be difficult to tell if I were even above ground or water. But the sky is still clinging to light, as the plane chases the dying embers of the sunset all the way towards the Pacific. The cloud bank that hugs the horizon is rimmed in a thin atmosphere of orange, which slowly leaks to pale blue, then dark blue, then black. Jupiter beckons above.

And then, every so often, the inky  void below is disturbed. A tiny defiant outpost of light appears, absurdly huddled against the black satin all around. Like some strange lichen pattern, a few lines can be made out against the indistinct mass of faint illumination. The edges are fuzzy, and a few single points of light have ventured out further, like scouts into the unknown.

Not yet, the lights call out. The universe may not care whether we are snuffed out or not. But for today, here lives Man. Today, generations rise and fall, struggling to subdue this rock of ours. But our children’s children may one day conquer the stars.

"It may be that the gulfs will wash us down:
It may be we shall touch the Happy Isles,
And see the great Achilles, whom we knew.
Tho' much is taken, much abides; and tho'
We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield."


Saturday, September 21, 2013

The History You Don't Know

I was having a discussion with Athenios the other day about the Byzantine Empire. Apparently this is a big part of the curriculum at Greek schools. And for someone who tends to think of themselves as fairly well-versed in history (The Cheap Seats: Really? You think that about yourself? We never noticed!) it became hilariously apparent that I know next to nothing about the Byzantine Empire. It was the continuation of the Eastern Roman Empire after the split, and eventually conquered by the Turks. Anything else? Anything at all?

I suspect I'm not alone in this. In fact, it got me thinking of what a parody version of history would look like if constructed only from the knowledge of a decently educated citizen of a British Commonwealth country. I suspect it would look a little like this:

a) Before 500BC - Nothing.

b) ~500BC - Ancient Greece, Democracy in Athens, maybe the Peloponnesian  War

c) Some time after 500 B.C. (Origins mysterious) -> 400 A.D.ish  -  Roman Empire

d) 400 A.D. ish - Fall of Rome to the Goths

e) 400.A.D. -> 1066  - ????  Mysterious Dark Ages @#$%, nothing much going on

f) 1066 - Battle of Hastings, Norman Invasion of Britain

g) 1066 - 1500ish - ????  More mysterious Dark Ages nonsense

h) 1500ish - Renaissance in Italy

i) 1600ish - Britain appears out of nowhere

j) 16-something (30ish? Who the hell knows) English Civil War, Charles I gets executed, Oliver Cromwell turns out to be a tyrant, King is brought back

k) 1670 -> 1776 - ???? Who the hell knows

l) 1770-> 1790something  - Lots of stuff, American Revolution, Captain Cook discovers Australia, French Revolution

m) Early 1800s - Napoleon takes over Europe, gets beaten first by the Ruskis in 1812, then eventually for good at Waterloo

n) Early 1800s -> 1914  - ???? Probably something going on, but not sure what. The American Civil War was in there somewhere, right?

o) 1914->1918 - World War 1

p) 1929 -> 1933 - Depression, Rise of Hitler

q) 1939 -> 1945 - World War 2.

r) 1950ish -> 1969 - Cold War with the Soviets

s) 1969 - Moon Landing, Vietnam War around this period

t) 1969 -> 1989 - More Cold War

u) 1989 - Fall of Berlin Wall, End of Cold War

v) 2001 - 9/11 Attacks, start of War on Terror.


Now, what's hilarious about this is the huge gaping swathes of ignorance in the middle. From World War 1 onwards they have a pretty good understanding, but before that it gets quite patchy. And as soon as you start interrogating our hypothetical British subject about some of the question marks, hilarity ensues as it becomes obvious how clueless they are. For instance:

The entire Byzantine Empire gets just wrapped up as part of the 'Dark Ages'. Who they are or what they did, nobody knows. The Crusades happened somewhere in there too, right? Oh, you mean there were lots of them? And they were fought by some group called 'The Franks'? Who the hell were they, and what happened to them?

I also hear the phrase 'Holy Roman Empire' thrown about from time to time - what was all that about? Is that the same as the Byzantines? They were all Christian, I think, surely they must be basically the same people. Also, what exactly was going on in Europe from about 1700 onwards, other than Napoleon? The Austro-Hungarian Empire must have been in there somewhere (same with the Ottoman Empire), since I heard about them as part of World War 1, but what else they did is anybody's guess.

And this isn't even getting to the question of what was happening the rest of the world, such as Asia or South America. Maybe it's understandable that people stick to their own region. But the Brits don't even seem to know much about Europe!

These questions all have interesting answers - I do know more than our hypothetical educated Brit above, and half the the remarks above are facetious. But it's still embarrassing how little I know about most of this stuff. It's like the timeline of European history is one of those old-world maps that end in obscurity with the phrase 'Here be Dragons'.

It makes you wonder what alternative perspectives you might have on the world if you knew about all these other events in human history.

Wednesday, September 18, 2013

Thought of the Day

"Better to live under one tyrant a thousand miles away, than a thousand tyrants one mile away."

-Daniel Bliss

Tuesday, September 17, 2013

Amazon: Supporting Ben Franklin's legacy by making one of two certainties more certain

To paraphrase England's greatest prime minister, commercial partners, like nations, have no permanent allies, only permanent interests.

It used to be the case that Amazon was a fairly reliable partner in helping consumers find the lowest cost purveyors of particular products. Of course, it was only limited to those in their network of people selling through them, but this tended to be pretty liquid. For most products I searched for, there would be a sufficient range of sellers that you'd get decent price competition. This is made easier by the fact that once you're comparing literally the same product, it's basically a commodity market - there's some sorting on reliability of shipping and returns policy, but that's about it.

Amazon always privileged themselves slightly by defaulting to selling the item themselves if they stocked it. But it was simple to click on the tab for 'new' and find a range of sellers sorted by the total cost of the item plus shipping, which was what you paid. Problem solved - buy from the cheapest guy, the end.

In other words, as long as you clicked on the tab, Amazon would make it easy to tell if they were the cheapest provider of the goods or not, and the sorting process made it clear how you could purchase the lowest cost item, even if wasn't from them. Amazon were willing to take the hit to some direct sales (though they got some back in fees from the marketplace seller) for the repeat business that came from running a good price comparison service. 

But starting about a year ago, the interests of consumers and Amazon started to diverge. The reason is that for residents of various states (now up to 12) Amazon has to collect sales tax on their purchases. The citizen was always obliged to pay the tax, at least nominally, but in the past Amazon wasn't involved in collecting it. Collection was meant to occur because citizens would voluntarily report the sale tax on their internet purchases to the state (Ha ha! Stop it, you're killing me!). In practice, this made the Greek Tax office look like a model of perfect enforcement.

The loophole, which doesn't get greatly discussed, is that while Amazon is now forced to collect sales tax for its own providers, and for providers in the same state as the purchaser, it isn't compelled to (and in practice, doesn't) collect sales tax for third party sellers outside the state of the purchaser.

So what would a permanent ally do? 

Simple - he'd now sort purchases on total purchase price of Price + Shipping + Tax. That's the end cost to the consumer, let them find the lowest cost item.

But this was apparently a bridge too far for Amazon. This would put their own offerings at a structural disadvantage, and a decent one at that. In California, for instance, the minimum sales tax at the moment is 7.5%. This article claims that Amazon's after-tax profit margin, for comparison, is 1%. Can you see why playing at a 7.5% disadvantage is a game they're incredibly reluctant to play? 

And so we witnessed the internet commerce equivalent of the Suez Canal Crisis between erstwhile allies. Amazon felt that listing the total price would hurt them so much that they were willing to significantly degrade the usefulness of the price comparison function of their website. So they continue to only list cost in terms of Price + Shipping.

It gives me the absolute $#!7s that I can't sort on total cost any more. The only way to find out is to click through various sellers, add them to the cart, see if tax is added on, remove the item if it is, go back, find another seller, and then compare the tax with the difference in price. 

For small items, I won't always bother. But I will always resent the fact that Amazon is deliberately making my life harder for their own purposes. 

To give them credit, Amazon fought damn hard for a long time to prevent the states from forcing them to pay, but in the end, they saw the writing on the wall. Tax was going to get collected eventually, because the bankrupt states saw them as a cash cow waiting to be milked. Maybe I should cut them some slack.

Or maybe not. There are, after all, no permanent allies in commercial transactions. They happily screwed us when it suited them, so I have no compunction in reducing my business to them in response.

I don't know if it's possible, but if someone figures out how to scrape amazon prices for the lowest total cost, I'll direct all my purchases through them.

The only thing that would be even better would be to be able to scale the weight placed on taxes by a fixed amount. I'd probably set it at about 1.1 for small purchases. In other words, I'd rather pay slightly more money just for the pleasure of depriving the State of California of additional revenue.

That's not going to happen, of course, because Amazon makes it hard to just scrape all their data. So in reality, we consumers just have to bend over and take it.

Marketers love to tell you that the customer is always right, but it's not true.

It sucks to spend so long thinking that your purchasing dollars made you Dwight Eisenhower, only to find out that you were actually Anthony Eden all along and didn't know it.

Monday, September 16, 2013

Briefly

1. Just $10? Why not $50? Now THAT'S a living wage! It's free, after all.

2. Physicists discover that nominal interest rates are indeed positive.

3. It's not quite as good as Garfield Minus Garfield, but Calvin and Hobbes mashed up with Dune is still quite excellent.

Saturday, September 14, 2013

Drowning in Words

From a reddit post recently:



Just remember, ignorance of the EU's 26,911 word missive on the sale of cabbage is no excuse!

David Foster Wallace memorably wrote an essay entitled 'Some Remarks on Kafka's Funniness from Which Probably Not Enough Has Been Removed', a title which captured the essence of Kafka perhaps better than anything else that could be said about him.

In both his love of brevity and his appreciation of absurdity, I'm sure the great Mr Kafka would find much of interest in the modern regulatory state.

Postscript: Scholars are still debating the authenticity of the the part in the Dead Sea Scrolls that talks about Christ's '10 Commitments'.

Awesome

Steve Sailer links to this fantastic New Yorker comic:


Ouch! Please report to the burn unit of the hopsital!

This hits so many outrageous buttons at once: 'incisively observing an unusual but true correlation', 'needless withering putdown of other people's dubious choices' and 'old school snobbishness' all in one.

I went through the list of people I knew with tattoos for P(Divorce|Tattoo), and it went 'Yep...Yep... Nope...Yep...'. Okay, what about the other direction, of the non-tattoo folks for P(Divorce | No Tattoo)? 'Nope... Nope... Nope... Yep...Nope... Nope.. .'

Day-amn.

If you, like me, are not particularly enamored of the spreading of this social trend, there are far more eloquently reasoned and interesting critiques of tattooing (for instance, this great Theodore Dalrymple essay), but as Mr Mencken put it, one good horse laugh is worth ten thousand syllogisms

As to why the underlying correlation exists, I think it works on two levels.

One is the treatment effect of traumatic parental events in a child's upbringing. Part of the appeal of tattoos (as far as I can tell) is the notion of their permanence - being able to inscribe something on yourself that will stay fixed, committing an idea or picture to permanent association with yourself. I can imagine that this desire is subconsciously more sought out by people for whom a significant event in their childhood was the disruption and dissolution of the home life they'd thought of as permanent.

The other is the likely heritability of time preference, and compulsive decision-making more generally. I can imagine that the kind of parent who enters into a rash marriage, or decides to have an affair with the secretary or mailman, will (through probably both genes and culture) result in a child who will think less about how the tattoo is going to look when they're 50 with wrinkled skin, or 26 and applying to the law firm.

Still, whatever the reason, I'm mentally filing this one away in the list of life's correlations to bear in mind when one needs to get all Last Psychiatrist in one's analysis of a person.

Tuesday, September 10, 2013

What Henry Blodget Could Have Written

(Some background - the article that started it all)

"There has been a recent furor over the fact that our CTO, Pax Dickinson, made some remarks on twitter that various people found offensive. I'm not going to summarise them - his twitter feed is publicly available, as far as I know he hasn't deleted or retracted any tweets, so if you're curious about the controversy, I invite to go read his words yourself (in their full context) and make up your own mind.

Rather than talk about the specifics of what Pax wrote, I want to talk about a broader question - whether companies should be in the business of effectively policing the private opinions of their employees.

We at Business Insider are in the market of providing news, opinion and discourse about events in the world today, and we do so in a way which disrupts the broken business model of most old media organisations. This line of work attracts people who are interested in the world around them, and their views will cover the whole spectrum of politics and politeness. Some of them will necessarily be iconoclasts, oddballs, misfits, and brilliant free-thinkers of all sorts of stripes. Interesting, competent people are always welcome at Business Insider.

Within this business, some people are employed as writers - that is, their words and public pronouncements are in fact their work flow, and the basis on which their performance is judged. Other people are employed in other capacities, making sure that the rest of the business operates smoothly.

Pax Dickinson is not employed as a writer at Business Insider, and as such is not employed for either his writing or his private opinions. Pax Dickinson is employed to make sure that the website at Business Insider operates at world-beating standards. Which, in case you're curious, it does. He's done at outstanding job at this, and BI wouldn't be what it is today without his efforts. We didn't hire him for his sexual preference, for his choice of reading material, for his political views, or for his ability to peacefully go along and get along. We hired him for a job, and he did it. He still does it.

From our perspective, that's the end of the story. We are simply not interested in policing the private twitter feeds of our employees to make sure they don't say anything controversial. That's it. To the extent we have an opinion on Pax's twitter feed, it is this: the private affairs of our staff are entirely their own business.

I could tell you that I don't agree with what he wrote. It's certainly tempting - I definitely wouldn't have written it myself. But to do that would be to give credence to the more basic assumption here - that we should take a position on agreeing or not with the political opinions of our staff.

Now, I'm also the CEO of Business Insider, and I have to make sure we have a viable business here. Lots of people are upset with Pax. Many are threatening to boycott our site. Perhaps, for business expediency, I should simply jettison Pax to please the people complaining the loudest.

You all are our customers, and you're entitled to visit or not visit our website according to whatever reasons you wish. That's up to you. We hope you stick around to keep viewing our great reporting. But if you decide you simply can't bear to read a site that employs someone like Pax, we'll sadly accept your verdict. If it turns out that enough people feel that way, then I as a CEO will have a sad choice in front of me, but not a hard one - if it's a choice between 'keep Pax and lose the whole business' or 'fire Pax and keep the business', every CEO in existence will choose the latter.

But before you insist on that course of action, I want to invite you to consider the larger angle here.

We live in a world where the bounds of acceptable discourse shrink ever further by the day. We live in a world where the only people willing to write on the internet under their own name are those who hold the most mild, innocuous milquetoast opinions.

When you choose to boycott a business based on the private views and words of its employees, you are sending a message - we demand ideological conformity from your staff. We demand that you, on our behalf, insist that none of your employees makes controversial statements or jokes that we don't agree with or that we find offensive. We demand that you do this not only for statements made inside your organisation and representing your organisation, but also statements that people make in their own individual capacity in their own free time. We insist that your employment contracts have an effective clause that one should not commit to permanent record any words likely to cause offense to people.

Collectively, you can easily get someone fired for their twitter feed. But there's a catch. You can't just do it for the opinions you disagree with. Because the other side is quickly going to learn the game, and the result will be a narrowing of the discourse all around.

I would ask you, is that really the world you want to live in? If it is, fine - that's what boycotting BI will produce. If enough of you vote with your dollars, that's what you'll get - a world where every single purchasing decision becomes a political decision. Where one cannot buy an icecream or mattress without asking what the political affiliation of its owners are, and what positions they enforce upon their employees.

If you, like me, find that world stifling and invasive, unfit for citizens of a country long praised for its robust discussion of ideas, then you have to check your initial impulse to boycott everything you don't like. You need to accept that there will be people in organisations whose products you buy who hold opinions you don't agree with, and that's okay.

This is not a question of 'free speech', specifically, since there's no government interference going on. You're all free to do what you want. But there's a choice we have to make about how much we as a society want to sanction people for their words alone. We at BI favor a policy that, if in doubt, we're in favor of more expression, not less.

Most corporations simply fold under the pressure of a boycott threat like the one we've received. But we at BI are taking an unusual step today - we're gambling that there's enough people out there who are willing to support Business Insider precisely because it does not police the private views of its employees.

We pledge that when you take a job with us, short of you breaking the law, you can write what you want, under your own name, without fear of being fired.

Imagine that.

Imagine how liberating that sounds.

Imagine if you could do that in your own job, right now.

If that's the world you'd like to see, we hope to continue to see you at Business Insider."

The sad, predictable reality is here.

Sunday, September 8, 2013

Trauermusik

In January 1936, King George V was in seriously declining health. He had suffered from pleurisy and pulmonary disease for a number of years, and it had become apparent to his doctors that the end was near. (So much so that his doctor, Lord Dawson of Penn, on January 20th took the step of announcing that "the King's life is moving peacefully towards its close."). The King died on the night of January 20th, apparently hastened by a lethal injection of cocaine and morphine from his doctor.

At the time, German composer Paul Hindemith was in London, and meant to be performing the next night the English premiere of a viola concerto he had written, 'Der Schwanendreher'. With the death of the King, the concert was cancelled. The BBC, however, decided that they wanted Hindemith to be involved with the musical choice for the occasion of the King's death.

After debating that morning about what to perform, eventually it was decided that Hindemith should write something new for the occasion. And so, between 11am and 5pm on January 21st, he did, and it was performed live that evening in a radio broadcast. The result is the beautiful 'Trauermusik' ('mourning music', or 'funeral music'). The strange combination of tonality (giving a clear melody) but non-diatonic structure (giving the non-standard chord progressions) give a sense of sadness and complexity that seems appropriate for the death of a monarch of over 25 years reign.



This beautiful piece was written in six hours. 

Trauermusik for the King.

Trauermusik for the Empire.

Trauermusik for the age when a dignified and solemn British public mourned their departed monarch by listening to classical music on the radio.

Friday, September 6, 2013

I only read it for the articles

Specifically, the obituaries.

The 'it' here is The Economist. Their obituary section, on the last page of the magazine, is far and away the most interesting part of the whole publication, and the part I always turn to first. It's not uncommon that this will be the only bit I actually read.

The reason it's so remarkable is that it pulls off an incredibly difficult feat - surveying a person's life in a way that manages to be respectful but even-handed. This is a fine line to walk - one does not wish to speak ill of the dead, but an obsequious hagiography will simply make for dreary and implausible reading. Consider their obituary for Osama Bin Laden if you want to see them take on an extraordinarily challenging subject for which to pull off this feat.

Most interestingly, they choose their subjects in a way that gives you insight into some or other aspect of society, while still being focused on the person in question.

For an example of a thoroughly unorthodox but excellent piece, look at their recent obituary for Elmore Leonard. Can you think of any other magazine that would publish something like that?

It left me glad I renewed my subscription recently after a long absence.

Then, of course, I flip to the front of the magazine and find masterpieces of grimly comic absurdity, such as endorsing Kevin Rudd in the Australian election. The role of Rudd's earlier 'liberal' policies towards asylum seekers feature several times in their reasoning. Personally, I would have thought that a magazine calling itself 'The Economist' might be able to give some nominal recognition to the fact that thousands of extra boat people have drowned as a result of responding to the incentives of this 'liberal' regime in an entirely predicable and obvious fashion. The dig at Abbott about homosexuality is particularly comical, given that Kevin Rudd's support of gay marriage dates all the way back to ... May this year. Now that's conviction! That, and praising Labor for passing a carbon tax with a price of carbon set at 3 times the world market price. Adam Smith would be proud.

And I get reminded of why I gave up my subscription in the first place.

Wednesday, September 4, 2013

The one phrase you probably haven't heard being thrown about much in the debate on whether to intervene in Syria.

"Libya".

So, we want to topple a nasty secular dictator we know, who is locked in a struggle with Al Qaeda-linked terrorist 'rebels', confident that we'll manage to turn the place into Switzerland.

How'd that work out last time? Not so hot, as I wrote about at the time.

How's it going now? You've stopped hearing about it, but that's just because the west has a short attention span.

From a randomly-chosen item in the first couple of hits when I type 'news Libya' into google:
"We all thought Libya had moved on – it has, but into lawlessness and ruin"
Libya has plunged unnoticed into its worst political and economic crisis since the defeat of Gaddafi
A little under two years ago, Philip Hammond, the Defence Secretary, urged British businessmen to begin “packing their suitcases” and to fly to Libya to share in the reconstruction of the country and exploit an anticipated boom in natural resources.
Yet now Libya has almost entirely stopped producing oil as the government loses control of much of the country to militia fighters.
Well that's just grand.

No, really, things will work out much better this time. Trust us! From the producers who brought you 'The Arab Spring'.

Fortunately, common sense seems to be slowly breaking out this time around.

It started in Britain:
British Prime Minister David Cameron loses parliamentary vote on Syrian military strike
 But now it's catching on everywhere:
TONY Abbott: We’ve got a civil war going on in that benighted country between two pretty unsavoury sides. It’s not goodies versus baddies, it’s baddies versus baddies. And that is why it is very important that we don’t make a very difficult situation worse.
Look, the phrase 'baddies versus baddies' is definitely infelicitous, but the sentiment is certainly correct. (You could probably paste the same quote into most internal conflicts in the Middle East, if not most conflicts in the Middle East more generally). I personally prefer the Kissinger restatement of the same view about the Iran/Iraq war - 'It's a shame they can't both lose'.

Still, better crudely phrased realism than naive dross about dreams of freedom that winds up with thousands more in body bags.

When I said it's catching on everywhere, you can always rely on some people to refute the 'everywhere' part:
Sweden on Tuesday became the first European Union country to announce it will give asylum to all Syrian refugees who apply.
“All Syrian asylum seekers who apply for asylum in Sweden will get it,” Annie Hoernblad, the spokesperson for Sweden’s migration agency, told AFP.
Ha ha ha! "All"?

I don't think you've thought this through.

Monday, September 2, 2013

Rent-Seeking vs. Rent-Collecting

When historians of the future are writing the epitaph for the west, I imagine that one of the characteristics that will strike them about the present age is the increasing prevalence of rent-seeking.

As the government inexorably expands in size and scope, it becomes more of a suckers game to simply outcompete the opposition, and more lucrative to lobby the government to have them shut down.

This might take any number of forms - ludicrous licensing requirements that lower supply, absurd restrictions on competitor firms, tax breaks for your particular boondoggle industry - whatever works.

If you want a list of some of the more outlandish ones, browse through the cases the Institute For Justice has fought over the years. It's a Sisyphean task, alright.

The strange thing, though, is that most people profess to hate rent-seeking. So how come we end up with so much of it?

Part of this is simply political economy. A small but organised group fighting for a large benefit will often out-lobby a large dispersed group (e.g. taxpayers, consumers) who each suffer a small harm.

Part of it is just rank hypocrisy - when other companies lobby for their licensing requirements, it's just to squelch consumers, but I'm deeply worried about customers not getting their hair braided correctly.

Nobody is the villain in their own narrative, after all.

But I don't think that's all of it.

I think that to really understand the extent of rent-seeking, you need to appreciate those who enable them - the rent-collectors.

The way I would characterise it is that rent-seeking, properly defined, is about lobbying for socially inefficient laws and regulations that will benefit you privately.  The trial lawyers lobby turns up to argue that we really truly ruly need to have a legal system where the loser doesn't pay the other side's costs, for instance.

Rent-collecting on the other hand, is what happens when a party simply takes advantage of a bad law that is already on the books. Unlike the rent-seeker, the rent-collector does not actively push for socially inefficient legislation. Instead, he simply takes the inefficient law as he finds it - somebody is going to get the rents due to the bad law, and it may as well be me.

These are the much wider circle of folks who are thus corrupted by the process - their own self-interest stops them agitating for a repeal of the bad laws, but their lack of involvement in the initial setup means that their consciences are clean.

For every community organiser who gets a cushy job on the rent-control board, there are hundreds of tenants getting a few hundred bucks a month for free from their landlord.

For every creep in the restaurant lobby fighting to outlaw food trucks, there are hundreds of restaurant proprietors vaguely relieved to not have a truck parked nearby.

And sometimes, the rent-collectors (at least indirectly) will be people who in other circumstances would be the first ones to crusade against rent-seeking.

American securities class action lawsuits are like something out of a Kafka novel. The shareholders of a company collectively own the company. Suppose the company makes some screwup and causes the share price to drop. Based on the fact that the company is a separate legal entity, some lawyer and a gold-digging lead plaintiff will file suit on behalf of the shareholders against the management of the company that they themselves own. The management is of course protected by the company, so money is coming out of the company coffers (which the shareholders own) to nominally compensate the shareholders of the company. Got that? Well, actually, the current shareholders (who don't owe an actual duty to anybody) are indirectly paying money to the old shareholders (who often overlap substantially with the current shareholders). In theory, anyway. Part of the money is coming from insurance companies who write the professional indemnity insurance for the directors, but the company is going to be paying that back in higher premiums in no time flat. You can rest assured that the only people making any money off the whole farce are the lawyers.

Or are they? Who else benefits from this ridiculous charade?

A lot of the time, it's economic consulting firms. They make a decent living defending companies against these lawsuits, and showing that the damages aren't as high as the often ludicrous plaintiff's claims make out to be. These are some of the most free market types you can imagine, with economics degrees from the best universities.

Don't get me wrong, in the scheme of this whole monstrosity, these guys are far and away the most defensible. They're fighting for good guys, so to speak.

But still - how many of them would be out there lobbying to get securities class action reform to eliminate all this absurd waste? How many of them would honestly greet such reform with the same zeal that they would if it happened in any other industry? Even if it put them out of a job?

To ask these questions is to know the answers.

When despotic regimes take prisoners of war, one of the things they often try to get the captives to do is to write out statements that are disloyal to their home country. Sooner or later, cognitive dissonance takes over - the things you wrote down that you originally didn't believe, you come to believe, because you subconsciously prefer this view to the alternative that you wrote cowardly and disloyal things rather than face punishment. The extreme form of the result is Stockholm Syndrome. There's a reason that making disloyal statements is punished as a serious offense.

The reality is that behind every rent-seeking lobbyist are thousands of rent-collecting regular joes who have convinced themselves either that a) the current regime is either downright sensible, or b) at a minimum, it's terribly unfortunate but there's really nothing to be done, old chap.

Thus are the sheep corrupted to be complicit in their own fleecing. They'd all acknowledge that, sure, this is just robbing Peter to pay Paul. They'd further acknowledge that, sure, everyone here thinks they're Paul, and sure, they can't all be right. But still, when all's said and done, I really will be Paul, and that's all that matters, right?