Timmy elsewhere

It’s a rather unlovely thought that part of our economic system, capitalism, is driven by the base motive of greed for profit. It’s the other part of it, those markets and their competition, which lead to why it makes the rest of us so rich. For the combined system does one thing extraordinarily well – it makes things cheap in short order.

In 2007 the iPhone was $500; today no one makes anything that feeble and entry prices are still only, what, $20? That’s not a bad recommendation for an economic system, really.

63 comments on “Timmy elsewhere

  1. Better a system based upon base motives which produces an abundant, peaceful society than one allegedly based upon altruism which ends up murdering millions and immiserating the survivors.

  2. For all its faults, capitalism benefits far, far more people for longer. You only have to look at West Germany and East Germany for a reality check. It is also based on real human desires and motives Socialism, however altruistic, never provides the same benefits, and depending on the severity of the imposed system will kill you.

  3. And are the motives so base?

    I want to produce wealth for me and my family. I do not want to do it by being an baby-eating, baseball bat-wielding, people-hating bastard…

    My desires are totally compatible with the well-being of others, in fact they contribute to it.

    There is nothing base about my desires. They are noble.

    Even if I say so myself.

    Never give up the high moral ground because some ‘person’ claims it is theirs, just before they kill you.

  4. Odd that you would miss this Timmy.

    The beauty of capitalism is not that it’s run by greed, that doesnt come from capitalism, that’s human nature.

    The beauty of capitalism is that it makes greed work for everyone.

    a la Smith’s comments about the self interest of the Baker etc

  5. “Never give up the high moral ground because some ‘person’ claims it is theirs, just before they kill you.”

    Indeed, especially to international socialists.

  6. Though the conclusion is right, to ascribe it to “greed” is altogether too simplistic. If greed were that dominant, why do we not all work longer? Or stop donating to charity? There are many and varied motivations; greed, as portrayed by the left is not one of them.

    Of course, the left never describe their own acquisitive tendencies (demanding higher wages, say…) as “greed”, do they…?

  7. What normal people call reasonable self-interest, lefties call ‘greed’, especially when practiced by others.

  8. In business, earning the good will of your customers is crucial, and being greedy for profit can easily destroy that goodwill. The need to win custom and stay competitive means greed is tamed by self-interest – except, of course, in monopolies. Many of the most decent and generous people I have known have been business people.

  9. Capitalist investment in natural monopolies like land (and property) does not increase the supply but super-inflates land prices , which increases rents and mortgages and decreases demand: result economic stagnation.Like what we’ve got at the moment.

  10. @DBC – Since when are land and property natural monopolies?

    That makes absolutely no sense…

  11. @Surreptitious Evil

    When you adhere to a godless religion that claims to explain all of human history and to predict the future, you have no need for figures. You just *know*.

  12. Are you overweight Reedy?

    I’ll bet good money that you are as many are. Do you think that many poor people in pre-capitalistic times had bulging bellies?

    Do you think that the victims of assorted socialistic famines both inadvertent and deliberate had bulging bellies.?

    Has obesity ever been a problem for the poor at any other time and place in history?

    You should thank you lucky stars for the market you socialist pustule. The socialism you crave would likely slim you unto death.

    And no bollocks about the 50s and the mixed economy please. That –akin to Chavez and his giant-screen handouts–is just socialism stealing the benefits of the market for an unearned handout. It didn’t and never could last.

  13. abacab,

    And indeed, property isn’t even particularly naturally restricted (unlike land – and see the Netherlands, Hong Kong etc). Converting a disused warehouse in to a hipster ghetto, as a trivial example.

    It just seems that way to many of us because of the idiocy of (that application of) the Town and Country Planning Acts.

    It would be, if planning permission would be granted, entirely possible to knock my house and outbuildings down and put up a 10 apartment block of 2 bedroom flats. You might even, at a squeeze, have room for 10 car parking spaces. In fact, my parents live in a block of flats which has clearly replaced a (I suspect somewhat larger but) similar house.

    I might be somewhat cross, of course 🙂

  14. Theo

    YES. I spend my working life talking to the Chairs of quoted companies, top managers, entrepreneurs and SME and large business owners.

    Usually, cultured, socially aware and aware of the responsibility that comes with the job and the position of power. Polite, considerate even when they are telling me to get lost.

    What you also see is knowledge, skills, dedication, assertivity, clarity of objectives and speed of thought. It’s no bloody coincidence that most of them are where they are.

    I work mainly in the Bilbao area, one of the earliest to industrialise in Spain, with important connections with the UK and European business habits. That’s a nod to our mate in the South.

    I would not put my hand in the fire for so many people in Madrid. The capital has a large number of crony capitalists, suckers up and general wideboys. Harder to spot the good ones.

  15. I just can’t fathom how land is supposed to be a natural monopoly – what’s strange about “I own this bit, you own that bit, he over there owns that bit”.

    Where I live we’re even in joint ownership cos it’s an apartment building – I own 5% of the land, along with about 30 other people.

    What is natural about one entity owning it all?

    Or does DBC not understand what a natural monopoly is?

  16. The thing about capitalism is that it rewards people who provide something that other people regard as of value, while socialism rewards people who by force of arms tell other people that what they are receiving is of value.

  17. Capitalism (or rather free markets) takes human nature and harnesses it for good, socialism attempts to build a system around human nature as it would like to be.

    In order to decide one has to answer one question – are humans fundamentally altruistic, or fundamentally self interested? Not only that, but how many of each are there? Because capitalism can work with any number of altruistic people, no problem. Whereas socialism can only operate if the majority are altruistic. Which as we all know they are most definitely not………………

  18. Tim,

    The iPhone is easy. Show me a successful free market in healthcare.

    Even our domestic gas & electricity markets are constantly threatened with intervention, because elderly loyal customers pay £200/year more than young fickle customers. Yes, it’s a regulated sector, but somehow I doubt that removing Ofgem would solve that problem.

    (True free marketers deny that it’s a problem, akin to people paying over the odds for an extra-large coffee at Starbucks; and I have some sympathy for that view. But politically it doesn’t wash.)

    It’s true that most markets work well, and we just don’t notice them. It’s also true that the ones which don’t work tend to have the highest levels of government interference. But there are plenty of examples where companies soak their customers in hidden fees or bamboozle them with legalese. In Britain our regulators are quite good at nipping this in the bud, but in the USA it’s widespread – have you ever seen an American phone bill?

  19. Andrew M;

    “soak their customers in hidden fees or bamboozle them with legalese”

    True. But in the US, to what degree is that learned behaviour from the healthcare industry?

  20. Andrew
    Why is it a problem that elderly loyal customers pay £200/year more than young fickle customers? As long as they could change but don’t, I genuinely can’t see how that’s a market failure?

    (I can see it’s a shame – my wife sorts out my parents’ bills to keep them low, despite the fact that they’re minted.)

    I think most people understand most basic economic concepts fairly well, at a sort of common sense level. What they do struggle with is Jamie Dimon taking home £50 million a year.

    My lefty mates are always pointing to things like that and saying ‘How can anyone justify that?’ I reply 1) that no one needs to justify remuneration in a private business and 2) that he doesn’t eat the money – Aston Martins need buying if Aston Martin workers are to keep their jobs etc.

    But even I, in my heart of hearts, wonder at some of the pay awards. They seem almost designed to foment revolution, some of them.

  21. “Show me a successful free market in healthcare.”

    Opticians
    Pharmacies
    Internet forums
    (broadly) dentistry

  22. What Gamecock said. The whole self-interest = greed meme must be killed not reinforced. What the f else is life for but for living?!

  23. Most countries feel like they need to ensure that virtually everybody can access healthcare. In some cases, like the UK, the government is a monopoly provider of both the funding and the service itself. In others there is a competitive market in the provision of healthcare but the government has a hand in funding. Singapore is the most famous example but South Korea is another one. There are many other examples of ‘mixed models’ such as those in Switzerland and Germany.

    In my view you need to separate a judgement about the quality of a service provided, the value for money you get, and access for the poor.

    Places like Singapore and Korea do very well in the first two categories. Maybe the UK does better in the last but I doubt it somehow.

  24. “Show me a successful free market in healthcare.”

    Another is podiatry. Only available on the NHS for diabetics and certain other conditions.

  25. Andrew M: How can you be shown successful versions of areas controlled by the state?

    Healthcare is endlessly meddled with and has the extra complication of the Doctor’s trade union.

    Gas and leccy are former state capers–tho gas still starts off going tho’ the gubmint pipes–who are allowed to exist as a controlled cartel whose prices–like the banks–vary a bit but never radically.

    Try starting your own company to build -say-mini-nukes and undercut the other suppliers plus set up your own supply network bypassing the National Grid and see how far the free market is allowed to get.

    Please don’t criticise markets for not –yet I hope–being able to best those in command of the costumed thugs.

  26. abacab, Jim, Swindon,

    Good examples. It’s true that much of private healthcare works well; but there are plenty of stories of them ripping off their customers. This can happen in any trade where you have to rely on an expert’s judgement: famously with builders and car mechanics, but also vets, dentists, and private surgeons.

    Cowboy builders can be brought to heel by Trading Standards officers; medics have their professional bodies. But neither of those represents a free-market solution. Lately we’re seeing some better behaviour because of online reviews, not sure if that’s enough.

    Interested,

    > Why is it a problem that elderly loyal customers pay £200/year more than young fickle customers? As long as they could change but don’t, I genuinely can’t see how that’s a market failure?

    It’s a hard sell politically. Try telling people that we’re going to change the electricity market such that all the stupid people will have to pay £200/year more than the clever people. Even the clever ones will think that’s unfair. Yet that’s exactly what happened under privitisation.

    I’m not saying that nationalisation is the answer, but you have to concede that there’s a certain unfairness in ripping off little old ladies to line the pockets of the young.

  27. Land is a natural monopoly in that each piece of land only has one owner – until you build a block of flats on it and a sharp lawyer invents “flying freeholds”.
    But then one has the corollary that every motor car is a natural monopoly because it only has one owner – the one registered with the DVLA.
    No two pieces of land are identical (although in many cases no buyer will notice the difference) but to jump from that to “one seller controls the supply of land to the market of buyers” is a leap only possible for a lefty.

  28. Try telling people that we’re going to change the electricity market such that all the stupid people will have to pay £200/year more than the clever people. Even the clever ones will think that’s unfair. Yet that’s exactly what happened under privitisation.
    It’s not really about stupid vs clever though. It used to require awareness and making phone calls, tracking prices, etc. Now there are a million and one websites that will do all the work for you (in return for commission). With adverts for Go Compare and Compare the Market all over the show, even the most stupid person must be aware. So now it’s about who can be bothered – lazy vs motivated. And I have no problem at all with lazy people having to pay more (in fact, I like that I have the option to be lazy myself if I can’t be arsed to shop around).

  29. “Privatisation” is switching from state to corporate socialism. It is not the creation of a free market.

    Nationalisation is switching back to state socialism and is beyond stupidity.

  30. DBC / Dave
    Your favourite profession, sociologists, have calculated that right wingers give 30% more to charity than left wingers.
    A fact buried under a socialist mattress somewhere.
    Does this make right wingers worse people?

  31. Andrew M
    “I’m not saying that nationalisation is the answer, but you have to concede that there’s a certain unfairness in ripping off little old ladies to line the pockets of the young.”

    Given that we are running a humungous deficit and have nearly 100% debt/GDP I’d suggest it might be the little old ladies ripping off the young.

  32. bloke in france,

    Two wrongs don’t make a right.

    Rational anarchist,

    > It’s not really about stupid vs clever though.
    Call it lazy versus not lazy, sure. But again, we’ve taken a system where both groups were treated equally and replaced it with a system where one group is disadvantaged.

    And all for what gain? It’s the exact same current, the exact same gas. Why bother even having a market in something where the product by definition can’t vary?

  33. “And all for what gain? It’s the exact same current, the exact same gas. Why bother even having a market in something where the product by definition can’t vary?”

    Person A might like a fixed rate per kWh, whereas person B might still have Economy 7 heaters, so would like a day-rate/night-rate system. Person D might have some 3-phase machinery, so might want a 3P connection. Some companies might not want to supply 3P to domestic customers.

    And if there’s not a market in it, what’s stopping a monopoly supplier ratcheting up the price?

  34. Interested,

    “But even I, in my heart of hearts, wonder at some of the pay awards. They seem almost designed to foment revolution, some of them.”

    If its a successful company, *shrug*, however big payoffs for abject failure is a different matter, not least because of the PR it gives to lefties.

    France,

    “Your favourite profession, sociologists, have calculated that right wingers give 30% more to charity than left wingers.”

    Being pendantic, right wingers give away 30% more of their own money than left wingers give of their own money. I suspect left wingers win hands down when it comes to giving away other people’s money, especially to their mates.

  35. abacab: perzaktly. In my shop there’s only the lights that use electricity, meaning the standing charge is 98% of the bill, whereas at home I have a spread of electrical usage so the standing charge is about 15% of the bill. I want there to be market options so that I can get a supplier for the shop that charges appropriately for its usage.

    (I’ve found one, I just need to get to the end of the current contract to escape)

  36. Andrew M ““And all for what gain? It’s the exact same current, the exact same gas. Why bother even having a market in something where the product by definition can’t vary?”

    So a Cornetto and the $1000 ice cream are the same? They are both ice cream.

    Because of nukes the French already pay less for electric than we do.

    A free market would drive prices way down. So why assume –and that is what it is an unexamined assumption–that the only choice is state or corporate socialism?

  37. What BiND said.
    I use Gift Aid to avoid paying any higher-rate tax. I challenged Murphy, when he was going on about his high moral values, to tithe and encourage his readers to tithe and he refused flatly.

  38. ” I want there to be market options so that I can get a supplier for the shop that charges appropriately for its usage.

    (I’ve found one, I just need to get to the end of the current contract to escape)”

    No (or lower) standing charge and a higher rate per kWh that will work out in your favour for your shop I presume?

  39. “And all for what gain? It’s the exact same current, the exact same gas. Why bother even having a market in something where the product by definition can’t vary?”

    Same goes for petrol, potatoes, broadband, mobile phone access, bank current accounts, milk etc etc etc. Should we have State monopoly suppliers of all these too?

  40. You only have to look at West Germany and East Germany for a reality check

    ===
    Communism was able to make Prussians lazy, dirty, and inefficient.

    Impressive!

  41. “And all for what gain? It’s the exact same current, the exact same gas. Why bother even having a market in something where the product by definition can’t vary?”

    The product may be the same, but price and service do vary.

  42. Andrew M,

    “Cowboy builders can be brought to heel by Trading Standards officers; medics have their professional bodies. But neither of those represents a free-market solution. Lately we’re seeing some better behaviour because of online reviews, not sure if that’s enough.”

    True. And that’s because there’s limits to what good markets can do. There is a role for the state when people can make catastrophic or highly harmful decisions.

    The effect of many bad decisions is experience. You go and watch some recent Robert DeNiro movies, you learn this isn’t a good use of money. You’ve lost a few quid, but it’s no biggy. Maybe some people like what he does. So, there’s no role for a regulator in that.

    The problem with many “industry bodies” is that they’re often a bit shit, though. They’re designed not to ensure competence but (to quote The Last Psychiatrist) to “convey the impression that competence was measured”. When things goes wrong and you have to deal with the Law Society or the BMA or any of these guys, you realise how shit they are.

    http://thelastpsychiatrist.com/2014/04/the_maintenance_of_certificati.html

  43. “where both groups were treated equally and replaced it with a system where one group is disadvantaged”.

    You’re thinking backwards: I see a system where both group benefit from a better offering overall to start with so everyone already won, including old ladies. I fail to see why one group should be deprived from doing even better, thanks to that system, when it is available to all.

    You’re not only assuming that old ladies are necessarily in need of your help but instead of helping them, you think depriving others is better.

    Yeah right.

  44. “there are plenty of stories of them ripping off their customers”

    The reason being that redress is very hard to get, and why is that? The justice system.

    I would have thought that one of the state’s primary use is upholding the law through the justice system. That is one of the absolutely basic reason for a state to exist and they cannot even get that right.

  45. Communism was able to make Prussians lazy, dirty, and inefficient.

    I shall borrow that for one or two Germanophile lefties I know.

  46. Theophrastus,

    > price and service do vary
    Some companies might offer marginally better service; but £200/year better? We’re talking about a company that is contacted twice during the contract: once at the start, and once at the end.

    Bloke in Swindon,

    Yes, the rule of industry bodies is that they work firstly for themselves; and secondarily for their fee-paying clients. The general public doesn’t get a look in. See also: unions.

  47. When things goes wrong and you have to deal with the Law Society or the BMA or any of these guys, you realise how shit they are.

    A lawyer I know complained to the SRA about the solicitor who did (almost, but not very well and rather too slowly. And overcharged) his conveyancing on his last house move.

    He’s now convinced he could almost go as far as deliberately maiming his clients in front of the court and retain his certificate.

  48. “And all for what gain? It’s the exact same current, the exact same gas. Why bother even having a market in something where the product by definition can’t vary?”

    Natural gas is highly variable though. A resource will have 80-97% methane as well as fractions of propane, butane, hydrogen, helium, nitrogen, carbon dioxide, argon, krypton, … These different gasses have to managed so that your boiler doesn’t explode but the chemistry isn’t hard. If you want to create your own gas supply, and the state allows you to install the infrastructure, all you have to do is spend the money to install the infrastructure.

    Note: I am now working on a synthetic gas project. If everything stays on schedule I’ll be begging for funding for the commercial prototype by the end of the summer. In order to ensure my gas doesn’t blow up your boiler, understanding the varying components of natural gas is a must.

  49. monoi,

    Your arguments are well-made and received with thanks.

    > I see a system where both groups benefit from a better offering overall to start with

    If indeed prices are no higher overall than they would have been, then I’m minded to agree with you. Looking at international comparisons, in the UK we don’t pay noticeably more for our gas or electricity, so you’re probably correct. Train fares are another matter though.

    > You’re not only assuming that old ladies are necessarily in need of your help

    I presume you’re making the the classical liberal argument, that there’s nothing wrong with some people paying more than others for the exact same product. A typical example is Ryanair charging passengers different prices for the same flight. But shouldn’t a utility be different? (I admit this is more of a moral argument, not economic.)

    > but instead of helping them, you think depriving others is better

    The government can step in and help specific groups e.g. by giving old folk a £300/year winter fuel payment. That’s still depriving others, albeit via the tax system rather than via their fuel bills.

    > The reason being that redress is very hard to get, and why is that? The justice system.

    That’s an excellent point, which bears repeating often.

  50. ‘Secure your own mask first before helping others.’

    Taking care of yourself first is the ONLY way you can take care of others.

  51. Given that we are running a humungous deficit and have nearly 100% debt/GDP I’d suggest it might be the little old ladies ripping off the young.

    And the housing market.

  52. Please explain how us oldies can exploit the young. Or anyone. When we see adverts for funeral insurance , nursing homes, care for drug addicts – we wonder.

  53. Gamecock
    Brilliant!
    ‘Secure your own mask first before helping others.’

    I wonder what the emergency instructions on socialist airlines are,
    In event of emergency please press button send to CiF.

  54. Sorry to joint this debate so late. Rather preoccupied with practising some active capitalism, just at the moment, to do much more than glance at Tim’s place.
    There’s a comment someone made above about greed being human nature & nothing to do with capitalism as a principal. That capitalism, through markets, tends to limit greed by negating the effects of greed. The greedy,by competing, get less opportunity to be greedy.
    Bilbaoboy says “I work mainly in the Bilbao area, one of the earliest to industrialise in Spain, with important connections with the UK and European business habits. That’s a nod to our mate in the South.
    I would not put my hand in the fire for so many people in Madrid. The capital has a large number of crony capitalists, suckers up and general wideboys. Harder to spot the good ones.”
    And that encapsulates the problems in this country.
    The greedy have captured the political, the administrative & legal system, so they actively hamper capitalism & the operation of markets. But that applies most fully in what one might call the “white “economy. The further one moves into the “grey” economy towards the “black”, the better capitalism & markets perform. To the benefit of all. Or to put it another way – the criminals are more honest than the judges.
    And I think this is why you see such a marked difference in performance between what one might call the “northern” economies – the Anglo-Saxon in the UK/USA, the Germanic & the Scandinavian & say the Latin. One possibly does need some form of State to provide a structure of law & property ownership for capitalism & markets to operate most efficiently. But there’s nothing benevolent about the State. It’s a necessary evil. All to easily, the machinery of the State gets captured by the greedy. Because markets operate within the State itself. Except the commodity being traded & the currency used is power.

  55. “part of our economic system, capitalism, is driven by the base motive of greed for profit. ”

    I never realized that, before capitalism, there was no greed for profit.

    Why O why did humanity fall from such grace?

  56. @ fnord and PF
    I thought that all the surviving Germans were expelled from East Prussia …

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