Dear Lord Almighty

How did this spaz ever get to be chairman of the FSA?

\”I think some of it is socially useless activity,\” he said, referring to the complex financial instruments that have largely been blamed for triggering the biggest global financial crisis in decades.

I think Big Brother on TV is socially useless but that doesn\’t mean I advocate higher taxes upon those who produce it or partake of it.

Absolutely everyone thinks that some activity or other is socially useless but the definition of a free society is one where we tolerate people doing things which we regard as such. The moment we discriminate between activities on the basis of what we \”think\” about them we lose that essence of being a free society.

Or as the Daily Mash puts it:

ACROSS the UK the search has begun for a business that is socially useful.

17 thoughts on “Dear Lord Almighty”

  1. whoa there, hold on a cotton pickin minute.

    A troll that sits under a bridge and demands payment every time a billy goat wants to cross, is an example of a socially useless (harmful) activity. Are we supposed to tolerate trolls in the name of a free society, or are you as foolish to believe that in our actually existing free-ish societies, trolls cannot exist?

    Personally, I would like to retain the option of “thinking” about what happens in our societies, and intervening, from time to time, to try to improve matters. And I write that as a fan of Hayek, and fully aware of the perils of intervention on the basis of “thinking”.

    If this chap is a spazz, then he’s in good company. Here’s another spazz in the FT today, a former chief economist of the IMF and spazz writes here and I link to a collection of learned spazzes in this comment.

    Just perhaps, Tim, you might reconsider

  2. Luis

    The problem is not what he said as much as who he is. It is not in the remit of the FSA to decide who is and who isn’t socially useful.

    Your troll example is actually one about externalities. If the said activities impose unpaid for externalities on the rest of us, then by all means tax them. However, knowing what we do about the crisis, the management of the FSA imposed rather massive externalities on us by not doing their jobs properly.

  3. Serf

    refresh yourself on definitions:

    Externalities

    Directly Unproductive Profit Seeking

    Rent Seeking

    Trolls being more akin to the latter two. But the Troll was only one example of why thinking about what’s “socially useful” is not always daft. Once you start looking seriously at markets with externalities, principal-agent problems, rents, information problems etc. there are very many ways in which the actions of private individuals operating in a “free” market might be socially harmful, for reasons that are of a fundamentally different sort to heterogeneous preferences over “reality” television programmes.

  4. Luis, your troll is extorting money through the threat of violence. I hardly think that was the sort of thing Tim had in mind.

    Matter of fact, your troll example sounds a lot like the government.

  5. It is not in the remit of the FSA to decide who is and who isn’t socially useful..

    Hector Sant was at great pains to tell us that it was no part of the FSA`s remit to decide political /moral matters and he energetically accused Politicians of passing ducking responsibility . So which is it ?
    Timmy is right of course but is it not surprising that a collection of glorified clerks get such rich gravy
    Usually Timbo is gets a blue steel stiffy when the market is allowed in to clear out the stables .I just wonder why he is not suggesting that no market is setting these prices and if the market`s decision hade been final they would all be flipping burgers on Margate Pier . There have to be some vertiginous barriers to entry .
    I therefore accuse Tim of inconsistency along with the FSA . As always only I judge with a clear un-blinking eye seeing all things. Me me me

  6. Luis

    Your troll is not socially useless, he is actively (and wholly)harmful.

    Presumably you would also ban golf; it is socially useless and sometimes harmful:

    The use of golf clubs to bludgeon to death anyone I don’t like would also be harmful, and golf has very little utility; while deals may be done on the golf course, they would probably be better done in a lawyer’s office; and when deals are not being done golf is of no use to society whatsoever. None the less I don’t advocate banning golf.

  7. Mark E,

    I am afraid you are a little confused. Let me try to explain.

    Economics is founded on the analysis of welfare, which in turn is based on the preferences of individuals. To speak loosely, anything which contributes to welfare is socially useful. People enjoy playing golf (you are quite wrong to say it has “very little utility”), therefore golf is socially useful. Usually, we assume that if people are doing something of their own free will, in the context of a functioning market system, we can assume it’s welfare optimising (or as close as we can hope to get to it).

    However, there are various dysfunctional sorts of things that can go on in an economic system which serve to reduce welfare – even in a market free of government interference.

    Rather than being some statist weirdo, that enjoys a bit of bansturbation, I am merely expressing mainstream economic reasoning, to be found in such hotbeds of socialist thought as standard economics text books

  8. But, is “mainstream economic reasoning” anything more than a mathmatically-obfuscated version of examining the entrails of goats?

  9. Yup. Reading that twats comments on the BBC site last night it felt as if they’d just gone and posted an excerpt from Atlas Shrugged. Political/Bureacrat parasite in charge of government department almost single handedly responsible for overseeing a catastrophic financial crash decides that the successful examples of banking must be taxed to high buggery because they are “socially worthless”.

    Honestly it’s almost as if Ayn Rand was writing the script for this prick.

  10. [all this said, it’s not obvious how a Tobin Tax, if that’s what this chap proposes, would differentiate between welfare-destroying and welfare-enhancing activity. If there are any Trolls lurking in the financial sector, a blanket tax like that is going to shrink the good along with the bad, I’d have thought. I guess you could argue that the quantity of financial transactions is too great, for some reason, so that simply reducing the quantity and shrinking transaction-related activity (high-frequency trading? complex investment tactics that involve numerous transactions per position?) would increase welfare.]

  11. Luis, if bankers were trolls, they would have to be able to use violence. I am not aware that Barclays, Goldmans or whomever take money with menaces. Just a point.

    Of course, these banks benefit from markets that are distorted by governments, and in some cases, entirely artificial markets. But taxing banks will not solve that problem. And of course it is a complete evasion of responsibility for regulators to attack banks, when they should be reminded of how it was central – state – banks, that caused the fuckup in the first place.

    What Tim said.

  12. Well, allow me to be contrary.

    It is in the trolls interest to ensure the bridge continues to be sound enough to use, so it undoubtedly works to maintain it. To do otherwise would ensure that long term it lost its source of income.

    It is also in the trolls interest not to demand so much that an alternative route was constructed. In other words, he is constrained by what the market will bear, and he contributes to the maintenance of the capital infrastructure. Where is the problem?

  13. for the love of ….

    look, I’m not saying “bankers are trolls”; that was just a colourful metaphor, what’s somebody going to object to next, the fact that trolls have long colourful hair, but bankers don’t?

    There are ways to manoeuvre oneself into a position to extract rents (directly unproductive profits) without actually having to use threats of violence, and without carrying out any metaphorical bridge maintenance either. Plus there are other ways, other than being a rentier, in which to harm economic welfare. Regardless of whether you think the blame ought to lie with the central banks, or whatever, the idea that the private banks as they currently exist might contain some elements that are welfare-destroying (not socially useful) can hardly be dismissed out of hand and neither can the idea that there might be some regulatory responses that could eliminate some of the costly but not useful activity. I’m not sure that a Tobin Tax is the way to do it, but that doesn’t change the fact it makes sense to ask whether (parts of) the finance sector is socially useful.

    I know that arguing from authority is not the way to go, but very many smart and knowledgeable people (I’d hazard smarter than all of us) take seriously the idea that parts of the finance industry make money from themselves in a fashion that has no genuine productive purpose (hence, a drag on welfare) and rather than just knee-jerk against that idea, why not take it seriously too? I have already supplied some links in comment 1, here’s another smart person making a similar argument. These are not people with halfwitted left-wing ideas about what “genuine productive purpose” means.

  14. Luis, in a proper free market, it is a matter of opinion as to whether anyone, be he a banker or provider of rap videos, does something we consider worthwhile or not. Of course, the current market is not completely free and full of distortions, so some of the excesses that you talk about would go away in a free market.

    No doubt a lot of financial finangling might disappear if we did not have say, a large government bond market or without regulatory arbitrage where governments create silly rules in the first place.

  15. Luis, forget the trolls for a minute. Do you accept that the city of London has brought in massive amounts of money, jobs and taxes for this country?

    What do you think will happen to the companies that make up the city if this government of all the talents (ha!) were to implement this tax on transactions?

    Do you think London would remain the place to do business, or do you think all these companies would fuck off to Shanghai, Hong Kong or New York, or basically anywhere it was cheaper for them to do business?

    And then would what happen to the governments tax take, and then what would happen to normal non city types taxes?

    This absolute fucknut who should not be left in charge of a tea-towel, let alone a regulatory body actually said:-

    “It’s clear to me that the FSA has to be very, very wary of seeing the competitiveness of London as a major aim, and that’s not a popular thing to say.”

    So he doesn’t see the competitiveness of London as important. Do you?

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