Timmy ElsewhereMay 8, 2010 Tim WorstallTimmy Elsewhere18 CommentsAt the ASI. Whether you want redistribution or not you still need economic liberalism underneath it. previousWell done to the New York TimesnextOh my, what a surprise 18 thoughts on “Timmy Elsewhere” DBC Reed May 8, 2010 at 9:43 am Rather undermined by a basic misapprehension of Statism,the reification of a different set of influences than the socialist and fascist ideas commonly adduced.The Strong State and its economic and political understrappings arose from the shock of Napoleonic Citizens’ armies routing the old mercenary forces relied on by the ancien regime.After their early successes, the accent was soon on building up huge populations (reasonably fit /the Uk’s Boer War recruiters had to reject a huge proportion of volunteers) and also industrial infrastructure ( this being critical in the American Civil War).The main spur to Statism was Militarism reinforced by Managerialism if abstract nouns are the order of the day. BTW Since the UK evolved from the last highly Statist World War as a mixed economy ,those who style themselves opponents of Statism are actually Enemies of the State-a description which would doubtless reinforce a sense of personal identity in those who,among other follies,consider the hysterical lady novelist Ayn Rand a good writer and political oracle. In the Uk we are about to see an offensive against the public sector launched on the grounds of pure economic ignorance and prejudice. Kay Tie May 8, 2010 at 1:38 pm “In the Uk we are about to see an offensive against the public sector launched on the grounds of pure economic ignorance and prejudice.” No, on the grounds of the fact that we can no longer afford to pay for the million extra people employed in the public sector to do very little of effect. DBC Reed May 8, 2010 at 3:35 pm @KT What happens when private sector companies merge .eg. United Airlines and Continental?They save not necessarily on front-line services but on back-office operations.Proving that while in competition they supported duplicate management systems,which rationalisation cut down.Competitive markets create bureaucracy; socialist centralisation cuts it out. Take a centralised public -sector operation and privatise it amongst competitors and you end up setting up bureaucracies in every single competeting outfit.Except they don’t compete : they adjust their capacity to cover their share of the market and strenuously avoid competing which would create huge unsellable inventories.But they maintain the multiple bureaucracies. Most of this demonisation of cheaper more eficient public services comes from their finances.For some reason private sector banks can create money and supply the private sector at rates of interest that ,given that the money is created ,not borrowed, is extortionate going on fraudulent:the government cannot create credit and pay for public services at a reasonable rate of interest (as Lincoln did). Tim Newman May 8, 2010 at 5:08 pm Competitive markets create bureaucracy; socialist centralisation cuts it out. That explains the lack of bureaucracy in the USSR and its successor states. Gareth May 8, 2010 at 5:20 pm DBC Reed, “Competitive markets create bureaucracy; socialist centralisation cuts it out.” What matters is not how much bureaucracy there is but how much it costs the public. State bureaucracy is merrily unhindered by competition and is a monopoly that is funded by force. Kay Tie May 8, 2010 at 5:33 pm “Competitive markets create bureaucracy; socialist centralisation cuts it out.” Ah bless. DBC Reed May 8, 2010 at 7:42 pm @TM I once worked in a Stalinist model institution where we got on with the job and there was little management with all the functions of personnel,pay and grading,marketing etc carried out for several similar places by a small ,centralised,number of low-paid clerical officers and local government apparatchiks.The freedom for us at the productive end was more or less total. Then come independence (privatisation)and all the institutions acquired their own in-house personnel (“Human Resources”) depts which actually took over rooms more productively used. Ultimately it does n’t really matter whether people are making a profit for their employer or not because the whole economy is the accounting entity.It is just a matter of keeping the national money supply in a non-inflationary equilbrium.The productivity of machines more than makes up for the unproductive classes: the armed forces,judges,the police,teachers,nurses (the representatives of a civilised society).Things Major Douglas pointed out a long time ago. Tim Newman May 9, 2010 at 3:27 am I once worked in a Stalinist model institution where we got on with the job and there was little management with all the functions of personnel,pay and grading,marketing etc carried out for several similar places by a small ,centralised,number of low-paid clerical officers and local government apparatchiks. And what exactly did this Stalinist enterprise actually do? Kay Tie May 9, 2010 at 10:25 am Man works in well-run state enterprise (he believes). Enterprise is then privatised and run badly (he believes). Ergo, all state run enterprises are better run than private ones. Who can spot the logical flaw in the argument? DBC Reed May 9, 2010 at 3:10 pm @TM I’m not going to identify the public sector work-place that was wrested taken out of public control for no reason of economy. I would not want to appear to criticise the place’s managers who had to play the hand they were dealt. @KT Instead of snarky comments, why not work through the numerous examples of management change-overs I have described and explain,for instance with private sector mergers,why competition does not tend to increase the total number of managers. You could carry on with fire brigades: private fire insurance,uninsured people’s houses used to burn down whole blocks; competitive bus services,operating on same routes badly maintained buses used to turn up minutes before timetabled buses to steal passengers: no government house building programme , a house price bubble here and in the States that nearly destroyed the Capitalist system and still did n’t house everybody.I could go on but I get the impression that discussion of actual cases is not your thing. Kay Tie May 9, 2010 at 3:19 pm “but I get the impression that discussion of actual cases is not your thing.” Because the weight of evidence so overwhelms your fatuous examples that it’s clear you at just trolling. DBC Reed May 9, 2010 at 7:20 pm @KT Ok then give some evidence that my numerous examples are wrong e.g I would really like to know why private sector mergers producing savings is not evidence that the pre-merger firms were not over-manned;that private fire insurance did n’t burn down whole streets;that private sector housing has n’t produced an inflationary nightmare….the list is endless.Your list does n’t even start. Tim adds: ” I would really like to know why private sector mergers producing savings is not evidence that the pre-merger firms were not over-manned;” We’d start with that one. Perhaps they were? Perhaps the merger meant that the merged firm was less over manned. Which is actually why we like the private sector. Because there’s a system in which those who are screwing up by being over manned can become properly manned. Do try and grasp this point. No one is ever saying that market systems are perfect or correct. Only that market systems correct error and become more perfect more quickly than non market systems. Like, by merging back offices and thus becoming more efficient. Tim Newman May 10, 2010 at 3:53 am I’m not going to identify the public sector work-place that was wrested taken out of public control for no reason of economy. Ah. A non-job. Thought so. DBC Reed May 10, 2010 at 11:52 am Very nice of Mr Worstall to make a deus ex machina appearance ,even if it to confuse matters farther by agreeing with most of what I said: firms in market competition have to carry a lot of spare capacity =overmanning/back office operations= bureaucracy.It follows that market competition only exists when two competing firms are both geared up to supply all the market: if they split it down the middle and carry inventories for 50% each they are not in competition. To take some actual cases: housing.The standard market romantic position is that left to themselves capitalist noble savages will ensure everybody is housed affordably and that it is only those durned planners that stop the developers building all over the place.(If they should ever do so,of course,the same people as property owners /nimbys would lie down in front of the JCB’s.) They pore over plans with real negative expertise.But as any land taxer knows, the developers are n’t going to do that because it is not in their interests to flood the market with houses as this brings down average prices.Better to build a few expensive houses (the expensive part being the inflated land value) than build a lot of cheap ones,which tends to devalue their land banks. Jim Claydon as President of the Royal Town Planning Institute, tired of the baying majority of private sector romantics in this country which blames planners for everything,save when they need them,complained : “All landowners including homebuilders maintain land values by managing supply.It is not in their interests to release large quantities of land because this deflates its value” So market capitalism decreases supply ,puts up prices in the housing market.Prove me wrong. Actually I do not come on to sites like this to cause pointless arguments.I genuinely would like to know what the pro-argument for markets is e.gI have often wondered what the point of the stock market is:it doesn’t give existing firms any market capital and sells control of any voting rights in the business. gene berman May 11, 2010 at 4:08 am Insofar as economic understanding is concerned, discussion with you is pointless; not because (as some might suspect) you are committed to a particular “party” interpretation of reality but (surprisingly, at least to me, after seeing how frequently you comment here) for the simple reason that, for practical (discussion) purposes, you actually speak a different language, making communication well-nigh impossible. As an example of such disconnect, let’s take the subject “bureaucracy.” In reading your comment, I can see that your definition of the term seems to be related to hierarchal organization and to the accomplishment of, essentially, clerical functions. Now, while it is true that bureaus are all hierarchal and very many are primarily concerned with matters of record-keeping, etc., these are not the defining characteristics of bureaucracy nor have they any bearing on the fundamental difference between bureaucratic management on the one hand and, on the other, management in a private, for-profit enterprise. The two cannot be more different in purpose nor in methods. In point of fact, the two have almost no similarity whatever (excepting that private entities subject to close supervision of state regulatory agencies may tend to take on some of the characteristics of those with whom they must deal routinely). Actually, what woke me up to the fact that you have so little understanding of economics was not a muddled interpretation of “bureaucracy,” which is common enough in common parlance but was, in fact, your final paragraph, asking for the “pro-argument for markets” and “what the point of the stock market is.” I’m not ridiculing you. There are some types of knowledge not readily apparent to cursory observation. I’m going to recommend a few things you might read that I believe you’ll find both mentally stimulating and enlightening. “I, Pencil” (pamphlet by Leonard Read intended for young audiences but which describes the market and its functions in unmistakable terms). “Economics in One Lesson” (by Henry Hazlitt, being just what it purports). “Bureaucracy” (by Ludwig von Mises; a small, easily-readable book, which will, after you’ve read its 125 pages, make you nearly as knowledgeable on the subject as any man on the planet (and more knowledgeable than 99.9999% of them). At some point in a study of Economics, you’ll actually begin to be able to answer your own question about “the point of the stock market” and realize that, without such institution(s), the forward progress of civilization would come to a halt (and its population subjected to a reversion to far more primitive material conditions–with an enormous consequent loss of life). DBC Reed May 11, 2010 at 8:11 am @GB The heart sinks when Gene Berman (never knowingly unpatronising ) hoves into view. I was using the term bureaucracy in its strict sense meaning the rule of people in offices (or bureaux /its a French word you know).The attempt to explain at considerable length : people in private sector offices,Good; people in public sector offices,Bad is deeply,fatally,boringly, unconvincing .We were talking about over-manning by personnel in support roles and how private sector mergers can save money by cutting duplicate systems.Dunno what you’re talking about. Likewise no reference to the dysfunctional market in land ,which I adumbrated with quotes from other people.Since the UK land market lumbers First -Time -Buyers with an upfront ,lifetime debt of I00 GB quid,crowding out possible other purchases of goods made by fellow workers in this country ,this matter is not a mere detail.Except to Berman. The question of stock markets remains unanswered: except go read a book (and, would n’t you know it ,one of them’s by von Mises whose contribution to “Economic Thought” was If you don’t increase the money supply you won’t get much inflation.No shit Sherlock!) . This question was also largely rhetorical:I cannot see why the country’s entire prosperity is imperilled by plunges on the FTSE when this mainly affects bozos who have bought shares secondhand off other bozos and who have obtained voting rights in a company which has to make stupid short term decisions to appease them,otherwise they sell out to an asset-stripper who sells the factory(See Kraft/Cadbury:our Tory MP Brian Binley said this takeover shook his faith in international capitalism). The challenge still stands : prove me wrong (see above @ 14) gene berman May 11, 2010 at 10:57 am Sorry for my intrusion and my lack of horse-sense. Seems as though when I try to lead ’em to water, they bolt at the first sight (or whiff) of it. I tend to be philosophical about such differences, though. In part, that’s because I’m old and have long since passed through the life stage given to displays of combative prowess. But, more importantly, it’s because I’m not old enough to forget that, back then, some 40 years or more ago, before I’d learned anything about economic matters, I’d have sounded very much as you do now. ` DBC Reed May 12, 2010 at 8:05 am Oh my Gawd!Gene Berman is givimg me the when I was young and knew no better “I’d have sounded very much like you ” line. I am 66. Leave a Reply Cancel replyYour email address will not be published. Required fields are marked *Comment Name * Email * Website Save my name, email, and website in this browser for the next time I comment.