All entries for June 2005

June 30, 2005

Michael Portillo on idealism and Kyoto

Michael Portillo writes a good piece in the weekend edition of The Times about the lack of idealism amongst the public/political parties and the increased emphasis placed on pragmatism. The article later considers climate change and proposed Kyoto protocol. Michael Portillo defends the Bush’s decision not to jump on board.

Our best hope of postponing climate change rests on two things. First, use more nuclear energy. Second, find new technologies. We need to re-inject carbon into the earth rather than releasing it to the atmosphere and we need to develop batteries that can power cars. The innovation for those advances is likely to be provided mainly by the United States…The US’s key role in saving the planet will be disappointing to those who enjoy using poverty and global warming as sticks with which to beat the American Satan.

Read the full article here.

Over time, economic growth and increasing wealth, fuelled by relatively lax business regulation, have allowed countries to overcome great environmental and technological constraints. The Kyoto protocol and the anti-growth policies embodied within it may halt climate change, but will curb technological progress at the same time. The protocol’s advocates often wrongly imply that reduction of emissions is costless; the only barrier being the greed of nations. Greed and self-interest no doubt play a role, but there’s also genuine thought behind decisions not to participate.


June 29, 2005

Paul Krugman, 50 Cent and Trade

HedgeFundGuy of the mahalanobis blog has an amusing take on the issue of Paul Krugman’s recent renunciation of his economic training. Krugman’s recently aired view on China and the purchase of US assets is compared with rapper 50 Cent’s view on Live8 and free trade. Anyone keeping track of Krugman’s op-ed pieces in the New York Times won’t be surprised to find that he isn't the one talking most sense.

Read it here.


June 27, 2005

Tesco worries

The BBC reports on the growing number of special interest groups complaining about the growing dominance of Tesco.

There is a growing coalition raising questions about how global giants, including Tesco, affect independent retailers, producers at home and abroad, and the environment.

Tesco, which is the fastest growing supermarket group in the UK, has become a target for campaigners.

On Thursday, an anti-Tesco website – Tescopoly – was launched by a coalition of eight campaign groups.

Read the full article here.

One argument highlighted by the article is the increased funds flowing to ‘big national or multinational chain[s], rather than to local traders’. As Don Boudreaux has said in the past, it makes little difference whether the salaries of local residents are being spent at the local corner shop or at a shop several times larger because it’s impossible to keep money within a given locale. To do so requires a people to live in isolated autarkic communes. Such communities would produce everything required for sustenance locally, choosing not to engage in trade with others. Such a system is a throwback to a time we’ve long outgrown.

Do these protesters genuinely think the UK would be a better place if all money held by Liverpool for example, stayed within Liverpool? Or if all money generated in Birmingham stayed within Birmingham? We have all benefited from being able to purchase clothes cheaply, thanks to low cost textile production in China. We’ve all benefited from being able to purchase low cost DVD players and televisions from producers in South Korea. If the movement of funds between countries is of little relevance, why should movement within the UK be any different?

Spending money at a local store doesn’t increase the likelihood of funds remaining in a given area anyway. A local, independent food store may still purchase its fresh produce from another region or country, just as a local hardware store will look to the region/country that offers the cheapest inputs. Choosing to spend money in a local store simply delays the inevitable movement of money elsewhere, reducing efficiency in the process.

Overall, the desire to keep money ‘locally’ is misplaced. One’s salary is better spent at the firm offering best value for money, regardless of who owns it or where it chooses to send profits.


June 25, 2005

Radio 4, Philosophy and Marx

BBC Radio 4’s show In Our Time is running a survey aimed at uncovering the nation’s favourite philosopher. The show’s website provides audio clips of various individuals putting forward the case for the various candidates.

Michael Grove of The Times questions the popularity of Marx, the likely winner of this survey and explains the appeal of his philosophy to those who tend to dwell in academia.

A sample –

The author of The Communist Manifesto and Das Kapital may be the godfather of more misery, death and criminality than any other figure from the last 200 years. But he speaks, across the decades, and over a mountain of corpses, to an eternal yearning on the part of intellectuals. Marxism appeals to the thwarted dignity of the intellectual, flattering the academically inclined by playing to their sense that the world does not value them as it should.

Karl Marx has the answer to the central question that most troubles contemporary intellectuals. Not, “what is the meaning of life?” but “if you’re so smart, why aren’t you rich?”. For all those who form our intellectual classes, the readers of the New Statesman and the London Review of Books, the lecturers in sociology and cultural studies, the Arts Council England administrators and LEA curriculum advisers, life is plagued with a nagging injustice. They possess what they believe to be superior insights to the majority, a more cultivated mind, a more refined sensibility, a broader intellectual range. And yet they don’t enjoy the worldly success, or esteem, of those coarser souls who devote themselves to the grubby business of commerce and exchange. How can this injustice be explained? There must be something deeply, systemically, wrong with the way society is organised.

Read the full article here.


June 22, 2005

Academics, celebrities and their proposed solutions

With all the current publicity about Live 8 and debt relief, it’s worth asking why the majority of airtime goes to singers, pop stars and those who generally don’t deal with the pertinent issues day in, day out. Without meaning to flog a dead horse, take the issue of ‘trade justice’; the idea (minus caveats) that poor countries should be free to erect barriers as they see fit, removing them when they think the time is right.

Take that idea into any politics/economics department across the country and you’d be faced with counter-arguments about moral hazard and the entrenchment of special interest groups from undergraduates and professors alike. However, the public won’t hear such views outside of universities and op-ed pieces in select broadsheets.

It’d be foolish to think the voices of celebrities are more prominent because they care more for the causes they champion. I think the popularity of their cause is down to the fact that people can play an active role in the solutions they propose. If ‘trade justice’ is the goal, we can walk around wearing white wristbands to highlight the issue in the minds of government. If the solution is more aid, we can dig into our pockets and whip out some change or a debit card.

Contrast those solutions with the view that institutions in African need to change if poverty is to be eliminated; the view that corruption and internal conflict must cease. How do such proposals allow the public to participate? We can’t donate institutions and we can’t donate peace. Wearing wrist bands is useless given that African leaders won’t see them. The true solutions to the problems abroad involve inaction on our part and proactive movements abroad.

Overall, the views that gain widespread popularity and acceptance are those which permit public participation. Any solution, however valid, which isn’t conducive to domestic action, will be dominated by anything that gets people out of the house and makes them feel good about themselves temporarily. The problem lies not with appeal of celebrities versus stuffy academics, but with how sexy the proposed solutions are.


June 15, 2005

eBay pulls Live8 tickets

Following on from yesterday’s comment about Live8 tickets, eBay have given into the pressure from customers and organisers to ban their resale.

From the telegraph.co.uk

The internet auctioneer Ebay was forced to withdraw tickets for the Live 8 charity concert from its website last night after Bob Geldof demanded a boycott over its refusal to prevent touts selling tickets.
The company's climbdown came after hundreds of protesters made bogus bids on the site of up to £10 million in protest at sellers attempting to make a profit.

Geldof, the organiser of Live 8, threatened legal action against the website – which he likened to an "electronic pimp" – and accused those people selling their tickets of "disgusting greed".

It’s not clear why those who sell tickets on are being criticised, whilst those who choose to enjoy music that would otherwise cost an exorbitant amount are heralded as being more altruistic. The value inherent in the ticket lies in the quality of bands on offer. By going down and enjoying the concert, one benefits from that value in-kind. Through the ticket's sale, the seller obtains its monetary equivalent. To the extent that there are willing buyers and resale is permitted by law, the person selling the ticket on eBay is no better off than the person who decided to listen to the music.

eBay probably made the right business decision, but it’s initial statement on the issue was correct

"We are allowing the tickets because we live in a free market where people can make up their own minds about what they would like to buy and sell. Ebay believes it is a fundamental right for someone to be able to sell something that is theirs, whether they paid for it or won it in a competition."

June 14, 2005

Bob Geldof, Live8 and eBay

It appears that winners of the Live 8 ticket raffle are choosing to place their goods on eBay. BBC News says the following

Bob Geldof has branded the sale of Live 8 tickets on the internet auction site eBay "sick profiteering".

The Live 8 organiser called on the site to ban tickets for next month's London show, featuring Coldplay and U2, which were won through a text competition.
He said: "I am sick with this. It is a disgrace. It is completely against the interests of the poor."

"The people who are selling these tickets on websites are miserable wretches who are capitalising on people's misery. I am appealing to their sense of decency to stop this disgusting greed."

Sadly, the mechanism by which bidding on eBay perpetuates poverty wasn’t explained fully by Geldof. His comments imply the tickets have some inherent value which is being diverted away from the poor to the merely greedy. He’s right that they have high value, as evidenced by the high prices they’ll command on resale. Still, if it was paramount that this monetary value was captured by the organisers, why offer them for a paltry £1.50 text message in the first place?

Truth is, they could have offered the tickets for £10 each and would have sold out in minutes. They could have offered them for £40, £60, or even more, without having to worry about lack of demand. For someone who cares so dearly about the plight of others, his endorsement of the decision to offer tickets so cheaply is strange, and his accusations against the secondary auctioneers are thus irrational.

Bob Geldof would claim that morals dictate all revenue should go to charity, yet there exists no code of morals set in stone. My claim that it is moral for him to plough the majority of his multimillion pound fortune into investment into Sudan or Uganda is no more or less valid.


June 01, 2005

Costly University Degrees

The Financial Times ran this story on Monday about the falling returns to a university degree due to the glut of new entrants into the higher education system. This is unlikely to be surprising to anyone, but it never hurts to have studies put forward figures to illustrate the point.

Graduates can now expect to earn an average £140,000 more over their lifetimes compared with those who choose not to go to university; down from the previous estimate of £400,000.

The BBC also coments on the issue, saying

Maths or computing degrees made the biggest difference to earnings, adding £222,419 for men and £227,939 for women.

However, arts subjects meant just £22,458 more over a lifetime for men, compared with A-level leavers.

Dr O'Leary [Swansea University professor] said this could actually mean a loss of earnings, when tuition fees and living costs at university were taken into account.

This highlights the importance of thinking carefully about subject choice and not thinking University is something that must be experienced at all costs. I don't believe subjects which bring greater wages are inherently better, or more useful, but teachers shouldn't allow 6th formers to have unrealistic expectations about such financial issues. Additionally, it makes questionable the claim that taxpayers should be supporting prospective students, given the huge variabiliy in returns to different subjects and in degrees from different institutions.

See the Financial Times article here.
See the BBC News article here.


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