Are “idealists” better than everyone else?

“One of the great mistakes is to judge policies and programmes by their intentions rather than by their results”, said Milton Friedman. The fact that someone claims noble, idealistic motives is often reason enough for them to receive recognition for what they do. Even critics of Greta Thunberg, for example, are quick to praise her “idealism.” Regardless of what her actions actually achieve, people tend to admire her idealism. In contrast, people with a “materialistic” attitude are branded as superficial and anyone who strives for fame is swiftly labeled a pathological narcissist.

The German literary critic Marcel Reich-Ranicki takes a very different view: “Respectable people work in pursuit of glory and money. Indecent people want to change the world and save others.” Of course he is exaggerating and a host of counter-examples immediately spring to mind: Jesus Christ and Albert Schweitzer are among the countless idealists who have changed the world for the better, while innumerable power-hungry and corrupt dictators have been responsible for much suffering and misfortune.

Nevertheless, Reich-Ranicki has got one thing right: The multitude of idealists who wanted to improve the world and redeem people – and in doing so delivered immeasurable suffering – is long and includes mass murderers such as Adolf Hitler and Mao Zedong, along with fanatical cult leaders and the fighters and followers of IS. 

In his speeches, Adolf Hitler railed against the bourgeoisie, accusing them of materialism and a lack of idealism. Hitler wanted to build his party as a fanatical fighting force of idealists. “Anyone who today fights on our side,” he proclaimed in a speech to SA fighters in 1922, “should not expect to win great laurels; far less can he win great material goods – it is more likely that he will end up in jail. What we need today is a leader who is an idealist, if only because he must lead those against whom it would seem everything has conspired. But therein lies the immeasurable source of our strength.” Hitler didn’t attract the support of large sections of the German population in the years 1929 to 1932 by proclaiming anti-Semitic slogans, but because he advocated a social utopia, the Volksgemeinschaft, that would break down elitism and unite Germans across class divides. In this case as so often throughout history, idealism led to dictatorship and the formation of a murderous regime. 

On the other hand, however, there are hundreds, if not thousands, of examples of entrepreneurs whose “materialistic” pursuit of profit has significantly improved people’s lives. Thanks largely to Sam Walton, the Waltons became the richest family in the world. And he became rich by establishing a chain of stores, Walmart, that has served millions of people by offering high-quality produce at reasonable prices. Just take a glance at the list of the richest people in the world and you will quickly see that most became rich as entrepreneurs and innovators who invented new products and services that improved the lives of people all around the world. This is true for the Microsoft founder Bill Gates, Amazon’s Jeff Bezos and the Google founders Larry Page and Sergei Brin.

Steve Jobs is probably an exception among entrepreneurs because he deliberately marketed himself as a world-changer – which he undoubtedly was. He recognised that by appealing to higher values and ideals he could inspire his employees to excel and turn consumers into disciples. He styled the rivalry between Apple and IBM as a battle between “good” and “evil.” Accordingly, only Apple could possibly prevent IBM from dominating the computer market and creating the dark age envisioned by George Orwell in his dystopian novel 1984. 

The founder of Microsoft, Bill Gates, ended up as one of Jobs’ fiercest rivals, although they did collaborate closely for a number of years. Gates once observed, “Steve was in ultimate pied piper mode, proclaiming how the Mac will change the world and overworking people like mad, with incredible tensions and complex personal relationships.” Jobs uttered one of his most famous sentences in 1983 when he succeeded in convincing John Sculley, president of Pepsi-Cola, to become Apple’s new CEO: “Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world?” He convinced another early employee to come to Apple with these words: “We are inventing the future. Think about surfing the front edge of a wave. It’s really exhilarating. Now think about dog-paddling at the tail end of that wave. It wouldn’t be anywhere near as much fun. Come down here and make a dent in the universe.” These are the kinds of words you would expect from a guru rather than a corporate leader. In fact, “make a dent in the universe” became one of Jobs’ go-to formulations. Another employee reported that Jobs repeatedly rallied his employees with sentences like these: “Let’s make a dent in the universe.” “We’ll make it so important that it will make a dent in the universe.”

Most entrepreneurs change the world without ever making such a big fuss about it. And perhaps a number of them really are “only” driven by the pursuit of profit. But in their pursuit of profit they create more benefits for the world at large than many “idealists” who set out to save people and make the world a better place. As Adam Smith observed in The Wealth of Nations: “By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.”

Rainer Zitelmann is a historian, sociologist and author of the book The Power of Capitalism. https://the-power-of-capitalism.com/

It's really important to understand value

This is from the Ellen MacArthur Foundation but it’s a common enough error out there. Common and pernicious:

The textiles system operates in an almost completely linear way: large amounts of non-renewable resources are extracted to produce clothes that are often used for only a short time, after which the materials are mostly sent to landfill or incinerated. More than USD 500 billion of value is lost every year due to clothing underutilisation and the lack of recycling.

This is nonsense. There is that foolishness about non-renewable resources of course. Cotton, flax, wool, silk, they’re all things that grow and so are renewable. As for the oil derived plastics the current complaint is that we’ve more of that raw material than we can allow ourselves to use. If we’re going to talk about water and the like then we’ve a rather large recycling system out there composed of oceans and clouds.

But the gross error is about value. The only useful measure of value we’ve got is what we humans value things at. For there are only us humans around to be doing the valuing. Such human valuations are also entirely the liberty of the individual doing the valuing. We might, say, value Geoff Hurst’s second half ‘66 shirt rather more than a pair of used khaki BVDs after a Ten Tors challenge completion. Same amount of cotton thread in there perhaps, amount of labour, resources consumed, but humans can be odd that way.

People “underuse” their clothes by whose calculation that is? Given that the only possible proper valuation is according to the precepts of those doing the using - rather than some tongue clucking observer - that the clothes are used exactly as much as they are is proof that they are not underused.

Further, if value were gained - or even not lost - by recycling then more recycling would be done. As with Ferraris not appearing on scrap heaps and Yugos doing so.

The very concept of the $500 billion is wrong. Which does rather mean that we shouldn’t be using it as an input into any decision making process we might impose upon society.

London has low damages from air pollution

The Guardian is, strictly, correct here:

The health costs of air pollution from roads are higher in London than any other city in Europe, a study has found.

Two other urban areas in the UK, Manchester and the West Midlands, have the 15th and 19th highest costs respectively among the 432 European cities analysed.

The Guardian is also being horribly misleading even as they are that, strictly, correct. For they are telling us the gross amount of damage to human beings from that air pollution. Which, given that London is, by far (between two and three times larger than the next on the list studied, Berlin) the largest group of people being looked at seems reasonable, that it should be so. Even if the damage were 1 penny per person per year London would still be top of the list of shame of gross damage.

It is rather later in their reporting that we get told this:

City size, combined with pollution level, is a key factor contributing to total social costs.

London, on a per capita basis, doesn’t even make the top 10. Actually, London is about half the per capita cost of those top 10 - roughly, you understand.

A useful example of selective reporting leading to being entirely misleading. But then one has to read The Guardian extremely closely to find something not so these days….

This does rather kill the idea of a planned and scientific socialism

As the incurable optimists that we are a bulletin from that pursuit of the silver lining to the current cloud. This is from Zoe Williams in The Guardian:

In order to follow strict rules, people need to believe they will make a difference: a drop in cases is not enough. If no progress is made during the lull, it feels like an outcome postponed rather than averted. In areas over which the government has the least purview there has been progress: treatment for the virus in a hospital setting has improved; death rates have gone down. Yet the government has nothing to show for the time we bought it. Indeed, every week since March has brought some new instalment of their inadequacy. When it’s not a calamity directly related to the virus – million-dollar consultants selling mixed messages, PPE procurement from amateur chums – it’s an A-level fiasco, or a university debacle. Deferred gratification is something most of us, at our most responsible, can comprehend, but it presupposes some future that is indeed gratifying. When tomorrow simply looks like a worse version of today – and the spectre of a no-deal Brexit doesn’t help, here – why kick the can down that road?

Leave aside the specific subject the complaint is about and consider the wider implication here. In order to agree to be subject to detailed rules we have to believe that those creating and imposing them are competent. As, obviously, is true of such rules being effective - there must be competence in their creation.

We’ve now that experience of detailed rules created by the British state and doesn’t that just kill any idea of a planned and scientific socialism?

Given what’s been happening we’re going to put these people in charge of the bread supply? Get them to run the coal mines and bus companies again? Decide who may build what, where?

This is not specific to the specific party in power either. Decades of our experience of Whitehall and Westminster tells us that competence is in equally short supply either side of the dispatch box. No, we’ve met a lot of these people and our insistence on less political direction of the real world is based upon such experience.

Perhaps this is something we should hope for rather than insist upon but the correct victim of current events is that ridiculous idea that the Man in Whitehall knows best.

Consumption is the point and purpose of all production

What matters in an economy is that consumers gain more of what consumers want. How those desires are met is, at very best, a minor and secondary question. So this is not something to worry about:

Shop closures soared at a record rate in the first half of the year as coronavirus lockdowns hit the high street.

Britain lost 6,001 more chain stores than it gained in the first half, up from a loss of 3,509 in the same period last year, a study by PWC, the professional services firm, found.

The pandemic has laid waste to high streets, costing thousands of jobs in the process.

Well, it could be something to worry about if shoppers still desired the services of those shops. However:

Although the retail sector rebounded after the spring lockdown

Retail sales are up year on year. That is, consumers are gaining what they want from the wider retail system, the services of the retail system. So, in the grander terms, we have no problem at all.

Sure, change is uncomfortable, transitions can be painful for those being transitioned and so on. So to the extent that we have a problem it is one of easing this passage from one method of sating consumer desires to another. That is, we don’t want to go about saving, supporting or subsidising the old way but we might well want to support people through the transition.

To be plain about it, if people don’t want physical shops any more then bye bye physical shops. For the only point of any form of production is to enable consumption and if we’ve a new and more desired method of gaining that consumption then the old production system can go hang.

Once again with the reasoning from manipulated prices

Prices are, of course, information. Information necessary to any decision about what to do next. However, as we’ve mentioned before, using a manipulated price doesn’t provide the information necessary. Because, of course, the price is false and so is the information by the amount of the manipulation:

Looking forward, the signals are not of recovery, but relapse, and it is not clear that the same old central-bank magic will make much of a difference. Inflation is sinking like a stone as consumers rein in their spending again. Annual prices in the eurozone fell by 0.3% in September following a 0.2% decline in August, according to figures last week. Consumer price inflation in the UK dropped to 0.2% in August, meaning prices barely rose.

Therefore, goes the logic used, we should have negative interest rates.

Our point here is not to argue either in favour of, nor against, negative interest rates - not here at least. Rather, the link to the UK CPI was this:

Falling prices in restaurants and cafes, arising from the Eat Out to Help Out Scheme, resulted in the largest downward contribution (0.44 percentage points) to the change in the CPIH 12-month inflation rate between July and August 2020.

We’ve had a specific and known manipulation of the inflation rate, one that lasted for one month at most. This is not a price from which we can gain useful information about what to do with the whole economy for the next few years.

Precisely because market prices are information we have to make sure that it is actually market prices, not manipulated ones, that we use as our inputs into the decision making process.

Recycling consumes resources, not saves them

As we might have pointed out before certain types of recycling consume resources, not save them:

The amount of household recycling collected has nearly doubled in some areas during the pandemic, pushing up the costs of keeping services running, local councils have said.

Eight in 10 English councils reported a rise in the volume of paper, cardboard, plastic and glass being collected since the national lockdown began, according to data from the Local Government Association (LGA).

Half of councils said they were collecting up to 20% more material for recycling than normal, with a third dealing with 50% more and some noting a 100% rise – on a par with levels usually experienced at Christmas.

The surge in the amount of household waste and recycling to collect has increased costs to councils,

Note that we do not say that all recycling consumes more resources then are saved. One of us once recycled some scraps of Soviet nuclear power station (unused, scraps from the construction, not from use) into those go faster alloy wheels for the cars of boy racers so we can hardly condemn the practice outright.

Rather, we need a system of determining which types, forms, of recycling of which goods save resources overall and which consume them. In a market economy this is simple enough. Systems which are losing money are consuming resources, those that turn a profit are saving them.

An increase in household recycling is increasing the cost of the system. This not being outweighed by a surge in the revenues from the sale of the items recycled. Greater volume means larger losses - the system is consuming resources, not saving them.

The aim of recycling is to save resources, household recycling consumes resources, we should stop doing it. That is, if the aim is actually to save resources. If it’s, as it might well be, simply a religious obeisance to Gaia then that’s alright then. Except for that obvious point that it has been several centuries since Britain enforced religious observance at the point of the law and that might not be something we wish to reintroduce.

Buy our jet planes because look at how expensive they are!

We may have mentioned this before but here goes again - shouting out about how many jobs your plan creates is advertising how expensive that plan is. Jobs are a cost of doing something, not a benefit.

Yes, people like to consume, that means they desire incomes, the normal method of gaining one of those is to go get a job. But from the 30,000 foot view any job doing the one thing means that same economic asset, that human labour, cannot be doing some other thing. There is thus an opportunity cost to employing labour in this one task - that opportunity cost being all the other things it could be doing instead.

Clearly the people sending out the press release don’t grasp this:

An economic analysis of Tempest conducted by PwC calculates the programme will also support 20,000 skilled jobs a year between 2026 to 2050.

That it is a press release is shown by the Times running much the same story as the Telegraph:

Manufacturing of Britain’s new force of heavily armed, manned and unmanned Tempest combat jets will sustain 20,000 jobs a year through to the middle part of the century, the UK defence industry has claimed.

Britain may or may not need new jet planes. Tempest may or may not be the jet planes Britain may or may not need. But advertising that the programme will create, or “support”, 20,000 jobs is an advertisement for the expense of the plan.

That’s 20,000 people - possibly even 20,000 skilled engineers - who cannot be making better windmills, sorting out car batteries, cracking mini-nukes, promoting diversity, automating childcare or finally, irremediably, solving Simon Cowell.

For jobs are a cost, not a benefit.

Perhaps they should but do they?

An interesting little commentary on Milton Friedman’s insistence that a company should - within the law and prevailing mores - attempt to maximise profits.

But there’s no getting away from it at Asos where sales are up by a fifth, annual profits have quadrupled and the chain added more than 3m customers in just 12 months.

...

As long as its young customer base can still buy the latest trendy gear at knock-down prices, who cares if there are widespread concerns about how the so-called fast fashion industry makes its margins and whether they’ve been built on the misfortune of others?

...

If we’ve learnt one thing from the scandal that engulfed Boohoo, it’s that for all the talk of younger customers being more socially conscious, the truth is that they care more about dressing well, and dressing cheaply, so the fast-fashion juggernaut hurtles on.

There’s a lot of insistence about what fast fashion ought to be doing - like not existing - from the morally minded out there. Yet clearly large numbers of people - they are handing over their own money, voluntarily, after all - find their lives enhanced by the availability of said fast fashion.

So, what increase human utility the most? Bowing to the moral demands or pumping the stuff out so that people may consume it? Clearly, it’s the second. Further, what maximises profits at the producing firms? Again, clearly the second.

So, the profit maximising option here, continue to make fast fashion fast and cheap, is also the utility maximising option. Given that utility maximisation is the name of the entire economic game, of even having an economy at all, profit maximisation is therefore in conflict with our goal in what manner?

Another way to put this is that you can only make a profit if you’re pleasing the customers so why wouldn’t we want people to try to please the customers in order to make a profit?

It’s even true that perhaps, according to some sets of moral precepts, that people should reject fast fashion. But do they? Apparently not which means that attempting to force its absence upon them is not, in itself, moral.

Perhaps the Fawcett Society would like to use facts and logic?

The Fawcett Society tells us that we must have lots more reporting of the gender pay gap. Even, that the law should force employers to spend lots more time pumping out lovely figures for all to ponder.

The UK is “unique in its light-touch approach” in not requiring private employers to produce a plan to tackle gender pay gaps, a report has found.

The research by the Fawcett Society and the Global Institute for Women’s Leadership at King’s College London (KCL) found the UK lags behind other countries, which have “much more robust systems”.

Researchers examined gender pay gap reporting legislation in 10 countries, and say the UK needs to do more to make faster progress on equality.

Well, gosh, when it’s put like that we’d all better get on with it, hadn’t we? Not enough effort being made and how could we hold our heads up in the global corridors of power if that were to persist?

Except, well, there’s that little nagging point. This more legislation, this more reporting, how actually effective is it? We are, after all, more interested in results than isometric exercise, that effort without movement thing. The report itself doesn’t compare the gender pay gap across countries and most certainly doesn’t attempt to tie it to how much - or how complex - legislation there is concerning the reporting of it. A quick look - and we’ll confess to not having run any proper statistical tests here - at the gaps doesn’t seem to show any correlation at all.

There is that second little nag at the back of the mind as well. As their foreword says:

However, the median gender pay gap among all employees currently stands at 17.3%,

Ah, no, we know this one. Over a decade back Harriet Harman tried to use this all employee median and was told off by the Statistics Authority for doing so. We might have mentioned this before. And yes, Ms. Harman’s numbers were supported by the Fawcett Society and they were, too, rapped over the knuckles for that misleading use.

So, Fawcett is not bothering to prove their contention, that reporting reduces the gap, nor are they using the right number for the gap in the first place. It would be a little cruel to remind all of Barbie’s point, that math is hard, but we do think we can and should expect better than this as justification for a change in public policy.

Which leads to that third, gripping, little nag. Given that the Fawcett Society doesn’t understand the current numbers available what makes them think that reporting more of them is going to aid?

We do know the answer to that question, yes. A demand for facts and logic is just mansplaining, isn’t it?