Oh Canada

For decades, Canadians were the butt of many cruel jokes about how pathetic and effeminate their nation was, with a vague notion that they were the indolent, slightly retarded younger sibling of the successful USA, smoking weed in their underwear and playing video games whilst the older brother was pulling double shifts at work.

In 2015, Canadians thought long and hard about how to deal with this unfair criticism and came to the collective conclusion that the best plan of attack would be to elect a former ski instructor, gap year backpacker and professional trustafarian, Justin Trudeau, as their leader.

As a consequence, they’ve deservedly got legislation such as this gem;

Canadian government nationalises journalism.

Actually, that should probably read “Canadian government further nationalises journalism” as they already annually spunk half a billion Canadian dollars (about $75.43 US and a couple of Tim Horton donuts) on the CBC. One supposes an addition $120m a year isn’t going to be that noticeable, therefore.

Anyone with the mildest knowledge of history and just the slightest tendency toward cynicism will find the language used to announce this “innovation” (yes, that’s how one likely recipient of taxpayer largesse described it) has creepy echoes from a previous time;

An independent panel comprised of members of the news and journalism industry will flesh out the application of the moves announced in Wednesday’s fall economic statement. In particular, the group will decide which journalism jobs and which news organizations are eligible for the new funding.

Independently deciding who amongst them will receive free money? Yes, that sounds fine, I’m sure.

Oh, and it’s not an across the board subsidy then? Not every news outlet and journalist will benefit?

The government said the package will aim to help “trusted” news organizations, but will leave it to the media industry to define the application of the new initiatives.

Trust is a difficult thing to define, isn’t it? It’s almost easier to define the conditions where one doesn’t have it. After all, as the man said, “there’s only two men I trust in this world; I’m one and you ain’t the other one“.

Bill’s Opinion

As with so many issues facing us on a daily basis, it is a dangerous mistake to assume a single cause. The legislation has an underlying assumption that there is only one major cause to the economic decline of the traditional media sector; that digital media has broken the business model.

That may well be a major contributing factor but what hasn’t been considered is that there may be another cause of similar importance. Amusingly, there’s a clue in the press release; Canadians are no longer prepared to pay for traditional media because the speed of delivery and far wider choice of digital sources has opened their eyes to quite how biased and limited the traditional media has been. They’ve lost trust, in other words.

So now they have the worst of both worlds; Canadians are going to pay for journalism they don’t want to read……forever.

Forever?

Yes; ask yourself, under what circumstances will a Canadian government ever be able to announce a closing of this funding source once it has been embedded for a couple of years?

The independent media will wail and moan from the highest steeples and undermine any political party that so much as hints that the time has come to stop subsidising journalism that nobody reads.

Corporate protection rackets

Spotted recently at a place of work;

An accreditation that the workplace is “breastfeeding friendly”?

Okaaaaaay.

What’s going on here, do we think?

Surely very few people in 2018 would be so vehemently against helping mothers to continue breastfeeding for as long as they wish after childbirth (well, perhaps not too long that the child could write a letter in cursive script requesting a portion)?

So why the need for an accreditation agency to provide fancy certificates which, in effect, do little but state that, “this employer isn’t a dickhead about breastfeeding“?

Well, perhaps it’s something to do with the fact that one has to pay to be accredited?

The website is suspiciously cagey about how much this accreditation will cost. “Call us for a quote” for a service that can’t be much more than a quick visit to the dedicated room and a browse of the written policy?

Hmm, smells like a scam.

Bill’s Opinion

As we’ve seen with monopolies on virtue signalling, such as White Ribbon, what begins as a laudable idea soon takes on a momentum and becomes self-justifying. The moment fees are charged for the charity’s official seal of approval, it can be fairly certain that the charity has corrupted its purpose.

In fact, the ABA isn’t actually a charity at all, it’s a private “training” business that receives revenue from two almost equal sources; the fees from its protection racket and generous donations from the Australian taxpayer;

That’s a nice business you’ve got there, it’d be a shame if anything happened to it like a negative press campaign about being a bad place for young mothers to work“….

Questions we can answer

Traditional bricks and mortar retailers are suffering as people switch to cheaper, more convenient ways to shop.

Here’s a question for anyone who owns or runs a business;

Q. What do you do if your competitors are carving into your margins and market share with cheaper prices and more convenient services?

Do you;

A. Look at your cost base and search for efficiencies that will allow you to reduce prices?

B. Work to create a better consumer experience?

C. Investigate whether there are alternative goods or services you could offer to complement or replace the loss-leading lines?

D. Lobby the government to impose special duties, taxes and levies on the consumers who purchase from your competition?

Bill’s Opinion

If you chose option D, congratulations! You are officially a member of the crony capitalism class.

Welcome to the internet and the 1990s, Australian retailers, spoiler alert; get to see Bowie, Prince, George Michael and Motörhead in concert at the next available opportunity.

Capitalism and democratic choices are a distant memory in Australia

Remember how, back in the mists of time there used to be a clear choice for voters; a party of the free markets and less government spending versus a party representing the working class and unions?

Perhaps we’re looking back with rose tinted glasses and t’was always thus. Nonetheless, Australians were given a very clear glimpse of what lies ahead should the economy take more than a minor dip over the coming months and years; the federal government becomes lender of last resort to crap businesses.

No. Really.

Treasurer Josh Frydenberg and Small Business Minister Michaelia Cash will announce the small business funding policy on Wednesday, promoting the soon-to-be-established Australian Business Securitisation Fund as a way to overcome banks typically only lending to the self-employed when they pledge their personal home as collateral.

To summarise the announcement; “if the banks looked at your business and decided it was a poor bet and you didn’t have enough skin in the game, we’ve just decided the Australian taxpayer and their superannuation funds will lend you the money anyway“.

It’s very easy to be generous with other people’s money, isn’t it?

This is bound to end well.

The irony is that this policy wasn’t announced by either of the openly Socialist parties but by one of the two parties that historically claimed to be champions of free markets and minimal government intervention.

At a state level, similar disconnects have been shown between expressed and revealed preferences. Here’s a “free markets” politician bailing out rent-seeking taxi medallion speculators.

The $2bn fund to lend money to businesses judged by commercial lenders to be poor risks is an interesting development though, coming as it does so soon in to the worst housing crash in a generation, but particularly after this little legislative gem was snuck through onto the statute books with hardly any media coverage or explanation; insolvent banks can be rescued by confiscating deposits.

Bill’s Opinion

Will a “bail-in” of superannuation funds or bank deposits ever happen in Australia?

Unlikely, but not impossible. The risk isn’t zero.

There’s a great and often quoted dialogue in Hemmingway’s The Sun Also Rises;

‘How did you go bankrupt?’ Bill asked.

‘Two ways,’ Mike said. ‘Gradually and then suddenly.’

Perhaps this is the “gradually” part for Australian depositors. If so, it might be an idea to know how quickly you could act to not be caught out by the “suddenly“.

Dick by name….

Australia is home to a gentleman called Dick Smith. He owns an eponymous chain of electronics’ stores where one can purchase all manner of flat screen TVs, music systems, white goods and other devices.

To the best of our knowledge, practically none of these devices are manufactured domestically. Like most western economies, Australia used to manufacture TVs and radios but the availability of cheaper and better quality imports from its northern neighbours in Asia hastened the decline of the industry.

Dick Smith has personally benefited greatly from this destruction of the local industry.

Imagine our surprise therefore that he feels the need to berate an overseas supermarket chain from copying his successful model but in the grocery sector.

Apparently, the management of Aldi are morally reprehensible for providing good quality imported food products at a lower price than can be produced domestically.

Ponder that for a moment. Now look at the brand of phone, tablet or PC on which you are reading this. Where was it made? Korea?

Now look at the label in your shirt or dress. Was it tailored domestically? Unlikely.

What should be done about this?

Bill’s Opinion

Dick Smith is typical of most Australian “entrepreneurs” in as much that, once he has made his fortune, he sees no reason to feel shame about lobbying and making public statements to pull the ladder up and prevent others from following his example.

His competitor, Gerry Harvey, is another example of this syndrome, campaigning for the federal government to impose the 10% General Sales Tax on low value overseas internet purchases, despite the fact that this will incur a net cost to the taxpayer.

“Capitalism” is a much maligned noun these days but consider whether there really is that much of it about. Certainly the people who often are pointed at as being “capitalist” are no such thing. Dick and Gerry have more in common with the mercantilists of the 16th century than Adam Smith or Ayn Rand.

It’s definitely the rental agency’s fault

In Victoria, Australia, a place where corrupt unions and progressive politicians rule the roost, a young girl was murdered at a private party.

Of course, the political instinct in response to this is never to let the judicial process run its course; prosecuting the suspected murderer by a fair trial, sentencing them to prison if found guilty, letting them go free if found innocent.

Nope, in Victoria, the answer is to look to increase regulation.

Wait, what?

What new regulation is required in a murder case?

Regulation against AirBnB.

Seriously…… why? Because the apartment where she was murdered was a short term lease through the rentals website service, so, in the lefty logic, AirBnB must somehow be partially responsible.

Maybe the Victorian Premier, Daniel Andrews, has a point. Let’s step through some counter arguments to our instinctive position that it was 100% the murderer’s fault that she died;

Devil’s Advocate Position 1

If AirBnB hadn’t let the apartment to a bunch of teenagers, they wouldn’t have thrown a party which got out of hand and a murderer wouldn’t have murdered her.

Let’s face it, who amongst us hasn’t had the urge to violently murder someone at a party in a short term rental apartment? None of us? Hmmm, maybe that’s not Daniel Andrews’ greatest argument then.

Devil’s Advocate Position 2

If AirBnB hadn’t rented the apartment, the party wouldn’t have happened and a violent murderer wouldn’t have murdered the girl.

Because teenage parties were only invented after AirBnB was established? Because murders never occurred before AirBnB was established?

Devil’s Advocate Position 3

AirBnB have a duty of care to all visitors of their rental properties. Therefore there should have been some protective measures in place to prevent a murderer from murdering in the property.

By this logic, your rental car company should prevent you from crashing the car or hitting pedestrians.

Bill’s Opinion

If you are a legislator in a country with Common Law, consider the possibility that, 803 years after Magna Carta, there may already be appropriate legislation to cover most major crimes. How likely is it, after all those years and hundreds of thousands of man days spent considering legislative responses to public policy questions, that you’ve just landed on the best solution to a pre-existing problem?

Murderers are responsible for their crimes, not the owner or letting company of the room in which the crime was committed.

Luxurious lamb

Welsh farmers will need protecting against evil foreign farmer following Brexit.

It’s obvious isn’t it, really?

The poor farmers of Wales will have to contend with the unfair competition from New Zealand farmers once the UK has exited the EU and struck trade deals with its former colonies.

This is indeed an economic tragedy on a scale of which there is no precedent.

Imagine the devastation to the British consumer of cheaper, market-priced food appearing in the supermarkets.

The Welsh Assembly is correct in its assertion that government intervention is required to ensure that no farmer is negatively impacted by this loss of EU subsidies and market protection from superior or cheaper imported products.

Or perhaps we are being sarcastic.

Bill’s Opinion

Why would the Welsh Assembly prioritise a small group of farmers above every carnivorous UK citizen?

The best interests of everyone in the UK who enjoys eating lamb is for them to be able to source a quality product at the best possible price.

Protecting a particular special interest group at the expense of the consumer is a return to mercantilism and the Corn Laws. Of course, this is precisely what the EU has been increasingly implementing over the decades following the UK’s entry into “The Common Market” (that was the name of the entity of which the 1975 referendum confirmed continued membership).

Who benefits? No, who *really* benefits?

Those helpful people at the International Organisation for Standardisation (ISO) have released a new standard, this one is focusing on the cross-border sale of secondhand goods.

Sounds perfectly reasonable, doesn’t it? If we can standardise the sale or donation (for charity, for example) of secondhand goods we can improve health and safety outcomes, reduce buyer disappointment and regret and bring order to an unregulated market.

To read the detail of the standard, you’ll have to buy a copy, but the summary probably tells us enough to judge whether it will be effective and/or of any use.

The standard reflects that there are going to be existing health and safety standards in individual countries which will still apply but this standard seeks to categorise the secondhand goods by their usability and condition.

An example given would be a car; it is presumably important that the starter motor works, whereas whether or not the GPS software is up to date is very much a secondary concern.

The standard is trying to assist the end buyer in making an informed decision and to set their expectations accordingly about the functionality and quality of the product they are procuring. One method the standard suggests is a categorisation of A through to D of the condition and functionality of the goods.

Will it achieve this and is there a more efficient way of delivering the same outcome?

Well…… the people at ISO may not be aware of this but there’s a website called eBay that currently enables consumers to buy secondhand goods across borders. How does eBay provide information to a consumer in, say, London who is buying a secondhand component for a marine Diesel engine from a vendor in Florida?

The answer is, of course, that eBay uses a condition grading system combined with a free text narrative field to describe the product and an option to ask detailed questions about the product before committing to buy. If the delivered product fails to live up to the description provided, eBay has a dispute process that arbitrates between buyer and seller to attempt to find a fair outcome.

Bill’s Opinion

The International Organisation for Standardisation seems to be about 15 years too late; the market has already found a solution to this.

Any country that adopts the standard and applies it at their ports of import can be certain that the prices paid by the consumer will increase.

It should also be obvious that these increased prices will result in lower volumes of sales of imported secondhand goods and a commensurate likely increase in local sales of the equivalent new items. And perhaps that’s the point of this belated push to regulate standardise the secondhand market; the main beneficiaries will be the industries who supply the new items.

Ah, vested interests seeking government intervention again…..

Special pleaders gonna plead specially

In what surely must be an April Fools’ joke, the former CEO of Walmarts complained that Amazon was too big and was putting small competitors out of business.

Which small competitors?

Toys R Us and J C Penny.

No, really he said that with a straight face.

Just a reminder for those not living in a country without a Walmart or one of their subsidaries; Walmart is a retailer with $500 billion annual revenue. It’s also the largest private sector employer in the USA with 2.3 million staff.

Ask the owner of an independent local store in small town USA how they feel about the prospects of a Walmart’s outlet being built in the neighbourhood and you’ll hear opinions not dissimilar to those expressed by Bill Simon;

Let’s examine those claims, shall we?

“Destroying jobs”

If we take a narrow view of the economy, the jobs lost at Toys R Us for example, this statement seems true. However, the products purchased online at Amazon rather than at a Toys R Us outlet are still required to be manufactured (mainly in China in both cases, but let’s ignore that as applying equally), packaged and distributed to the consumer. In addition, the consumers who have saved money by purchasing the same product at a cheaper price will now have the product PLUS some extra dollars which they will spend elsewhere in the economy, thus creating employment.

“Destroying value in the sector”

This is a quite vague statement and leans very heavily on how one defines “value” and from which subjective viewpoint one is looking. From the point of view of the CFO of Walmart, yes value is being destroyed, in terms of balance sheet and share price. In terms of the consumer, value is being created with savings, convenience and increased choice.

Simon’s comments were in response to President Trump’s tweet on the subject;

….which seems to be claiming Amazon is a bad actor for using a government service (the postal service) that happens to be provided at a loss.

Bill’s Opinion

Bill Simon and President Trump should really know better than to spout these economic fallacies. Perhaps they do and are being mendacious.

Simon was perfectly at ease with using the size of the corporation he ran to undermine the business models of hundreds if not thousands of smaller competitors. In fact, what a wonderful advertisement for the creative destruction of the free market that even companies as powerful as Toys R Us, JC Penny and Walmart can have their business models disrupted to the benefit of the consumer.

If President Trump doesn’t like the way the US Postal Service is run or the rules under which it operates, he should probably write a stern letter tweet to himself describing which changes he should make.

Special pleading, especially when using unemployment as a reason, is always at the detriment of the consumer who, by the way, has already unanimously-voted with their wallets.

Have we reached “Peak Elon Musk” yet?

Perhaps it’s a function of the modern news cycle, driven by clicks and speed to publish rather than the traditional print media that produces these archetypes such as Steve Jobs and, recently, Elon Musk.

One can’t log on to social media or news sites without being presented with a quotation meme, spurious story about their management style or genius of innovation.

These must surely be taken with a large pinch of salt; nobody is perfect and, sure these people have been very successful, but not all of it was due to their intellect or perspiration.

Take Musk, for example; his high profile spacecraft business, SpaceX, is partially-funded by Venture capital, but the majority owner is Musk.

Where did Musk make his fortune? His other company, Telsa Motors Inc., which has been the beneficiary of nearly $5bn in government subsidies. He may be good at manufacturing solar panels and lithium batteries but he’s no John Galt. Many of us would probably indulge ourselves in a spacecraft hobby if we’d been given billions of dollars of government welfare.

There are also suspiciously few voices questioning how Musk reconciles the green credentials of Telsa with the massive amount of traditional fossil fuel burned with each SpaceX flight.

The government handouts continue in Australia, a country which loves to fawn over famous Americans as if Übermensch. The state government of South Australia made some pretty poor decisions for ideological reasons over the last few years with regards to their energy supply,  resulting in several disastrous state-wide blackouts last year.

Like a knight in shining armour, Musk made a now famous boast that he could solve their problems with his batteries and, if he’d not completed this solution within 100 days, South Australians wouldn’t need to pay a penny. Again, after being the recipients of $5bn from taxpayers purses, you’ll be pleasantly surprised at most people’s generosity.

There is also the question of how much of the problem the 100MW battery will actually solve? Various reports suggest that it will have an hour’s capacity. What happens in the 2nd hour of an outage?

Also, given that the installation will have a price tag over over $150m, South Australians could be forgiven for asking about the probity of the government procurement process that selected a supplier on the basis of a Tweet?

Bill’s Opinion

Musk is likely a very talented engineer with some excellent innovative ideas. He is, however, even more talented at self-promotion and convincing starstruck government officials into handing over other people’s money.

Nice trick, if one can pull it off.