Monthly Archives: August 2021

To be sure it is Friday night.

‘give the kids a few Bob, After all sure it is Friday night. Ah, how could I tell her I was out of a job, from now on things were going to be tight’ -YESTERDAY’S MEN, CELTIC THUNDER

What was that thing about markets staying irrational longer than you can say solvent? Well, I’m no economist (and for that I don’t even do impressions. My advice on financial matters is officially worthless.) but as someone who really knows a little bit about fish, the state of the world looks like ‘interesting times’. That’s without any little details like war, or pestilence… maybe famine.

Anyway, the economic gurus have been telling us everything is sunshine, roses and unicorn-farts to power our new green cars. Which, um, I am finding a little hard to believe.

Personally, I believe we’re staring down the barrel of a hard recession, and possibly a new ‘great depression’. Too many things seem wildly out of kilter, and there are just too many things in what can only be called an entire bubble bath.

I live in Australia, so much of my perspective is skewed by this. Some of it may well make sense in other contexts. Australia’s economy is heavily dominated by raw materials, particularly iron ore export, coal and some agricultural produce a distant second and third. Australia once had its own manufacturing sector, making Australian products for Australians, and a little export, but really by us for us. Much of that is now dead. Our principal ‘in country’ business is selling houses to each other -at increasingly ludicrous prices. Much of that cost is ‘regulatory capture’ where government mandates mean a simple wooden frame house costs costs hundreds of thousands – at least half a million to build with all the regulations – whereas in terms of materials you could build precisely the same house for thirty thousand – the rest is creamed off by everything from suppliers (‘approved’ products) to tradesmen (licensed – it is very hard to do even simple jobs yourself without breaking the law, or paying extra levies) to a myriad of surveys – most of which add very little value and no one would pay a fraction of the price for, if it wasn’t for the law – but compliance puts hundreds of thousands on the cost for benefits in pennies, if any, and of a vast, intrusive very well-paid bureaucracy, which adds close to zero, or negative value, but they will tell you can’t live without – and prosecute you if you try.

At moment, with huge inflows from exporting commodities… we’re struggling to afford it. Most young ordinary working people in the major cities are priced out, and the WuFlu panics have seen that steadily spreading out to regional towns and rural Australia.

Our iron ore sales are in trouble because we really have one big customer, China. And China really has one big customer – the West, particularly the US. We’ve just been through the longest two weeks to flatten the curve in human history – and it shows no signs of abating, or of common sense in those in power – or anywhere else for that matter. Keeping the country afloat to keep on selling houses to each other – and keeping all the people -from suppliers to government parasites in funds has been vastly expensive. Governments being governments have paid for all this – particularly the bureaucrats salaries (where offices simply closed, they collected their paychecks and indeed nothing much changed (despite them being so vital that need to be well-paid) because none of it got done.)

But eventually all of that has to trickle through. There’s less commodity money coming in, and houses are so expensive that some people can just forget home-ownership. And of course, all that handout has been chasing less goods (inflation), both here and abroad… and when inflation hits the US or Europe or anywhere else that too comes back, because we don’t domestically produce much.

I’m of the opinion that we’re on the road to a lot of price inflation. Zimbabwe or Weimar? who knows? But certainly inflation in substantial figures… for essential goods – and accommodation. Now, the standard recipe for inflation is raising interest rates. You’ve spotted the flaw, have you? Because house selling is Australia’s main domestic business, and it’s very expensive and all most all mortgage funded… raising interest rates would be… interesting. Politically suicidal. They’ll rather allow rampant inflation – which targets the poor and prudent.

I suspect we’re in for a long, rocky period with government trying anything but the known effective methods – which would be raising those interest rates and massive deregulation – both of which would be hell on the housing market and the parasites/rent-seekers attached to it. I expect ‘infrastructure projects’, which cost way more than they stimulate and loads of ventures into socialist policies – and inflation of essentials running hot, jobs being less available, and wages stagnating.

And yes, a generation of ‘yesterday’s men’ – we don’t have that many factories (and those like the rest of us will suffer), but I expect a lot of those who have got very fat off the housing business to find themselves on a forced diet. I actually expect serious deflation – in the prices of things people don’t need, or simply can’t afford. (biflation – happens in fragile economies, where essential prices go up and non-essentials go down) Take the various government mandated documents – take the bushfire risk assessment. It’ll cost you a thousand dollars. Or $1400 if you live on my remote island. It’s a simple, non-situation flexible (so requiring no judgement, skill or common sense) tick the boxes, apply a very coarse formula process. You have to have various ‘credentials’ but a Gender Studies graduate would probably only find it marginally too challenging. Most of it is copy-paste. Four hours is putting it too generously. At the moment they have all the work they want because you have to have it (its value, to anyone with common sense, is negligible) They carry no liability – which if it was worthwhile and effective would be no problem. I expect, when the work dries up, they’ll first put their prices up at far higher than the rate of inflation – they had 20 days of work a month at $2000 a day or $40K a month…. they now have 5 days work and still want (and to pay their bills, need) $40K. (This follows precisely what traditional publishing did in the face of declining revenue – put up the price, cut payments to authors. Which made revenue decline further.) Then when this fails, they either go looking for the now scarce $25 an hour jobs they may have the skills for if they can find one, or cut their expenses to the bone, claim the dole, and take what little work they can get (they can take a few without losing the dole) at what the market will pay. There will be a handful of moderately expensive operators left, but they’ll actually provide something bespoke and problem solving, which will add some value.

My expectation for the rest of society tend more towards stagflation, with the cost of essentials rising and wages either not going up or not increasing at the pace of inflation. Some areas will be much worse than others: if you produce the essentials, you’ve got some chance. Historically we know job security (or a job at all, especially one that keeps up roughly with inflation in wages) will be precious. We’ll likely see a reversion to the historical norms of the great depression. Government (public service) jobs were precious. They were also moderately badly paid, but secure, with various perks. As things improved in the private sector, and wages there were better, the best (or those who could) left government service for harder work, higher risk but far better pay. So the public service boosted their pay rates ‘to retain talent’ – well, most of the bureaucrats who stayed had no talent, but it was very well paid, very secure, not hard work and loads of perks, and certainly at the bottom end paying way better than the private sector. That almost certainly will go. They’ll still have jobs. Far too many outside .gov won’t.

So: what comes for the rest of us? Who knows? Not me, that is for sure. I can say it probably won’t be good, because the politicians will be affecting it, and their drive is self-preservation and they’re not known for critical long-sighted behavior, or learning from history. I think the Australian govt. already very fond of playing nanny and micromanaging things they can’t do as well as the people they micromanage will try hard to inject cash into first home grants etc. to ‘boost’ the vast housing bubble. No, it won’t work. (I could explain why, but perhaps another post). They’ll prolong the recession/depression. Inflation will destroy savings, and government will find ways to loot the Australian ‘super’ retirement funds. It’s going to be grim. Some groups will escape the worst (fur coats and luxury cars still sold in the great Depression. Just not to you and I).

I’m not, frankly, sure what to do to minimize the impact. One has no idea how long it will last or even how bad it will be. I believe very bad, but then I’m a pessimist by preparation. The end results will have to be what they should have done in the first place: let the bad banks and propped up business fail, reduce the regulatory burden, Let the housing bubble pop to get prices back into affordable country (biflation – food prices and to some extent incomes go up, house prices don’t – or not at the same rate), get bureaucrats back to smaller numbers and far lower incomes (it would be nice if the rest of us did not have to suffer inflation to make this happen -but I can’t see that happening. It’ll just have to be the hard way – paper-pushers safe jobs wages not rising quite as fast as real inflation – because .gov will lie about that figure.)

My own steps: prevent myself being unable to service debt, and thus losing things to repossession – don’t owe on ‘hire purchase’. Buying non-perishable essentials that I use/need anyway – that in a pinch can be bartered or sold, or allow me to produce things that can be. Be as food and shelter self-sufficient as possible. I can’t afford to go particularly far, but I am doing my best.

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Under the weight of parasitism

We have many ‘isms’ out there. Capitalism, Socialism, Fascism, Communism, Feminism, Malapropism… for a start.

The problem with all of them – Ok, maybe not the last, is that no matter what they claim to be they usually suffer from parasitism. Some are in fact little more than parasitism dressed up in rationalization and excuses that sound good. Some may have even started with great ideals, worthy of at least consideration. But… well, the weight of parasites grows to a killing point, or at least a crippling one.

This of course is a core theme in quite a number of my books – not only about the problem but possible solutions to it, or at least how to make the best of it.

So: what is a parasite in this context? Well, a parasite produces nothing, and derives its entire living from the host, which produces something. Now, contrary to most views, parasites are not ONLY negative. At low levels, sometimes parasites do provide protection for example -sometimes from other parasites and sometimes from other problems. The host can, with very low levels actually be better off than the same critter without the low level of parasite. The key of course is the level, and just what positives they provide. The second point is all parasites do do ONE thing well – but not for the host – and that is increase in number.

Human societies always divide between the productive and the parasites. The producers and the rent-seekers, to put it another way. Rent-seeking behavior is best explained by the illustration of the river which the local farmers use to take their produce to market. The river exists. It flows through the land controlled by a local baron, or bandit chief (often the same thing, historically). He did not make the river, or do anything useful – but he put a chain across the river and charges the farmers a fee to cross it. He adds no value, he simply extracts rent, by virtue of killing anyone who doesn’t pay. He’s a pure rent-seeker, a worthless parasite. In the normal progression of things he will increase his fee until the farmers can barely survive. His judgement isn’t always good. The farmers quality of life and ability to invest in improving their farms will suffer. The baron and his retainers and dependents (even parasites haves parasites) will have their quality of life improve, although they produce nothing.

The Baron – let’s call him Biffo, has one thing to fear: that his position as rent collector will be usurped either by the farmers or another baron who wants to collect the rent instead. So he invents pretexts as to why his rent-seeking is perfectly justified. He’s defending the farmers from Baron Bigo who would charge more. Also he protect them from bandits (such as he himself once was).

In truth the biggest ‘risk’ he is protecting anyone from is another possibly worse bandit taking over. As I said parasites sometimes protect against other parasites – not because they are protecting the host, for the host’s benefit, but because they are protecting themselves, for their own. The host’s benefit is merely collateral to their self-interest, from their point of view (this is important). Here’s the thing: if banditry was easier and more successful Lord Biffo wouldn’t have bothered with the chain.

Of course Baron Biffo doesn’t do all of this on his own. No, he has a pack of lesser parasites, who, using Biffo as their arm, seek their own rent. Call them Sir Humphrey and his minions. Originally, they wound the windlass that raised or lowered the chain, but they found it easier to force the farmers to come and do the work. To Sir Humphrey it matters not who the current boss is: he just collects the rent, and makes any actual work the problem of the victims. Lord Biffo, Lord Bigo, or the revolutionary captain of the farmers who killed them both… Sir Humphrey and minions stay in their job. In a way, the problem is more about Sir Humphrey and minions, than the Baron. You can get rid of the Baron – usually by swapping him for another. Getting rid of Sir Humph and his pack is FAR harder.

The problem, in a nutshell, is the parasites operate under the context of ‘for your benefit’ – even if they are in fact the main problem (the baron was the bandit). And, short of an infinitely large space to get away, someone will always decide rent-seeking (for your own good) is actually easier and more profitable than working and producing for themselves. So if you’re a productive member of society: there will always be some kind of parasitic class claiming to be the government and taking as much of your production as they can.

The problem then becomes one of amelioration: limiting the parasites in number and power, possibly making them do something vaguely useful (the latter is, while desirable, still less important than just limiting the parasite load). It’s not merely a question of elections: that may change Biffo for Bigo, but does nothing to Sir Humphrey and his minion-nematodes. Biffo and Bigo are greedy but it’s the sheer bloodsucking volume of rest that weaken the host and make its life a misery until it dies. Biffo and Bigo can be restrained by the mere existence of a well-armed populace (something which I feel essential for any long term thriving state). Sir Humphrey and the bureaucrats just change masters, nothing else.

The key in this -and this was a part of STARDOGS and THE RATS, THE BATS AND THE UGLY – is that despite their claims they’re doing this for you, and protecting you from this that and the next – actually, their self-interest is the ONLY way to control, limit, and even channel their behavior into something not actively harmful, and maybe even useful. This, frankly. is easier in science fiction than reality.

Typically in reality, Baron Bigo may well promise to reduce the red tape. He may even manage to reduce some small part of it. It will have a positive effect – but while Sir Humphrey and minions are in place, it will come roaring back. I suspect the only way to actually deal with Sir Humphrey and his minions short of the guillotine, is somewhat science fiction to politics as usual anyway. We know they’re inefficient at best, and that the risk they’re protecting those who pay the rent from is often trivial. It IS important to get the risks stated at least – as well as the costs in attaining the protection. Take the TSA crotch-fondlers as an example. Hijacking joined being a privateer as a career of yesteryear at 9/11. A hijackers’s success rested on the possibility of survival IF you co-operated. How many people will believe their assurances now? Zero. The cornered rats will fight. Anyone who believes they’re going to die if they co-operate, won’t.

If nothing else, showing something that has a risk of millions to one, and yet costs the the productive a fortune… is going to make them have to look for other excuses. But they’ll find those. It’s what they’re good at. Often all they’re good at. However the right motivation – and yes, sf solution – is to tell Sir Humphrey that he’s got a certain budget to split between himself and his staff. The same budget regardless of how many staff, or what they claim to do. The problem of course is if the Sir Humph’s bottom layer of control actually DOES something useful – If there are 10 managers and office staff and one road-worker who actually does something – you know who is getting fired. So it also needs to be contingent on the job getting done.

All easier said than done. But the biggest step is realizing the enormous drag of parasitic rent-seekers on society. And calling them parasites is a start.

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