British Steel

Our minds have been distracted or mine has anyway, but British Steel became insolvent last week. Of course a huge blame game is started. Have the Chinese been ‘dumping’ steel on the rest of the world? Could the Govt. or the EU have protected it? Did the single market aid rules stop the Govt doing so?

Is China dumping? This article at the Conversation says “Yes”, big time!

This article at fullfact.org, “Is the UK calling for EU duties for Chinese steel?” deals with next three questions. The EU have raised duties but for many years the UK Government has been resisting more; they wished to avoid retaliation and for ideological reasons. There’s probably some “don’t give a shit” there too. It would seem that this is another policy area where New Labour failed to support its natural people.

The calls for renationalisation are now, rightly growing …

Creative Indusry exports or not

Over 6 months ago, I decided to see how true the proposition that Creative Industries are foreign exchange earners for the economy as claimed by British Music and the Shadow Culture team. I asked my MP to ask a written question and the replies are linked to in a comment on the above article. I asked for a broader range of industry classifications as I was interested in broader questions than just the creative industry.

I think this is validly constructed.

EMI was sold to Sony & Universal in 2012 and so their balance of trade position was reversed at that time and they were a competitively large music publisher at the time. I last looked at the structure of the global music industry a long time ago, pre-streaming, pre-Apple and pre-Spotify (which is incorporated in Sweden).

Five years out of nine, the industry was in deficit. The final year surplus is extraordinarily large, it would be good to see 2017/2018 and/or understand the reasons for this number. It is not historically true to say that the Creative industries are a net contributor to the foreign exchange account.

I should add that the aggregate trade current account deficit is run as at about minus £2.5bn /month over the period in question. …

Hiring Smart

This passed me by on my LinkedIn feed. They quote Steve Jobs as saying something allegedly wise against micro-management.

I wonder when he said it because I remember saying something similar in the 1990’s (while Jobs was at Next). It’s just as well that I wasn’t blogging or asserting copyright, although I might be richer than I am if I had. (It is however, merely a corollary of the “Theory X, Theory Y” model which was first stated in the “Human Side of Enterprise” by Douglas McGregor, published in 1960, which I commented on here …. , I also comment here … and also here … ) So even I was a bit late.

I was hugely amused by the comment suggesting that Jobs didn’t actually pursue this strategy! …

Trade & Brexit

Trade & Brexit

A friend posted a link to Larry Elliot’s article, “Ignore the free-trade evangelists. Brexit can create a fairer economy“, suggesting its critique of international trade implied some sunny upland in a post Brexit world. The article is sub titled “Free market economics created a world fit for multinationals. But we need less frictionless trade and more local control”., using a global context argument and yet diminishing the regulatory power which we share with the rest of the EU. The EU have sanctioned Microsoft, Intel, Apple & Google. The EU killed the ACTA & TTIP trade agreements. (Although not CETA, the Canadian version of TTIP). That is local control.

In no post-Brexit world, where we will take years to join the WTO and make new agreements with the 92 countries whose agreements we will have voided, will there be a vibrant British or Sterling economy, Elliot, and his fans are with Prof Minford in permitting if not encouraging the so-called legacy manufacturing industry to off-shore.

We should note that our Balance of Payments has been in deficit for, well forever really but is current running at £100bn p.a. about the same size as the crisis debt/deficit level that the Tories, supported by both the LibDems and rump New Labour used to justify austerity.

The UK will be poorer, and this misery will not be shared evenly and people will get angry. Anyone, with their hand dirty will be blamed. …

Fiscal credibility, ptui!

Yesterday, I went to a meeting on Brexit, Free-movement and immigration; conversation in the bar afterwards segued from, “why did a Corbyn led PLP argue to abstain on the Tories Immigration Act?” via a  post match analysis of Lewisham Deptford’s Brexit/Anti-Brexit meeting to consider the radicalism of Labour’s 2017 Manifesto and the development of macro economic policy since then; it doesn’t do so well when compared with the Corbynomics of 2015. One of the key developments since then has been the development of Labour’s Fiscal Credibility Rule, which promises to only borrow to invest.

To those who think this is smart, I ask why so-called current account spending on education is not seen as “investing” in Human Capital, but this is not it’s main problem.

However, I awoke this morning to see one of Richard Murphy’s tweets where he is contending with Jonathan Portes & Simon Wren Lewis, the rule’s author’s it would seem. It got a little testy. Anyway, here’s Richard, detoxifying, or not the twitter spat, and making the point that the Fiscal Credibility Rule is not based on Modern Monetary Theory. because it acknowledges the monetary constraint, and not the real world one. Murphy refers to his earlier piece, A challenge to Simon Wren-Lewis on modern monetary theory and Labour’s fiscal credibility rule in which he critiques the Fiscal Credibility Rule. My precis of his position is that the rule is based on a neo-classical approach, fundamentally legitimises austerity and fetishises debt reduction. I had a look for the Portes/Wren Lewis original position and assume that “Issues in the design of fiscal policy rules” is it.

My research took me to this, which Bill Mitchell claims to be his last words on the Fiscal Credibility Rule, the article contains the following powerful line,

The problem is that this reinforces the narrative that deficits and public debt are in some way ‘bad’ and as I note below this will not turn out well.

One of the problem’s exposed by Bill Mitchell’s article is that it suggests that the Fiscal Credibility Rule is a bit like Lord Buckethead’s nuclear deterrent policy, it only works if the secret is kept, in this case that Labour does not believe that the Fiscal Credibility Rule is a necessary macro-economic constraint even if the economists that wrote it do so.

ooOOOoo

To some extent, this article is just a reading list, there’s not so much of me in it., but I have promised myself a precis of Chapter 7/8 of Fazi and Mitchell’s Reclaiming the State, which is a relatively simple and short exposition of MMT. …

Positive balance

The BBC are very proud of their contribution to the balance of payments through the licensing of their content. I decided today to see if they do, in fact, contribute once the rights payments to 3rd party companies is taken into account. I have asked the DDCMS but the BBC is subject to FOI questions. I need to think about how I phrase the question, but Heather Brook’s book, should help, if I can find it. …

Risk, bias and planning

Risk, bias and planning

A couple of years ago, I wrote a precis of the McKinsey Quarterly article, “Distortions and deceptions in strategic decisions”. They started with a review of the way human bias can adversely impact strategic investment decisions illustrating it with a story about a mega-merger which failed. They conclude the article with,

Companies can’t afford to ignore the human factor in the making of strategic decisions. They can greatly improve their chances of making good ones by becoming more aware of the way cognitive biases can mislead them, by reviewing their decision-making processes, and by establishing a culture of constructive debate.

The first half of the article examines the propensity to optimism vs. perceptions of loss aversion and argue that portfolio management is a better way to evaluate the risk as lossess can be compensated by other success. I believe though that British management and particularly public sector management is very risk adverse; there is a higher fear of getting things wrong than getting things right although how we end up with Universal Credit, the Boris “vanity lard bus”, his water cannons and his other “erections”, I don’t know.

What made me remember the article was it’s listing of what they call tools to isolate any human bias to me most importantly

Another technique is to request that managers show more of their cards: some companies, for instance, demand that investment recommendations include alternatives, or “next-best” ideas.

I wonder how many of these lessons need to be applied to local authority planning decisions.  Check below/overleaf for more …

 …

Another look at free software

I read this, “‘Software is meant to be free …” at Hackernoon and found it disappointingly lightweight. It talks of Stallman, thus the four freedoms and the GNU project and mentions Eric Raymond in passing as the man who coined the phrase Open Source rather than the author of the Cathedral & the Bazaar and Homesteading the Noosphere. He doesn’t mention Stallman’s attack on the concept/phrase of Open Source since he considered it a diminishing of the four freedoms. It’s weak on the evolution of copyleft; it doesn’t mention for instance, Laurence Lessig and the Creative Commons. Clary also fails to mention Torvalds, the man most associated with Linux, the prime example of Open Source Software, although the EU Commission discovered that the largest contributor to the open source code base was Sun Microsystems.

It is particularly weak in its view of how and why the proprietary software behemoths adopted Open Source. They did so primarily in areas where they were weak in market share and profitability and where their competitors were the inverse. IBM’s massive investment in Linux, much of it through its OEM agreement with Red Hat was designed to kill Sun MIcrosystem’s Solaris; it is arguable that they succeeded, although both I and Eric Raymond think it’s more complex than that, as provoked by him, I argue here.

Our understanding of the economics and sociology has moved on since then. Anne Barron in her 2013 paper, Free Software Production as Critical Social Practice which I should really re-read looks at both and earlier in the previous decade Simon Phipps articulated new sources of value and new contexts for open source software, both how free software created scarce markets, and that open source governance models equally created and constrained the value of its free product. I was lucky to be able to present his theories once or twice and I reported on one such presentation on this blog 10 years ago.

These papers and theories are somewhat aged certainly when one considers the speed of technology development but its possible that even older theories such as Marx’s Fragment on the Machine and more recent developments in conceiving of immaterial labour, and the enigma of software’s role in the means of production are all part of the questions that need to be answered to understand the economic role and governance of software.

It’s not that software wants to be free … it’s just looking like no matter what theories of price you adhere to, free is the right price.

ooOOOoo

See also Free, the right price for software and maybe Monopoly and prices, both by me on this blog, written in 2009 exploring the micro/meso-economic classical welfare theories as to why software should be free. …

Reinforcing Monopoly

Hereby are two stories about how software acts as a barrier to entry to a market and reinforces the monopoly power of its provider.

The first is shown by the fact that industrial content are getting cold feet over the EU copyright directive as the service providers have switched to supporting Article 13 since they already have the so-called “upload filters”. Only the big boys will be able to remain in the game of hosting user authored content. As predicted, the new regulations will inhibit both startups and SMEs.

The second story is closer to home. The UK have decided to mandate age verification functionality for porn sites. Who do you think is going to build that? Alec Muffet and the Open Rights Group have been tracking this and even if you think it’s a good idea, they way it’s being done is disastrous. The BBFC is the regulator and this is a massive piece of scope creep, it looks like they will licence a third party to act as the software provider and again the favourites to win this business is an interested party. Alec’s latest blog post is on Medium and is critical of the regulator’s stance and IT Security expertise and he previously wrote about the competitive dynamics and opportunities created by the new laws. Muffet is also concerned about the profiling use of such a database of porn users. It’s almost back to the days of the Roman Empire where monopolies were licensed. …