Rob's Blog

I’m kind of a forgetful person. I can sit in front of a computer and manipulate virtual things all day and keep variables and chains of reasoning in my head, and solve all kinds of technical problems. But put me in charge of anything physical and I’ll forget where I put it, or even that I ever saw it. It’s the way I’m wired. It’s not that I accept it or blame anyone but myself, and I fight it and constantly try to find techniques to work around my limitations, but the fact remains that I’m good at some things and not good at others.

So it seems that sometimes the government is out to get me. Today I got a letter saying I’d forgotten to pay my car tax and have to pay a £40 penalty (or £80 if I forget to pay that). It’s actually a lot less than I might have thought, and it’s not like they don’t make it easy to pay, and I do at least *choose* to have a car.

But the fact remains: if I was good at bureacracy I would have become a bureacrat. All these requirements — fill in this form by this date or else — are thrust upon me with very little sympathy for the fact that this kind of thing falls outside what I’m good at.

I admit I don’t blog every time I incur a late fee for a forgotten credit card bill, and on the face of it it’s the same kind of thing, but the language here is crucially different. I have comitted an “offence” and must pay a “penalty” and if I forget to pay there may be “court proceedings”. A credit card company might at least phone me up and have a friendly chat about a forgotten bill. Indeed, I can remember one occasion where a late fee was waived when I told them I hadn’t realised a rounding error left me with a few pennies’ balance on a credit card. I don’t imagine the DVLA being all that understanding about it if I call them and tell them that I was organising a wedding when the reminder notice came and on honeymoon when the car tax was due.

And they are a monopoly. It’s not as if I can switch to another provider if I don’t like the terms. I can get a credit card that will take the minimum payment by direct debit. I don’t think the DVLA offers this option, as if the ability to fill in forms on time is part of the test for car ownership.

I can only be thankful that the horrendous ID cards scheme is unravelling. I can imagine the ways I might have unwittingly fallen foul of *its* requirements and penalties.

I do grocery shopping online. I ordered the usual four rolls of toilet roll. The pack that came had “50% extra free”. Now I have a mountain of toilet roll in the bathroom. More is not always better.

The offer fails on two levels: I didn’t know I was getting 50% extra free and bought it anyway. That means they gave me more than they needed to to secure the sale. If I had seen the 50% extra free, I would have bought something else.

Similar strangeness often happens when buying clothes and shoes. I choose a shirt I like for what seems to me a reasonable price and decide to purchase. I get to the counter, declare my willingness to pay the marked price, and the assistant scans the barcode, only to announce a 20% discount that I hadn’t expected. Maybe they do it for the goodwill.

Something big is happening: we are living in interesting times. The media have decided that the government needs to be changed. There is economic turmoil. People are afraid, but probably less about swine flu and the climate than about keeping their jobs. Nobody knows what will happen, so I am going to make some guesses. These are based on a mixture of hunches, wishful thinking and stuff I’ve read lately.

• There will suddenly be an election earlier than “anyone” predicted.
• Cameron’s lot will become unpopular very quicky after they get in power and since everyone will still hate the Labour party the whole of politics will be disgraced and someone new will save the day.
• There will be an upturn in the economy in the next nine months, followed by another even bigger downturn in the next 18 months and it will last for two or three years.
• There will be lots of inflation that “no-one” was predicting in the next two or three years.
• At some point in the next five years, the mainstream media will turn against the climate change consensus (these things come and go like fashions and this one is on borrowed time).
• At some point in the next two years the mainstream media will turn against Obama, a little bit, but not to the extent they did Bush and Brown.
• State pensions, welfare and healthcare will be phased out over the next twenty years to the extent that they are irrelevant to anyone under 40. You will need to take care of yourself. But healthcare will improve and get cheaper to the point that it won’t matter much. Private screening, for example, will be a big thing.
• Despite all of the bad stuff, twenty years from now people (especially “poor” people) will be better off and living longer because of technology.

Hopefully everything there will turn out to have been uncannily accurate and I can brag about it in a future post. Now, where to put my money?

Story told to me by a Scottish bloke in a bar in Dubai: He was driving in Nepal in the middle of nowhere and got a flat tyre. He was alarmed to discover that there was no spare. So they pushed the car to the nearest village. It was eleven o clock at night but they found some guys sitting around smoking who had tyre irons and tools.

Scottish bloke asked them to fix the tyre but they weren’t interested. So he got out his money. One hundred dollars? No. Two hundred? No? Three hundred? No. Exasperated, he took out his cigarettes to have a smoke.

The Nepalese mechanic’s eyes lit up. Marlboro! For two cigarettes the mechanic happily fixed the tyre.

Which just goes to show that money is only worth what people think it’s worth.

This is a rambling post in which I play devil’s advocate with myself in an attempt to better understand economics. I have a feeling it’s possible to mitigate the effects of being shafted by the government by thinking about the economy in a different way…

There’s a great discussion on Devil’s Kitchen about whether gold is better than fiat money or not, and just what money is anyway. I’d figured out a lot of this stuff myself but it’s nice to see it reaffirmed. For example, Ian B says:

The key thing to grasp is that wealth isn’t money. Wealth is value of actual goods, services, etc- stuff people actually use. Money is just a medium of exchange. The obvious way to recognise this is to consider the government doubling the money supply- everyone has twice as much money, but aren’t any wealthier, because the prices of all the goods have doubled. Economic growth is not the creation of more money. It’s an increase in production.

Being simplisticish, if there were a fixed money supply (e.g. with gold or a fiat which is never expanded), as production increased, the price of all goods would fall…

So that’s a good starting point. Proponents of gold say that it can’t be inflated and otherwise interfered with by governments. That’s probably a good thing. Some people say that gold fluctuates in value, which is bad, but gareth says, “Has gold fluctuated or the purchasing power of the dollar?” Quite, which leads us neatly on to Anonymous, who responds to the assertion that both gold and paper money are only worth what people think they are.

That’s true of EVERYTHING. Both paper money and gold have “real” value. There’s no such thing was “non-real” or “intrinsic” value! It is a concept spread by economically illiterate idiots, usually going on about how we should burn down all the hair salons and banks and replace them with corrigated iron sheds full of northerners hitting bits of metal.

I think the mistake you’ve made, which permeates all the broken logic in your post, is to regard currency as something that exists parrallel to so-called “”"real”"” assets rather than being a “”"”real”"”" asset itself. When you exchange something for currency (or currency for something), you are effectively bartering.

The difference between using currency and using say cow hides or shiny beads is that currency is uniform (1 unit of it is worth the same as every other unit of it), so it is universally comparable. Usually it also has other attributes that mainly just make it more convenient – such as non-perishability (apples arent a good currency, because they rot away quickly), being mass and volume dense (not so important these days, with electronic transfer, but if you want to exchange wealth manually it’s best if it’s actually portable), Etc.

So, to cut a long story short, the value of anything may go down as well as up: fiat money; gold; shares; houses; food.

So does it matter if the government prints loads of money? It won’t do what they say it will, it will just cause inflation, but so what? It’s predictable, so sell your money now and buy something else. Gold, shares or property, or some other country’s fiat money.

Storing wealth long term will always be a problem because of fluctuating values. The best you can hope for is that you make the right guesses about which things lose value and which don’t. On your side is that fact that stuff has a tendency to get cheaper and better as technology improves. This is what people call growth, except they go and confuse everyone by coming up with strange ways of measuring it like GDP. One day technology will be so good you’ll be able to conjure food and shelter literally out of thin air and then it won’t matter so much if your long term investments didn’t work out.

What about the economy? Market crashes happen. People suddenly decide a bunch of stuff is worth less than it is. Bad news if you own that stuff, but otherwise no big deal. Nothing real has been lost. There are still people and they can still do and make things. They might not be able to get paid for doing the things they used to do, but eventually they’ll figure out something else to do instead.

The real problem is the uncertainty. A lot of people, especially the ones in charge of large resources, stop doing things for a while until they figure out what’s going on. That’s why jobs are lost and shops close. But the people are there and they’ll figure out what to do eventually and things will get back to normal.

Hopefully what they figure out to do will be useful to you and me. There’s a risk here that governments will decide to take some of your stuff away from you and use it to induce people to do things that don’t help you. This is annoying because you went to a lot of trouble to get that stuff and you don’t get anything in return. So while the economy isn’t such a problem, tax *is* a big problem.

Which brings us back to government monetary policy. If governments print money it is effectively a tax because the value of the money goes down. But this is mainly a problem if you have lots of the money that the government is printing. If you have gold or shares or property, maybe it doesn’t matter so much.

There was a discussion on Samizdata about manufacturing in the UK and whether or not it was dying, which digressed onto whether or not it mattered. Alice said this, about the fact that technology freed up a lot of human labour from manufacturing and agriculture:

If Brits (and more generally the West) were using the labor surplus for “bread, beer and dancing girls”, everything would be fine. But the Brits, like the rest of the West, are not. They are using the labor surplus to hire uncountable numbers of bureaucrats who make life difficult for everyone who want to make bread or beer, let alone earn a decent living as a dancing girl.

Those self-satisfied liberals are wasting a unique historical moment.

Indeed.

For my part, I don’t think manufacturing matters. I can envisage technology that will make manufacturing cost free. The world won’t come to an end. People will just have more time to spend designing cool stuff and entertaining each other. And, sadly, making up rules and measuring things to prove the rules are being followed.

I made a DVD of some Microsoft Flight Simulator stuff for a friend in Australia. It’s just me flying around in a pretend aeroplane, recorded off the computer screen using Fraps, and slapped on a DVD+R. It would be completely boring to anyone except me and my friend.

And, it would seem, customs officials.

The conversation at the post office went pretty much exactly like this. I remember it in great detail. I don’t know if this says more about post office employees, government departments, or me. But sometimes the world strikes me as very wierd.

RF: I’d like to send this to Australia, please.

Post Office Employee: [blank look]

RF: Do I need a special stamp or something?

POE: Put it on the scales, please.

RF: [puts it on scales]

POE: What’s in it?

RF: Um, [at this point my brain is trying to make sense of the question: POE already knows the weight and volume so my brain is struggling to find other information that could conceivably be of use to POE] er, it’s a DVD.

POE: How much is it worth? Fill this in please. [hands over a little sticker with a form on it]

RF: Hm. It’s a gift so I’ll tick the gift box. How much is it worth? Well it’s not really worth anything. I’ll put zero.

POE: [laughs] You can’t put zero!

RF: Well it’s really not worth anything to anyone.

POE: [skeptical look]

RF: Um, [at this point I'm trying to remember how much I paid for the pack of 10 blank DVDs and divide this by 10, but part of me is vaguely aware that this is silly because I've destroyed the blank DVD by writing my useless data on it] er, I’ll put one pound then.

POE: [skeptical look]

RF: [hands back sticker]

POE: You need to sign it.

RF: Where do I sign? Oh, I see. So this will go by airmail? How long does that take? A few days?

POE: Yes. One pound sixty-five please.

All I have are questions. Do I really live in a world where I can make a computer animation of some aeroplanes, put it onto an optical data storage medium, and send it in the post, but have to write on the envelope what it is and how much it is worth? Who will take any notice of the value I wrote? Will they judge me on it? What would have happened if I’d put zero? What would happen if I decided I’d created seminal art and my DVD was worth £10,000? Will they eye my envelope with suspicion and tear it open hoping to find something more valuable? Will they put my DVD into a computer to look for pornography, terrorist plans or pirated software? Was writing “DVD” and “£1″ the correct thing to do, or are there arcane rules written somewhere I should have acquainted myself with before daring to post something to Australia? Am I the only one who thinks this is crazy?

Update: I think what’s touched a nerve with me here is the way POE asked these questions as if they were perfectly obvious questions. As if I should instantly know the value of my parcel. My brain is telling me these questions are crazy, but my eyes are showing me a normal, sensible looking person. Something doesn’t connect. From POE’s point of view, there’s this bumbling idiot who can’t answer a simple question. Meanwhile, I’m standing in the post office grappling with philosophical ideas about what value is and wondering whether I should find out by making a batch of my DVDs and putting them on the market. Maybe I should have said, “it’s a video of me playing a computer game. How much would you pay for it?” Sometimes I think I am not for this world. I belong in the mathic world of Neal Stephenson’s Anathem.

Has it always been like this? Everywhere we go in Britain we are constantly nagged, fussed over and mollycoddled. Today I was in the Tesco Extra in Isleworth. There is conveyor belt ramp leading to the mezzanine. Every five seconds a recorded voice annonced, “warning: you are reaching the end of the conveyor belt. Please get ready to push your trolley off the conveyor belt.”

By the checkout, a sign read: “Blah blah plastic bags blah blah save the planet blah blah from August the 4th we will only give you a bag if specifically asked to drive this message home. Every little helps.” Piss off, Tesco, that doesn’t help.

And what is it about moronic, un-thought-out “planet saving” schemes that have no effect but to make life just that little bit more miserable? In the suggestion box at work recently: measure a mugful of water into the kettle before boiling it; offer an incentive to not use the lifts; make the staff wash up instead of the cleaners and get rid of the dishwashers. At least none of these daft ideas has been implemented.

Between the planet and constant health and safety warnings (“maximum speed around this bend, 30mph” — don’t want you making judgements like that without expert advice) it’s like being followed around by your Jewish mother.