Starting a business is I think in many ways like building an
aeroplane (something I have never done) in that you lay out all
these plans, you do a bunch of work, and then one day it has to
actually fly, properly.
It is only when talking to people that you realise just how few
people have actually started a business. For starters you can
discount all the self declared "Entrepreneurs" who
think that their service industry is a business, it isn't.
I'm talking about a proper business with a physical product
here, and experience of setting one of those up is terrifyingly,
shockingly rare.
This is important to understand, because the world is populated
by people who at one end of the scale simply reach into their
banker's pocket and throw a million pounds at a new business
located in London, and at the other end of the scale by people
who re-mortgage the house to start a service industry job
(builder / decorator / hairdresser / plumber) in what was their
trade anyway.
Joe the plumber who works for County Plumbing, deciding to go
self-employed and start up on his own isn't a new business,
it isn't even a business, it is a service industry, and the
market was already there.
The million pound venture in London might actually be a new
business, making instrument gauges for "ricer" car
tuners, actually making as opposed to importing, but it is in
London, which is a lot like parachuting weed seeds into a compost
patch.
My first authentic experience of this was Peter G, also known as
Lord Inchcape, chairman of P&O etc, who basically turned up
at a bit of jungle a few miles outside Bandar Seri Begawan in
Brunei and decided to set up a logistics depot for the offshore
oil platforms.
First, import the Cat D9's to level the area, then import the
concrete and steel and wiring to build the depot and wharf,
import a fleet of Fodens, import... you get the picture.
The most interesting thing about this was he did it with 50 bucks
US of his own money, and a quote I shall remember all my life,
"Never use your own money, if the idea is any good, other
people will give you their money."
But even Brunei wasn't Antarctica. For instance mains
electricity was simply a matter of stringing up the poles from
the grid, ditto water etc, the basic infrastructure was already
there. What wasn't there could be flown in from further
afield or shipped in from say Singapore, and using the existing
infrastructure as a foundation, built upon.
Brunei was a lot of years ago, and the gap between the UK and the
Brunei jungle is at least as great as the gap between the Brunei
jungle and Antarctica, at least, you would be forgiven for
thinking so.
But the fact is that for most regions of the UK, let's take
Exeter in the southwest, a city with 2,000 years of history,
the reality is you ain't much better off than we were all
those years ago in Brunei, there is a foundation of mains
electric grid and water grid to build on, but from there on in it
just gets worse.
Whereas Brunei had access to the relatively cheap markets of
Singapore for materiel, here is Exeter the chances are much of my
new business infrastructure is going to have to be shipped from,
you guessed it, the Far East.
Steel? Yeah, there is a single local steel stockholder, but the
prices are astronomical. Bricks, all the local brickworks have
gone, most bricks are now imported, believe it or not. Electrical
cable and wiring, the last UK plant that actually made cables as
opposed to importing them closed three years ago. Machine tools,
you're joking aren't you. A fleet of vehicles,
that'll be Renault or Volkswagen from Europe then, employee
overalls and safety wear, China. Office furniture, made in
Poland. Office IT, made in Hungary. Paper for invoices etc, made
in Scandinavia. Mobile phones, ditto.
And speaking as someone who has imported stuff this means
everything is cost + shipping + import duty + 17.5% VAT + various
middlemen's cuts.
Workers to actually build the new plant, chances are they are
going to be Polish or Hungarian or Estonian too, and the plant
they will be driving will be Kubota and Hitachi etc.
Then there is materiel itself, everything from thermoplastic
granules through nonferrous metals even to silly stuff like dry
ice (my nearest dry ice stockist is just outside London) in
sustainable industrial supply quantities is going to be imported
via agents and resellers in the London area.
HSS machine tools, Germany or Sweden if you are lucky... you
really do not want to know how hard it is to find a simple
hacksaw blade made of proper bi-metal HSS.
And so we take time out from this discussion and see how many new
proper businesses have been set up in the south-west in the past
20 years..... ummmm... none.
Not a single one, and it really is no wonder.
Speaking personally If you employed me to bugger off to Papua New
Guinea to set up your new factory I'd be a lot more
confident than if you employed me to stay here and do it, I'd
put it (as a time-served marine engineer) as a challenge on a par
with sending me out to Exeter Airport and expecting me to design
and build an aircraft from scratch... you'll get something
made of wood and canvas and capable of maybe 70 mph if you can
find someone desperate enough to act as test pilot, while I
desperately stuff the Sopwith Camel blueprints behind the
(imported from Korea) potted plants.
Now let's look at Imperial England, when two thirds of the
globe was pink and the sun never set on the empire, how about
Lister, (click the link, not what you'd expect for a
factory that made multiple millions of engines of all sizes and
exported them literally worldwide) or a few miles away the home
of aviation or a few miles from that the home of railway
manufacturing.
But this isn't about "manufacturing was what made us the
greatest", this is about places like the UK and indeed like
New York, so called "FIRE" economies, Finance,
Insurance and Real Estate, what do we do when the financial
services industry passes (passed?) its sell by date and we need
to get back to some good old protectionist, anti-globalisation,
local, home grown MANUFACTURING industry?
My sincere worry is that we can't.
Not a question of money, it doesn't matter how much money we
print, setting up a business of necessity requires certain
foundations, foundations that simply do not exist any longer.
It will be like watching Discovery Channel biker build off.
Wheels? Farmed out and CNC made.
Paint? Farmed out.
Powdercoat? Farmed out.
Frame? Bought in ready made.
Engine + trans? Bought in ready made.
Brakes? Bought in ready made
So the guys spend a week cutting and welding a few bits of metal
while comparing themselves to people who actually build things
with their own hands.
Cut these assholes off from their Custom Chrome catalogue and
their outsourced everything and they'd be left making
kids' playground swings and climbing frames, with literally
no way to leverage themselves back into making actual roadworthy
motorcycles of any kind.
One deep shift that could help a lot is Georgism, based upon
Henry George's ideas.
As the tax burden shifts from transaction taxes to pure economic
rent, the diminishing deadweight loss of such taxes makes sense
of renewed industry. When it is possible for something to be
traded in a circle without loss, it gets to its destination
frictionlessly. Being able to manufacture and trade without reams
of documentation and taxation obstructing consentual trade would
surely do marvels for industry. Because land value tax only
suffers an administrative deadweight loss, but is otherwise
economically neutral, there will simply be more wealth to go
around to pay such a tax.
A friend of mine, Adrian Wrigley, recently gave a talk at the
Liberal Democrat Party Conference on
systemic fiscial reform. The irony being that the party had
just recently defeated such a proposal for Scotland in favour of
their cherished and "obviously fair" (to those ignorant
of economics) Local Income Tax. Meh.
The problem isn't people, but rather any form of economic
rent (a larger class than just land rent, to be sure). Taxation
of land value doesn't directly move the bottleneck one iota.
Rather, (part of) the economic rent goes to the government (this
can be seen as the taxpayer, if this tax offsets other taxes).
The best rational use of the land remains much the same as it
was.
Shortages are just as they were before, except that since now
transactions aren't taxed, greater productivity will find new
bottlenecks, but a shortage of plant with resulting greater
profit will attract investment, and therefore not form a
permanent bottleneck.
By focusing upon people rather than resources, you're missing
the economic argument, but then you did say that you
hadn't thought about it seriously yet. Georgism is
sufficiently different from what we do right now that all our
instincts towards caution cut in. That's fine, as long as we
keep thinking.
So, if instead capital becomes concentrated, will this still
not be a similar problem?
Short answer: no.
Longer answer: Poverty is the problem that Georgism attempts to
address. It does not address wealth (Henry George's book is
called "Progress and Poverty", not
"Progress and Inequality"). There
isn't a natural shortage of capital, so changing the
portfolios of the rich from land (of which there is a shortage)
to capital is a definite gain.
If you see wealth itself as a problem, Georgism isn't going
to be enough for you.
Also, I am not worried about all forms of inequality. That is
built in to life.
So please explain how the ability to take interest (perhaps big
interest) on loaned capital will differ from rent taking on land.
Briefly will do for now. I am trying to get a handle on the
essence of the idea.
So please explain how the ability to take interest (perhaps
big interest) on loaned capital will differ from rent taking on
land.
Hang on. You don't loan capital; you loan money to
invest in capital. Capital is productive
"stuff".
If banking stays much the same, money won't fall into short
supply, since the money supply is that for which the interest
rate follows the bank rate. In practice, because more investment
opportunities means more cash flowing into the economy, the
interest rate will be higher in order to stave off inflation.
Given a fixed money supply on the other hand, you are faced with
deflation since cash is drawn into new areas, so that each coin
has to do more work (subject to velocity concerns).
However, this is transitory; these "problems"
are problems of coping with growth as the economy adjusts to the
removal of deadweight losses. Just when a new field opens up, so
there are greater profits for investors, so much the same is the
case when all fields open up. This is not a form of economic
rent, but rather the result of the most productive activites
(which are now more productive) receiving funds before the less
productive. The rich here are getting a larger slice of a larger
pie.
Unlike with the case of land, competition is alive and well.
Instead of landowners taking the entirety of a tenant's
surplus wealth as each tenant bids against others, there is
simply more to go around.
" The term land as
used herein, is intended to include all natural resources, such
as the earth and all its locations, minerals, oil and waterfalls
as untouched by human hands;
the term labor, all
human exertion whether by brain or brawn or both;
the term capital,
all wealth (such as tools, machinery, investments and goods in
process of exchange) used to produce more wealth"
So, what am I going to loan, land? I guess you could call gold
land since it is a mineral but perhaps gold coins are capital
since they have been converted into a good of sorts.
Do you see all of this in terms of a fiat currency where money
can just be printed into existence? Or something else? Looks like
a fiat currency, but I could be mistaken.
Well, Henry George's categories are inexact by modern
standards. I've drawn more from discussions with my friend
than from Henry George per se.
Initially, profit represents innovation and new productivity, but
over the longer term, productivity accumulates to stores of
economic rent through competition. Economic rent accrues to items
that are scarce.
There are stores of economic rent, and wage is one of those (due
to the finiteness of the population). I prefer this understanding
of labour than Henry George's seperate category. I can
understand the motivation for a different category, since
better wages are desireable (other things being equal), whereas
other rents are in general a straight transfer of wealth from the
poor to the rich without anything new being produced to justify
that transference.
I am not especially concerned with whether currency is fiat or
(for example) gold-backed, although I have an emotional
preference for the latter, since a limited supply of coinage
makes for one less worry: that of whether one can trust the
issuer of currency. I had a recent discussion with
Uncle Entity over these matters, and I am cautiously pro
gold-backed currency now.
All the same, I argued both sides since it's not really
important to Georgism. The value of stores of coins is far less
important than the fact of coin circulation, and coins adjust
well to small shortages and excesses because the velocity of
circulation can easily adjust.
Gold-backed currency would (instantaneously) cause there to be
deflation (an increase in the value of gold) due to the reduction
of transaction taxes. This suggests to me that if one were to
shift to Georgism and a gold-backed currency, it would be
most sensible to shift to Georgism first. This isn't
to say that the other change isn't in itself desirable.
It might help if you laid out your ideas a bit more then.
For instance, you speak of economic rent. But he would seem to
say rent is from land (which granted is more than we normally
consider to be land) and I think I get him to be saying that this
rent is collected by the government on behalf of the collective
owners (citizens? how do you handle non-citizens? do you need
to?) He would call interest that which comes from loaning out
capital and this capital can be privately owned. And wages is
what you get as a result of your labour. (How this plays out for
the non-employed I will need to think on more.)
So, when you speak of economic rent, are you talking of what he
calls interest?
"I am not especially concerned with whether currency is
fiat."
Well then, I claim dibs on the right to print the money. ~;-)
Oh sorry. Economic
rent [Wikipedia]
is a pretty standard term of economic discourse. Not everyone
here is an economic technocrat :o)
Economic rent is explicitally not interest. Economic rent
is what an owner can extract from stuff that is in short supply
that accordingly sucks up the "spare" value that is
around the place, with the effect of keeping people poor.
Interest isn't a problem, for the intended use for the money
is expected to make more than the value of the interest, or else
the loan would not have been taken out. Unlike rent, interest
does not systematically cause poverty. For that you also
need poor luck or poor judgement.
Regarding whether currency is fiat or not. I'm not offering a
complete manifesto here, and luckily, the nature of the currency
is seperable as an issue from optimal tax structure. It isn't
my intention to suggest that the issue isn't important, but
only to state that that is not what I'm talking about right
now.
Interest
isn't a problem, for the intended use for the money is
expected to make more than the value of the interest, or else the
loan would not have been taken out. Unlike rent, interest does
not systematically cause poverty. For that you also
need poor luck or poor judgement.
After the CDS credit mess, I think we've got an oversupply of
both poor luck and poor judgement, and the original Abrahamic
religions were right- USURY IS JUST BAD.
Fannie May and Freddy Mac were strongly encouraged to guaruntee
bad mortgage loans for social reasons. On top of that, salesmen
who were getting a slice of sales but none of the financial risk
were fraudulently selling bad mortgages.
But the worst of it was this: the availability of easy finance
pushed the cost of housing (implicitally the land value) sky
high. The policies pushed by a Democrat administration and
continued by the Republicans only pushed housing out of reach, so
that the poor who could otherwise have paid for a mortgage were
priced out by those who were willing to take the risk.
This isn't a glorious story for capitalists either, for it
wasn't in the banks' interests to give these bad loans.
This disaster in the making was the product of an ignorance of
economic rent amoungst the political classes meaning that
self-defeating social criteria influenced lending policy, simple
fraud, and willful blindness amoungst those who thought that
widespread easy loan availability was a good thing.
None of these factors are a criticism of loans per se, and
particularly not industrial loans, nor of share ownership. The
causes are the usual culprits of fraud, management blindness,
ideological blindness, and economic ignorance.
. . .
It is unfortunately the case that economic rent gets none of the
attention that it deserves, or else there would be fewer
politically-inspired loans and grants with which we can simply
outbid each other, ending up exactly where we started (except
that the bank that owns mortgages our property is
better off).
This isn't a
glorious story for capitalists either, for it wasn't in the
banks' interests to give these bad loans. This disaster in
the making was the product of an ignorance of economic rent
amoungst the political classes meaning that self-defeating social
criteria influenced lending policy, simple fraud, and willful
blindness amoungst those who thought that widespread easy loan
availability was a good thing.
None of these factors are a
criticism of loans per se, and particularly not industrial loans,
nor of share ownership. The causes are the usual culprits of
fraud, management blindness, ideological blindness, and economic
ignorance.
I see it differently. I see that as an intense criticism of
the idea of loans, industrial loans, and share ownership, because
they ENABLE fraud, management blindness, ideological blindness,
and economic ignorance.
I'd like to see us, for once, purposely engineer an economic
system that specifically makes those things impossible, and is
simple enough that a 10-year-old with a multi-core machine at his
fingertips can theoretically detect something going wrong.
What I don't want is to go through another 8 years of
shouting into the darkness "there's something very bad
about to happen", only to have everybody tell me I'm an
idiot then end up right and STILL have people telling me I'm
an idiot.
Surely, if we are talking how things might work if we did things
in the way suggested, we would understand each other better if we
used the terms as the theory does and especially not mix the
usage from the current model with the usage of the alternate
model.
Thaks for the link. So, is it posited that economic rent can be
had in a Free Market?
So, again, what do you see as properly (optimally) being taxed,
and how?
Presumably, land (in the sense of all natural stuff I guess) but
not capital and not labour. So, lay it out a bit more. Examples
will help, even if only as samples and not as complete info.
Economic rent is had wherever there is a limiting and fixed
supply of a good. When there isn't a limiting supply, greater
demand initially causes a price rise, but then competitors come
in (or else supply is simply increased), bringing the price back
down. However, when supply is limited, that can't happen, and
the price simply rises. We can choose how high we're willing
to bid up each thing that is in finite supply, but our spare cash
ends up boosting one price or another.
There is plenty of economic rent to be had in a free market, but
regulation isn't really a fix since bidding high is how the
market signals best use. All the same, there is nothing special
about the absolute level of the bid, and taxing a chunk of
the land value (or even all of it) doesn't change the best
use, but only the value of the land itself, and only to the
landowner.
Some taxes are clearly bad. Isn't it crazy that I can't
paint your fence and you fix my roof without the taxman taking
from both of us? Surely the only difference after such a trade
(apart from the time taken) should be a glossy newly-painted
fence and a roof that doesn't leak. The taxman's take,
however, most likely means that neither of these jobs get done.
This is known as deadweight loss, which is empirically
seen to increase quadratically with the level of taxation. Things
that should be done simply aren't done.
Since the best use of land doesn't change with land tax
(unless one goes over 100% of the value, in which case the land
is abandoned), but transaction taxes prevent ever more trade, the
higher that they are, it clearly makes sense to shift from the
latter to the former. You would think that it was a complete
no-brainer, but I suspect that the real issue is that it is
easier to take money from the worker than the landowner, to hell
with economic efficiency!
. . .
Sorry, I just got a phone call then that threw my thinking. I
hope that what I've written is clear enough!
"Economic rent is had wherever there is a limiting and fixed
supply of a good."
Give real examples please. And for examples showing goods getting
economic rent in a Free market, please do not use those where
government granted monopoly plays enter into the equation.
"but I suspect that the real issue is that it is easier to
take money from the worker than the landowner, to hell with
economic efficiency!"
There is also the fear by the small land owner that the best use
arguement will be used to take his land from him. Kick him out
into the boonies where the land is not valuable. Let the rich all
live together on the valuable land in a wealth ghetto.
Give real examples please. And for examples showing goods
getting economic rent in a Free market, please do not use those
where government granted monopoly plays enter into the
equation.
Simple rent is the most obvious. A mineral with known and limited
supplies that is soon to run out. A well in the desert would
extract rent up to the point where it was economic to pipe water
in. A niche market in any good. Also, in the shorter term, any
market which is undersupplied (for example when a new good is
created).
Admittedly, radio spectrum is artifically scarce through
government regulation, but even in the absence of such
regulation, there is a natural shortage, from which someone could
own and lease the rights.
There is also the fear by the small land owner that the best
use arguement will be used to take his land from him. Kick him
out into the boonies where the land is not valuable. Let the
rich all live together on the valuable land in a wealth
ghetto.
The valuable land would get taxed proportionally. I fail to see
that it plays in the rich ghettoites' interests. The fact is
that at present, every time a school or road is built, it is
landowners who reap the benefits. A tax on land value would
redistribute that benefit back to the intended recipients.
There is a problem with the transition, and how to make
that transition is a problem in its own right, especially since
land ownership is not uniform across the population. It would
take time, and perhaps initially land value tax would offset
income tax. The additional value liberated by removing the
deadweight losses could perhaps finance a compensation scheme
focused upon small landowners.
If you see
wealth itself as a problem, Georgism isn't going to be enough
for you.
I seem to find that to be the fault with quite a few progressive
economic systems; it's the basic problem with Marxism as
well.
Maybe that's why I'm attracted to regressive (or at
least, resetting) economic systems such as the ancient Israeli
Jubilee system or Islamic Banking- where there is room for
humanity *outside* of the economic system.
I may have missed the "play", not sure what you're
talking about.
I'm talking about the tradition of tribal ownership of
property which is rented/sold to individual users, but returns to
ownership of the tribe once every 50 years (the Jubilee year).
This guaranteed every 2nd generation that there would be a
"reset" of wealth distribution in ancient Israel, with
land as the basic value. It was started by the Judges who
ruled Isarel after the defeat of Canaan, and lasted several
centuries.
Even a poor tribe could feed it's people by agreeing to
remainder-of-the-50-year leases of land in exchange for money,
and 12 out of the 13 original tribes had their defined amounts of
land that they would recieve back every 50 years.
The system ended when Israel was conquored by Babylon. Only
3 out of the 13 tribes returned and by then, the economic system
had entirely broken down and never returned. Greece
conquored Babylon, Rome Conqoured Greece, the Eastern Empire
conquored the Western Empire, the Ottoman Empire conquored the
Eastern Empire, the British absorbed the Ottoman Empire as it
crumbled, the UN replaced the British Empire and granted Israel
time again. But the Jubilee never returned, save as a
revived concept from time to time in child religions.
And this reset did not happen in walled cities if I recall
correctly. And there were some other wrinkles. I have often
wondered if something similar might be wise these days but the
details would be wild.
I seem to remember that at least in parts of Japan, in the recent
past, land was so expensive that and owner did not need to
develop or manage it, that some companies (it may have been
banks) would form a partnership with the owners and do the whole
shebang for them.
There used to be a decent amount of 99 year leasing of land
around here if I understand things properly.
Huh, do you have a quota of hints that you give to everyone and
you have about used up all of the ones alloted to me?
If you don't get the usage, fine, I am happy to re-phrase on
query.
I may have been speaking loosely, but I did mean play. Perhaps I
should have said rule. As in one of the plays in the game of
life. Perhaps like castling in chess? A play or move?
Perhaps, but certainly not always in the same hands, at least
where I am from. But we seem to be trying to change that here...
(how is another matter...)
Perhaps, but
certainly not always in the same hands, at least where I am
from.
Really? I didn't know there was a country where capital
and property ownership didn't go hand in hand. Someday
you'll have to tell us where that is and explain the
historical conditions that divorced land ownership from capital
ownership.
I've known a few cases where, on purpose and by law decree,
land/capital ownership was divorced from political power was
divorced from military power; feudal Japan had it's three
class system where one could be a ruler, a farmer, or a warrior,
but could NOT be two of these (to have wealth of any sort meant
that the samurai had to give up his sword). But I was
unaware of a place where land ownership was divorced from
capital.
once such place today is the Bahamas. Not saying that some
wealthy folks don't have a lot of land, just saying that a
lot of what would be considered poor folks do have a lot of land.
Or had up until fairly recently if that is no longer the case.
At least in part because of what we refer to as generation land.
once such place
today is the Bahamas. Not saying that some wealthy folks
don't have a lot of land, just saying that a lot of what
would be considered poor folks do have a lot of land. Or had up
until fairly recently if that is no longer the
case.
I would have thought all the land in the Bahamas, long ago would
have been bought up by the wealthy. I'll have to look
into that.
a lot of the land was given to former slave families at
emancipation (if I get things right) as what we call generation
land. To my knowledge, much of it is still in the families'
possessions.
There is also still a large amount of government or crown land as
far as I know.
Don't "worry" though, I think we are trying to
"remedy" that situation.
When was emancipation in the Bahamas? Seems that those
islands are so picturesque, the whole place would be covered in
vacation homes and the slave families would long ago have gotten
rich themselves off of "generation land".
Is subdividing not allowed by law? The only way I can think
of that a family owning "generation land" that long, in
that environment, would be a lack of ability to subdivide.
Otherwise, you keep the acre or so you need for food &
house, sell off the rest, and use that capital to start a
business.
For, if labor-saving inventions proliferated until perfection
was obtained, and the need for labor in wealth production was
entirely done away with, everything the earth could yield could
be obtained without labor. And no matter how small the population
might be, if anybody but the landowners continued to exist, it
would be at the whim or by the mercy of landowners'
bounty.
Uh huh...
Interesting how labor saving devices are the root of the problem
but increases in efficiency in land use or natural resources
doesn't cause the same concentration of wealth into the hands
of the landowners.
They also go awry when they make the false assumption that all
excesses above the cost of production go to 'rent' as
opposed to being divvied up among the owners of the means of
production, i.e. the capitalists (who don't necessarily have
to be the land owners), or else reinvested back into the business
for future production.
The equal right of all men and women to the use of land is as
clear as their equal right to breathe the air. It is a right
proclaimed by the fact of their existence. For we cannot suppose
that some men and women have a right to be in this world and
others do not.
They need to prove that instead of just asserting is as fact
because the only way one could have that 'right' is to
violate the negative rights of another.
And the 'solution' just builds off these utopian
fallacies...
Well, I probably shouldn't have linked to the page since what
I understand of Georgism comes out of discussions with my friend,
and I'm not too sure about Henry George's
ideological drive. I do think that a shift from
transaction taxes to economic rent makes a lot of sense, though.
I'm definately in favour of productive capital. No question,
there, and you'll see that if you follow the other threads.
Regarding the issue of rights. All taxes offend natural rights.
transaction taxes obstruct trade, and land value taxes discourage
the ownershp of "sitting" land. If the subject is the
balance of taxation, there's no pure answer other than
stopping taxation altogether. However, if taxes cannot be
eliminated, it is reasonable to ask onself which taxes will cause
the least harm. One reasonable measure of that is surely how much
the tax changes economic behaviour. Transaction taxes effectively
block productive trades; under a system of land value tax, the
rental value of land is reduced (or in the extreme case,
eliminated), but the rent that can be extracted given different
uses of the land retains its differentials, and so the same
economic decision should be made.
They also go awry when they make the false assumption that
all excesses above the cost of production go to 'rent'
as opposed to being divvied up among the owners of the means of
production, i.e. the capitalists (who don't necessarily
have to be the land owners), or else reinvested back into the
business for future production.
Profit over a normal rate of return for the risk is only
transitory. Competition eliminates the surplus. If the market is
such that competition cannot enter the field, then the value that
one gains from that is economic rent. Land is another sink for
rent. The point about rent is that the bidding process is such
that surplusses are consumed in the bidding process. To see a
classic example of this, consider how stretched mobile phone
companies have become outcompeting each other for radio spectrum
in Europe.
Your response comes accross to me as an ideological reaction to
what is surely simple and orthodox economics. It requires a more
profound counterargument than simple disgust.
However, if taxes cannot be eliminated, it is reasonable to
ask onself which taxes will cause the least harm.
Yes, that would be another unproven assumption that this theory
is based upon.
If the market is such that competition cannot enter the
field, then the value that one gains from that is economic rent.
Land is another sink for rent.
Those are two different forms of 'rent'. One is 'rent
seeking' and the other is charging someone for the exclusive
use of your property. Same as 'wages' is charging someone
for the exclusive use of your labor and 'interest' is
charging for the exclusive use of capital.
The point about rent is that the bidding process is such that
surplusses are consumed in the bidding process.
The same can be said about wages and interest. Which is actually
my point.
Labor, capital and land are all limited resources except
in a system that has managed to eliminate all labor from the
equation.
The very nature of humans suggests that this will never happen
and hasn't given any evidence to the contrary in all of human
history. There have been many, many inventions that have put tens
of thousands of people out of work in one fell swoop but there is
still no shortage of work to be done.
To assume that it will and come up with a system based on this
unfounded assumption which involves removing scarcity from land
and capital is bound to fail because the basic premise is flawed
and goes against the very nature of the environment we find
ourselves in—a world of scarce means.
Your response comes accross to me as an ideological reaction
to what is surely simple and orthodox economics. It requires a
more profound counterargument than simple disgust.
The point about rent is that the bidding process is such that
surplusses are consumed in the bidding process.
The same can be said about wages and interest. Which is
actually my point.
Well, wages are actually a form of economic rent since people are
in finite supply. Interest is the odd one out here, since supply
and demand varies with the rate. Interest doesn't grow
infinitely to absorb whatever is thrown at it since as it varies,
seekers of such capital either partake or drop out.
Land and wages are different from interest since the land supply
doesn't grow or shrink with demand, and people need to eat
however low wages are, and generally keep working at higher wages
(not least because they've got to pay their mortgages(!)),
and again their number doesn't change drastically with wage.
If you tax capital, you discourage trades; if you levy a land
value tax below the rental value, or a poll tax below a
"suicide" level, land does not vanish, and people do
not disappear (although they might illegally 'disappear'
to avoid the tax): both are still available for productive uses,
and the best use in both cases is much the same as it was before
the tax.
I agree with you that Henry George made a mistake in classifying
wages seperately from other economic rent, but surely the rest is
as much common sense as supply and demand is. Certainly the
"law" of supply and demand has bizarre exceptions, but
one would be a fool not to reckon upon it.
Well, wages are actually a form of economic rent since people
are in finite supply. Interest is the odd one out here, since
supply and demand varies with the rate. Interest doesn't grow
infinitely to absorb whatever is thrown at it since as it varies,
seekers of such capital either partake or drop out.
'Capital' is also finite. Counterfeit claims to capital
(fiat currency) doesn't have such a restriction so is used to
set the price of capital and makes it appear to not follow the
law of supply/demand but that's just not the case.
The underlying capital structure (means of production)
doesn't disappear if the interest rate gets too high nor does
it magically appear when the central bank inflates the money
supply. Only through mixing land with labor can 'capital'
be created so it follows that it would behave in the exact same
way as land and labor that compose it economically speaking.
This is also one of the main reasons businesses always fall into
the business cycle trap, the 'claims to capital' get out
of sync with real capital and false signals are sent to
them that the demand is higher than it really is due to the
artifically low interest rates. So they invest in projects that
would make perfect sense if the this disconnect wasn't there
and later on find out that actual demand was lower than the
interest rate signal was sending.
The key is to understand that when the government starts up the
printing press they aren't creating capital but only claims
to existing capital and whoever is the recipient of these fresh
claims are appropriating the land and labor of the actual
producers of capital. Which also explains why governments love
fiat currency so much as it allows them and their allies to gain
real capital parasitically.
The interest rate (whether set by fiat or supply and demand)
determines capital flow, so I agree that physical capital
doesn't change very fast, but then that isn't the
quantity that we're dealing with here. If profits are greater
and are invested into new captial, it is the flow quality that is
important, since these new profits (amd hence new supply) are
themselves capital flow.
Taxing capital flow and transactions generally has a clear
deadweight loss in that what could be reasonably reckoned to be
worthy investments are simply not made in much the same way as
worthy trades are not made when transaction taxes are levied.
Although I don't advocate poll tax, I give it as an example
together with land value tax as a tax that doesn't change
economic decisions. As for value coming from "land mixed
with labour", this is in a sense true, but the fact that
labour can move means that the two elements are seperable. Land
can be taxed without impinging upon wages.
I agree that all tax is distorting in that anyone who is taxed
would have eventually put their received income elsewhere, and
the government is taken their place. Taking land is no different
in this regard to taxing transactions or anything else. That
can't be helped unless we are to be rid of tax altogether.
The rest of what you write about fiat verses constant currency is
not relevant here, although the untrustworthiness of currency
issuers is a worthy topic in its own right. I have been careful
to argue both sides, so as to make the nature of currency a
separate issue.
I'm not really arguing where on the production cycle it would
be 'best' to tax because it doesn't really matter,
the taxes are ultimately paid by the consumer no matter how you
look at it.
Plus I would never argue in favor of taxation to begin with
because I don't really see it as a moral form of theft unlike
most people.
But anyway, one you mix land with labor you can't separate
them because the labor has already been expended to produce the
capital good.
And 'interest' is the rate charged for the use of capital
no matter if it is money loaned from the bank, a widget produced
early in the production cycle, a machine press to stamp out the
widgets or the labor expended to produce the widget. If you pay
for something now but don't get paid for the final consumer
good until the future then part of the 'profit' is
actually interest charged for the loss of the use of your capital
while it was tied up in the production cycle.
If you're lucky that is because there is no guarantee that
you can retrieve any costs for risking your capital.
It's the theory that profit is anything above simple interest
because you can get interest risk free any old time but only
through risking your capital can you receive profit.
Finally, you can't seperate out fiat currency and its
relationship with real capital because of the effect it has on
the price of capital goods(higher) and interest charged(lower)
due to its very nature, assuming constant inflation which is what
we usually get. If you don't look at the Big Picture you are
bound to reach flawed conclusions because you can't seperate
out the parts from the whole in The Real World™.
I'm not really arguing where on the production cycle it
would be 'best' to tax because it doesn't really
matter, the taxes are ultimately paid by the consumer no matter
how you look at it.
I really don't think that that is the case. If rent can be
extracted, the cost won't be passed on since rent is the cost
of being in the game. The owner of the rent-producing good will
lose out, to be sure, but they cannot pass on the cost in an
efficient market. Supply and demand is stronger than they are as
an individual, and the supply of a rent-yielding good is fixed.
I'm not saying that the economy isn't affected; it is:
cash is taken out of it, and used for government purposes. The
private sector is smaller, and the government sector is larger.
Unless government spending is itself productive, the displacement
of workers from the private to the state sector reduces the
overall amount of wealth.
However, the government has an incentive to spend upon such
things as infrastructure and schools over war and welfare in that
doing so directly and immediately increases their revenue.
Infrastructure projects such as new rail lines can push up nearby
property prices by three times the value of investment.
Such an alignment of interests has to be better than the status
quo.
Plus I would never argue in favor of taxation to begin with
because I don't really see it as a moral form of theft
unlike most people.
I really think that this is the crux of it. Which of two immoral
systems is better is a little like the question of whether you
should take the red or the green poison pill.
If anything, you would not want the current system to work
better, since your intent is to change it. You have to be careful
of this one though if you are tempted by such a strategy: the
idea making things worse so as to bring on a revolution
doesn't have the most glorious past adherents.
I say that as an aside, since I don't believe that that is
your position. Rather, you seem to argue things because you
believe them to be the case.
But anyway, one you mix land with labor you can't
separate them because the labor has already been expended to
produce the capital good.
Well, you can't separate them philosophically, any
more than you can separate various workers' input into a
final product, but the market does it anyway, albeit somewhat
arbitarily.
If you're looking for the effects of a tax upon the
marketplace, it is the market's "judgement" that
matters. Since taxing the land doesn't change the supply, the
land will receive the same allocation as it would have done
before the tax.
The philosophical argument won't change market realities, but
it might bring in a moral dimension, which is what I suspect is
your real drive.
Finally, you can't seperate out fiat currency and its
relationship with real capital because of the effect it has on
the price of capital goods(higher) and interest charged(lower)
due to its very nature, assuming constant inflation which is
what we usually get. If you don't look at the Big Picture
you are bound to reach flawed conclusions because you can't
seperate out the parts from the whole in The Real
Worldâ„¢.
I agree that the nature of currency is an important question, and
perhaps changing the tax system and ridding ourselves of fiat
currency would both be good moves that combine non-linearly to
get a whole larger than the some of its parts, but it is surely
also the case that they can be argued for seperately.
I do understand that from your perspective, being rid of tax
altogether would be better still. Whether that is desirable or
not, I do not believe it to be attainable since the need of the
less intelligent for hierarchy has a tendency to construct
tax-levying entities, and eventually states. I wish that human
nature were different :-(
"Since taxing the land doesn't change the supply, the
land will receive the same allocation as it would have done
before the tax."
There is something in this thought that is just not sitting right
with me. I am not sure I can pinpoint it yet.
I don't even know if you really will get the same allocation
with taxing it.
So, please give some details on how it will be taxed? A
percentage of value? Who will set the value? How will the value
be set? Since the land will be taxed, I assume the land will
still be in private hands??? Or will the state come to own all
the land somehow and tax itself or will the "tax" be in
effect the rent the state charges for use of the land? In any
event, how will the state tax lands that it owns?
Will this be a simple yearly "ownership" tax? Or will
there be a tax on land transfer? Both? Something else?
There is something in this thought that is just not sitting
right with me. I am not sure I can pinpoint it yet.
I don't even know if you really will get the same
allocation with taxing it.
This is probably the biggest reason why land value tax is not
prevalent today. The idea of tax that doesn't change economic
behaviour is counterintuitive. Yet it is just a matter of
supply and demand.
For example, if Argentians had to pay a poll tax, would their
call centre operators receive more (before tax) than Indian call
centre operators? I'd suggest that the answer is no, because
the laws of supply and demand are ignorant of such factors.
Similarly if there were a "tall persons" tax; would
tall people in an apple-sorting factory be paid more to
compensate?
Replace "tall people" with the land on which the
factory was built, and you can begin to build an intuition as to
why a land value tax would not change the allocation. The supply
of land is much the same as it was before, and since all
landowners are in the same position, they can't act to share
the tax with the owners of the business, since they can simply
move to a landlord who is more "desperate".
I have noticed that when you start to test the concept, people
don't really believe in supply and demand, but more in terms
of "forces". People don't like mechanisms; they
like essences, which is why Marxism retains its populatity
IFAICT.
So, please give some details on how it will be taxed? A
percentage of value? Who will set the value? How will the value
be set? Since the land will be taxed, I assume the land will
still be in private hands??? Or will the state come to own all
the land somehow and tax itself or will the "tax" be
in effect the rent the state charges for use of the land? In
any event, how will the state tax lands that it owns?
In order to be taxed, land has to be surveyed so as to get an
estimate of its unimproved value. This is important, or else
there wouldn't be an incentive to improve the land. My
understanding is that where this is done, requests for
re-evaluation are rare compared with land transactions generally
(of the order of 2%). A bill would then be send to the landowner
which would be a fraction of the rate of interest on that value.
Henry George would have that fraction be one (100%); for me, it
would be the value that it needs to be to eliminate transactional
taxes (short of 100%). The land would remain in private hands.
The tax department would charge the department that
"owned" the land. It is important that state entities
face the same tax regime as everyone else so that they themselves
act efficiently.
Will this be a simple yearly "ownership" tax? Or
will there be a tax on land transfer? Both? Something else?
See above for billing. Land transfer would be untaxed, although
future liability for the tax would lie with the new owner.
"In order to be taxed, land has to be surveyed so as to get
an estimate of its unimproved value."
And is this to be done for all land? Or does the tax only begin
to be due when you request for your land to be surveyed and
appraised? I assume the former.
Now, since it seems there is a benefit these days to having land
left alone and pristine, it seems there will have to be a
mechanism to allow for this or you would tend to force all land
to be developed at least to the point where the income from it
equals the tax bill.
Now, since it seems there is a benefit these days to having
land left alone and pristine, it seems there will have to be a
mechanism to allow for this or you would tend to force all land
to be developed at least to the point where the income from it
equals the tax bill.
Actually, you point out a real problem: and that is
environmental, rather than economic. Luckily, you also point the
way to a solution.
See, I don't know about your property tax system but ours
goes something like this.
No property tax on undeveloped land, only on developed land. No
property tax on land under a certain value.
No property tax on developed or undeveloped land in the out
islands for citizens.
So, since there is no property tax on undeveloped land here,
there is no reason to have it appraised if you are sitting on it,
letting it be. A lot of it is not properly surveyed either as I
understand things.
I have noticed that when you start to test the concept,
people don't really believe in supply and demand, but more in
terms of "forces". People don't like mechanisms;
they like essences, which is why Marxism retains its populatity
IFAICT.
You're only looking at one aspect of supply of demand; if
supply stays the same then demand will stay the same.
You ignore the other part that says if you raise prices demand
will fall and if you lower prices demand will rise. As you point
out there is a static supply of land so it would be impossible to
increase supply to lower the prices to compensate for the lower
demand nor would it make economic sense because as demand falls
it would cause a surplus of unrented properties and make it
virtually impossible to charge the true cost of the land to the
renters. Which is actually the plan, to destroy 'rent'.
If you raise the prices across the board and don't allow the
businesses to pass on the increased costs, as is the whole point
of this is to stop land 'rent seeking', then you will
have a situation where the marginal buyers and marginal sellers
can't reach a market clearing price.
The current rents will be too low for the sellers who won't
rent the land at a loss (presumably to pass it on to someone who
will use it more efficiently) and the new rent that takes into
account the increased taxes will be too high for the marginal
buyers who will then either close up shop or go find another
place to rent with added moving costs (if the one time moving
costs don't put them out of business).
I do agree that the Marxists don't get this since they
can't seem to understand that something simple like minimum
wage actually causes unemployment as the businesses who can't
afford the now more expensive marginal workers just lay them off.
Eventually everything will stabilize at a newer, grander, lower
business level because they will be paying 100% of the taxes to
support government directly instead of spreading it out to all
different levels of the economy and there would be less of them
to bear the burden...
As I was saying earlier about the basic premise being flawed,
they wish to destroy the land rental market because it infringes
on someone's 'right' to land ownership.
I do agree that
the Marxists don't get this since they can't seem to
understand that something simple like minimum wage actually
causes unemployment as the businesses who can't afford the
now more expensive marginal workers just lay them
off.
Just like the capitalists can't seem to understand that if
you get a tax deduction for payroll, there should NEVER be any
reason to be rich enough to have income taxes at a higher rate.
I'd have replied sooner, but the world and her dog arrived at
my door, and I've been somewhat busy.
You ignore the other part that says if you raise prices
demand will fall and if you lower prices demand will rise. As
you point out there is a static supply of land so it would be
impossible to increase supply to lower the prices to compensate
for the lower demand nor would it make economic sense because
as demand falls it would cause a surplus of unrented properties
and make it virtually impossible to charge the true cost of the
land to the renters. Which is actually the plan, to destroy
'rent'.
Supply and demand is more complex than that. There are competing
uses for the land, and all are equally taxed. Supply and Demand
works because another thing becomes relatively more or
less desirable given the change in price. The use of the land
does not change. You are right, however, that the owners of the
land get less rent for it, but then (in a steady state scenario),
they paid less for the land in the first place.
Destroying 'rent' is indeed socialist's interest in
the plan; my interest is different: that of eliminating
transaction taxes on the basis that these do interfere
with economic activity. A land tax wouldn't stop me fixing
your roof and you painting my fence; a transaction tax might.
If you raise the prices across the board and don't allow
the businesses to pass on the increased costs, as is the whole
point of this is to stop land 'rent seeking', then you
will have a situation where the marginal buyers and marginal
sellers can't reach a market clearing price.
Not really. The land is cheaper in the first place (as it is less
valuable), so that if the business owns the land, the interest on
the capital used to buy the land is lower to compensate for the
tax. That prices rise across the board is a false premise.
The real issue is the transition. However, full
compensation is possible. This is the case because whereas
transaction taxes have a deadweight loss, taxes on economic rent
do not, so that there should be greater economic activity
resulting in higher tax revenues over the period of transition
(and beyond).
"It's the theory that profit is anything above simple
interest because you can get interest risk free any old time but
only through risking your capital can you receive profit."
In an honest system, can you get interest without risking your
capital? If you loan your money out at interest, it may not get
paid back after all.
That's one of the roles banks are supposed to play, assuming
the risk for their customers money they loan out.
The depositors get simple interest while the banks earn
entrepreneurial profits on top of that by charging the loanees a
higher interest rate than the they pay the depositors.
All the moral hazard introduced by 'insured doeposits'
and 'lender of last resort' has changed that role but I
don't think too many people classify modern banking as
honest.
That's one
of the roles banks are supposed to play, assuming the risk for
their customers money they loan out.
But they don't loan out their customer's money.
Instead, they create new money to loan out at many times
the amount of their customer's money, thus avoiding the need
to split the higher interest rate with depositors.
All the moral
hazard introduced by 'insured doeposits' and 'lender
of last resort' has changed that role but I don't think
too many people classify modern banking as honest.
I certainly don't. But then again, I don't classify
any system that hides information as honest.
Let's put down a real simple bank play without fractional
reserve banking.
Bank has 1,000,000 in equity on its balance sheet.
Bank takes in 1,000,000 in deposits into accounts that can be
withdrawn at any time. Interest rate 2%.
Bank loans out 1,500.000 in loans that can be called at any time.
Interest rate 4% or greater.
On a day just like any other day but different, all the
depositers want their money. So bank calls in enough loans so
that they can meet this demand. But the people who borrowed
can't repay and now the bank can't repay.
How do the depositors get their money back? (Forget insurance
schemes for the example.)
Bank takes my $1000 and $1k from nine other people and loans it
to the local honest used car dealer. None of this money is a
demand deposit because we all know that it isn't available
until some point in the future, probably have that date
stipulated in the contract.
The bank does this a thousand times a month and has constant
money churn all the while never touching the demand deposit
accounts so all the demand depositors could take out their money
and the bank wouldn't have to call in a single loan to cover
it.
That's the way it's supposed to work where a demand
deposit is a bailment contract and timed deposits are a
'loan' to the bank and not where they have full use of
all the money in their vaults and are protected from losses by
law and the banking cartel.
You know, I am beinng a bit of a dunce on that one.
Forget that I said without a fractional reserve system on that
example.
Now for the other way.
You put money in the bank but not on fixed deposit. Bank
can't lend this out as you may ask for it tomorrow.
Therefore, bank can't earn interest on it, therefore they
can't pay you interest on it.
Since they don't lend it out, it should be there for me
unless they have a robbery.
Hence my original question: "In an honest system, can you
get interest without risking your capital?"
I put money in on fixed deposit. Bank can loan that out and have
the loan due on or before the day my fixed deposit comes due.
Bank pays me x% interest and charges (x+y)% interest to the
borrower.
There's always some risk, that's just the way the world
works.
I'd say there is a lot less risk in a proper banking system
than keeping it stashed in your mattress or buried in your
backyard. You're only risking the total and complete collapse
of the bank and not assuming the risk involved in the loan the
bank makes.
I don't think they would do something like risk your money on
a $1 million loan to someone earning $30k/year if it came down to
them having to pay up if the loan defaulted.
Well, you're not going to get interest on a demand deposit
but will have to pay a warehousing fee for them to watch your
money and give you convenient means of payment like checks and
debit cards.
If you want interest you need to open a timed deposit where the
money isn't able to be taken out at any random time because
the bank doesn't necessarily have it. They pay you interest
so they can use your money to loan to others and they also assume
the risk of the loan failure, any losses are taken out of their
profits and not your deposit.
Short of a bank failure your money is 'safe'.
That would be a proper banking system, a bailment contract for
demand deposits and the money they lend is specifically given to
them for that task as a loan or an investment in the bank.
Looking at your post, I think we may be in agreement with what an
honest system is.
I think what I was trying to get at (I am having problems with
the display of these deeply indented conversations) is that in an
honest system, you can give your money to a bank for safekeeping
in an account which you can withdraw at anytime but then you
can't get interest or you can put it in a fixed deposit and
get interest.
This getting interest on accounts that you can take your money
out at any time is problematic for an honest system. Or do you
disagree?
I'm a long time silent fan of your articles, but something
about that last bit about the custom builders made me need to
write in, mostly because it's inconsistent with some of your
previous articles.
You are two quick to discount the value and ability of, to be
abstract, welders and finish builders. Those are two skills that
should earn them the title of "someone who builds stuff with
their own hands" without question. By your logic, NOBODY has
any right to such a title, because apparently, they can't
make a product entirely from raw materials. Let's take a look
at your hypothetical motorcycle manufacturer to see how absurd
this would be.
In order to earn your title and bragging rights, you'd have
to make the brake systems in house. Now, it's not that hard
to make a caliper, a rotor, and some pistons on a CNC machine.
Some motorcycle builders can do that in house. You could probably
do it with your system. However, what about the finish parts for
the breaks? The pistons are going to need seals, and that means
either a ring made of specialty steel and heat treatment, or
typically a rubber boot. So to get the title, you're going to
need to be able to mold and vulcanize rubber in-house. What about
the banjo fittings on the break lines? Well, now you need a
casting and heat-treatment plant in house. I could go on, and
that's just for the brakes; let's not even start with all
the specialties required to build an engine. The worst part of
this is that even if you could do all of these things (apparently
required to say you can build stuff with your hands), you'd
end up with a braking system not designed by braking engineers-
which is where the inconsistency comes in, as you've argued
against this very situation in the past.
The point is that you're discounting a group of people with a
skill far surpassing 99.several 9s percent of people in the
modern world, because they don't have skill in a variety of
specialties, any one of which alone would have me bragging about
building stuff with my own hands.
That aside, building complex machines such as motorcycles and
cars has NEVER been even a one-company operation. GM had
suppliers for stuff like steering boxes, and those suppliers had
suppliers for stuff like seals and specialty forged parts, and
those suppliers had their own suppliers, all the way back to the
mines and rubber trees. The strength of your argument isn't
that people can't do this stuff by themselves, but that the
supply chain has been broken. Yes, those finish builders would be
out of luck to build their product without their supply chain.
And most unfortunately of all, breaking that supply chain may
become a reality sooner rather than later with protectionism and
soaring shipping costs.
The point is that you're discounting a group of people with a
skill far surpassing 99.several 9s percent of people in the
modern world, because they don't have skill in a variety of
specialties, any one of which alone would have me bragging about
building stuff with my own hands.
If only that were so.
I'll take the point about "not everyone can make a brake
caliper from raw ore", indeed, neither should they,
economies of scale and all that.
However...
The fact is that armed with the Custom Chrome catalogue and
equivalents building a so called "custom" bike is as
hard, literally, as building a "custom" computer.
You just pays your money and order a bunch of bits that are all
designed to fit.
As for the alleged elite metal fabrication skills, you're
having a laugh, go ask a certified welder like a boilermaker or
suchlike what they think of the welding and fab on these shows,
you're in for a very nasty shock.
Here is a classic example, and I've downloaded and watched at
least 30 biker build off episodes, and at least as many again
similar programmes.
Every last one of them, without exception, builds the exhaust
pipes like day one amateurs, they all start at the motor, add
randomly cut pieces tacked together, and end up at the end,
completely, totally and utterly wrong, you start with both ends
fixed, and even if you don't have a pipe bender you learn how
to mark and cut pipe on a radius to that the two ellipses join
perfectly, instead of what they all do which is cut on the
straight bits.
Exhaust pipes also need to have a specific volume, for a 4 stroke
motorcycle that volume is a multiple of the cylinder
displacement, not just some random length that came out like it
came out, which makes an utter mockery of tuning the engine.
Welding frames is even worse, nobody has an eye for stresses and
nobody anneals the metal, just chop and tig, which is another
reason all the bikes look like abortions and end up as glorified
torture machines designed for nothing quite so well as destroying
the human spine.
OK, not everyone can do primo paint, but everyone can do fairing
and filling, except nobody does, and it is an EXTREMELY eare
custom frame that doesn't show a weld.
My current (off the road for two years awaiting a re-wire and
rebuild that I just don't seem to be able to prioritise)
bike (gallery, page 1, 3rd one
down, 6 pics, none of which show any of the detail work) , which
was made with exotic tools like files and hacksaws and stone age
stuff like that, is sufficiently "custom" that people
who have been riding 20 years come up and ask "Is that a
TR1?" and sure as shit didn't cost 20 thousand dollars.
Since those pictures were taken it has been painted by an 18 year
old girl under my supervision, and the wiring loom will be made
up from scratch, which again leaves all these "custom bike
builders" for dead.
There's 30 plus years of hard riding experience gone into the
customisation of that bike, a bike that until I took it off the
road did 2 thousand miles a month in all weather, everything just
falls into place and with rider the centre of gravity is less
than two feet above the ground and smack bang between the two
axles, with the result that it feels like being slung down the
road on a tea tray, without exception everyone who has a go gets
off with a major grin and starts talking about FUN, and how all
that amazing "old" technology like big wheels and old
style forks and shocks and old style tyres don't actually
seem to get in the way of performance, corners better than their
16" wheels with upside down forks and low profile tyres,
blah blah blah, only thing it is lacking is power, and that too
is deliberate, a low tuned motor pulling very tall gearing, you
go fast (if you want to) by not having to slow down for corners
etc, and sustaining 100 mph plus apart from soon costing your
licence kills your neck in short order, sides, I can sit on that
girl doing 70+ on the A roads all day and get off and I don't
know I've been in the saddle, no numb ass, no aching back, no
cramped shoulders...
Nah, sorry dude, just can be with you when it comes to the so
called custom bike builders as featured on the telly.
There are tens of thousands of guys out there not promoting
themselves wildly on the telly who have built real custom bikes,
with real skills.
I get why the UK is in this fix, somewhat- there's a
potential physical problem there of lost empire, too small of an
island, limited natural resources.
What I don't get is why the United States is in the same fix-
only worse. We send ore & scrap metal overseas to Asia
for processing. Why the hell are we doing that?
I get why the UK is in this fix, somewhat- there's a
potential physical problem there of lost empire, too small of an
island, limited natural resources.
We've still got a metric buttload or resources, those same
resources that built our empire, but we closed all the mines, all
the smelters, all the factories, and built shopping malls and
housing estates on top of them.
Oh, I thought you meant a non-energy mine, something that
isn't renewable in 1000 years or so.
Coal is pretty common. Just about any forested area or area
that was forested has some.
Iron is pretty common too.
Bauxite is less common, but still common enough that anyplace you
have the energy, you have the ore nearby to make alluminimum.
But I'd think that say, copper, gold, tin, silver- these
would all be long gone in Europe, with no producing mines left.
Is that so, or have they too been closed up simply because
the labor is more expensive?
Starting a business, in Antarctica
Starting a business is I think in many ways like building an aeroplane (something I have never done) in that you lay out all these plans, you do a bunch of work, and then one day it has to actually fly, properly.
It is only when talking to people that you realise just how few people have actually started a business. For starters you can discount all the self declared "Entrepreneurs" who think that their service industry is a business, it isn't.
I'm talking about a proper business with a physical product here, and experience of setting one of those up is terrifyingly, shockingly rare.
This is important to understand, because the world is populated by people who at one end of the scale simply reach into their banker's pocket and throw a million pounds at a new business located in London, and at the other end of the scale by people who re-mortgage the house to start a service industry job (builder / decorator / hairdresser / plumber) in what was their trade anyway.
Joe the plumber who works for County Plumbing, deciding to go self-employed and start up on his own isn't a new business, it isn't even a business, it is a service industry, and the market was already there.
The million pound venture in London might actually be a new business, making instrument gauges for "ricer" car tuners, actually making as opposed to importing, but it is in London, which is a lot like parachuting weed seeds into a compost patch.
My first authentic experience of this was Peter G, also known as Lord Inchcape, chairman of P&O etc, who basically turned up at a bit of jungle a few miles outside Bandar Seri Begawan in Brunei and decided to set up a logistics depot for the offshore oil platforms.
First, import the Cat D9's to level the area, then import the concrete and steel and wiring to build the depot and wharf, import a fleet of Fodens, import... you get the picture.
The most interesting thing about this was he did it with 50 bucks US of his own money, and a quote I shall remember all my life, "Never use your own money, if the idea is any good, other people will give you their money."
But even Brunei wasn't Antarctica. For instance mains electricity was simply a matter of stringing up the poles from the grid, ditto water etc, the basic infrastructure was already there. What wasn't there could be flown in from further afield or shipped in from say Singapore, and using the existing infrastructure as a foundation, built upon.
Brunei was a lot of years ago, and the gap between the UK and the Brunei jungle is at least as great as the gap between the Brunei jungle and Antarctica, at least, you would be forgiven for thinking so.
But the fact is that for most regions of the UK, let's take Exeter in the southwest, a city with 2,000 years of history, the reality is you ain't much better off than we were all those years ago in Brunei, there is a foundation of mains electric grid and water grid to build on, but from there on in it just gets worse.
Whereas Brunei had access to the relatively cheap markets of Singapore for materiel, here is Exeter the chances are much of my new business infrastructure is going to have to be shipped from, you guessed it, the Far East.
Steel? Yeah, there is a single local steel stockholder, but the prices are astronomical. Bricks, all the local brickworks have gone, most bricks are now imported, believe it or not. Electrical cable and wiring, the last UK plant that actually made cables as opposed to importing them closed three years ago. Machine tools, you're joking aren't you. A fleet of vehicles, that'll be Renault or Volkswagen from Europe then, employee overalls and safety wear, China. Office furniture, made in Poland. Office IT, made in Hungary. Paper for invoices etc, made in Scandinavia. Mobile phones, ditto.
And speaking as someone who has imported stuff this means everything is cost + shipping + import duty + 17.5% VAT + various middlemen's cuts.
Workers to actually build the new plant, chances are they are going to be Polish or Hungarian or Estonian too, and the plant they will be driving will be Kubota and Hitachi etc.
Then there is materiel itself, everything from thermoplastic granules through nonferrous metals even to silly stuff like dry ice (my nearest dry ice stockist is just outside London) in sustainable industrial supply quantities is going to be imported via agents and resellers in the London area.
HSS machine tools, Germany or Sweden if you are lucky... you really do not want to know how hard it is to find a simple hacksaw blade made of proper bi-metal HSS.
And so we take time out from this discussion and see how many new proper businesses have been set up in the south-west in the past 20 years..... ummmm... none.
Not a single one, and it really is no wonder.
Speaking personally If you employed me to bugger off to Papua New Guinea to set up your new factory I'd be a lot more confident than if you employed me to stay here and do it, I'd put it (as a time-served marine engineer) as a challenge on a par with sending me out to Exeter Airport and expecting me to design and build an aircraft from scratch... you'll get something made of wood and canvas and capable of maybe 70 mph if you can find someone desperate enough to act as test pilot, while I desperately stuff the Sopwith Camel blueprints behind the (imported from Korea) potted plants.
Now let's look at Imperial England, when two thirds of the globe was pink and the sun never set on the empire, how about Lister, (click the link, not what you'd expect for a factory that made multiple millions of engines of all sizes and exported them literally worldwide) or a few miles away the home of aviation or a few miles from that the home of railway manufacturing.
But this isn't about "manufacturing was what made us the greatest", this is about places like the UK and indeed like New York, so called "FIRE" economies, Finance, Insurance and Real Estate, what do we do when the financial services industry passes (passed?) its sell by date and we need to get back to some good old protectionist, anti-globalisation, local, home grown MANUFACTURING industry?
My sincere worry is that we can't.
Not a question of money, it doesn't matter how much money we print, setting up a business of necessity requires certain foundations, foundations that simply do not exist any longer.
It will be like watching Discovery Channel biker build off.
So the guys spend a week cutting and welding a few bits of metal while comparing themselves to people who actually build things with their own hands.
Cut these assholes off from their Custom Chrome catalogue and their outsourced everything and they'd be left making kids' playground swings and climbing frames, with literally no way to leverage themselves back into making actual roadworthy motorcycles of any kind.