Thursday, 26 November 2015

Chairman Mao

It goes from bad to worse for the Labour Party. To use a mass murder as the basis for a joke is a new low; most people will be quite worried about the fact that Britain's main opposition party has become a complete joke. Moderate Labour MPs won't need to oust Corbyn and his team, at this rate they will self implode on their own accord.

Tuesday, 24 November 2015

Income Myths

“Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as "bad luck.”

Robert A. Heinlein 

There are so many modern myths concerning income a few are highlighted in the video below. I've got plenty more to say on the subject as this only scratches the surface.

I was once in the poorest 20% in so called "poverty" as progressive would say. This was back in 2005 just after I graduated and landed my first job just to pay the bills and gain experience at first. Fast forward 10 years to 2015 and I am now in the so called top 10%. I don't feel it as I'm still the same person with lots of enthusiasm and a will to try and make a difference. That 10 years makes a world of difference, I have gained real world experience, employees now value my skills and knowledge. The whole point is people do not stay poor. I'm a real life example and can comment it on it. I'm not the only one. My dad had a similar journey. He started on very low wages, in fact he constantly reminds me that everything was very expensive back when he was young compared with now. He was chuffed to get a brand new car at around the time I was born in 1983. It was a basic Ford Fiesta. Today it would look like a tin can on wheels but back then it was a high priced item.

Washing machines, dishwashers, microwaves - that was living the dream, I still remember my parents buying the various appliances as they became more affordable. Now we buy them when our existing ones break; they have become so cheap its mostly too expensive to pay someone to fix the broken one. From growing up on a council estate my dad has elevated his income into the top percentiles by hard work and a passion for what he does for a living. He started at the bottom like me and gained skills and knowledge as he matured over his 40 years in the workplace. People look at the snapshot statistics and say "the poor are getting poorer and the rich are getting richer!". This misses the vital point that people move through income percentiles during their life and when this is analysed then the whole premise of the Socialist sob story begins to fall apart.

Tom Woods did a recent podcast doing a wonderful job of highlighting some of Thomas Sowells recent book with snippets about incomes. At the bottom I've attached the podcast for anyone who wants to listen with many myths completely torn apart. When tracking people over a ten year period the phrase "the poor are getting poorer and the rich are getting richer" actually turns on its head. The bottom 20% find their incomes rise by on average 91%. Meanwhile the top 1% see their incomes fall by 26%. Now we are tracking individuals rather than static income percentiles, the picture becomes rather different. The phrase lies, damned lies and statistics rings truer then ever.

What we also find is that the elite brackets of the so called 10% and 1% are not as elite as people would have you believe. In America over 50% of the population enters the top 10% of earners during their lifetimes. Even in the top 1% of earners, over 10% of Americans are associated with this bracket at some point in their lives. In the study they also found that 10 years later most of the people in the top 1% were no longer there.

Now of course certain individuals may remain in the bottom 10% all of their lives for whatever reason but even these people gain tremendous due to the advances and wealth of others. Even if we were to look at the most lazy and incompetent individual in society they actually gain the most from Capitalism and free markets. Innovations such as cars, electronics, Internet, travel; all of these have now become accessible to the common man and all were once only available by elites. They became affordable because markets continually drove innovations and price reductions. People who create such goods may get very rich in the process, but to succeed they may have had to take huge sacrifices. 80 hour weeks. Taking lower pay when they could be earning a higher and more reliable income with an employee. Risking their assets, relationships, bankruptcy. Truth is, most of us can't handle these sorts of pressures. Thats why we should be grateful for the people who can. Meanwhile the lazy person who has a job but does as little as possible, gets a steady income, doesn't risk their own net wealth or deal with the pressures listed above, gains from all the innovations of the people who do go through such trauma.

So why has the share of incomes increased for the top 1% or the top 0.1% in particular? There are a number of reasons the most obvious one is technological change, the world has become more connected and richer. Now companies operate in places that historically were never available. India, China, South America - all are opening up and if you can create a global product then you can sell it to more people who are all wealthy than 30 years ago. Computers and the Internet now allow global reach to any budding entrepreneur. CEOs have to manage global supply chains and can consequently scale to larger markets, therefore they are paid more due to the global impact they have. During the same period taxes for the rich have fallen significantly. In the UK top tax rates used to be well over 90% and are now around 45%. Despite this halving of tax rates the rich have never paid more as a percentage. Back in the 1970's it was around 15% of total tax, now it has risen to over 30%, ironically there has never been more socialist distribution from rich to poor despite what the progressives will tell you. Consequently people on higher tax rates now declare their income rather than go through the bother of escaping tax when the tax rates were too high. Back in the 1970's CEOs would get their income in other ways; off book assets, or dividends or any other clever accounting trick. They always had the higher income in the past - they just never declared it.

Its time to abandon the politics of envy. The bashing of the 1%. The demonisation of the millionaires. We should all be more civil to one another rather than allowing the socialists and progressives to divide us all into tribes and to create hate against one another - the politics of envy. Peoples incomes change over time. People generally do not stay poor forever. To envy certain income percentiles is to envy yourself. Limiting peoples freedoms has never done anyone any good. The poor getting poorer and the rich getting richer is just another Socialist myth.

Thursday, 19 November 2015

Whos going to pick up the tab

"Free" University, cancellation of Student Debt and a $15 minimum wage for people who work on site in a University. All we need to do is go after that "greedy" 1% minority. Simple?

Like with anything if wealth was just as easy as changing a couple of laws and clicking our fingers there would be no such thing as scarcity. The interview is an embarrassment towards people who still hold socialist beliefs, that all one has to do to make society better is take from their fellow man.

Are the 1% hoarding all that money? How did many of them become the 1%? Do they contribute nothing to society? I could pick any multi-millionaire businessman who at one time had next to nothing but made staggering wealth not by just taking from others but by creating something from nothing. They obtain this wealth by meeting consumers needs better than what previously existed. I don't shop at Amazon to enrich Jeff Bezos, I shop there because I value its competitive prices, convenient service and the fact I can check real consumer reviews against products. Prior to services like Amazon I had to go to a physical shop that was only open at certain hours. I had no simple way of comparing prices with other retailers without walking from shop to shop and could only get prices from my area rather than the whole world. There was also no real consumer feedback on what I was buying. Companies like Amazon changed all that. They created wealth from nothing, from nothing more than a garage and one guys vision. Now it provides jobs to thousands of people and millions of consumers value it. Did Jeff Bezos ask anyone else to pay for this? No he went out there and earned that right.

Has Jeff Bezos contributed nothing to society? Is he hoarding his money or is he constantly innovating looking at where to invest and create wealth for us all? That money is genuine capital and is either in a bank paying for your mortgage or starting the next great startup or ready to invest in creating new jobs and capital goods. What the Student in the video is proposing is for the Government to take that money, spend it now - instantly, with the institutions no doubt asking for more money in another few months time. Jeff Bezos couldn't provide that capital to startups, or for your loan or to re-invest back into making Amazon even more efficient. Remember everyone else is greedy - especially the 1%. Its never people who ask for someone else to pay for their education, its never people in Western Countries who can be unbelievably bone idle if they please but still enjoy a life of luxury compared to their fellow human beings born into a country where odds really are stacked against them and who earn a dollar a day and have to toil and suffer to get that dollar. And in most cases countries that are in that state because they persecute the 1%.

The idea that we need to spend more on education is a joke and shows how little creative thought many have, in particular Socialists/Progressives who just want to maintain the status quo and spend more of other peoples money on it. As I've already posted we can have better education at a fraction of the cost if we just allowed people to try different solutions rather than a single top down approach we currently have. Society generates wealth when people disrupt what currently exists and do something completely different, not pursue the same course. The funniest thing about the video above? Turns out the person getting interviewed isn't working class or remotely close. She went to an expensive private school and now goes to one of the most costly Universities. Also it has been posted that her dad has a home with an estimate value of around a million dollars. Doesn't that make her the 1%, the people she believes who never contribute anything to society? 

Friday, 13 November 2015


I recently went out on a night in London with my Brother. It was the usual night out with him. Lots of alcohol; drinks at the start of the night at his house in London, bar then club. One thing was different. We decided to use Uber, a new taxi application, to navigate around. My brother had already used the service before and I had the app, albeit it I had never used it as they currently don't operate where I live.

After finishing at the bar the London underground was no longer running so we decided to try get a bus to the club. We ended up waiting for twice the scheduled time at which point my brother had had enough and ordered an Uber cab. Within minutes it arrived. We jumped in and got to our destination very much quicker and more reliable than the bus. The cost? Around £8 for a journey in Central London on a Friday night at around 1am and we arrived right outside the club.

Later that night we left at around 3:30am. Usually its a pain to get back to his house. Its either a night bus that takes an hour or trying to flag down or call a private taxi. Again tooled up with Uber we called a cab and it cost us around £13 to drive from south of the river just past Waterloo all the way back to the East of London on the other side of the river. Any other taxi would have cost a fortune by comparison.

Why do I mention all of this? Because various vested interests all over the world are in the process of using Government agencies to try and restrict Uber in the marketplace. Uber offers a fundamentally safer, more efficient and cheaper form of transport than currently exists. Instead of the taxi companies innovating or the Governments removing existing arcane regulations they are trying to stop or limit the service. Uber recently won a court case against the TFL (Transport for London), however the TFL are now fighting back further. They are trying to demand 5 minute waiting times - in the form of once the taxi turns up the passengers are not allowed to enter the vehicle for 5 minutes. The bogus claim is to state its a "safety issue". Last time I checked waiting around on the streets in London at 3:30 in the morning is less safe then being in a moving car.

Uber is the most valuable unicorn company with a valuation of around 50 Billion Dollars, a symbol of the recent tech boom. Its investors include Google, Amazon, Microsoft and Richard Branson to name a few. Theres even Shawn Fanning as an investor who you may remember created napster, another disruptive technology. Uber is nearly as valuable as British Petroleum, despite having 5% the number of employees and while BP generates annual profits of 4 Billion Uber yields non. Such is the power of software and in Ubers case the potential of future profits. Uber is a disruptive technology along with other similar companies in this space and will do huge good for us all.

They will make taxis safer. With ratings bad drivers can potentially be banned. It works two ways. Bad abusive passengers can also be banned. Currently there is nothing stopping an abusive passenger getting into a taxi on multiple occasions as there is no way for the taxi driver to communicate this information with other drivers. With Uber the person can be banned for their bad behavior as Uber tracks all this data. No more trying to hail down a cab late at night on the streets. With Uber you call a cab and get an ETA of when it will arrive. Not only that but you can see it real time on a map just before it arrives and go outside to get it. All Ubers cars are tracked some may see this as a curse and its possible alternative businesses could opt not to do this. But personally I value this. You can imagine a future where parents tell their young Children to get a taxi back after a night out. As it currently stands sometimes the child may pocket the money their parents give them or fail to organise a taxi in time. Well not with Uber, with Uber the parents would be able to track it all. All your previous journeys are there for you to view, time, cost; its all there.

Uber is very efficient. No longer do taxis drive round aimlessly looking for passengers. Ubers algorithms can now match up taxis with passengers in real time based on location, even before the current taxi journey finishes, its algorithms are already seeing potential next matches. Uber has recently proposed a car pool service, where it will match up passengers going in similar directions to the same taxi. This brings down the costs of fares for the passengers, gives a slightly higher rate for the taxi driver and is a more efficient use of petrol and road space. Ubers dynamic pricing system generates the correct incentives for taxi drivers to be on roads to match passengers real time demands. At busy periods Uber ups the price of journeys as an incentive for drivers to take to the roads. At quiet periods the price drops to avoid idle cars on the roads.

Uber are even advertising it's social benefits. Black people in America have claimed that existing taxi drivers would avoid them in favour of white people. Uber solves this as the driver has no idea who the next customer is and picks them up regardless of race, sexual orientation or appearance.

Like all disruptive technology the majority of us wins but there are a minority of losers. The established taxi model is broken, it can't be fixed, we can't undo Uber like technology. Until engineers solve self driving cars (and they are well on their way to doing this - Uber is also prototyping these) there is still a need for taxi drivers so rather than fight the new innovations, existing taxi drivers should join in the revolution. The existing regulations are broken and were never about consumer safety but about cartelising the work and limiting newcomers. Uber is breaking this and giving power back to the people. Drivers can work wherever and whenever and take more polite passengers. If they don't like a passenger they give them a bad rating and Ubers algorithms will not match them up next time. Passengers get a better service at cheaper prices. Business = Data and Algorithms. We're only just beginning to scratch the surface of this concept and change the world for the better.