Quotation of the Day

From An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, Oxford World Classics Edition, Book 4, Chapter 2 (pages 292-293):

"To give the monopoly of the home market to the produce of domestick industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation.  If the produce of domestick can be bought there as cheap as that of foreign industry, the regulation is evidently useless.  If it cannot, it must generally be hurtful.  It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy.  The taylor does not attempt to make his own shoes, but buys them of the shoemaker.  The shoemaker does not attempt to make his own cloaths, but employs a taylor.  The farmer attempts to make neither the one nor the other, but employs those different artificers.  All of them find it for their interest to employ their whole industry in a way in which they have some advantage over their neighbours, and to purchase with a part of its produce, or what is the same thing, with the price of a part of it, whatever else they have occasion for.
What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.  If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.  The general industry of the country, being always in proportion to the capital which employs it, will not thereby be diminished, no more than that of the above-mentioned artificers; but only left to find out the way in which it can be employed with the greatest advantage."

Quotation of the Day

From An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, Oxford World Classics Edition, Book 4, Chapter 1 (pages 276-277):

"That wealth consists in money, or in gold and silver, is a popular notion which naturally arises from the double function of money, as the instrument of commerce, and as the measure of value.  In consequence of its being the instrument of commerce, when we have money we can more readily obtain whatever else we have occasion for, than by means of any other commodity.  The great affair, we always find, is to get money.  When that is obtained, there is no difficulty in making any subsequent purchase.  In consequence of its being the measure of value, we estimate that of all other commodities by the quantity of money which they will exchange for.  We say of a rich man that he is worth a great deal, and of a poor man that he is worth very little money.  A frugal man, or a man eager to be rich, is said to love money; and a careless, a generous, or a profuse man, is said to be indifferent about it.  To grow rich is to get money; and wealth and money, in short, are, in common language, considered as in every respect synonymous.
A rich country, in the same manner as a rich man, is supposed to be a country abounding in money; and to heap up gold and silver in any country is supposed to be the readiest way to enrich it.  For some time after the discovery of America, the first enquiry of the Spaniards, when they arrived upon any unknown coast, used to be, if there was any gold or silver to be found in the neighbourhood?  By the information which they received, they judged whether it was worth while to make a settlement there, or if a country was worth the conquering.  Plano Carpino, a monk sent ambassador from the king of France to one of the sons of the famous Gengis Khan, says that the Tartars used frequently to ask him, if there was plenty of sheep and oxen in the kingdom of France?  Their enquiry had the same object with that of the Spaniards.  They wanted to know if the country was rich enough to be worth the conquering.  Among the Tartars, as among all other nations of shepherds, who are generally ignorant of the use of money, cattle are the instruments of commerce and the measures of value.  Wealth, therefore, according to them, consisted in cattle, as according to the Spaniards it consisted in gold and silver.  Of the two, the Tartar notion, perhaps, was the nearest to the truth."

Quotation of the Day

From An Inquiry into the Nature and Causes of the Wealth of Nations by Adam Smith, Oxford World Classics Edition, Book 1, Chapter 5 (page 36):

"Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life.  But after the division of labour has once thoroughly taken place, it is but a very small part of these with which a man's own labour can supply him.  The far greater part of them he must derive from the labour of other people, and he must be rich or poor according to the quantity of that labour which he can command, or which he can afford to purchase.  The value of any commodity, therefore, to the person who possesses it, and who means not to use or consume it himself, but to exchange it for other commodities, is equal to the quantity of labour which it enables him to purchase or command.  Labour, therefore, is the real measure of the exchangeable value of all commodities."

I Quit



I had been working on a series of posts about the Scottish Parliamentary elections earlier in the year, analysing the manifesto promises made by each of the main parties and how they stacked up on various issues.

Then I realised that these posts were incredibly long and boring, so I scrapped them all.



See what I mean? - Politics is boring.





Boring.

I'd rather blog about something a bit more interesting.  Such as the fact that yesterday I was on the observation deck on the 124th floor* of the tallest building in the World.  This was possible because my company have sent me to Dubai on business.  I'm staying in a very nice hotel, with satellite TV and internet access, I order room service for breakfast every morning, my laundry is done for me and strangely even sometimes arrives back with each item folded and individually sealed in cellophane and because it's for business I'm not paying for any of it.  I have also just quit my job.

The tourist brochure image of Dubai is something like this.





The reality is more like this: A giant building site in the desert.



I don't want to get into the nitty-gritty details of why I quit, suffice to say that I didn't see my career panning out quite how I'd hoped and felt that a move was now necessary.

This was a difficult decision to make, it's the first job I've formally quit.  Previous jobs I've had were either temporary positions, where I was neither fired nor quit, but simply reached the end of my time in them, or were less formal arrangements (i.e. working for a friend's parents).

It's an awkward conversation to have with your boss, when you tell them that you don't want to work for them any more.  It's also quite an adrenaline rush and gives a strange sense of freedom.  Freedom in the sense that you realise that there are always alternative options to what you're doing with your life at this point in time.

I've also been listening to the audio-book version of "The 4 Hour Work Week" by Timothy Ferriss.  I'd usually consider a book like this a bit too self-help book-esque for me, but there's a lot of useful stuff in it, like resources to help you out in setting up your own company, planning International travel and quitting your job.

One thing I have taken away from it is the distinction Ferriss makes between mistakes of ambition and mistakes of fear; the former being a mistake of action, the latter being a mistake of inaction because you are afraid of the consequences.  His advice is generally along the lines of thinking through what really is the worst-case scenario and you'll realise that it's not necessarily that bad.  Consequences of bad decisions are rarely fatal or irreversible.

He also makes a point which I think is very worthwhile noting if you're considering leaving your job, that is:

"Thousands of people, many of them less capable than you, leave their job every day."

If you're thinking about quitting, but fear is holding you back, bear this advice in mind - I may well be one of them.

* As I've noted the observation deck of the Burj Khalifa is on the 124th floor.  It's called 'At the Top', but with over 200 floors in the building it's nowhere near the top!  In fact it's only the 3rd highest observation deck in the World, despite the fact that the building is by far the tallest by any measure.  Seems like they missed out on what would have been an easy World record for them to take.

We interupt your regular scheduled programming...

I'm currently travelling for work and am unsure of how much internet access I'll have, therefore I won't be blogging for probably at least the next couple of months.

This message has been blogged thanks to the free Wi-Fi in Charles de Gaulle airport, which on a side note is a nightmare: my plane landed here at 9 am and I've only just reached the gate for my connecting flight at 11 am thanks to almost two hours of taxiing (maybe that should be taxing) around runways, two buses to get to the right part of the airport and a huge queue to get through security.  Next time I'll request to go through Amsterdam.

Around the Intenet: July 2011 Edition

• 25 US Mega-Corporations versus 25 (not so small) countries [hat tip to the Freakonomics blog]
• If a monkey takes a photograph, who owns the copyright? [hat tip to Freakonomics] more here.
• If It Were my Home [hat tip to Tyler Cowen]
• Where and how we live [hat tip to Freakonomics]

Around the Internet: June 2011 Edition

• Best Rejection Letter Ever* [hat tip to Alex Tabarrok]
• Coming soon: An Austrian Village in China [hat tip to Tyler Cowen]
• Japan's Artistic Gas Storage Tanks [hat tip to Tyler Cowen] 
• Sawstop - A safety device that stops a circular table saw when it detects contact with flesh [hat tip to Jeff Mosenkis and the Freakonomics Blog]
• Sexymp.co.uk - Website that asks you to rate Members of Parliament based on who you'd prefer to have sex with [hat tip to Guido Fawkes]
• The Magic Washing Machine* [hat tip to Eric Crampton]

* Both of these links should have been in April's 'Around to Internet', but I lost track of the links before I got round to writing that post, so here they are, resurfacing 2 months later.

What's Wrong with Private Universities?

That is the latest question asked by Chris Dillow over on his blog, prompted by the recent announcement by Professor A.C. Grayling to open a 'New College of the Humanities', a new private university in London and protests over the planned estabilishment.

I think it's a very good question and I liked Dillow's analysis and I think he's spot on when he observes that:

"It’s unlikely, therefore, that the NCH will greatly increase our already terrible inequalities of educational opportunities."

and

"...state control does not guarantee the protection of high vocational standards..."

I think the question can be answered in even more simple terms than Dillow's though.  Perhaps it is useful to use a simple thought experiment here:

Imagine for a moment that Prof. Grayling wants to open a bakery rather than a university.  He intends to open this bakery in your town, where there are already several other competing bakeries.  He also intends to sell his bread at say £2 a loaf, twice the typical going rate of the bread from the existing bakeries, but he justifies this by claiming that his bread is of superior quality.

Two questions arise at this stage:

1. What happens when he opens for business in this situation?
2. Is there anything wrong (in a moral sense) with Prof. Grayling doing this?

Let's look at the first question.  When he opens for business in this situation, several things could happen:

• People are willing to pay more for the (percieved) increase in quality of the product and begin shopping at Grayling's Baked Goods Ltd.  Grayling makes a lot of money whilst the customers enjoy better bread; the existing bakeries sell less and make less money (some may even go out of business).
• He doesn't get enough business because his prices are too high and no-one is willing to pay them.  He can then embark on a World-class marketing campaign, lower his prices, relocate the business to where he would have more willing customers, or go out of business.

Now let's look at the second question: Is there anything wrong (in a moral sense) with Prof. Grayling doing this?

It seems intuitive to me, and I would bet most people, save the most hard-line communists, would agree with me that the answer to question 2 is 'no'.

There is nothing wrong with what is a mutually beneficial trade between two informed parties.  You can't object that the trade between Grayling and his customers is unfair because you can only afford to pay £1 for your loaf of bread.  You can still buy your bread for £1 from your usual baker - this trade does not hurt you at all.

You may object that this is a simplistic example and not representative of the real life situation, where we are discussing university education rather than baked goods.  So, we need to consider, does this example differ in any meaningful way from the real world case?  What's the difference between buying a university education and buying a loaf of bread?

Other than the scale of the purchase the difference I think would seem to lie in the fact that a university education is an investment for the future; it enables you to signal to employers that they might want to employ you raising your prospects of a better job, with better pay.  Again it has to be asked though, is there anything morally wrong with someone who can afford to pay more for an education doing so?

Again, the answer would seem intuitively to be no.  Setting aside the possiblity of paying for a degree with no regard to educational standards (i.e. it doesn't matter if you only get a 25% average, as long as you pay the fees), there is absolutely nothing wrong with this arrangement.  Professor Grayling has offered to provide a service for a fee; if there are people able and willing to pay that fee, why shouldn't they receive the service?

As in our quaint little bakery example, this trade does not hurt you in any way as a consumer just because you can't afford to partake yourself.  The alternative is to not have the option at all, for people who can afford it as well as those who can't.

We don't ban upmarket bakeries on the basis that the average person can't afford regularly to shop in them.  Neither should we ban private universities on the basis that the average person couldn't afford to attend.

Why I Hate (And Can't Live Without) My Phone

That's the title of this fantastic post by James Altucher over on the Freakonomics blog.

I particularly liked these bits:

"I hate Connecticut... Every house is bigger than the next in Connecticut. It makes me feel anxious and jealous.

I see little kids riding bicycles outside these mega-mansions. I hate them. Then I hate myself for hating little kids. There’s nothing good about Connecticut."

"Or worse yet, if someone emails, “Call me. Important.” And it’s a Friday night and they won’t be in until Monday. If I do a statistical analysis, I bet you when someone writes, “Call me. Important”, there’s an 80% chance it came at 5:01pm on a Friday night. And it’s probably bad news."

Around the Internet: May 2011 Edition

A quiet month for the 'Around the Internet' feature this month, but I am attempting to get back into more regular blogging as well.

• Economist Alarm Clock [hat tip to Alex Tabarrok]
• The culture that is Japan - Japanese invent a box that can simulate a kiss over the internet [hat tip to Tyler Cowen]