A couple of articles this week on perspective, and especially why those on the political left often state a marked distaste for those on the right.
The Adam Smith Institute’s President Madsen Pirie makes the case that the real difference between the two is not attitude but method:
The left typically favour the use of state power through high taxation, nationalization and the fixing of prices. The centre-right typically favour relatively free markets, private enterprise, and prices that respond to changes in supply and demand. Their case is that these usually achieve more sure and more rapid economic growth than can be attained by collectivist planning and state controls. The left pursue greater equality, whereas the centre-right seek to promote greater opportunity.
In Wednesday’s Times, Daniel Finkelstein takes issue with the left’s disdain (“True socialism always ends with the Stasi”):
Hatred of Conservatives is common currency on social media, and at Labour conferences you can buy mugs with the words “Never kissed a Tory” on them.
… Not unreasonably, many Conservatives are quite hurt. It’s never nice to be thought evil by someone. And the misunderstanding, that Tories are like Mr Burns out of The Simpsons, is quite frustrating. There is also something quite amusing about people who check someone’s position on free schools before they kiss them.
Both worth a read.
Photo by Justin Luebke on Unsplash
Eighty years ago, in The Nature of the Firm, Ronald Coase (1910 – 2013) explained why firms exist. His answer (transaction costs) both explains the recent rise in the number of sovereign professionals and highlights the challenge faced in building a high-value sovereign professional business.
Essentially, Coase argued that firms exist where the cost of contracting individual tasks becomes too burdensome. It is relatively cheap and easy to contract simple tasks in the open market, such as taking a taxi or paying a window cleaner. However, the myriad subtle responsibilities of, say, a personal admin assistant are more effectively met by hiring someone on a contract of employment.
The rise of technology, especially smartphones, the web and cloud computing, has dramatically reduced transaction costs on both sides. Size matters less and it is easy for an individual to market themselves, to be found, engaged and for all the requisite admin to take place. Those relatively concrete transaction costs are clearly lower as a result. One could imagine such relationships reaching a new equilibrium where it is now economical effective to contract out a larger set of “tasks” to sovereign professionals.
However, building on Coase’s work, Sanford Grossman and Oliver Hart described two types of rights over a firm’s assets: specific rights, which can be contracted out and residual rights which cannot. The more a sovereign professional works on a client’s strategic projects, the closer he or she comes to those residual rights. At that point, as The Economist describes in Coase’s Theory of the Firm “a merger would make more sense” – i.e., that work may be better done by an employee.
The challenge for the sovereign professional is to build the sort of “trusted adviser” relationship that gives access to strategically important (and therefore valuable) projects while maintaining independence.
Both papers are worth reading and digesting;
The Sanford and Hart paper, The Costs and Benefits of Ownership:
A Theory of Vertical and Lateral Integration, (which is on my “to read” pile) is here.
No one can build you the bridge on which you, and only you, must cross the river of life. There may be countless trails and bridges and demigods who would gladly carry you across; but only at the price of pawning and forgoing yourself. There is one path in the world that none can walk but you. Where does it lead? Don’t ask, walk!
Friedrich Nietzsche (1873), Schopenhauer as Educator
Hat-tip to the ever excellent Maria Popova at BrainPickings and this post on Nietzsche.
The Economist draws bleak parallels for the independently-minded between today and the 1930s of George Orwell’s Keep The Aspidistra Flying.
“Keep the Aspidistra Flying” foreshadows the dilemma that befalls today’s millennials. With so little room for manoeuvre and such high penalties for non-compliance, their quiet conformity belies a devastating loss of freedom, a crushing of the spirit that only their great-grandparents could relate to.
When Terry Gilliam’s dystopian, retro-futuristic vision first came out (in 1985), I was blown away. So much so, I watched it twice in succession, in a tiny cinema in Stratford-upon-Avon that doubled as some sort of tourist attraction during the day.
As you might expect from Gilliam, the film is a visual delight.
With strong echoes of Orwell’s 1984, its quirky humour highlights, rather than softens, the darkness of an omniscient – but woefully inefficient – bureaucracy. And like 1984, Brazil was written as a satire of its own time. Anyone who has ever argued with a “computer-says-no” bureaucrat will know this world.
The hapless dreamer of a protagonist – Sam Lowry – is played by a young Jonathan Pryce, better known these days for wily, mendacious characters like Game of Thrones’ High Sparrow and Taboo’s Sir Stuart Strange or Wolf Hall’s Cardinal Wolsey.
It is strange, bleak and beautiful.
Here’s the trailer…
And here’s Gilliam talking about the film …
A reminder, or call to arms, from Seth:
They (whoever ‘they’ is) made it easy for you to raise your hand. They made it easy for you to put your words online, your song in the cloud, your building designs, business plans and videos out in the world. They made it easy for you to be generous, to connect, and to lead.
Read the ever pithy and relevant Seth, here.
Photo by James Bold on Unsplash