Panchromatica

House prices - a different perspective from Chris Dillow

Housing crash: why worry?

1. Many men have borrowed thousands of pounds to buy an asset that’s fallen in price. We call them car-owners. No-one worries about negative equity in the car market. So why worry about negative equity in another consumer good?
2.  Sure, some people have lost money because they over-invested in housing. But why should we care about these any more than about those who over-invested in Laughing Boy in the 3.30 at Wincanton? It’s not the government’s job to bail out bad gamblers.

Stumbling and Mumbling: Taxing men

From: Stumbling and Mumbling: Taxing men.

Could it be that the government taxes income for the same reason Willie Sutton robbed banks - because that's where the money is?

Street Art

Today the main thoroughfare of Baie-Saint-Paul is closed to vehicular traffic. Thousands of visitors dine on outdoor sushi, sugar pie and onion soup served up in plastic cups. At least a hundred painters operate from homemade paintboxes, massive "tabourets," French easels and "Stanley Mobile Work Centers." Anything goes--oil, watercolour, acrylic. Amateurs rub shoulders with seasoned pros. As it is in life, some know what they're doing, others have lots to learn. Visitors watch the painters and wander in and out of the nearby commercial galleries.

From The Painter's Keys, a fascinating site from the artist Robert Genn. You can get his newsletter here.

Also posted here. I will from now on be blogging on art, photography etc at that location, where these issues will stand alongside my photographs and other art work. There will be occasional cross posts, especially where, like this one, there is an overlap with my other concerns - or simply because I feel like it.

More on fairs and festivals

Some time ago, (2003 in fact!) I posted asking for information about the economic impact of markets fairs and festivals. Some time later, (2006) I made a separate post about so-called Anti-Social Behaviour, that touched in passing on a phenomenon known as Charivari. I was intrigued therefore to discover a research project at City University in London, that focussed on economic outcomes from such events, but in one of the academic papers linked also to some of those other ideas inherent in Charivari.

Throughout the academic literature, carnivals and festivals are associated – by historians and anthropologists alike – with altered social forms, excitement, even danger. Opinion is divided over whether the carnival is a locus for radical transgression, or simply an escape valve for revolutionary energy, which acts to reinforce the status quo (Cohen 1993; Waterman 1998; Webb 2005). Either way, attention is drawn to the tendency for popular festivals and carnivals, in many parts of the world, and in many historical periods, to be characterised by risqué reversals of hierarchy, ludic mimicry, flamboyant and celebratory cultural expression, and a sanctioned overstepping of conventional rules and norms of behaviour. Arguably, carnival is also associated with spontaneity, and with a sense of being carried away by the momentum of the event through improvised action and kinetic excitement. Although many carnival arts involve meticulous attention to form, structure, even ritual, there remains a strong feeling that participation is more than can be conveyed through an account of moves, music and costume. The element of risk, of unpredictability – not, in any sense, of anarchy, but of an altered understanding of authority, whether actual or imagined – is at the heart of the experience of carnival.

There are also links here with the idea of the feast of the  Lord of Misrule

This is misnamed a feast, being full of annoyance; since going out-of-doors is burdensome, and staying within doors is not undisturbed. For the common vagrants and the jugglers of the stage, dividing themselves into squads and hordes, hang about every house. The gates of public officials they besiege with especial persistence, actually shouting and clapping their hands until he that is beleaguered within, exhausted, throws out to them whatever money he has and even what is not his own. And these mendicants going from door to door follow one after another, and, until late in the evening, there is no relief from this nuisance. For crowd succeeds crowd, and shout, shout, and loss, loss.

This fear of the reversal of power, of disturbance of the common good runs deep. After all, we can't have public officials made fun of can we?

Look around you

There is a view of art that places it at the top of human endeavours, represented I suppose by people like Michaelangelo, Da Vinci, Van Gogh, Rembrandt. However the existence of such elevated work does not invalidate art produced by us lesser mortals.

Oscar Wilde is supposed to have said, in response to a question about why America had such high levels of violence, “because you have such awful wallpaper”. This seemingly flippant response masks an essential truth, enumerated recently on TV by Stephen Fry, that we seem to be the only species able to make the place uglier by our efforts. Not everything we do of course – I think the sublime qualities of the English countryside must surely count as one of the greatest artistic achievements of all time.

Nevertheless, the environment we create for ourselves is often impoverished and at worst downright ugly - even unhealthy. We know as a race we can do better.  The challenge is to create the conditions in which that can happen. Artists surely have a part to play and while a 21st Century Michaelangelo would be nice we can't rely on that so it will depend on all of us to raise our sights - at least occasionally - from the cashbook to the world around us.

What's it worth?

The collection (and hence the sale) of digital art is yet another topic that has been hotly debated since the art form began to register on the radar of the art market. The value of art – at least when it comes to the traditional model – is inextricably linked to its economic value but the ‘scarcity equals value’ model does not necessarily work when it comes to digital art. … The model of limited editions established by photography has been adopted by some digital artists whose work consists mostly of software, and this has allowed their art to enter the collections of major museums around the world.

            Christiane Paul “Digital Art”

            Thames and Hudson 2003

This quotation is about the more challenging forms of digital art – where the technology is itself the medium. Nevertheless, many of the same difficulties emerge in considering work such as my own, which is an extension of ‘conventional’ media using digital tools. Even here, where the output is a 2D image on paper, the concept of the ‘original’ breaks down.

I have always had problems in accepting the idea of a limited edition photograph, but I can see some merit in it. The limited edition has its origins in practical limitations that do not apply to photography in the same way and not at all to digital photographs. There are only so many prints that can be made from a plate before it physically deteriorates. Silkscreen prints have an even smaller practical limit. These physical limitations do not apply to the photographic print, but nevertheless wet darkroom work is not a precise art. Each and every photographic print requires the application of a craft skill and thus each print is in its own way unique.

This whole assemblage, so carefully constructed by photographers to raise the standing – and not coincidentally the value – of their art is destroyed however by digital photography and by extension, digital art in general. There are digital equivalents of all the wet darkroom tools – dodging/burning, changing contrast, toning etc, but once the first print has been made all the others are infinitely reproducible without any variation. While I’ve seen it argued that with digital photographs, the ‘original’ is the computer file and all the prints are copies, I think this is nonsense. In truth, digital photography makes the whole concept of an ‘original’ both irrelevant and meaningless. If each copy of an image is identical to the first one, and is made using the same process and media, how can it be otherwise?

So, returning to the quotation, if there is no ‘original’ what does this do for value? Clearly value based on scarcity goes out of the window unless that scarcity is manufactured by artificial limits on the number of prints made. What other drivers of value might there be?

One of these is of course reputation. The conventional path to a reputation seems to involve being adopted by a big name like Saatchi, or becoming the darling of a small group of Mafiosi cognoscenti, almost always gallery owners or critics - Damien Hirst and ‘BritArt’ being perhaps the most obvious examples. The response from the Mafiosi to people like Jack Vettriano is illuminating too. The venom directed towards his work, popular with the public without being taken up by the big galleries, is remarkable.

This is the inevitable consequence I think of that worldview which holds that art is simply what the ‘enlightened’ say it is. As well as being arrogant, this view has always seemed to me to be anti-creative, denying the essential openness of artistic endeavour. That openness is however a good match for the openness of the internet, and it may be that the opportune link between digital art and the digital technology of the Internet offers an alternative route to the generation of value through reputation. We can see some of this at work on social media sites like Facebook, Flickr and their various clones. Indeed, the relentless pursuit of views, comments and favourites ratings pursued by many on Flickr suggests that peer group approval – regardless of the members of that group – is a significant factor in generating self-worth for some people.

However, for an artist to translate reputation gained in this manner into financial returns, more is needed. At one time it seemed as if micropayment sites like RedBook (now defunct) provided a mechanism, but the income generated was trivial, for me at least. Microstock agencies do appear to be generating income, but I suspect largely for the agencies themselves. So, in the awful jargon used by Yahoo after its acquisition of Flickr, artists need to ‘monetize’ the reputation created on sites like Flickr or MySpace. Yahoo’s ideas for monetization don’t semm likely to have much to do with their customers however, if their recent behaviour is anything to go by. I suspect that for artists, generating value and reputation is much more about creating new marketplaces than about increasing the share of a static market.

I’ve touched on one aspect in this post about art markets. In the UK most Art Fairs are again in the hands of the galleries and critics. In the US things appear much more open. The galleries still control the very big names, but in a vast network of Art Festivals where artists, a different community of peripatetic artists sell their work direct to the public. Undoubtedly much of that work is populist rather than challenging but this alternative market place is nevertheless available. In the UK we have much further to go.

The gallery model depends on high prices – the gallery owners need to pay rent on expensive floorspace. They can’t generate the volumes of a high street store so to get a decent ratio of income/ft² they need a high markup. This in turn limits the market to the high rollers who can afford it. The so-called Affordable Art Fair includes items up to I think £5000 – not exactly the sort of sum available to most people. Creating those prices is as much hype as anything else. It depends on blowing up the reputation of a small bunch of people as ‘The Next Big Thing’. To keep this bubble expanding it also depends on more and more extreme works. It doesn’t monetize the work, it fetishises it. The secondary market for these artists is often non-existent. The big investors – with millions available - go by and large for Monet or Van Gogh, not Emin or Hirst.

Your average jobbing artist doesn’t get a look in with this process. Most need to combine their work with teaching or the pursuit of public money. Because they have no alternative model available, they also imbue a similar worldview in their students and in their public paymasters.

If art – real art – is to have a future in this country, it has to be a profession in which there is a realistic chance of making a living. Prostitution on the public purse or the pursuit of rich patrons are not viable career paths. I hope in future posts to come back to this problem.

Cross posted from here

Restraint of Trade?

From Ebay

In February, we reduced the visibility of UK items on eBay.com, as they had reached a level where they were significantly impeding domestic trade on eBay.com. We are aware that a small percentage of sellers, who relied in whole or in part on US buyers, were significantly affected by this reduced visibility.

Since then, we have been planning how best to display some UK items on eBay.com and some US items on eBay.co.uk so that cross-border trade can thrive without impeding domestic trade on either site.

It seems to me that there are several ways to read this. One is that US sellers are worried about competition - especially with the slipping $ to £ and $ to € rate of exchange. References to 'impeding domestic trade' tend to reinforce that interpretation.

On the other hand I've noticed - for example on Etsy - that many US sellers seem frightened of selling internationally. Having looked at the US Postal Service Web site I can see why. Sending anything out of the US seems to be a bureaucratic nightmare.

Some US sellers however seem almost to be unaware that there are people outside the US borders who actually buy things. This shows up a great deal in forum discussions of all sorts. I remember being accused of being 'Unamerican' back in the days when I had an AOL e-mail address for example, the person concerned clearly having no idea that AOL was an international company. I suppose, given the huge size of the USA, this isn't entirely surprising, since making any international journey takes much greater effort than travelling within Europe.

EDIT: It occurs to me that it is always possible for the buyer to exclude non-local sellers so I suspect my less charitable conclusion has some merit.

 

Charles Handy

One of my heroes is the management thinker, Charles Handy. He a good writer and unlike so many in his field his humanity shines through everything he writes. He is also one of the few contributors to BBC R4 ‘Thought for the Day’ who didn’t make me immediately want to vomit. His latest book, Myself and Other More Important Matters, has just won a Management Writing Award 2006 for the best management book and an extract is printed in the November issue of Management Today. I haven’t read the new book yet, but of his other writings, The Empty Raincoat is a brilliant must read. The title comes from a statue he saw in Minneapolis. From that book:

We were not destined to be empty raincoats, nameless numbers on a payroll, role occupants, the raw material of economics or sociology, statistics in some government report. If that is to be its price, then economic progress is an empty promise. There must be more to life than to be a cog in someone else’s great machine, hurtling God knows where.

From his new book:

More and more, I have moved from dealing with the `how' questions to the `why' ones. It is the Socratic impulse that keeps me questioning. Why do we need such big organisations, when most of us don't 'relish working in them? Why do we treat those within them in the ways that we do? Why do we live our lives as we do? Success has many faces. Why do we choose the ones we do? Is there too much love of money, for its own sake? Or is capitalism at fault - or, more truthfully, our interpretation -if capitalism?

I can't think of any better mechanism for making the world a better place than a set of open-market economies, carefully regulated so that they remain properly competitive. But it is -the phrase `making the world a better place' that is often missing from the capitalist narrative. As it is currently seen and measured, capitalism takes selfishness to be its driving force, something that can easily develop into greed. Capitalism assumes that it is part of the human condition to be all out for ourselves in a dog-eat-dog world. We are hard-wired for competition. It is a rather dismal assumption. Nor is it neces­sarily a true one. There is an altruistic gene in most of us. Most of us want to contribute to as well as take from the world. The danger, as I see it, is that the language of capital­ism, reinforced by its instruments and the measures they use, may imprison us in a cause that we don't necessarily believe in. But, when the more brutalist version of capitalism is dom­inant, what else can most of us do except conform to the stereotype, muttering dissent as we go?

Because the capitalist narrative decrees that more is better, businesses continually buy their competitors, and are aided and abetted by their bankers and consultants in so doing, al­though all the evidence is that only in a minority of cases does the end result leave the customer or the purchasing share­holders better off. Why, then, do they continue to do it, creating organisations too big for human scale in the process? Why do organisations, when reporting their actions during the year, speak only of results for them, seldom for their cus­tomers or the world at large? Because, I have to assume, more is thought to be better, be it more power, bigger sales or greater influence. Yet we know that in much of the rest of life, and in other organisations, more is not always better. I some­times suggest to business executives that if they were to ask a symphony orchestra what its growth plans were for the com­ing year, they might not speak of increasing the number of musicians, or even the number of performances, but would talk more of growing their repertoire and their reputation. Yes, more money would help, but only as a means to achieve those ends. It is no different for other arts organisations, or schools, better often when smaller.

Meeting with a wine grower in the Napa Valley who told me that his ambition was to grow his business, I said, looking around me, `Where will you find the extra land, or are you going to buy up your neighbours?'

`Oh, I don't need to grow bigger,' he replied, `just better.'

Why don't more businesses think like that, I wonder?

Business, I continue to argue, mistakes its means for its ends, and we will always continue to do so until we, society backed by government, redefine those ends to make them more relevant to the needs of more people. It is not enough, I believe, to pay one's taxes and leave the rest to government.

Inevitably, perhaps, my messages are a reflection of my values. I do care more for individuals than organisations, who are, after all, just their instruments. I believe that if organisa­tions were to take more seriously the individuals who are, in effect, the organisation, they would find their own objectives easier to achieve. I believe that organisations are, in a broad sense, the servants of society. They exist to provide us with the things and services we need or want. We rely on them to do so efficiently and effectively. Ideally, their interests and ours should coincide, but they will prosper most if they define their purpose as something bigger than their own survival. Those organisations, as well as those individuals, who work only for their own benefit, eventually discover that they are their own worst customer, because they are never satisfied, seldom thanked and leave no legacy. The definition of success in our modern affluent world is one of our more intractable problems. It was easier once when we had fewer choices. Now we can choose but have no good criterion for the choices. Even business executives have to be philosophers.

Why can’t more managers be like him I wonder?

Grim Meathook Future

Looking up the economist Walt Rostow on Wikipedia I came on the striking phrase, Grim Meathook Future.  Following it up brought me to this:

The upshot of all of this is that the Future gets divided; the cute, insulated future that Joi Ito and Cory Doctorow and you and I inhabit, and the grim meathook future that most of the world is facing, in which they watch their squats and under-developed fields get turned into a giant game of Counterstrike between crazy faith-ridden jihadist motherfuckers and crazy faith-ridden American redneck motherfuckers, each doing their best to turn the entire world into one type of fascist nightmare or another.

Of course, nobody really wants to talk about that future, because it’s depressing and not fun and doesn’t have Fischerspooner doing the soundtrack. So everybody pretends they don’t know what the future holds, when the unfortunate fact is that — unless we start paying very serious attention — it holds what the past holds: a great deal of extreme boredom punctuated by occasional horror and the odd moment of grace.

Bastiat, pollution and the minimum wage

Bastiat’s ‘broken window’ problem is regularly cited in aid of the argument that ‘public’ expenditure is not beneficial and does not lead to any increase in wealth. In summary, expenditure on repairing a deliberately damaged window does not generate wealth, because the expenditure on its repair takes away money that would otherwise have been spent at the shoemaker, the grocer or in some other fashion. Bastiat makes the same argument by extension against expenditure by the state.

It is not immediately clear why repair to the window when damaged by weather or natural wear and tear seems ‘good’ while repairing deliberate damage is ‘bad’. Clearly there is an opportunity cost for the owner of the window. However from the perspective of the glazier there is no difference. The money he receives can be spent as he wishes and to him represents real additional wealth. Moreover, when it is spent it generates further wealth for others down the chain of spending – the multiplier effect. This is the nature of money – it goes round and round…

Imagine however if the glazier had paid someone to go around breaking windows in order to generate business for him. The effect would have been the same but in this case the glazier would generally be seen as behaving illegally. Regardless of the cause, be it accident or design, the repair of a broken window adds no value to the economy as a whole – its effect is not additive but redistributive.

Applying the argument to the treatment of pollution raises interesting questions. It is often argued by the same people that requiring industry to reduce or remove pollution is a tax on wealth generation. This is not the case for (at least) two reasons.

First, as I have argued elsewhere,  if an action is morally correct it applies to the institutions we create as much as to individuals since institutions cannot act of their own accord – they require individuals to act for them. The concept of a corporate person in this context is nonsense. That post develops this idea in relation to the issue of pollution.

Second, a business creating pollution is in the position of the breaker of windows. Requiring them to pay for cleaning up their own pollution or better still preventing it in the first place, is not a tax on wealth creation but a perfectly reasonable act – the window breaker is forced to make reparation not the window owner.

There still remains the issue of redistribution. It may be that some people make no little or no contribution to the economy as a whole because of a dependance on state benefit. Redistribution by means of minimum wage policies could therefore remove them from benefit and allow them to contribute in their own right.  Moving money from the employer to the employee in this way may not of itself lead to a net increase in economic activity but by removing the call on the state for welfare, it reduces the contribution required by the state, which does. The state however will inevitably find other things to spend the money on ...