Citing Pasteur's famous dictum, this article from a couple of years ago tells the remarkable story of the development to commerciality of the lithium-ion battery.
And it's a classic illustration of just how messy and random much of science and business can be. In this case, at least a UK organisation made some reasonable money from it!
A great read.
ND
When I first joined the Conservative Party as a teenager, many long years ago, the opening sentence of the rules read thus:
Membership of the Conservative Party is open to anyone who opposes Socialism and Communism ..."
And there you have it in a nutshell. Conservatism, and the Right in politics generally, isn't really any kind of ideology - it even has to define itself negatively, by what it's opposed to. It's essentially an unintellectual, not-very-articulate Burkean tendency. Genuinely articulate Rightists such as Roger Scruton are few and far between - and they don't have cults, cliques and followers. Leftists, who really are ideologues and can't envisage any other way of life, spit out words like 'capitalism' as if that, too, is a competing ideology - and that's an ignorant misunderstanding, too. 'Thatcherism'? Not really: Keith Joseph notwithstanding, Thatcher's was a forceful petite bourgeois tendency on HRT. 'Reaganism'? Not much up top, is there? - as Thatcher herself said. 'Gaullism'? Nah - just nationalism. 'Neo-liberalism'? If anything, an expression of the desire to clear the decks for some fairly aggressive money-making. Etc etc etc.
So if you'd asked me any time up until very recently, I'd have said that in my political lifetime the Right has been essentially non-ideological. Frustrating for the Left because, for all their fervour, ratiocination and well-written 5,000-word essays peppered with nicely-turned neologisms, they've nothing intellectual to grapple with except the splitters in the other Leftist factions.
Until very recently. Because now, it's quite evident from the voluminous output of what we might loosely call the 'Trumpite' camp, there is thinking going on that is identifiably ideological.
Of course, it's also messily bound up with some entirely mercenary motives; and as with any broad movement, one can readily discern several camps whose varying emphases in their pro-Trump enthusiasms are really quite different - the makings of fissures and splits yet to become a serious problem for The Donald's regime; but that will come. IMHO it's rather too early to attempt to systematise all this; but it's brewing up to a point where one will be able to.** There are some early attempts at articulation - here's one - but not perhaps very convincing yet. (This of course isn't to be marvelled at, because being essentially Right-ish, the whole Trump thing will have a strong tendency to inarticulacy.)
Meanwhile, as all this is slowly coagulating into something with defined contours we can pin down and gaze at, we face the sobering fact that many of its leading lights in the highest of high places are unhinged, messianic, in a massive hurry, drunk on power, and untouched by normal considerations of prudence. We need no better evidence than the truly amazing spectacle of grown men in high office, with all the resources in the world should they care to use them with due deliberation, conducting their communications like a bunch of doped-up teenagers on their mobile 'phones plotting a Friday-night fight with a neighbouring crew. The average County Lines drugs gang isn't as crass in its actions as these high-ranking promoters of the Trumpian Flame. FFS, what is to become of the 'Free World'?
ND
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** if anyone knows of a good early attempt to do this, or would care to try themselves in less than, say, 100 words, we'd all like to know!
Trump seems to have fired the first salvos of a new global trade war. Does he imagine, as did Putin with his shooting war, that opponents will rapidly fold and it'll all be over in days or weeks? Well, maybe. But Colombia might not have set the pattern.
Old Pa Drew was in the international foodstuffs game and, having been a WW2 soldier in his time, brought me up to the slogan "trade is better than war": and I'm a free-trader. Well, but it was never a cure-all, as I readily admit.
On the other side of the account, history records nations who viewed sea-faring merchant activity as the work of the devil, and sought to ban trading altogether. Which is a debate we perennially return to here at C@W in rather more subtle form: what's the appropriate degree of dependency on trade, as opposed to national self sufficiency? There's no scientific way of resolving this question, even though there are metrics one might try to deploy.
In any event, some trade-dependencies are faut-de-mieux: I was once posed a deliberately provocative question in a seminar by a Chinese energy economist, relating to Europe's dependency on cross-border electricity trade to keep our highly interconnected grids functioning: this was surely a major strategic weakness and a Very Bad Thing, she demanded. I politely replied that, yes, sometimes import dependency can work against you, and that *ahem* some countries were dependent on imports for their oil ...
Anyhow: the rationale for trade is, of course, that it engenders efficiencies. The Trump Trade War might just give us some hard data on just how costly are the inefficiencies his stymying of free-flow might bring about.
Then again, maybe everyone hastens to do his bidding...
Looking forward to hearing from some of you supporters of mercantilism and self-sufficiency out there. (I'm caricaturing a bit, I know.)
ND
Here's a very odd story, that we must surely assume comes from Lloyds itself.
Lloyds cuts risk management roles in bid to ‘move at greater pace’
Bank’s risk assessment method blocking change, internal review concludes ... internal risk structures were acting as a “blocker” to change ... The changes will help the bank in “resetting our approach to risk and controls” and enable Lloyds to “move at greater pace”, according to an internal memo seen by the Financial Times. Mr Nunn [CEO] has been ramping up the pace of change at the bank after setting out a turnaround plan in February 2022.
Well. First of all, whoever this Charlie Nunn is, waiting more than two years before "ramping up the pace of change" sounds to me like being asleep on the job: a classic "re-launch" so beloved of failing governments and managements of all kinds. FFS, he became CEO in August 2021! I'm no revolutionary, but the longest I ever waited in a new managerial job before making changes at pace was about 3 months, and that delay (for such it was) was for a very specific tactical reason. Ordinarily, it's Machiavelli's dictum that should rule: make your big changes straight away. Two years is, frankly, pathetic. (And check Nunn's salary!)
Secondly, what sort of caricature BSD does he wish to be seen as, ostentatiously axing risk management posts? I'm not really asleep at my desk, I'm a BSD! Get out of the road, you risk managers! We'd be making so much more money if it wasn't for you! Yeah, right. Two years.
Thirdly, properly construed, the one facet of financial** risk management that can only with difficulty be a positive contributor to doing good business, is credit risk management. There's only ever bad news in credit: the best that can happen is that counterparty performs its side of the deal! Which we kinda assumed in the first place, right? And nobody ever pays you more than you billed them for, and says - hey, keep the change.
Otherwise, financial risk management should be viewed as potentially a big positive contributor to doing good business. It is good business you want to do, right? Or is it a quick speculative buck: book the 'profits' today, grab the bonus and run away? I start to wonder.
Finally, the joke is, "The shake-up will see 45 jobs removed from these risk teams, equivalent to around 1.5pc of the 3,600 people who work in risk jobs for Lloyds." In other words, it's trivial, cheeseparing stuff anyway.
ND
(PS, I have never been a risk manager, in case you were wondering. But I have worked with some brilliant ones. Only in a dysfunctional organisation does RM stymie good business.)
________________
** There are loads of non-financial risks that fall into the same baleful category: 'operational risk' (- the catchall for a lot of shit-that-can-happen); and reputational risk, political risk etc etc etc.
The other day I was asked by a good friend and ex colleague whether, by some remote chance, I'd kept a copy of a report we'd written - 20 years ago ...
Well, he stood a chance as I've always been quite hot on backup. Sure enough, there was the relevant backup folder - on an old CD, my standard procedure in those days.
As I hunted for a USB CD drive, it crossed my mind that back in the early '00s there was a scare, naturally promoted by someone selling another kind of data storage solution, that CDs were destined somehow to degrade over time, and fairly quickly too. So, getting the little drive whirring into action, I waited with mild misgivings for the old familiar sound-pattern to run its course ... and lo! the report [i] - easily read, thanks to the wonders of backwards compatibility.
These bloody liars, eh? Which led to a further train of thought. I started my energy career in a big old household-name oil company, and at the time the public debate over lead in gasoline was raging. We had several refineries and some very fine labs, and we were assured - by technical folk one was inclined to believe - that there was no way on earth to make gasoline of suitable octane, economically, without the addition of lead. Well, the lead limit was reduced from (IIRC) 0.64 g/l to 0.43 [ii] ... then a few years later to 0.15; and thence, without fuss, to zero. Was this possible without extravagant extra cost? Oh yes it was!
In other words, these sage technical types were lying through their teeth, not only to parliamentarians and newspapers etc but even to their own colleagues! [iii]
It is really difficult to "follow the science" with any confidence. As Hugh Laurie's character in House frequently said: everybody lies ...
Caveat emptor? How do you stand a chance, hmm? Follow the money is often a better principle.
ND
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[i] It is quite good, actually! We wrote it for the European Commission.
[ii] I may have mis-remembered the decimal. Or the units. It's a while ago, and nowadays nobody talks about lead at all !
[iii] The whole story of lead in gasoline is pretty interesting - see this BBC article. Be sure to read right to the very unexpected end!
Asset-stripping is hardly new: but the first really big company to be terminally hollowed out by modern financial engineering was Enron (1987-2001). The reason why it happened there, was completely the opposite of what's taken place at Thames Water. Enron was chronically under-capitalised for conducting the business it was (very successfully) engaged in: giga-scale market-making in the energy sector, with attendant innovation and creativity that has been much missed in the sector since 2002 (sic) but never truly replicated. Nostalgic laments aside, what Enron absolutely needed for its business model to be workable was to maintain investment grade credit status, because long-term dealmaking was its forte, and nobody[1] will do long term deals with a shaky counterparty.
Why was maintaining credit status a problem? Because (a) as an inevitable structural problem, cashflow lagged profit (which can be the death of literally any business, however sound); (b) it couldn't borrow any more, which deprived it of the traditional solution to that issue; and (c) - the real killer - it was committed to perpetual expansion, it being traded on Wall Street as a growth stock[2].
This conundrum became fully apparent (to Enron itself: the rest of the world just gawped and invested) as early as 1993, when the financial engineering started. For a few years there was ample opportunity to do some clever but wholly prudent stuff, resulting in a balance sheet that was a marvel of precise and efficient design. However, by the end of the '90s what could be achieved by such elegant means was pretty much exhausted, and they started resorting to some deeply imprudent expedients, designed by Enron people who really knew what they were doing - and abetted by banks who should have known better - and could therefore build it very big and very bad. (It didn't help that one of the main architects of all this was actually on the take in the literally criminal sense.)
* * * * *
Enough of history: it suffices that some potentially very dangerous financial technology had been designed and employed, able to be abused in completely different circumstances. Enter highly capitalised Thames Water, with physical assets and guaranteed revenue streams galore; the most fertile ground imaginable for financial engineering - and ideal circumstances for gouging out all the cash and remitting it as dividend. And so, it seems, they have.
How dangerous is this? One might say: who remembers Enron now? Didn't the lights stay on, and the waters close over? Hopefully, optimistically, that's right: HMG has quietly resolved several seemingly vast corporate problems in the past, British Energy 2003 being perhaps the best example ("Nuclear Generator In Financial Meltdown" - never a comfortable headline). With TW there appears to have been a bit of advance warning: and maybe with the recent 'rescue' of Bulb, some sensible generic thinking has already been done in government. Maybe. And Thames Water is squarely based on real assets.
But on the pessimistic side:
Which brings us to the elephant in the room: TW has suckered in a range of serious international financial players. OK - so, caveat emptor and leave them holding the keys? That may be possible in strictly legal / contractual terms: and HMG probably has reserve powers to direct the continued operation of the assets. But here's the thing: like any financial player, those big Canadian pension funds and Far East investors really, really hate being left holding the keys. In those circumstances, they have literally no idea what to do next: we know this, because it's happened many times around the world.
So what happens now. In coalface terms, there are asset-oriented specialists like Macquarie and Cargill who know all about restructuring and bailout. They'd make fortunes from the gig: but they know what to do. Is that how HMG will play it? It won't look good.
More widely however, what does this do for the future attractiveness of UK plc for inward investment? We've long been the envy of the world for how easily we've attracted cheap foreign dosh, and a large part of the economy is now based on it. Kick away TW, and what do all these people do with their next chunk of money? Equally great and easily-executed opportunities elsewhere don't grow on trees - but there are plenty enough, not least with government-backed Net Zero projects sweeping the globe.
In short, the worst-case scenario is, in sequence: (a) a serious investment strike by otherwise UK-directed money; (b) downgrading of UK plc's credit rating, with all its inflationary and currency implications; (c) drying-up of deal flow for the City.
This could be Very Ugly Indeed. All the more reason why HMG will step in smartly. But what if TW is just the tip of the iceberg? Where's, *ahem* Gordon Brown when we need him to Save The World?
ND
[1] Nobody with any brains, that is - though amazingly, some companies still do.
[2] Everyone in Enron was substantially paid in company paper - so the idea of letting the share price slip was anathema.
[3] Sold to a rapacious Centrica, as recounted here before. They then got carried away and foolishly bought 20% of the nuclear portfolio when EDF bought the rest. Has been doing them quite nicely just recently though, of course.
Dunno how many of you know who Aaron Bastani is, so we'll start with a brief and hopefully fair pen-picture. Bastani is highly articulate, apparently well-read, and sharp. He's in the category I tend to describe as "honest lefties": with notable blind-spots and a distorted worldview (usually a variant of sub-marxism), they'll nevertheless generally bow to truth and logic when confronted inescapably. (The code for this is that they've noticed something is "problematic" - i.e. sits very awkwardly with their worldview, making them deeply uncomfortable, exactly because they feel the force of the logic and the truth.)
Plus, Bastani is a tough cookie, a serious and driven entrepreneur who Gets Things Done: notably, his impressive Novara Media creation, now a burgeoning mini-empire of alternative media. At the start of this project, his purposeful and businesslike conduct could have been labelled "social entrepreneurship", but it must now fast be reaching the point where he can start to cash in, if he wants to. (His commitment to leftism is clearly intellectual rather than temperamental, and he has many very traditional conservative traits: enthusiasm for family & becoming a house owner; married in church; etc etc.)
And now, hahah! he gets to interview "The World's Biggest Political Streamer", Turkish-American Hasan Piker, "arguably the most influential political voice on livestreaming service Twitch". Mr Piker, we very quickly realise, makes a shedload of money from his own ultra-successful leftie media activity.
Bastani is just wide-eyed & drooling with pleasure at talking to this guy. 54 minutes in, he gets to ask his new friend about ... his big, new, nice-part-of-LA *ahem* mansion and his costly new electric Porsche. Now to be fair to Bastani, he does kinda try to get his man to justify such expenditures; but boy, he let's him off the hook easily. They quickly agree that the Red Line is, never to become a landlord ... oh, and not to have three Porches - "that would be ridiculous!". Right, right. Everyone should have nice things that are within their means "... as long as your morals are not compromised." Ah yes, of course.
It's just so funny. Because it looks for all the world like Bastani is casting for arguments as to how he's gonna justify his own Porche in a year or two's time. Go for it, Aaron! You know that a part of you is capitalist, really.
ND
All manner of ambitious people are
in the market for good psychological insight. Businessmen, con
artists, priests, politicians ...
'Smith!' screamed the shrewish voice from the telescreen. '6079 Smith W.! Yes, you! Bend lower, please! You can do better than that. You're not trying. Lower, please! That's better, comrade. Now stand at ease, the whole squad, and watch me.'
It's long been obvious that no legislation is required to force a large section of society to keep their telescreens on at all times.
And now we have Peleton: being shouted at remotely for not keeping up with your communal exercises performed in front of the telescreen.
Orwell was a pretty good leftie psychologist, and reckoned people could be made to love Big Brother (and keep those screens on). He hadn't perhaps realised that plenty of people love Big Brother without any compulsion whatsoever - and are willing to pay to have him beamed into their homes & watch their movements. Ah, capitalism! - always ahead of the game.
ND
À propos of a note I made about capitalist innovation at the dawn of the industrial revolution, yesterday one of our esteemed BTL anons kindly recommended my well-known classic on this topic:
"The history of donkeys in pre-Industrial Great Britain" Author - Nick Drew. ISBN 978-0-7334-2609-4. Price: £9.99
Haha! Cheap at twice the price: I have a few signed copies left ...
Suckers who bought this also liked:
What else are you taking to the Festival this summer, for those rainy afternoons?
ND
So now, let's take a look at Joe Biden's trillions.
The proposal would: put $621 billion into transportation infrastructure such as bridges, roads, public transit, ports, airports and electric vehicle development; direct $400 billion to care for elderly and disabled Americans; inject more than $300 billion into improving drinking-water infrastructure, expanding broadband access and upgrading electric grids; put more than $300 billion into building and retrofitting affordable housing, along with constructing and upgrading schools; invest $580 billion in American manufacturing, research and development and job training efforts
Yup: steel-'n'-concrete. There's a constant, plaintive strand of "but ... most of this post-covid growth-package stuff isn't properly Green ..." to be heard from various quarters: but it's rather drowned out by the sound of thundering hooves, both capitalist and workerist. Ain't that the way of the world?
Have a great Easter!
ND
That said, there are some pretty distasteful politico-financial pitches circulating just now. Most of you will have seen the grinning face of Nigel Farage (not least on the ads that blogger inserts on our pages, and ubiquitously on Guido). His promotion is at once blatantly political and blatantly self-interested. He wants us all to get rich by cashing in on Brexit, via a little scheme he has in mind ...
I can't see Nigel enhancing his rep much in this way, not withstanding its anti-establishment tone: and it kinda suggests he doesn't plan on making a serious run at the 2024 GE.
But all that's pretty tame and domestic (and above-board in regulatory terms), compared to certain ghastly current US scams which I have no intention of linking to on this site, but which pitch mercilessly to the rabid tendency in US "politics", making it virtually their patriotic duty to hand over all their wordly wealth to, errrr, a little scheme ... The promoters have presumably already identified their heavily fortified bunker-on-the-Brazilian-beach for the inevitable day when it all goes tits-up, and some extremely angry owners of patriotic firearms come looking for a righteous refund.
Bernie Madoff, when all said and done, only plundered the gentry, who were satisfied to let the law run its course. He probably doesn't fancy reprising his ponzi schemes to fellow inmates of the federal pen ...
ND
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^^ I haven't forgotten that we haven't followed up yet on this post from the end of last year: http://www.cityunslicker.co.uk/2020/12/define-capitalism-holiday-homework-for.html
There are several ways of looking at the mighty hiccup just suffered by the great Jack Ma's corporate empire as the Chinese authorities thwart the epic IPO he had scheduled for Ant Financial Services.
1. One in the eye for Chinese dreams of FinTech domination
Not really. Theirs is a specialist domestic financial sector, and it doesn't depend on Ant, or Ma's other corporate vehicles having free rein. Word is, the authorities are toying with transition 100% to a virtual currency. Now that's the big development to be watching for. (Can it be done? Much like Xi's Social Credit dream: easy to conjure up over a beer, and to recognise the advantages that would accrue to the CCP - if they could make them happen. The practical difficulties, however, are legion, and they advantages almost certainly not what they think. Law of Unintended Consequences looms very large.)
2. See, the Chinese can't do Due Process
Errr, I think we knew that. The CCP is quite explicit: it recognises no higher authority, in this world or the next. So (a) there will always be a lot of business China will never get, for this very reason.
Then again (b) neither can several other countries do Anglo-style Due Process, e.g. Germany! - as we've discussed here before. HOWEVER, no end of western companies "who should know better" kow-tow for Chinese business like there's no tomorrow (and I chose that simile with precision). Marxists always scoff at this: the capitalists will sell us the rope with which we will string them up! Haha. Yeah, always gets a laugh.
3. So it's just like Russia, then?
Sort-of, but slicker. Yes, after a few nervous years in office, Putin got to the point where his terms for the oligarchs were - remember, мои друзья, you cannot overstep the mark I lay down. The CCP built the whole of its capitalist regime - or rather, stood back and watched its capitalist regime develop spontaneously under the freedoms they rather prudently granted - on the same clear understanding from the very start. Mr Ma may have been wondering whether he might just be big enough to think otherwise; but ...
4. At least no blood was spilled
Now we're getting closer. How much more civilised, how virtual (virtuous?) to put a spoke in the wheel of an IPO, than to put a bullet in the back of the head. (But we do know that's in the toolkit too.)
5. OK, but not a proper capitalist regime at all
Can't agree. Capitalism is the human economic activity that thrives whenever and wherever there is space for the ordinary person to profit personally from their own ideas and keep enough of the proceeds to represent personal capital. No implication whatsoever of unlimited licence. Works best with Due Process, but works pretty well in less 'formal' frameworks, too. As the Chinese have proved magnificently over the past 30 years.
6. Any lessons for us?
Not really; because in both the paradigm economies of the Anglo capitalist model (US and UK), private businesses ultimately operate under the possibility of direct governmental intervention, often with very little resemblance to Due Process. A brief engagement with the history of the nuclear power sector since it was supposedly 'privatised' will leave you in no doubt on that one: and very many more examples could be adduced.
Oh, and many folk heartily wish our government would also intervene against Due Process earlier and more often. When it suits them, naturally ...
ND
The sort of question that gets posed all the time on a couple of the blogs on our blogroll (e.g. Chris Dillow's and Tom Powdrill's). And a very fair poser for C@W."most think their pay is not a reflection of the quality of their work. We also note that bonuses have a limited impact perception of pay. Not a single industry shows a majority who think their performance has a direct impact on their paycheck. Only 8% of those who work in the sports, culture & recreation industry believe the quality of their work will affect their salary ... What about finance? Finance firms often argue that their controversially high bonuses are the key to excellence. With only 30% of financial services employees thinking their pay is linked to their performance, it is an argument which does not convince ... If employees do not believe performance drives pay, what do they think does? Is it longevity, politics, being in the right place at the right time? Whatever it is, the belief that performance has little or no impact on remuneration is disheartening and cannot possibly encourage productivity or a thriving corporate culture."So - there's the challenge.
