Weekend reading

Good reads from around the Web.

I seem to have spent years arguing – online and off – with men (invariably men) who are 10-30 years older than me – about exactly the wrong problems.

There’s a certain type of clever man who tends to fret about:

  • Peak oil
  • The rise of China, especially in the context of outsourcing
  • The lack of UK manufacturing and engineering
  • The lack of future jobs in the West

Yet not one of these bothers me much at all. (Of course there have and will be switching costs to resolving any issues that do arise).

Peak oil was always a bogus threat, at least in our lifetimes and those of our kids. I didn’t foresee the fracking bonanza that’s handed me a win here quite so quickly, but I knew we’d find plenty more hydrocarbons. The world is still stuffed with them. Our problem is we’re burning them.

Also, alternative energy progresses rapidly. The sort of man I’m thinking of tends to hate alternatives – I think they’re all children of the 1950s at heart, and love to see billowing smokestacks overseen by a man from the Ministry – but they tend to respect mathematics. Eventually alternatives will win on all fronts.

The rise of China may present geopolitical tensions, but like most global trade it’s a big win for us. We get an enormous range of things far made more cheaply than we otherwise would, and we often retain the bulk of the profits generated, too. (See Apple’s margins for more).

UK manufacturing? These laments are a manifestation of the sweatshop fetish of most of the public, but particularly men of a certain age.

Most manufacturing is low-end and makes little money. We’re pretty good at the rest, and we retain a significant manufacturing base, albeit a shrinking one in relative terms because we’re so much better at services.

As for the lack of jobs in the future, that’s just a lack of imagination. Sadly, humanity shows few signs of swapping tat and titillation for more quality time, and I’m sure we’ll find new ways to keep the proles and their bosses busy for decades to come.

Like what? Like 1,000 things I could list and 10,000 we can’t imagine yet.

Just one example – for years I’ve suggested that in the future everyone might want their own custom house, designed and built to their specs by a personal architect, and fitted with bespoke furniture and designs.

That’s a lot of new skilled jobs, compared to fields of Barratt boxes.

Ten-years ago my suggestion was deliberately fanciful, but recent advances in 3D printing have led some to speculate that we might one day build houses an atom layer at a time, from the ground up. (It’s already being pioneered in Amsterdam and elsewhere).

Combine that with the computer-backed architecture that already gives us apparently impossible floating roofs and bending walls, and Acacia Avenue need never be the same again.

What really worries me

I haven’t even mentioned fears of (or relish for?) the end of capitalism and the consequent gold bug mania.

To be honest I suspect this is a temporary concern of people who’ve never read any financial history seeing banks going bust on the news. Capitalism goes through periodic waves of crisis. Always has, always will.

So am I a deranged optimist? Do I have any worries?

Absolutely I do – plenty.

Here are just a few of the things I think are really worth fretting about:

  • Environmental collapse and climate change
  • The coming uselessness of antibiotics
  • The end of all privacy and absolute (if consensual) State control
  • Biologically engineered terrorism

On the first of these, I’m indebted to reader Andrew who reminded me that Jeremy Grantham’s latest quarterly letter [PDF] was out. I usually agree with most of what Grantham writes, and this time he tackles ecological collapse and the increasing viability of alternative energy in one coherent message.

I particularly like how he calls out another bugbear promoted by the greybeard doom mongers – that the pension crisis should be solved by stuffing more kids into the bottom of the pyramid – as he like me sees population growth as a top three problem needing fixing.

Grantham writes:

The return on helping encourage a lower population everywhere is incredibly high. Yet little is done at an international level and indeed the issue is treated like a hot potato even by usually well-meaning NGOs.

But we can do it, and my guess is that we will indeed succeed on this front. In the meantime it would be encouraging if economists, The Economist (not to pick on them but I tend to hold them to higher standards than others), and economic discussions in general would look out a few more years and stop discussing lower population growth as if it were a dire economic threat rather than our last best hope.

Of course, as growth rates drop rapidly and populations quickly age, there is an added burden to workers of carrying more non-workers for one generation as the changes flow through the system. Then things stabilize again.

This cycle can be ameliorated enormously by having older people extend their contributions and by facilitating the full participation of women in all countries.

The ruinous alternative is to have an ever-growing population run off the cliff collectively.

There’s also stacks of interesting stuff about alternative energy – enough to encourage me to finally pull my finger out and write the post I’ve been promising some of my friendly opponents for years – and a second article warning on how high profit margins could herald a coming dark age of super-inequality.

Oh yeah, I believe rising inequality is a real existential threat for the West, too. Even for billionaires, although I suppose few of them would agree.

Talking of which, one who does – Warren Buffett – is hosting his annual investing festival in Omaha this weekend.

If you can’t make it you can now follow him on Twitter, where he’s now tweeting.


From the blogs

Making good use of the things that we find…

Passive investing

  • No free lunch from the equal-weight S&P 500 – Rick Ferri
  • The best performing stock market in the world since 2008 – R.I.T.

Active investing

Other articles

Product of the week: Virgin Money has launched a savings bond paying 3%, but you have to tie up your money for five years. Its new 3%-paying five-year ISA savings account is also a table-topper, says The Telegraph.

Mainstream media money

Note: Some links are to Google search results – these enable you to click through to read the piece without you being a paid subscriber of the site.

Passive investing

  • Will index investing kill the market? – Adviser One
  • CNBC’s rating decline is good for investors – US News
  • Swedroe: Stock market gains come from few top performers – CBS

Active investing

Other stuff worth reading

  • Why have so few bankers gone to jail? – The Economist
  • Crossrail to boost London house prices – The Telegraph
  • Where’s the beef with interest-only loans? [Search result]FT
  • Crowd-funding options for UK DIY dragons – The Guardian
  • What’s most important about money to you? – NY Times
  • Meet Mr Money Mustache, who retired at 30 – Washington Post
  • Matt (cartoonist) on property [Slideshow]Telegraph

Book of the week: The range of deals offered by Amazon local is impressive – I’m being touted more experience packages alongside cut-price restaurants and the like. Most boast at least a 50% discount, although like all sales bargains be sure you actually want what you buy. (Need doesn’t come into it here!)

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