What caught my eye this week.
One of the most dismaying aspects of the past decade’s political shift is seeing people who’ve thrived under ‘the system’ now shaking their fists at it.
From Donald Trump railing against corporations after presiding over several occasionally bankrupt ones, to the Chinese state turning on its most successful tech firms, to Barry Blimp and his friends criticising the elites from their exclusive spa and pool complex in Berkshire, hostility towards free market economics is everywhere. We see the consequences in rising US protectionism and the diminishment of Great Britain PLC and her citizens thanks to that vote.
It’s one thing to bemoan globalisation if you’re an artisanal farmer in Africa displaced by cheap calories from China, or a former industrial worker with now-redundant skills in Scunthorpe or Flint.
But well-to-do Brits decrying the shadowy forces of international trade that paid for their pensions? With zero evidence except a few half-baked statistics from fringe economists talking out of their Agas?
I’d take Citizen Smith over them any day.
Down with prosperity!
Combine the increasing antipathy towards global trade on the right with the age-old hostility towards enterprise on the left, whiz it in a social media blender, and you get this:
We could quibble over Zitelmann’s definitions I’m sure. But you only need to spend 20 minutes on Twitter or to listen to certain popular populist politicians to know the anti-capitalism vibe is real.
Yet as Joachim Klement argued when he shared Zitelmann’s graph this week:
Capitalism is responsible for creating more wealth and progress than any other economic system ever invented. It has lifted more people out of poverty than all charitable efforts and aid organisations put together. It has taken us out of the Malthusian trap and increased agricultural productivity to a level where we can feed more than eight billion people on the planet, most of whom would have died of starvation or never been born without the financial means to develop modern agriculture. And it has provided the foundations on which health standards have increased so much that global life expectancy has more than doubled in the last 100 years.
Few would say everything is perfect. Certainly not me. Just look at the other graph in this week’s Weekend Reading below.
But most of our problems stem from political choices and voter selfishness, wishful thinking, or even outright incredulity, rather than unfixable issues with capitalism.
Capitalism provides a framework for incentives to work. But it’s up to governments and voters to decide the rules of the game, what to reward, and how to divvy up the proceeds.
Capitalism isn’t dead. But it needs to fix itself. More of us should learn how to be capitalists, and to understand the source of our wider prosperity.
Quant fund pioneer Jim Simons, who died this past week, once said: “I did a lot of math. I made a lot of money, and I gave almost all of it away.”
Not a bad template for the ideal capitalist. But many people might start with simply doing the maths.
Have a great weekend!
From Monevator
Inflation hedges: what works and what doesn’t – Monevator
A question of trust – Monevator
From the archive-ator: holiday strategies to refresh a frugal soul – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
LSE boss says IPOs are on the way as Shein and Rasberry Pi ready floats – CityAM
Takeover interest in UK companies hits highest since 2018 [Search result] – FT
Reddit strikes deal with OpenAI to train LLPs on Reddit content – The Verge
Meme stock mania returns… – NBC via Yahoo Finance
…with this EV company rising 3,500% [!] in the week – Sherwood
US brothers arrested for stealing $25m in crypto in just 12 seconds – BBC
Brexit border IT outages delay import of perishable items to UK by up to 20 hours – Guardian
The percentage of US firms requiring workers-in-work is falling – Sherwood
Man told he is not British after 42 years in the UK – BBC
Why Britain is the world’s worst on homelessness [Search result] – FT
Products and services
High Street banks start to cut the cost of fixed-rate mortgages again – Guardian
Santander has brought back its £175 bank switch deal – Which
Get £200 cashback with an Interactive Investor SIPP. New customers only. Minimum £15,000 account size. Terms apply – Interactive Investor
Owners of period properties spend twice as much on maintenance – This Is Money
Cheaper Spotify Basic plans launched – Be Clever With Your Cash
Santander’s very popular 5.2% easy account rate drops to 4.2% next week – This Is Money
Transfer your ISA to InvestEngine by 31 May and you could get up to £2,500 as a cashback bonus (T&Cs apply. Capital at risk) – InvestEngine
Why would it take 30 days for Companies House to remove a fraudulent address? – This Is Money
Over 6,000 UK bank branches closed since 2015 – Which
Deliveroo has hiked delivery costs for all customers – Be Clever With Your Cash
Flats for sale with outside space, in pictures – Guardian
Long-term mortgages mini-special
Are 25-year mortgages a thing of the past? – Guardian
‘Serious questions’ for lenders over surge in ultra-long mortgages – Sky
Should you run away from marathon mortgages? – Which
You probably won’t be paying a 40-year mortgage into old age – Simple Living in Somerset
Comment and opinion
25-years old and with a 13.2% chance of living to 100. What to do? – Fidelity
Diversification is about decades – A Wealth of Common Sense
Happy conclusion – Humble Dollar
Three assets that might not diversify as well as you think… – Morningstar
…plus Bitcoin and gold won’t save you in the end times – Of Dollars and Data
An interview with Tyler from Portfolio Charts [Podcast] – Many Happy Returns
Understanding the inflation-protection of TIPS and similar bonds – Elm
Managing £1m property portfolios in an hour a month [Podcast] – The Property Podcast
Why active ETFs are better for fund managers than for you – Money Marketing
The long run is just a collection of short runs [Podcast] – Morgan Housel
Naughty corner: Active antics
Portfolio construction and the lower middle market – Permanent Equity
Starbucks’ digital dilemma – SatPost
BP and Shell go back to basics to boost shareholder returns [Search result] – FT
Small cap quality shares are currently good value – Verdad
Compounding made simple [Podcast] – Far From The Finishing Post via Apple
A deep dive into closed-end fund pricing versus NAVs – Acadian
Kindle book bargains
How to Own the World by Andrew Craig – £0.99 on Kindle
The Great Post Office Scandal by Nick Wallis – £0.99 on Kindle
Number Go Up by Zeke Faux – £0.99 on Kindle
Chums: How a Tiny Caste of Oxford Tories Took Over the UK by Simon Kuper – £2.89 on Kindle
Environmental factors
Businesses are struggling with reusable packaging – Guardian
Calpers to direct $25bn to green private market investments [Search result] – FT
Glimmer of hope for the mountain chicken frog which was once a national dish – BBC
Ancient trees reveal last summer was the hottest in past 2,000 years… – BBC
…despair is understandable, but stubborn optimism may be our only hope – Guardian
Robot overlord roundup
OpenAI introduces GPT-4o and more for ChatGPT free users – Open AI
10 mildly mind-blowing examples of what the new ChatGPT can do… – via X
…meanwhile Google responds with an AI that can find lost spectacles – BBC
The great flattening – Stratechery
AI can replace stock analysts [Research] – SSRN
How AI turned a Ukrainian YouTuber into a Russian – BBC
Jim Simons RIP
Quant investing pioneer and philanthropist James Simons dies at 86 – Reuters via Yahoo
Our man in East Setauket – Institutional Investor
The algorithm behind Jim Simons’s success – The Alchemy of Money
RIP to the man who beat the efficient market hypothesis – The Intrinsic Perspective
Off our beat
Johann Hari and the new ‘miracle’ weight-loss drugs – Tim Ferris
Building embryos – Aeon
UFOs, God, and the edge of understanding – Vox
Suddenly there aren’t enough babies. Birth rates are crashing – WSJ
NASA Black Hole simulator takes viewers beyond the brink… [With video] – NASA
…while Google and Harvard unveil most detailed ever map of human brain – CNN
Steve Albini, 1962-2024: the engineer who shaped rock’s most visceral moments – NME
The 15 greatest video games magazines of all-time – Guardian
And finally…
“Today’s economy is good at generating three things: wealth, the ability to show off wealth, and great envy for other people’s wealth.”
– Morgan Housel, Same As Ever
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Thanks for the Spotify tip – I’ve never listened to audiobooks. I’ve switched to Basic.
Spotify basic works for me – learned about it here. Almost saves me my monevator subscription 🙂
It’s so easy to move cash around these days. We use HL active cash and will be moving 150k from Santander into 2 different banks paying 4.7%. It’s literally zero hassle and time to do it so why accept the lower rate? I know you can get slightly higher rates if you DIY, but I think it’s a good deal to take a slightly lower rate to avoid all the faff.
Another thanks for the Spotify tip – just downgraded from premium family to basic family
Ancient trees reveal last summer was the hottest in past 2,000 years… – BB
That will be the Brexit vote…
The Morning Star article on portfolio diversifiers is odd. REITS, junk bonds and crypto are all traditionally regarded as risk-on assets. So if added to a portfolio of equities, their returns will probably have high correlation (to the equities) and little diversification overall. If, however, they are added to a portfolio of AAA-rated government bonds or cash, they will probably have low correlation (to high-grade bonds, cash) and provide a great deal of diversification. So the starting point (i.e. what’s in your portfolio to begin with) really matters, but the article seems to gloss over that point completely.
Please be aware that Johann Hari, quoted admiringly by Tim Ferris on weight loss drugs, has a history of let’s say debatable journalism. Wikipedia goes into detail (with plenty of sources and supporting links and references) and summarises: “ In 2011, Hari was suspended from The Independent and later resigned, after admitting to plagiarism and fabrications dating back to 2001 and making malicious edits to the Wikipedia pages of journalists who had criticised his conduct.”
Clearly one should give people a second chance etc but in the knowledge that just this last week the Guardian reported: “ Johann Hari and his publisher Bloomsbury have apologised after the author wrongly claimed in his latest book that Observer restaurant critic Jay Rayner had taken the diabetes drug Ozempic.“
Interesting article on capitalism +
The elephant in the room of course is the current competitor communism (theism as per the Iranian Republic is coming up on the outside). Myself as a “youth” of the 60s even as we rioted as per today’s students we were well aware of the parameters within which we protested-being full of WW11 and Cold War stories of our parents -we treasured the freedom to protest with out being imprisoned,shot or put psychiatric wards -all features of communist regimes
The Left -Labour et al were always historically sympathetic to Communism and remain inclined to State Control ,Central Planning,the State knows best and repression of the individual and the family as manifested currently in the extreme by the communist regimes of Russia and China
The Right of course goes in the other direction with its failures-Nazi Germany and Japanese Imperialism-thankfully and hopefully well in the past but consistent support of Capitalism has always been one of its strong points
The free world has amongst its many strengths a belief in Capitalism as the fundamental engine of wealth generation -and so it has proved to the great benefit of countries and their citizens that have adopted this economic/political system
Of course freedom ,history,capitalism as the sixties student riots and present day ones show has to be relearnt and fought for by each generation through protest and promotion of alternatives as we are currently witnessing but that is the price of living in a free society financially well funded by its underlying capitalist economic system
Interestingly for Britain our current crop of political leaders -Tory and Labour are more of the Left persuasion as our European neighbours and Americans are going increasingly Right
Free capitalist societies always appear decadent,fractious but fun compared to the alternatives-I see no immigration to Russia or China! but through adversarial but nonviolent debate and protest ably funded by the capitalist economic engine at its heart the successful way of life we are lucky to be living will hopefully continue for a few more generations-we may however have to fight for it(Russia/Ukraine) once again as our parents did-as a grandparent with two grandsons of fighting age (19) I sincerely hope not
xxd09
Thanks for the interesting links as ever. Particularly the “The interview with Tyler from Portfolio Charts [Podcast] – Many Happy Returns” Interesting discussion on SWR.
Not sure if you featured Portfolio Charts before, I may have missed it. Some interesting options to see how different portfolios preform.
@TI:
Great set of links this weekend. Particularly liked the Jim Simons RIP special.
@2s6d: BTW, are you aka half crown?
Worth noting that Portfolio Charts data starts in 1970; other much longer dared sources are available. Good old FIRECALC data goes back to 1871 – and quite a few notable things happened in that intervening century!
@xxd09 (#9): You say of right wing authoritarian and totalitarian regimes:
“but consistent support of Capitalism has always been one of its strong points”
I respectfully disagree, based upon the historical record.
With the notable exception of Chile’s experiment with the Chicago school policies of Milton Friedman from 1973-90 under Pinochet; most of the regimes of the authoritarian right were or are either ambivalent to the ideal of ‘liberal’ free trade and free markets (a minority) or (the majority) somewhat hostile and pursue/ pursued a protectionist/tariff/ import-substitution/autarky and/or corporatist statist agenda.
If you think of Fidesz (the Hungarian Civic Alliance) under Victor Orban and MAGA Republicans under DJT; well, they’re not exactly free trade advocates.
To cite just a few of many examples here:
– ideas of a Corporatist State in Fascist Italy from 1922-43;
– of the “Estado Novo” (1937–45) in Brazil during the rule of the right wing dictator Vargas;
– of Peronism in Argentina (on and off) from the 1940s to 1976; and,
– of the conservative Catholic orientated regimes of Salazar and Franco from the 1930s to 1974 and 1975;
were in each case rather antithetical to liberal ‘free market’ economics, as the idea is (and has been) generally understood.
Similarly, I think it would be a grave mistake to believe that the CCP ever abandoned Marxism-Leninism (M-L) and that (quoting@TI above) Xi’s state now “turning on its most successful tech firms” is a point of ideological departure from 40 years of economic reform.
The CCP never once waivered in its fundamental beliefs after Deng’s commenced market reform in 1978, any more than Lenin did when the ravages of famine & civil war in 1922 forced him to temporarily reintroduce elements of capitalism via the SU’s ‘New Economic Policy’.
Deng’s pragmatic turn in 1978 was a tool, and no more than that. A temporary capitalist means/expedient in order to achieve a nationalist & a M-L two fold end, namely:
– Reversing what the PRC calls ‘China’s century of humiliation’ from the outbreak of the first Opium War with Britain in 1839 through to the victory of the CCP in 1949; and,
– creating what the CCP calls ‘an advanced socialist society’ by 2049.
Any notion that, after Mao’s death in 1976, the CCP leadership went soft on M-L etc as an end goal is thoroughly dispelled by looking at what the Party actually says to its cadre in its internal documents, which show it’s real thinking and continuity of its M-L orientation. In particular, the CCP has never repudiated Stalin, or his methods, unlike the CPSU under Khrushchev (1956) and Gorbachev, as shown by this rather revealing contemporary Russian take on Chinese thinking:
https://en.topwar.ru/57022-v-kitae-stalin-zabveniyu-ne-podlezhit.html
Thanks as always Team Monevator for the weekly post and links.
Thanks Marco, HL active savings is a really useful platform – the hassle of opening new accounts really frustrates me, especially ones you have to wait to post something out before you can transfer funds in. And really like the term structure HL offers – 1,2&3 month fixes for example.
Athough I’m completely sold on capitalism, for me the big issue is around inequality – which I think is, ultimately, deeply corrosive of the system.
The US is staggeringly sucessful at creating an enormous pie, but less so at dividing that pie remotely equitably. The UK is poor at growing the pie, but more equitable in division.
What’s the answer? I really don’t know.
Wow, this is so insular and myopic and probably the worst thing I’ve read on this site.
90% of life on this planet will be dead in 150 years and that’s all because of capitalism, short term gains for long term losses, that is not a system to herald.
@BarryGevenson — Monevator is surely the only financial and investing website on the Internet with a dedicated weekly section of environmental links. I am fully aware of the threat from climate change, habitat destruction, and so forth.
The only way I see this as correlated with capitalism is the latter’s higher growth versus alternative systems.
We can set the rules. We can introduce a carbon tax or enforce the laughable ‘fuel duty escalator’ that is always wavered or put a £1000 surcharge on short-haul flights or any one of innumerable other things.
We don’t because people are ‘insular and myopic’ and wouldn’t vote for it.
If you think a Statist/communist alternative would be better for the environment then we’re going to have to agree to disagree, except in as much as growth would be lower as I say. (Although even then it’d almost certainly slow technological progress that might produce solutions, such as clean energy etc).
If you want to substitute ‘rampant consumerism’ for capitalism then that’s on a stronger footing, though again we have the ability to set the rules of the game. 🙂
Incidentally, global population growth has collapsed, which is perhaps our only super-positive hope for the environmental dread you and I share. That population collapse is entirely correlated with (a) shifts to capitalist / market-based economies (b) prosperity.
“90% of life on this planet will be dead in 150 years”: doubtful and undefined (% species extinct, reduction in biomass or the absolute numbers of individual organisms?) Granted things will probably get very bad, with a possibility of worse, but no model with realistic parameters gets to a Permian-Triassic “Great Dying”, which is the level implied by the quoted statement. I’m not saying there’s good grounds for optimism, but the realistic worse case, whilst terrible, is nothing like a Vesuvian hot house, or even an ‘entry level’ geological mass extinction, like a Cretaceous-Tertiary event. Here’s the forecasts out to 2300 and 2500 respectively:
https://www.nature.com/articles/s41467-018-02985-8
https://onlinelibrary.wiley.com/doi/10.1111/gcb.15871
Whilst there’s no basis for complacency, we’re also not on the path to a scenario like in the film “Silent Running”.
Ah…, ‘Silent Running’.. I remember it well. A cult classic.
@TI you may have well linked to similar story before but this caught my eye this week on retirement age change…
https://www.thisismoney.co.uk/money/pensions/article-13421443/Age-access-private-pensions-rise.html
“Webb explained the ‘very odd’ pension rules for people born in a two-year window between 6 April 1971 and 5 April 1973.
They will be allowed to access their pension at age 55 for a period, but then be denied access again from 6 April 2028 until they turn 57.”
This is me and I had missed the fact that there will be a period after I’m 55 that I can’t access my pension. Just to add to the fun for that first year of pension shenanigans.
@AndyJ — I missed this, bonkers you’re right! I think @TA may be affected, have forwarded it along to him. (He possibly knows already…)
@ AndyJ – thank you for sharing this. I’ve come across this potential SNAFU before but Steve Webb is the first person I’ve come across who’s prepared to stick his neck out on it.
There’s some nonsensical tap-dancing around the issue from HMRC here [dated 2 months ago]:
https://community.hmrc.gov.uk/customerforums/pt/01c7bb75-edec-ee11-a81c-00224800d1a4?page=1
And this note here:
https://commonslibrary.parliament.uk/research-briefings/sn05847/
“There may be some transitional issues. For example, an individual who does not have a protected pension age and at 5 April 2028 will have reached age 55 and has started but not completed the process of taking pension savings before the change in normal minimum pension age. The government will provide further advice on the proposed transitional arrangements and provisions in due course.”
AFAIK, no such advice has been issued.
I must admit last time I looked into it, I thought it was so nuts that nobody would apply the rules like this. A couple years more disillusionment later and it seems entirely plausible.
I am caught up in this, but my pension would be closed for just under six months. People will end up having to take a big tax hit if they have to cover much longer periods.
Stop the madness!
Thanks for picking up on it both. As you say it’s completely nuts. I plan to be quick off the mark and try and get sorted as soon as the birthday cake is finished but I suspect it will catch some people out of it stays this way.