I read one of my all-time favorite wisecracks in a newspaper op-ed by a Canadian writer many years ago. The author lamented “We could have had it all—British traditions, French cuisine, and American engineering. We ended up with American traditions, French engineering, and British cuisine.” It was in that context that I read this piece by Sir Roger Scruton at the Library of Law and Liberty, “Tradition, Culture, and Citizenship”:
The concepts of tradition, culture, and citizenship have this in common – they are summoned to protect our political inheritance against the disintegrative forces to which it is now exposed. They are tenuous, fragile, subject to many interpretations, and bend or break when we place too much weight on them. But they are among the important assets we have, when it comes to opposing the view of society as simply a power struggle between groups, who have no other end than to gain the ascendancy over their rivals. That view of society, as a power struggle, whose aim is domination or the escape from it, has been an intellectual commonplace from Marx to Foucault and beyond. Its falsehood is best displayed by examining the three concepts that form the topic of this article.
He goes on to distinguish between what he calls “shallow traditions” on the one hand and “deep traditions” on the other. “Shallow traditions” are things like Christmas trees, highland dress (if you’re English), and ceremonies of lessons and carols at Christmastime. “Deep traditions” include the common law, belief in individual responsibility, and citizenship (defined as the “active participation in the business of government”). I would include the English language itself among deep traditions.
I had two reactions to the essay. First, I think that, like many Brits, Sir Roger underestimates the tremendous differences between England and the United States. The second was G. K. Chesterton’s observation that America is a country founded on a creed. I’m less optimistic than Sir Roger is that when the creed itself is rejected that there can be anything left to recover.
The original quote was from an American, and it was German engineering. But Canada is screwed up much worse than the US; they got their Hilary.
The version I was familiar with was called the diplomat’s view of Europe.
Heaven in Europe is where
the English are the policemen
the French are the cooks
the German are the mechanics
the Italians are the lovers
and the Swiss organize everything
Hell in Europe is where
the German are the policemen
the English are the cooks
the French are the mechanics
the Swiss are the lovers
and the Italians organize everything
OT-Interesting piece on capacity utilization. Never really sure how accurate this is.
http://bonddad.blogspot.com/2017/12/why-would-anybody-invest-when-capacity.html
It’s never accurate because they use nameplate capacity and rumor. When wevdiligence an industry we have a firm do original research. It’s still dubious. No one really knows our capacity.
But in addition, there is expansion capital and efficiency capital. We just approved a major project at one of our companies that will increase output potential only as an artifact. The real purpose is quality, and reduced peak downtime.
Does a shuttered buggy whip factory count as unused capacity? My intuition is that there’s an enormous temptation to count inputs rather than potential outputs.
At some point unused capacity is unusable capacity or never-to-be-used.
Those are the economic terms for it.
Individual companies invest for lots of reasons.
1. We have spare capacity for things we don’t need and not enough of the things we do. E.g. there is excess retail real estate and not enough amazon warehouses due to the shift to online retail.
2. You need to invest so your company does not lag competitors – car manufacturers have all the car factories they need; but they need to invest heavily for EV and self driving cars since in 10-20 years those will be required features.
3. Because the investment pays for itself. Wind farms keep getting built despite power consumption staying stable; under current laws building and running wind farms is more profitable then using existing coal plants.
4. Irrational exuberance. It’s a bigger factor then we admit; think railroads, the fiber networks of the dot com era. People and companies invest due to a gold rush mentality.
Looking at capacity utilization is not really the way to think about investment; but there’s a point that tax cuts won’t stimulate investment. Of the 4 factors, tax cuts / reform directly effect #3, and indirectly #4.
#4 is a big question. We had a debate the other day on what’s in a gold rush right now; blockchain and AI were consensus. There was disagreement on e-commerce / Cloud. Could tax cuts change psychology enough for people to do crazy things?
You guys aren’t framing the argument correctly. A capital investment (not in securities) incorporates a variety of considerations, and is very situational. E.g. Capacity for sales opportunity. Labor savings. Throughput. Yield improvement and input efficiencies other than labor. Quality. New product performance attributes. And so it goes.
The dominating considerations vary with each decision. If failure to invest presents an existential threat to a business taxes won’t matter. If sales potential is ginormous taxes won’t matter. Regulatory issues or subsidy may dominate taxes. But those are sexy or specialized examples. They are in the decided minority. The everyday blood and guts decisions that represent the volume are much more often closer calls. Many times a variable moves only 10-15% either way. If you don’t think a change in after tax return that moves 33-50% matters then you have not done much investing.