The Mercy in Price Hikes

Some people are getting agitated and hostile at the pumps. Now, I know the cost of living pressures are tough, and I sympathise. But what we have here is an arithmetic challenge that’s basic Econ 101, and it’s not the people selling fuel who are at fault. In fact, quite the contrary – raising prices in a time of shortage is the least bad thing for us. Here’s why.

Before hostilities began, the world consumed roughly 100 million barrels of oil each day. But with Iran limiting the Strait of Hormuz to most international shipping, we read that only about 80 million barrels are now reaching global markets. That’s the arithmetic problem for the global economy: until that bottleneck eases, the remaining 20 million barrels of daily demand must effectively be squeezed out. And the only mechanism capable of enforcing that reduction is higher prices. Now let me reassure you that it’s the least bad thing for us.

As you’ve heard me say before, at its core, economics is the study of human behaviour regarding competing preferences and how societies allocate scarce resources among competing uses. Prices are the signalling system that makes this allocation possible – and higher prices are vital information signals, telling buyers, in real time, that the resource is now more valuable relative to its availability.

Now, here’s what’s happening across society that you won’t fully see because it’s so thinly spread. Many of those who can put the resource to its most productive or urgent use are willing to pay more for it, while many who value it less step back. Tragedy of the commons issues aside, here prices reveal the hierarchy of preferences across millions of people – those transactions are revealed preferences showing those who value the fuel the most at the margin.

Naturally, no price signalling mechanism is perfect – for obvious reasons – but the alternative is far worse. Without price signals, scarcity would have to be managed through much less effective ways. The price system gives us the best whack at creating a relatively orderly, decentralised way of matching limited supply with the people who can use it most effectively and need it most during the tension.

Dodgy Lookalike Beliefs

Criticisms of one misjudged thing often mirror the properties of criticisms for other misjudged things. Think of the critique of socialism as a mirror for the critique of identity politics, climate alarmism, cult membership, and groups of that nature. We are critical of socialism, but a key part of that criticism involves a natural critiquing of the motives, intentions and psychological biases that underpin this dubious economics. It’s not like we are saying socialism is flawed because its proponents are of a dodgy ethical and intellectual disposition – it’s that its flaws are based on bad and myopic economics, but also that the bad and myopic economics doesn’t come from nowhere – it is bound up in a whole host of complex psychological, tribal and emotional factors that cannot be divorced from the viewpoints.

The other thing that is clear about extreme left wingers is that what often masquerades as care for the poor is largely a product of intense dislike towards other people’s successes. That is a complex matter that probably deserves a blog of its own (although people like Orwell have made the point before) – but suffice to say here, the inner animus, bitterness, resentment and narcissism that boils up in extreme lefties complaining about the economy and damaging our society is a key driver in the formation of their opinions, and remains a psychological factor that cannot reasonably be divorced from the professed beliefs being espoused.

Similarly, to have a proper understanding of dodgy lookalike groups like the aforementioned, one needs to understand the mental manifold that drives the beliefs, and the cultural patterns that give rise to this kind of conditioning. Certain people who are ideally psychologically primed make good candidates for extremism and cultism. The main thing to keep at the forefront of your mind is that those involved in extreme religious or political fundamentalism are not really concerned about the information they are peddling. They write as though the content is everything - but really it isn't - they are just groups of people who have the kind of psychological disposition that is best fed by a 'my way or the wrong way' kind of mentality.

And, as ever, the old chicken and egg question looms large: does predisposition to ungrace cause a gravitation to fundamentalism, or does assent to fundamentalism cause consequent ungrace? And we can no doubt add many other variables to that structural model.

 

Odds, Ends and Stray Musings: Three Types of People

 

The world can be split into 3 groups of people

 

1. Those who know less than they need to.
2. Those who know about as much as they need to.
3. Those who know more than they need to.

 

There are only a few things the average person needs to know about, say, showers, car tyres and garden plants to get by (as long as there are experts to call on). But there are things that many people ought to know but don’t, which is having a detrimental effect on their ability to get by. Things like how to treat people to maximise relationships, how to get the best out of your work life, and knowledge about optimum health and nutrition, to name but three. 

Lastly, those who know more than they need to fall into two camps, those who have invested more time than they need to on things, and those who acquire the knowledge they need and then dig deeper, ask more questions, and acquire knowledge that most others don’t even think about. At first glance, this might look like excess. But in reality, it’s the surplus of knowledge in this group that drives progress for human civilisation.

Group 3’s curiosity and mastery are not just personal quirks; they are the foundation on which society advances. While Groups 1 and 2 operate within what is necessary for survival, Group 3 explores what is possible for progress and pushes us into new frontiers.

Some Of The Curious Things About Supply & Demand

When it comes to goods and services in the free market, four things will happen: 

1) Increase in Supply

2) Decrease in Supply

3) Increase in Demand

4) Decrease in Demand

I'm sure readers who've been with me this long won't need explaining what the direction of the price and quantity arrows take with the various increases and decreases (here's a wiki page if anyone is unapprised).

The reason I'm writing this is that although most people know the basics, there is often a very wrong assumption made. Given the size and complexity of the market, it's fairly obvious that the variances on prices, supply and demand are impossible to predict precisely in the future, and hard to keep track of in the present. For this reason, in the short term it is not at all unusual to see prince increases and quantity increases for the same product (ditto decreases).

When we see cucumber or coffee or cereal consumption on the up (or down) while at the same time seeing the prices on the up (or down) it is simply a sign that within the laws of prices, supply and demand there are often underlying, unforeseeable events that add a bit of disorder into the mix. That is to say, in the short term, supply and demand arrows are not immutable; they are indicators that predict longer term behaviour, especially if one changes other things stay relatively constant.

Imagine Tom Joad eats lots of rice and a small amount of fish. As rice becomes harder to come by and the price starts to rise, his food budget is strained to the extent that he is has to cut back on fish and demand even more rice. The increased demand ramps up the price further and Tom Joad experiences a vicious rice-fish circle. Contrary to popular opinion, rising prices can in principle lead to increased demand, not decreased demand (this is what is referred to in economics as a 'Giffen good'). 

Put it this way, generally speaking though, if the consumption of rice, fish, cucumber or oranges steadily drops, you can be quite sure that in the long term production and (or) prices will be altered to match, and that's a general rule that's fairy reliable.

About 25 years ago in the UK, petrol pump protesters brought the country to a standstill by creating a shortage of fuel - and there was talk recently of it happening again. Naturally, prices increased and many angry consumers declared that when one or two firms hike up their prices on a particular product that that means they have a monopoly on that product. Not only is that usually not the case, it mostly reveals just the opposite; it exhibits healthy competition – it is competition revealing scarcity in this case that raises prices.

If something is in short supply (like, say, oil when there is a domestic crisis or trouble in the Middle East) it is assumed that the increase in price is due to a monopoly company hiking up its prices. If a company really could increase their supply with a supply restriction, they wouldn’t ned to wait for a domestic crisis or trouble in the Middle East to do so. The economy doesn’t facilitate the simultaneous profit from unrest and a single monopoly. 

At the time of the petrol crisis in Britain, some people even suggested that there should be a mandatory cap placed on individual sales – say of £30 or £40. As I said at the time, that’s a bad idea – a £30 or £40 cap on individual petrol sales probably would not have had the desired effect that many think – it would more than likely increase overall consumption, because even more people would head to the garage, and that would also cause more misallocation. 

It is as crazy as trying to regulate the crude oil supplies by legislation – one might as well forget the near-ineluctable law of economics, which says that prices go up when things are in short supply. That is exactly what happens – price controls play a part in controlling the wholesale level, meaning refiners minimise their fuel supply, meaning the prices at the pump go up, not down. Lower supplies means you pay more at the pump, so oil regulation has a bad effect for the consumer. 

Some People Might Be Just Too Hard To Satisfy

 

As I argued a few years ago in my blog about the Easterlin Paradox, individual happiness is fairly hard to measure, and global happiness is prohibitively hard to measure. Here are a few things, however, that my experience tells me are obvious. It's better to be rich enough to have the basic necessities for survival, comfort and pleasure than it is to be in poverty. Happiness can increase as income increases, but there will be a point at which this levels off. While richer people may find greater thrills in their status-mongering and individual accomplishments, less wealthy individuals who are not driven by status to the same extent may be happier in their relationships and internal motivations. 

The upshot is, if by magic we had a perfect measuring device for happiness, I wouldn't be surprised if the people who registered the highest levels of happiness were people who were (in no particular order) 1) reasonably well enough but not extremely rich, 2) pretty smart, 3) in a loving relationship, 4) involved in good inter-personal relationships, 5) in a relationship with God.

I mention this not as another philosophical commentary on the nature of happiness, but to probe another avenue of consideration. Are people unreasonably hard to satisfy? And is that especially true of people who are more left-leaning? That is to say, despite the financial difficulties of the past few years, and how admittedly dire politics is at present, if you measure over a much longer distance, then the economic growth and increased standard of living for UK citizens in the past 150 years has been so astounding that if you were transported from the Victorian age to the present day to see the astronomical progress we've made, you might justifiably expect there to be far fewer people always going on about how bad things are. I'm working on the almost certainly justifiable presumption that we all agree that being well off materially is preferable to being badly off materially. I know this on account that just about everybody behaves as though this is true, even though they are free to make decisions that support the alternative view.

What's been happening, it seems, is that the better off the UK has become, the more things people find to be angry at - and that seems to be because our enhanced standards of living afford us the luxury to complain about things our forebears would have been too poor to complain about. Today we think of people in hardship who our forebears would perceive as abundantly blessed. It's as though the better off we've become, the worse not being better off is relative to our advancements. Think of it like this; Geoff, who drives a Ford Sierra, is still using a 1990s phone, a VHS video player and portable colour television would seem to be struggling compared with the majority of the population who have better cars, a digital phone, and an HD smart television with access to hundreds of channels and thousands of films and programmes. But to a Victorian, Geoff's life would look absolutely amazing. We get unhappy about Geoff's life only because our fantastic increase in living standards has made his life seem worse than the expected average.

Look at how our lives have been enriched by technology, by increased knowledge, by supermarkets, by millions more jobs than ever before, by more leisure time than ever before, and by the countless ways that machines and devices now do things for us in seconds that once would have taken us minutes, sometimes hours, in the past. We can buy things cheaply (tax add-ons excepted), we can do most things without having to travel or make phone calls, and we have access to more knowledge, information, other people, goods and services than ever before. For most of us, our lives are economically and socially blessed (at least compared with the alternatives that have plagued our forebears, and still continue to plague many people in developing countries) - yet so many people fail to give this the proper regard.

Now, I'm not saying that none of the following deserve any of our complaints or calls for improvement at all - but I believe that everyone can be more enhanced by adopting a much better sense of perspective and gratitude. Supermarkets have revolutionised the shopping industry, saving us millions of pounds each year, yet many just want to complain about CEOs' pay. Amazon is the world's greatest ever shopping experience, saving us billions of pounds each year, yet so many complain about its tax contributions. And then there are social media platforms like Facebook, which enable us to socialise, organise events, share experience, have good discussions, meet people around the world we'd otherwise never meet. Skype lets us speak face to face with anyone in the world in a way that would seem like science fiction to people of 100 years ago. YouTube gives us access to pretty much everything that's ever been filmed - interviews, debates, films, music, education, and extraordinary moments across the world captured on camera, from the absurd to the shocking to the dangerous to the hilarious - it's fantastic. 

And then there's Google - giving us access to just about anything we could ever want to know. Here's the remarkable thing - every online product I just mentioned is provided free of charge: endless socialising, endless knowledge, endless entertainment - all readily accessible at no financial cost to just about all of us. And all that aside from the immense benefits that such enrichment confers to the wider world in terms of outside investment, access to trade and opportunity to develop. Yet when many think of Facebook and Google, they are so often preoccupied with wealth inequality and access to their data - when a few years ago they had no platform on which to have any data and to use those free services. 

There are, of course, justifiably grave concerns about big tech - especially the negative effect social media is having on young people. Although that does not mean its overall effect is net negative. I see it as a bit like alcohol; excessive use generally correlates with negative outcomes, whereas balanced, assistive, creative, relational use generally correlates with positive outcomes. 

Given the extent to which humans are hard to satisfy anyway, it seems to me that in the case of the vast majority of people regularly complaining about so much (especially on the left), they are unreasonably hard to satisfy. Even if we magically flicked a switch and wiped out all their current so-called 'injustices', they would probably just carry on coming up with more and more complaints - because, like Parkinson's Law, where work expands to fill the time available for its completion - I believe it's quite possible that the human tendency to complain expands to fill the space left by material progression and higher living standards. 

Knowing The Price Of Sex And The Value Of Nothing

As I was cycling through the city earlier this evening, I felt my regular lament at the ugly sight of graffiti tagging that spoils so many buildings. As far as I’m concerned, graffiti tagging on private property is carried out by selfish young men who have no respect for the buildings they are defacing or the people who are associated with them. And sometimes I think, if only females looked down on graffiti tagging (or other acts of criminality or irresponsibility like that) with more ridicule and contempt, boys would eventually stop doing it.

I know that sounds like an outlandish thought, but it has truths that are supported by evolutionary history and psychology (especially in the work of psychologist Roy Baumeister) regarding the dynamics of sex and attraction, where we know that women are largely the "gatekeepers of sex," and influence the behaviours and ambitions of men accordingly. Baumeister posits that women determine the standards men must meet to access sex, which complements a long-standing evolutionary principle that women primarily do the choosing and men compete to be chosen.

Although it works both ways, of course - while women are the primary gatekeepers of sex, men are primarily the gatekeepers of commitment and long-term relationships. Women, due to higher reproductive costs (such as pregnancy and childcare), are typically more selective in choosing sexual partners. This selectivity drives men to compete and adapt to meet women’s standards, shaping behaviours such as ambition, status-seeking, and displays of loyalty. But men are often more selective when it comes to committing to long-term relationships or marriage. While casual sex may require fewer standards, commitment demands more from potential partners - such as trustworthiness, compatibility, shared values, and longevity. Men historically needed to ensure their investment (e.g., time, resources) would be directed toward raising their biological offspring, which meant they were more likely to commit to women they deemed faithful and emotionally supportive.

Here, then, we see how responsibility is shared between the sexes. Women can provide good quality control for male behaviour, and men can improve their conduct to make them more desirable in terms of selectability. In fact, I don’t just mean that as a fanciful whim where one or two minor improvements could make a bit of difference (although that is still true) – I mean that if there were radical societal changes in terms of improvements of attitude, conduct, and mutual accountability between the sexes, we could start to reverse a negative trend and be on the way to becoming a Christian country more than ever before.

In economic terms, this goes back to the price of sex within societal norms. In a Christian society, the price of sex is higher than in a society run ragged by promiscuity and hedonism. This aligns with the Christian ideal of chastity. The female beloved insists on not just commitment, but virtue, respect, patience and noble intentionality from their prospective beloveds. And with sexual intimacy being a sacred act reserved for marriage, males share the responsibility in taking the lead to ensure the relationship is built on friendship, trust, love, and shared Christian values that transcend fleeting physical desire. This higher "price" for sex necessitates a framework where males must rise to moral and ethical standards of Christianity, and chastity would function not as a limitation but as a transformative force. Relationships of such stability, integrity and self-discipline benefit not only the couples themselves but also their roles and influence in the broader community.

As the "price" of sex has decreased in the modern time of easy divorce, sexual liberation and the breakdown of family values, so too have the efforts some men make to meet higher standards and women to insist on them. If sex is too freely available, men won’t aim for higher standards and societal decay will continue. Remember too that there is strong evidence in psychology that delaying gratification to prioritise long-term rewards over short-term pleasures is one of the cornerstones of emotional and psychological maturity.

The Next Ten Years Are Going to Be Ridiculous

Scientific and technological progress is accelerating so quickly that I regularly reassure my readers that the coming decades will bring unprecedented scientific, technological and economic progression on a scale so prodigious that they won’t be able to believe it. The trouble is, given that most people who most urgently need to hear this don’t read my blog - on account that statistically most people in the world don’t read my blog - the message of encouragement isn’t getting out there fast enough.

According to research I’ve read, current trends even in just AI show capacity growing more than 25× per year, vastly outpacing human research growth. Even if these rates slowed by a factor of 100, the combined cognitive labour of humans and AIs would still expand far faster than anything in history, potentially delivering hundreds of years of innovation within a single decade. Rapid gains in computational capacity, algorithmic efficiency, model scaling, and inference costs all contribute to the next phase of what I call the progression explosion, which will trigger a corresponding unprecedented surge in technological development, robotics, and industrial output.

There may, of course, be fresh things to contend with, with such acceleration - like misaligned AI, power concentration, entrenched authoritarianism (which is, alas, already happening), and other challenges posed by advanced digital minds. But they will probably be a spit in the ocean compared with the huge potential benefits - especially extreme abundance, medical breakthroughs, and rapid scientific and material progress.

And as I’ve blogged about before, these advances will create unprecedented possibilities for solving long-standing “future problems” like climate change. If AI-driven research acceleration really does condense centuries of innovation into years, then technologies we are still working on - ultra-efficient batteries, carbon-negative industrial processes, fusion breakthroughs, and advanced materials for energy storage - will arrive with prodigious application far sooner than most people imagine. Rapid scientific iteration, combined with autonomous experimentation, would allow AI systems to explore billions of design possibilities for catalysts, solar materials, carbon-capture membranes, and so forth, before you can say “Greta Thunberg hates cheeseburgers served at BP Garages”.

 

On Negative and Positive Desert

 

I think Jimmy McGovern’s The Street is one of the best British TV dramas ever. One of the many memorable episodes, like the one I rewatched recently, involves a racist called Kieran getting credit for saving a 7-year-old Polish girl, Anna, from a house fire, when, in fact, it was actually his friend Duffy who committed the heroic act. But Duffy dares not claim credit for his heroism because he fears it will jeopardise the invalidity benefit he’s claiming. Huge tension ensues when Kieran willingly accepts all the adulation while Duffy begrudgingly laments his lack of recognition.

During the episode, this got me thinking about something else; whether an act is still heroic if the person had no memory or awareness of it - and acted it out in a trance-like state, where they did not consciously undertake the deed through any sense of bravery or moral duty. Probably not, or at least, much less so. Put it this way, if the person claimed no memory or awareness of the good act, it seems inappropriate to reward them. But that being so, does the reverse also apply - that if someone acted out a wicked deed in a trance-like state, with no memory or awareness of it, should they go unpunished?

In one sense, I can understand the temptation to argue that if a lack memory or awareness negates positive desert, it similarly negates negative desert. But that can’t be wholly satisfactory for one key reason. Negated positive desert means that the hero is merely not afforded deserved recognition and adulation. But negated negative desert means the general public are not protected from a criminal who has not only harmed at least one victim, but may go on to harm others - so should be incarcerated on that basis.

On What Humility Really Is

 

“God opposes the proud but shows favour to the humble.”
(Proverbs 3:34, James 4:6 and 1 Peter 5:5)

From my experience, humility is one of the most misunderstood of all human qualities. So often, people consider humility to be things like timidity, circumspection, or a lack of self-confidence regarding a viewpoint. But that is not right; humility is best thought of as accurate self-assessment. That is, humility is not thinking less of yourself than you ought, it is thinking accurately about yourself. 

To be in true humility means you don’t inflate or diminish your worth, abilities, or moral standing. Humble people are willing to see themselves as they truly are - capable of love and goodness, but also deeply fallible - which is why God calls us to live a life full of humility.

The opposite of humility isn’t self-confidence, as many think - because self-confidence is justified alongside competence. The real opposite of humility is narcissism - which is the refusal to acknowledge one’s own faults, limits, and responsibility for the bad things one is doing or contributing to. That is why humility is much rarer than many imagine, and narcissism is more common. Humility threatens the ego’s carefully constructed narrative, whereas narcissism reinforces it.

And that is why revelation begins with humility: only the humble can hear God clearly, because only the humble are willing to know themselves truthfully before Him.