A Moment to Celebrate Ourselves

It was National Freelancer’s Day yesterday, although not very surprisingly I missed it. Indeed, I suspect that all the freelancers out there missed it: partly because they are always very, very busy with other stuff; and partly because, by definition, we all work by ourselves, so we aren’t around other freelancers, who might remind us to celebrate.

Still, the Telegraph had an interesting survey to mark the occasion. It found that freelancers were on the whole happier than people who had jobs. Not very surprising, really. If you consider that most jobs consist of some idiot shouting at you all morning, then getting a terrible, over-priced sandwich that tastes like mouldy cardboard, with some bloke you’re only friends with because he happens to sit next to you, and then spending the afternoon in a crushingly dull meeting, it is surprising that us freelancers aren’t even further in the lead.

Its ten years now since I had a job in an office, so I’ve spent a decade now sitting around at home writing stuff. It takes a lot of discipline, of course. You have to get up in the morning and crack on with your work. You need to set yourself targets and deadlines.

And it has it ups and downs. But when you hit a down it is worth remembering that you are a lot happier than you would be in an officer.

In fact next year I might even celebrate National Freelancers Day – possibly with a plate of foie gras and a glass of Bordeaux at my desk.

Advice To Budding Thriller Writers.

I’m still really enjoying the round-table discussions hosted over at the International Thriller Writers website. This week, they are discussing the one piece of advice you would give budding thriller writers.

So what would my advice be?

First, learn about structure. Thrillers are very mechanical. They need great engineering. They are a bit like cars in that respect. They can look beautiful, but if they don’t work properly, then what’s the point (unless it’s a Jag, of course, in which case we’ll overlook the fact it doesn’t work).

So the most important thing you need to do is learn about structure and pace and plot. For my money, the best way to do that is to take an early Frederick Forsyth novel, and go through it again and again until you have learned absolutely what he is doing. Then do it for yourself. It’s a bit like taking a BMW apart, then re-assembling. If you do that enough times, you will figure out how to make a car. Same with a thriller.

Next, get with the times. Thrillers are stories of events. They reflect the world around them. So don’t write an old-fashioned Cold War spy thriller. Think about private military corporations (my subject). Or financial conspiracies. Or Iran. Or piracy. But make it something now and fresh we haven’t read about before.

Okay, that’s two pieces of advice – but both valuable.

The Tech Bubble....

In my Money Week column this week, I've been looking at the bubble in tech stocks. Here's a taster.

Right now, everyone in the markets is worrying about bubbles. It might be commodity prices, it might be bonds, it could be gold, or it could be the emerging markets. They are all up strongly in the past year. They all look as if they might have over-reached themselves.
But one distinguishing characteristic of a bubble is that no one really notices it. If everyone is complaining about the price of a particular type of asset, it is probably in perfectly good shape. It is the bubbles you haven’t seen that are likely to catch you out.
What are they? In a replay of 1998 and 1999, it might well be technology. Amazon is trading on a price earnings ratio of almost 70. Apple is now the third biggest company in the world. Google just keeps going up in price. And Facebook, if it ever comes to the market will be valued at billions.
And yet despite the explosive growth of the internet economy, all the old problems remain. Business models are flimsy, the barriers to entry are wafer-thin, and the technology moves so fast, it is hard for investors to make any money.
When the post-credit crunch bull market comes to a screeching halt, as it inevitably will at some point, it well be a technology crash that bring it down.
No one would deny that internet is now a huge business. That was underlined by a report by the Boston Consulting Group published last month. It found that in the UK alone, the online economy was now worth £100 billion a year, and accounted for 7.2% of GDP. If it was a separate economic sector, it would be bigger than construction, transport or the utilities.
Britain is not particularly advanced in its take-up of technology. What is true in this country will be true in every other advanced economy as well. This is a huge and growing chunk of the global economy.
It is absolutely right, therefore, that the companies that dominate the space should be sought after by investors. Anyone looking for long-term growth is going to want to own a slice of the leaders of the technology boom. Otherwise they risk getting left behind.
But hold on. Just because a company has good long-term growth prospects does not mean it is worth absolutely anything.
Take Amazon, for example. It was one of the pioneers of online retailing, and remains the best brand in that industry. I’d be surprised if there was a single reader of this magazine who wasn’t also an Amazon customer. Its latest figures were terrific: sales were ahead by 16% and profits were ahead by 39%. No doubt it will have a great Christmas. Even so, its share price has gone crazy. They have jumped from $25 a share in 2005 to $170 now. It is trading on multiple of 69 historic earnings, and 49 times the forecast earnings for next year.
Or take Apple. Sure, the iPhone is a big hit, and the iPad has been making a lot of noise. In the last five years it has got just about everything right, and there is probably no other business around that has so many devoted customers. Even so, there must be a limit to what it is worth. The shares are up by more than 50% this year alone. With a market cap of $290 billion, it is the second most valuable American business. It is the third most valuable company in the world, after Exxon Mobil and PetroChina. This, remember, is a company which, while it dominates the market for MP3 players, currently has just 4.1% of the mobile phone market, and slightly over 5% of the global market for personal computers. Those are hardly dominant market positions – but you would hardly guess that from its share price.
Much the same could be said of Google, or Facebook, or many smaller technology companies. They are good businesses, in a fast-growing sector of the economy. But they are also hitting crazy prices.
The trouble is, all the old problems with technology and internet companies remain.
For starters, there are still far too few barriers to entry. The days when a few bright Harvard students could start a website that would blow apart the industry, in the way that Mark Zuckerberg did when he started Facebook in 2004, may be over. Then again, they may not be. This is still an industry in its infancy. It is very easy for a few bright people to turn the web upside down with very little money to play with. That is great for them, and it is what makes high-tech so exciting. But is it very worrying for shareholders in the established companies. It is just too easy for a young entrepreneur to come along and blow you away.
Next, there are still relatively few sustainable business models. The online retailers make money, but often only by squeezing their suppliers to the bone. The internet is the most ruthless price comparison device ever invented, and one consequence of that is that margins will always be wafer thin. Businesses like Google may have a great advertising franchise right now – but there is no limit to ad space on the web in the way there is in the physical world. In truth, all online business models remain very flimsy.
Lastly, the technology moves so fast it is very hard for shareholders to make money. The founders and the venture capitalists who back them usually do pretty well. But by the time a company gets to the quoted market, its best days may already be behind it. It may never get to the stage of paying out steady dividends. Even Microsoft only paid its first dividend in 2003. Neither Google or Amazon have ever paid a dividend, nor are they planning to do so. By the time they do, they will probably look as far past their sell-by date as Microsoft does.
In reality, the tech rally looks overdone. It is bound to come shuddering down to earth again some time soon. And when it happens, it may well prove a trigger for a wider market correction.

Why we shouldn't bail-out the banks....

In the Spectator this week, I've been looking at Iceland. The lesson of its experience, I think, is that we probably never needed to bail-out the banks. The piece is here.

Why I Write Thrillers...

The International Thriller Writers website has started a series of online round-table discussions about thriller writing – sort of like a conference panel, bit without all the travelling.
I’ll be taking part in a couple of the upcoming discussions. But I think the first in the series looks really good: ‘Why Do You Read/Write Thrillers’.
It’s a fascinating issue for any writer. I mean, obviously I love thrillers. But I don’t only love thrillers. There are loads of different kinds of books I really enjoy, and I would be just as happy to write.
In the discussion, I think Todd Ritter gives the best answer when he says: “Reading a thriller that makes my pulse race takes me briefly into a world of danger and fear and excitement that I won’t experience in real life. It’s an escape and, well, a thrill”.
Still, that is more of an answer to the question of why you read thrillers rather than why you write them.
For me, I think the answer is that the thriller is such a great canvass. They are widescreen stories. They have action, characters, jokes and drama, but they can also take in politics, economics, war, technology, and international relations. They are very outwards looking books, which weave stories out of current events, but which also, at their best, are timeless. Other genres tend to be much smaller scale, rooted in one place or time.
But I guess every thriller writer will have a different answer to the question.

Writing ....Fast or Slow

In case you hadn’t noticed, this is National Novel Writing Month. An American initiative, it aims to get people writing a whole novel during November. It doesn’t make much difference in my house, of course. Just about every month is novel writing month for me. But the Independent has an interesting take on it, listing some of the great books that have been written in a few weeks. I’m not sure why they included Sebastian Faulk’s James Bond pastiche ‘Devil May Cry’, because it is a laughably poor book. But it has to be admitted there are some great books there. ‘On The Road’ for example took only three weeks. So did ‘A Study in Scarlet’, and ‘A Christmas Carol’. Even Dostoyevsky managed to knock out ‘The Gambler’ in only 26 days – although he doesn’t strike you as a fast sort of a writer, in the way that Dickens does.

So is it better for writers to rattle out a book fairly quickly? I certainly think there is something to be said for it, particularly when you are writing thrillers. They are by definition pacey books. A sense of speed is one of the things that readers like about them. Like roller-coasters, they need to be designed to go very fast, and have lots of twists and turns. It is easier to create that kind of breathlessness when you are working at high speed yourself.

That said, you don’t want that to turn into sloppiness. The other key element of a thriller is structure. And that takes time to build. There is nothing worse than reading a book that is all over the place, because the writer hasn’t taken enough time to construct the plot, or do the research.

My own solution is to spend ages on the outline – the structure – but then to write pretty quickly. But I’m sure every writer has their own approach.

How To Fix The British Economy...

In my Money Week column this week, I've been looking at how to get the British economy growing again. Here's a taster....

After the cuts, the growth story. Addressing the Confederation of British Industry in Birmingham at the start of the week the Prime Minister David Cameron tried to sound a more optimistic note on the economy. It wasn’t just going to be about slashing benefits, closing down theatres and arts centres, and making everyone work until they are ninety-five. The economy would soon be expanding again.
That is surely right. The U.K. can’t simply cut its way out of a budget deficit of 11% of GDP, the highest in out peace-time history. It needs to start growing again, and at a faster rate than it did in the last decade.
Unless tax revenues rise, and jobs are created to replace those lost in the public sector, the books are never going to be balanced again. Rising unemployment and collapsing firms will mean that tax revenues keep on going down. Very quickly you get into a vicious circle of cutting spending, leading to lower tax receipts, which means even more cuts. Only growth is the way to break out of that.
But how? In fact, there are plenty of good places to start. Cut corporation tax to encourage investment: reform welfare aggressively to increase the labour force: deregulate those industries that are still too protected: and create tax-free zones in those areas of the country where the state has crowded out the private sector.
There is no reason why the economy shouldn’t expand at the same time as the budget deficit is bought under control. Despite the simplistic Keynesianism that seems to have gripped much of the media, it is perfectly possible for economies to expand at the same time that the government is reducing its spending. There are two reasons for that. The government doesn’t create any money itself, it merely takes it from other people, either by taxing them, or by borrowing it from them. So its spending decreases demand as much as it increases it. Next, as government gets smaller, there are more resources for the private sector to exploit. As a general rule, the smaller the state is, the faster an economy can grow,
Indeed, the last time the UK embarked on significant spending cuts – under John Major’s government in the early to mid-1990s – the UK grew at an impressive rate, and plenty of new jobs were created. Two million jobs were created under the Major government of 1992-1997, which more than made up for the 700,000 jobs that were cut out of the public sector. Under Mrs Thatcher’s Tory government of the 1980s, the experience was similar: after the peak of the recession or the early 1980s, 2.97 million new jobs were created by 1990, which more than made up for the two million lost in manufacturing. There is no reason to suppose the UK can’t repeat that experience in the coming decade.
But it isn’t going to happen by magic.
You can expect to hear a lot of waffle from the government about boosting infrastructure spending, encouraging more lending to small business, promoting investment in green technologies, and cracking down on short-termism in the City. Most of it is nonsense. The Government has no idea which ‘green technologies’ will work in the future, and whether this country has any real competitive advantage in any of them. People have been fretting about the short-termism of the financial markets since Victorian times without ever finding a realistic way of doing anything about it. Nor does the government have any idea whether the banks should be lending more to small businesses, and if so, which ones.
In fact, the steps the government should take to get growth going again are far simpler. Here are four good places to start.
One, cut corporation tax. In Ireland, a 12.5% corporate tax rate made the country a magnet for investment from all around the world. It could do the same for the UK. Over the coming few years, dozens of ambitious new companies are going to be emerging out of the fast-growing economies of Brazil, China, India and Russia. Just as the Japanese did a generation ago, they will be looking for a base to expand into Europe. Britain should be the natural destination for them, as it was for the Japanese. But it won’t happen unless there is plenty of incentive for them to come here – and a low tax rates trumps just about everything else.
Two, reform welfare aggressively. The huge numbers of Polish immigrants who came to this country and found work in the last decade tells us the UK can easily create jobs for people that want them. There is no easier way of boosting growth than increasing the employment rate; GDP, remember, is just output per worker, multiplied by the numbers of workers. If you can move some of the roughly five million people now living in benefits into jobs, you not only save on their welfare cheques, you also boost the economy. That is what reforming welfare can achieve.
Three, deregulate protected parts of the economy. The Thatcher government of the 1980s freed up the economy to generate growth – mostly notably through privatisations.. This government should do the same. The most obvious candidate is land and building. It's virtually impossible to build anything, particularly in the South-East, which is one reason we have, for example, a relatively small tourist industry Make it easier to get permission for new buildings, and the jobs will follow.
Finally, create tax-free zones. Big parts of the UK - Wales, the North-East,
Northern Ireland - have reached Soviet levels of state dependency. The public
sector has crowded out any kind of private economy. Nothing can grow when the
state accounts for 60% or more of GDP. But just slashing state spending won't
work by itself. Instead, create virtually tax-free zones to encourage the
private sector to move into those areas as spending is cut.
Growth is not about picking winners, or choosing which sectors of the economy to promote. No one really has any idea, and least of all the government. But if it frees up space for entrepreneurs, the economy will respond – it has in the past, and it will do so again.