We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Obama transition team for space

It is a strange old world. About 2 weeks ago I was on a flight from Huntsville, Alabama, where I took part in the National Space Society board meeting, back to Washington, DC where I had some consulting work lined up. As I and two other board members walked to the luggage retrieval area, I commented that if someone had told me twenty years ago I would find three people from my address book on a Presidential Transition Team I would have thought them crazy.

One compatriot said, “You know what that means don’t you?”

“No”, was my puzzled answer.

“You’re now a genuine Washington Insider”, he replied.

I did know one of the Bush 2000 space transition team really well and a second shared many contacts with me. This time around is different. I find it very strange to find people I have known for decades and in two cases worked with for years, in actual position to define space policy for the next four to eight years.

The good news is, they are all good people who are both aware of New Space and who wish it to succeed. At least two of them have tried to work angles to get their own private sector trips into space. What I do not know is how much real influence they will have on globally important issues. I know for a fact all of them are aware of the disaster that is ‘ITAR’, a regime whose purported purpose was to prevent transfer of weapons related knowledge and hardware and whose actual, unintended consequence, has been the creation of competitive non-US space industries. Niches, whether biological or market, will be filled and all the State’s horses and all the State’s men working together can do nought but delay that inevitability.

With Hillary Clinton in State, there is a personal channel of communication available for this issue from within the transition team membership. I very much hope they use it.

Debt addiction

Andrew Sullivan, commenting on a remark about the enormous bailouts being put into place by Western governments, has this to say:

“The debt was so reckless and so immense that it now threatens to destroy the entire financial system. That’s what electing George W Bush twice has done for us. But then we are told that this threat requires us to do even more of the borrowing and spending before we can begin to get ourselves back in balance again. The unchallenged doctrine of the day is that: doing nothing would provoke a worse collapse than necessary and so we have to make our fiscal situation much worse now in order to make it much better later. Why am I not convinced?”

Well, Sullivan is obviously right that the way to solve our debt addiction is not to go on the equivalent of yet another binge in the hope of relieving the hangover. Although his glib remark that re-electing Bush twice has added to the debt addiction does rather ignore, for example, the role of the Democrats, for example, in opposing Bush’s attempts to constrain the US federal home mortgage agencies, Freddie Mac and Fannie Mae. He is right though to chide the Republicans for letting spendng soar, but then I fear that Sullivan has become such a victim of Bush Derangement Syndrome that even a good point now becomes distorted through his worship of Mr Obama. And if it is debt addiction Sullivan is worried about, I somehow do not expect the Community Organiser to be the one to decisively take us back to the days of small government.

Falcon 9 full up test of first stage

SpaceX tested the Falcon 9 a few days ago, November 22nd, on their giant test stand in McGregor Texas. I have reported previously as SpaceX increased the numbers of engines by a few at a time each test and am happy to report they have now succeeded in firing the nine Merlin engines in a sequence and for a period of time identical to that of a real mission.

Nine engines fired for 160 seconds; two were then shutdown and the remaining seven burned until the 178 second mark. The two engine shutdowns are done in the later stages of flight when much of the fuel mass has been burned off and the ‘G forces’ climb. This spare ‘oomph’ means a Falcon 9 can lose two engines and still reach the required orbit.

The stage developed 855,000 pounds of thrust at sea level. This will increase to about 1 million in vacuum. The Falcon 9 is not a little rocket.

A first flight attempt is expected from their Cape Canaveral pad during the first half of the coming year. I am not betting on a successful first flight, although it is a possibility. While the Merlin is now a fairly well understood engine, there are complex dynamic interactions between engines when you fly with more than one. I am sure Elon’s team has modeled and tested to the best of their ability, but simulations and ground tests are still ‘theory’ relative to real live flight.

I have no doubts whatever that the SpaceX team will have Falcon 9 flying for hire within the next two years.

You can watch the test here

Delicious

I don’t often praise The Times. It is too often busy pleasing the administration of the day, in order to maintain regulatory tolerance for its proprietor’s market dominance. But this is wicked, in both senses.

Commentary on Chancellor Darling’s performance yesterday includes a nonsensical Labour-loyal diatribe from Roy Hattersley… which is beautifully undercut by this by-line:

Roy Hattersley was Secretary of State for Prices and Consumer Protection, 1976-79

Samizdata quote of the day

I love to go to Washington – if only to be near my money.

- Bob Hope

So which country should Brits now be emigrating to?

A few months back – I don’t recall exactly when – I voiced my irritation here at the notion, regularly voiced by members of our commentariat until I said to put a sock in it, of leaving Britain to go and live somewhere else, usually the USA. I now officially withdraw this irritation. The sooner large numbers of Brits start voting with their feet, the sooner some kind of sanity may be restored to our public finances. Voice isn’t working very well just now, but there still remains exit, and the sound of people exiting is actually one of the loudest political voices there is.

Remember which way the Berlin Wall pointed? Idiot Western apologists for Bolshevism talked their way around everything else about the Evil Empire, but that they couldn’t explain. Remember when the success of Hong Kong as an alleviator of dirt-poor poverty and as a facilitator of the wildest of wild dreams was likewise denounced by the same idiots as a cruel and exploitative fantasy? Again, the statistics of who was then swimming, through what and in which direction, were the most telling of the lot, long before the economic numbers coming out of Hong Kong began to prove all those daredevil swimmers so magnificently right.

And here, now, nothing would concentrate the minds of our political class on doing the right things rather than stupid things like a mass stampede for the exit. If you are thinking now of leaving, do it. This would not only be selfishly sensible; it would be downright patriotic, just like regular voting for something sensible, only more so. In the event that any of our masters actually want to rescue our country from its present mess, nothing would be more useful to such persons than the pitter patter of adult feet, leaving for less insanely governed places. I still have hopes that Mr Cameron is now taking deep breaths and preparing himself to lunge for just this sort of glory. Call it the audacity of hope.

So, as the Americans say: way to go! But: where to go? Which countries are now the best bet for that alternative lifestyle, where you get to work, pay only moderate levels of tax, and are able rationally to hope that your grandchildren might do better than you instead of worse? The USA? Not now the obvious choice it might once have been, and in any case, how – legally – do you get in?

My suggestion is: Ireland. As the great Guido explained yesterday:

Ireland, which is taking the austerity route out of the crisis, slashing government spending, is attracting an entirely private sector solution to recapitalising banks. Property prices are becoming reasonable, tax rates are lower and big British run businesses are relocating to Ireland.

Ireland will probably be out of recession long before an economy crippled by Brown starts to recover – whomever wins the next election.

Apart from that peculiar “whomever”, that strikes me as likely to be very right, and a very good bet for a good place to go to. And as Guido makes clear, the pitter-pattering has already begun. And, look, Guido now has an update to that posting:

UPDATE: Ireland’s new finance bill is changing the law to entice non-doms to move from London to Ireland,

And I bet it’s not just non-doms. I bet that us doms are already joining in.

Pitter patter.

Tax and ethics

Amid all the words that will be written about the UK government’s Pre-Budget Report statement yesterday, many will no doubt focus on the utility, or otherwise, of proposed measures such as creating a new, higher 45 per cent tax band on people earning £150,000 or more. Maybe even some supply-siders will point to the destructive effects, the counter-productive consequences, and the likely exodus of entrepreneurs and wealthy citizens, if the tax hike becomes law – after the next election. And they will be right to do so, of course. Throw in the impact of cuts to tax allowances and rises in national insurance payments – a tax by any other name – and the real upper rate of tax is heading towards 50 per cent. I hope all those middle England Jeremy’s and Fionas who voted for that nice Mr Blair and who turfed out the Tories are feeling suitably chastened.

But the core of the problem with resisting such egalitarian acts of robbery is that pointing out the bad economic effects of such measures is not enough. Large swathes of the UK public do not care, or assume that they will never be very rich anyway, so why should they be worried? The current government and public sector, with state, inflation-proofed salaries, could not give a damn either. What is lacking from almost all political and media analysis of the increased steepness of the progressive tax code is a moral element.

Progressivism is a looter’s charter. There is no coherent, objective principle by which one can say that a person earning XXX should contribute say, 40 per cent of their income to the State while another person, on a higher figure, should pay 50, or 60, or even 80 per cent. It is about as scientific as plucking figures at random from a telephone directory. This is not just unwise, it is wicked.

The only reason I can think of for progressive tax is to offset the potential regressive impact of taxes on consumption such as VAT, sales taxes and the like. However, in practice the people who might benefit from any offset are not the same as those who get hit by a consumption tax in the first place. Far better, in fact, to cut through the web of complexity and introduce a flat-tax where the whole population, apart from the poor, pay the same percentage of their income, preferably at a much lower rate. Of course, the ultimate objective is not just flatter taxes, but lower, or no taxes, at all. But although this appears so much dreaming at the moment, anyone who wants to make the moral and philosophical case for lower taxes and against egalitarian thieving must do so in such moral terms and not expect that economic arguments will win the day. What Alistair Darling proposed yesterday was to clobber people for no other reasons than they happen to be well off and he knew quite well that his tax increase will garner relatively little revenue. But he does not give a brass farthing. This government is now acting out of spite.

I finish with this quote, taken from here: “The moment you abandon the cardinal principle of exacting from all individuals the same proportion of their income or of their property, you are at sea without rudder or com pass, and there is no amount of injustice and folly you may not commit.”

Priorities

I see the UK Chancellor, Alistair Darling, is making the point in the House of Commons that the financial crisis will not deflect the government from bringing about a low-carbon economy, despite the fact that such a change, by definition, will be costly. I am watching his statement in the House right now. He has also referred to the current economic climate as if it were an outbreak of a virus or a meteorite impact from outer space.

There is a risk that these people are sincere about all this. That, in fact, is the danger: not that such folk are liars and charlatans, but that they actually mean it.

Keeping the Keynes myth alive

The biographer of JM Keynes, Robert Skidelsky, writing in the Independent newspaper over the weekend, ponders what his economics hero might have done in the current environment. Not surprisingly, perhaps, Skidelsky argues that the economist would have advocated stimulating aggregate demand in some way, either through tax cuts, interest rate reductions or a combination of the two.

In the course of the article, he has a swipe at the “Austrian” school of free market economists who argued that Keynesian economics was – and is – quackery:

“However, his clinching argument in his 1930s debates with free market economists such as Friedrich Hayek was political. It was much too risky to allow economies to slide into deep depression. The example of Hitler was vivid in the minds of all democratic politicians. In 1928, at the height of Weimar Germany’s prosperity, the Nazis got 2 per cent of the vote. By 1930 they were up to 18 per cent. In 1933 Hitler was in power.”

The trouble with this argument is that when supposedly Keynesian stimulii were applied to economies in say, 1930s America, they did not work. Fact. As I pointed out here with reference to US official statistics, unemployment never fell much below the average levels for that decade until the outbreak of the Second World War. Paul Marks has also pointed out how FDR’s achievements were largely mythical, if not in fact the opposite. This woman has argued in a recent book that FDR’s policies made the situation worse. In the UK, the supposedly more fuddy-duddy governments of Baldwin and Chamberlain arguably presided over a less serious outcome by not adopting such “New Deal” policies. Meanwhile, in Japan during the 1990s and part of the ‘Noughties, a number of stimulus packages failed to revive the world’s second largest economy.

Now Mr Skidelsky presumably must be familiar with these statistics, and yet he argues that the reflationary policies of his hero, even though they have not been borne out by historical evidence, were somehow capitalism’s best defence against political fanaticism. He may be making the case that governments have to be seen to be “doing something”, even if it does not work much, to avoid the charge of callous neglect. But if policies don’t work, how is this supposed to calm political agitation? The German example is instructive: I would at the very least have thought that the destruction of the German middle class via the hyper-inflation of the 1920s was a major part of why Germany was so easily tipped over into extremism when economic problems hit home. And that reflation was caused by government, not the private sector. I also think that Skidelsky underestimates the extent to which people do, at a gut level, understand that the governments in power in the West bear some, if not all, responsibility for the present mess.

Meanwhile, I see the UK Labour government is going to take Britain down the wrong side of the Laffer curve by making tax hikes on “the rich” – including entrepreneurs and other wealth creators – a campaign pledge. And this despite evidence, which the government must surely realise, that higher marginal tax rates are destructive of revenues. Update: Fraser Nelson has a splendid, bullet-point take-down of Gordon Brown’s bare-faced lies on the economy and his supposed role in leading us to sunnier climes. It cannot be said too often what a complete shit the UK premier is.

Samizdata quote of the day

“There is no art which one government sooner learns of another, than that of draining money from the pockets of the people.”

- The Wisdom of Adam Smith, page 194.

So what did US conservatives expect?

A conservative friend of mine in the USA sent me a link to an article in Weekly Standard called The Sector Formerly Known as Private: how Obama intends to use corporations to effect social change… and I must say that it somewhat surprised me. The following is largely based on the letter I sent him in return.

We’re beginning to get a sense of what the next four years will look like. It won’t be a conservative era, that’s for sure. Nor will it, despite appearances to the contrary, be a reprise of the Clinton era. Bill Clinton’s version of economic liberalism meant slightly higher tax rates on income and capital, a slightly more burdensome regulatory apparatus, lower deficits, and a commitment to free trade. The public sector didn’t meddle too much in the private sector. It was content, for the most part, to sit back and enjoy the tax revenue that the tech boom poured in. Obama’s liberalism will be different.

Let us gloss over the absurd American use of the word ‘liberal’ when they actually mean ‘illiberal’, but my response to “We’re beginning to get a sense of what the next four years will look like” was… we? Was article author Matthew Continetti not listening to Obama during the campaign? Has he not examined the copious record of the vile man’s public statements ever since he entered politics? Nothing Obama is going to do should be unexpected. For Obama to do anything unexpected he would have to slash public spending and roll back regulation.

Is it really only now dawning on some people that Obama ain’t Bill Clinton? But guess what, do you actually think McCain would have shrunk the state and lowered the regulatory interference that not so much led to but actually mandated the sub-prime melt down? McCain is the one who is Bill Clinton, just with zipped flies and less charisma.

Let the whole stinking system of patronage politics burn I say because nothing is going to change for the better until the piles of garbage and rats in the streets reality rubs people’s faces in the true cost of voting in a political class who thinks wealth is something that is created by political actions rather than markets. Hell, it does not matter what I think, just look at the numbers as the economy slows, then contracts, and at the same time state expenditure actually increases. Do you really have to be an Austrian School economist to see the implications of that?

Never was there a better time for openly authoritarian regulatory statists to be in power, right when the global economy is on the edge of an abyss. There will be no economic growth to mask the expansion of the state this time. Personally I am looking up at them standing on the edge and chanting “Jump! Jump! Jump!”

Just at the point where the state’s tax take will nose dive because of the economic slow-down, the USA has elected someone who is going to massively increase ‘public’ expenditure. The money will come from where exactly? Tax the middle class? That kills consumption and the economy tanks even more. Print more money? That fuels inflation and the economy tanks even more. Screw it out of productive sectors of the economy? That makes marginally productive businesses go bust and makes them all cut their labour forces and increases unemployment… and the economy tanks even more. My guess is that by the time he is done Obama will do all of the above. It does not matter that the media will love The One all the way down to the crater, the pain will be spread around so widely no amount of propaganda will be able to shift the blame. If the so called ‘right’ cannot turn that into political success a few years from now then they are worthless fools.

A lot of people are going to get hurt and that is just too damn bad. Has the GOP actually run a free-market candidate for president since Barry Goldwater? Well Reagan was at least half way there, but only half way, but I give him a free pass because busting the Soviets actually was worth the money he spent. The GOP is as much to blame as the Democrats for where the USA is now, so a plague on both their houses. The situation now is exactly where ‘pragmatic’ and ‘realistic’ voting gets you. Why anyone who wanted a smaller state would have turned out and voted for McCain was beyond me… and of course many did not, they stayed home in droves and quite right too.

Guys, you have been voting for the lesser evil for so long you may have lost sight of the fact that you have been voting for evil, just a tiny bit less than the other guy. Well no more easy options, no more putting the day of reckoning off for some point in the future… the day of reckoning has arrived and I for one am delighted. Do your worst Obama… to quote Lenin’s inspiration Nikolai Chernyshevsky, “the worse, the better”. Do not think of it as a disaster but rather an opportunity to actually create an opposition worth voting for. Never has there been a better time to destroy the political careers of really large numbers of Big State Republicans.

That is what I think. Have a nice day.

War and state expansion

Glenn Reynolds has an interesting article at Forbes about the connection between wars and the expansion in state power. He argues – quite convincingly I think – that while war may once have been one of the primary causes of increases in state power, that increasingly, it is demand for other public goods and initiatives that drives state power. For example, I reckon that the environmentalist argument is likely to prove a significant justification for such increases in spending, tax and regulation, as will, alas, the current financial crisis.

The “war is the health of the state” argument is often one that some libertarians use to oppose any wars, even if such wars might have some legal/moral justification, on the grounds that wars inevitably create costs that outweigh the supposed benefits of toppling some nasty regime, etc. An example of this view comes from Robert Higgs, whom I recommend. But the WIHOS argument is not a fixed law, rather a general tendency with some clear exceptions. At the end of the Napoleonic Wars, for example, the UK public sector, such as it was, was retrenched and the income tax was abolished for more than two decades. The end of the Cold War saw significant cuts in military spending. Perhaps what is not so easily retrenched, however, are state controls and regulations over behaviour. Consider World War One. Before 1914, UK subjects did not need a passport; there was no Official Secrets Act and the role of the state, relative to that of our own time, was small. Now it is much larger.

WIHOS is not an iron law, but rather a sensible rule of thumb. Alas, there are plenty of other factors besides war that drive expansion of public spending and controls.