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Another post about Scotland

Janet Daley, the expat US lady who has spent the past few decades writing about Britain, is none too keen on the idea of what is on offer from the Scottish National Party:

What Scotland would become is a kind of East Germany, sitting smack up against its prosperous English neighbour. There would be another flood of migrants heading South to escape the dead-end last redoubt of Old Labour, draining the Scottish economy of youthful talent and ambition. How long before they build a wall along the border?

Judging by the reaction of the City to the possibility of Scottish independence (falls in sterling, etc), people are getting worried. It should be noted, though, that for some time any Scot with a lot of ambition has tended to go abroad, given that the place is not a big country and smaller nations will often see their best and brightest, for a while anyway, head overseas for fame and fortune. My wife, who is from Malta, is an example (she hasn’t yet found a lot of fame and I am most annoyed she is not a billionaire yet).

Until this matter is resolved, and even for some  time if it is, no major business will be comfortable about investing north of the border. Consider what happens if you have heavy borrowing in sterling, or have issued sterling-denominated shares and there is a risk of a big change, such as eventual euro membership. And look at the sort of people in the SNP with their leftist politics. Not a happy prospect. There is a free market tradition in Scotland, but it is nowadays very hard to find it.

Thoughts about possible Scottish independence

I might as well add my two penny-worth on this issue (or whatever currency the Scots might end up using, Ed). Scottish independence is now a very real prospect, not just a distant one. There is a flurry of commentary in the media at the moment about how any divorce could be painful and bitter: rows about how to divide up responsibility for the National Debt; relocation of defence forces from Scotland; North Sea oil rights; EU and Nato membership (Scotland could arguably be kicked out of both and might not be able to reapply soon), etc. Boris Johnson, London’s mayor, has a bit of a weepie on the subject.

The classical liberal in me says that so long as Scottish people who want to be fully self-governining do so for broadly pro-freedom reasons, that is not at my expense and I wish the new, separate nation luck. I will, however, take a far less benign view if there is any nonsense from Edinburgh about how the evil South must pay it off, by shouldering all accumulated debts, or demanding continued financial disbursements from the rest of the UK, or controls over matters not in its purview any more. I feel no very great emotional attachment to Scotland these days (I am about one-fifth Scottish through my mother’s family), although I certainly do respect and admire the great contributions to human civilisation from Scotland, as demonstrated in this excellent book published a few years ago by Arthur Herman.

It is perhaps naive to think that an independent Scotland would take its cue from the pro-market traditions most gloriously established by the likes of Adam Smith and other figures in the Scottish Enlightenment. (The Adam Smith Institute has had smart things to say about an independent Scotland, by the way.)  There is no reason in principle why that cannot happen, of course, but looking at the sort of political figures who are prominent in Scotland these days, the picture is not encouraging. Perhaps the Scots, free of the ability to blame London for their ills and forced to rely on their own resources, might experience independence as a bracing learning experience and an understanding of the need to be pre-enterprise will take hold. As long as SNP leader Alex Salmond is around, the prospects don’t look good. He comes across as a bit of a thug and a bit too pleased with himself.

A final thought: if the Scots do break free (will that mean lots of visa queues at the border? Ed) it could galvanise separatist movements in other parts of the world, such as in EU member states such as Italy (Lombardy) and Spain (Catalonia). And even in the US, Scottish-influenced parts of the country will take a closer look. When countries break up, it raises possibilities. The Scottish independence vote is not just a private matter for these islands.

 

Samizdata quote of the day

“There are no facts, only interpretations”, Friedrich Nietzsche once said. One needn’t be a nihilist or a relativist to be bemused at the latest radical rewriting of history from our official number-crunchers. Everything we thought we knew about the British economy’s performance over the past 15 years or so now turns out to be wrong. Endless articles, books and academic papers have become worthless at the stroke of the statisticians’ pen.”

- Allister Heath.

Hey, I thought the science was settled!

On the continued disasters in the Middle East

“It is striking, however, that you have more than 170,000 people dead in Syria. You have the vacuum that has been created by the relentless assault by Assad on his own population, an assault that has bred these extremist groups, the most well-known of which, ISIS—or ISIL—is now literally expanding its territory inside Syria and inside Iraq. You have Russia massing battalions — Russia, that actually annexed and is occupying part of a UN member state—and I fear that it will do even more to prevent the incremental success of the Ukrainian government to take back its own territory, other than Crimea. More than 1,000 people have been killed in Ukraine on both sides, not counting the [Malaysia Airlines] plane, and yet we do see this enormous international reaction against Israel, and Israel’s right to defend itself, and the way Israel has to defend itself. This reaction is uncalled for and unfair. You can’t ever discount anti-Semitism, especially with what’s going on in Europe today. There are more demonstrations against Israel by an exponential amount than there are against Russia seizing part of Ukraine and shooting down a civilian airliner. So there’s something else at work here than what you see on TV… And what you see on TV is so effectively stage-managed by Hamas, and always has been. What you see is largely what Hamas invites and permits Western journalists to report on from Gaza. It’s the old PR problem that Israel has. Yes, there are substantive, deep levels of antagonism or anti-Semitism towards Israel, because it’s a powerful state, a really effective military. And Hamas paints itself as the defender of the rights of the Palestinians to have their own state. So the PR battle is one that is historically tilted against Israel. …”

These comments are from a very senior US politician with close connections to a recent occupant of the White House. There are pretty close to my own thinking on all this. Which, assuming the quotes are accurate, is quite perplexing. I do, however, wonder how sincere the author of these words is about all this. Can you guess who I am talking about?

Meet the culture war – in deep space

I continue to read science fiction quite a good deal these days – it seems to be a trait of libertarian-leaning folk – and I noticed that Eric Raymond has an essay up on why some people, such as those that tilt left, are trying to make life tough for those with a different perspective. In this era of self-publishing and all the possibilities created by tech (something SF fans don’t need reminding of) it is surely particularly silly for any group to try and boss others around.

In a nutshell, Raymond says that certain types of science fiction writers suffer from “literary status envy”.

Here is a good paragraph:

Almost the worst possible situation is the one we are in now, in which over the last couple of decades the editorial and critical establishment of SF has been (through a largely accidental process) infiltrated by people whose judgment has been partly or wholly rotted out by literary status envy. The field’s writers, too, are often diminished and distorted by literary status envy. Meanwhile, the revealed preferences of SF fans have barely changed. This is why a competent hack like David Weber can outsell every Nebula winner combined by huge margins year after year after year.

To those on the outside, this all may seem fairly petty stuff, and in a way, it is. It is, I suppose, a phenomenon of what gets called “the culture war”; it is also, perhaps, a sign of how there have always been attempts – sometimes successful – to create things such as literary “establishments”, with the attendant phenomenon of people pressing their noses against the window, as it were. T’was ever thus. In the end, so long as there are low barriers to entry into writing such fiction, and a free market in the production and distribution of said, then the kind of science fiction I want to read will exist.

The left and anti-semitism

It is not an accident that the three key planks of the Left-wing outlook today – the anti-Israel anti-war sentiment, the shallow anti-capitalism of Occupy, and the worship of those who leak info from within the citadels of power – should all have had issues with anti-Semitism. It is because the left, feeling isolated from the public and bereft of any serious means for understanding modern political and economic affairs, has bought into a super-simplistic, black-and-white, borderline David Icke view of the world as a place overrun and ruled by cabals and cults and sinister lobby groups. And who has always, without fail, been the final cabal, the last cult, to find themselves shouldering the ultimate blame for the warped, hidden workings of politics, the economy and foreign turmoil? You got it – the Jews.

- Brendan O’Neill.

That parts of the left has a penchant for anti-semitism, and other forms of mad conspiracy-mongering, is not a new observation. Take this link, for example, from Discoverthenetworks.org

Just get rid of the goddam corporate tax

You can think of corporate taxation as a sort of long chess match: The government makes a move. Corporations move in response — sometimes literally, to another country where the tax burden is less onerous. This upsets the government greatly, and the Barack Obama administration in particular. Treasury Secretary Jack Lew has written a letter to Congress, urging it to make it stop by passing rules that make it harder to execute these “inversions.” I’ve got a better idea: What if we made our tax system so attractive to corporations that they would have no interest in moving themselves abroad?

- Megan McArdle.

I have actually read the letter sent by Lew to Congress, and right rollicking laugh it is too. It talks about a new sort of “economic patriotism” (which prompts me to think of Samuel Johnson’s famous line of patriotism being the last refuge of the scoundrel). Lew does actually admit in his letter that it would be preferable to go for root and branch reform and reduction of corporation tax. The US has one of the highest corp. tax rates in the industrialised world – 40 per cent – while the average for OECD members is in the mid-20s, and in the case of some countries such as Ireland, in the low teens. As a result of this system, US corporations have, according to figures I recently heard from JP Morgan, north of $700 billion held outside the US. The likes of Apple, Google and Pfizer, among others. This system is crazy; it is a sort of corporate twin of the equally mad US system of worldwide tax in which anyone born in the US, even if they have never set foot in Jefferson’s Republic in adulthood, have to file an IRS return. The situation in that respect has got worse with the enactment of the FATCA Act, a truly terrible piece of legislation.

If the Republicans want to seriously act as a party that represents business and holders of equities – such as those with 401(k) plans, a big cut to corp tax makes sense. Firms will bring their money back home, either returning it to shareholders, or investing it in the US, etc. Sure, some vested interests that benefit from the current state of affairs will bleat, but screw them. (This is the sort of reform – practical, worthwhile and beneficial, that should be a basic proposal on the GOP table.)

Bastille Day – Discussion Point

Today is the anniversary of the fall of the Bastille. It is easy – way too easy, in fact – for a Brit to make some sort of snide comment about the bloody awfulness (literally) of the events of that time, the Revolution, the terrible example of, well, the Terror, and so on. But, but trying to rise above all that obvious “god those Frenchies made a right pig of their revolution” sort of line, I am going to ask readers the following: What were, in your view, the good things that flowed from the Revolution?

Go on.

 

Airport security kabuki theatre

Even if checking every passenger exhaustively was the right way to thwart terror, why would any serious government issue a press release about it, informing the terrorists that you were on their case and keeping them up to speed on the things you’re looking for? They didn’t do that with Bletchley Park and the Enigma codes. Leaving aside the possibility that our leaders are just plain dim, we must assume their statements are a clever decoy. In that case, everything that we must endure at Stansted and Heathrow is pure ‘security theatre’. This would not be unusual. Much of what passes for ‘security’ and its kissing cousin ‘safety’ is little more than an elaborate show.

- Michael Hanlon. He has a book out with a co-author about safety issues, which looks interesting.

George Reisman on Thomas Piketty

Economic progress tends to increase insofar as the savings result in a larger supply of capital goods, which serves to increase production, including the further production of capital goods. The rate of return on capital tends to fall because the larger expenditure for capital goods (and labor) shows up both as larger accumulations of capital and as an increase in the aggregate amount of costs of production in the economic system, which serves to reduce the aggregate amount of profit. Our problems today result largely from government policies that serve to hold down saving and the demand for capital goods. Among these policies are the corporate and progressive personal income taxes, the estate tax, chronic budget deficits, the social security system, and inflation of the money supply. To the extent that these policies can be reduced, the demand for and production and supply of capital goods will increase, thereby restoring economic progress, and the aggregate amount and average rate of profit will fall.   

- Reisman is dealing with Piketty and his assertion that because returns on capital can outpace economic growth in general, that this is some sort of bad thing, to be stopped, banned and generally supressed. Perry Metzger of this blog has already done a lot to demonstrate the economically insane nature of Piketty’s analysis.

In summation, if you want to increase incomes, then an essential step is to stop attacking capitalists (not to be confused with crony capitalists tapping the public sector for privileges, etc).

Reisman has another devastating take-down on Piketty and his ideas on capital, at the Ludwig Von Mises blog. (Thanks to Paul Marks, frequent Samizdata commenter, for the pointer.)

Samizdata quote of the day

Why then are tens of thousands of Latin Americans willingly flooding into a supposedly racist country where cutthroat capitalism ignores the poor and the oppressed such as themselves? In most past polls of Mexican citizens, two general themes often show up: the majority of Mexican nationals believe that the American Southwest still should belong to Mexico, and a sizable minority would like to leave Mexico for the U.S. You figure out the mentality.

- Victor Davis Hanson (H/T, Instapundit.)

Travelling to a country, then despising it, does not strike me as a way to win friends and influence people. I don’t know how widespread this issue is in the US – I’d be interested in comments from US-based readers about the situation on the southern border of the US.

Samizdata quote of the day

“So why is it, then, that when it seems obvious that to understand finance you need to understand human behaviour, Finance World continues to insist that finance is `all about numbers’ and can be fully understood using mathematics? Partly, perhaps, because so many of them are mathematicians to start with and they find it difficult to see things other than within a numerical framework. Partly, perhaps also, because many have Type-A personalities and they find it difficult to deal with uncertainty. Yet surely also because so many are reluctant to admit that they may have been wasting their time all these years basing their work on the Markowitz worldview, just as so many unrepentant socialists found it difficult to admit they had been used as Stalin’s `useful idiots’ when the Soviet Union’ collapsed.”

- Guy Fraser-Sampson, The Pillars of Finance: The Misalignment Theory and Investment Practice, page 187. The book is about how, under the influence of mathematics specialists such as Markowitz, a lot of investment decisions got dangerously out of whack with reality, as we saw in 2008. Despite some pushback, a lot of the investment industry on which our pensions and savings depend are in thrall to risk and market ideas that are seriously mistaken. Throw in the joys of central bank fiat money and the rest, you have a problem. I should add that Fraser-Sampson, who is a professional investment figure as well as academic, is a big fan of the Austrian school (von Mises, etc). Even better, Douglas Adams, the 30 Year’s War and The Goon Show make an appearance. What more can one ask for in a book about finance?