The current lead story for the Daily Telegraph highlights the mixture of hauteur, obduracy and paternalism of an administration which has enacted policies designed to force up energy bills (for those dubious CAGW reasons) and is now trying to advise the public on the results:
David Cameron believes that millions of people facing rising energy bills should consider “wrapping up warm” and wearing jumpers, Downing Street has said.
The comments are likely to provoke anger from people struggling to cope with the rising cost of living.
The last sentence belongs in the “no shit, Sherlock” category.
Heating bills are as high as they are in large part because energy is produced not, by and large, under unfettered laissez faire capitalism – as it should be – but in rigged and heavily taxed conditions. The details are complex, but as far as the UK goes, it has been a Conservative/Labour/Liberal Democrat consensus that certain types of energy (carbon-based) should be heavily taxed. Taxes are costs and as the simplest businessman will know, such costs will either manifest themselves in higher prices, or lower output of services/products, or weaker returns on investment, or some combination of all three. There are, of course, other reasons for high energy bills, such geopolitics and our reliance on sources of oil, for example, from the Middle East.
We have an electricity industry that is now very close to not being able to cope with a harsh winter, according to various press reports. The government, unable or unwilling to be honest with itself about the issue, or face up to the mounting evidence about the dubious science on which anti-carbon ideas are based, is reduced to lecturing the public about wearing more clothes.
The former US president, Jimmy Carter, is remembered for some lamentable things in American life (although in fairness he did at least appoint Paul Volcker to the Fed and some industries got deregulated under Carter’s term). And one thing this man is remembered for is how he wore a woolly jumper in the White House to save on heating bills. He wasn’t doing that out of frugal fiscal policy, which might have been admirable, but because of the-then energy crisis to which his own policies contributed. (Price controls, etc).
David Cameron had better realise that a repeat of an energy crunch in the next year or so (blackouts, freezing weather, people dying of cold), will finish him off and his style of politics for some time to come. As for the rest of us, the demise of his brand of Toryism cannot come a moment too soon. A couple of years ago, when he and his finance minister were making nasty noises about the need to tax low-cost flights, I was reminded of that remark that the Duke of Wellington is said to have made about the-then new railways – he disliked trains as they encouraged the masses to move about. I cannot help but notice a certain parallel with how Cameron views the public – except that Wellington won a lot of battles.
Historian Niall Ferguson - who as shown here, has the guts to admit where he made a wrong prediction – has clearly had more than flesh and blood can stand from Paul Krugman:
So we public intellectuals should not brag too loudly when we get things right. Nor should we condemn too harshly the predictions of others that are subsequently falsified by events. The most that we can do in this unpredictable world is read as widely and deeply as we can, think seriously, and then exchange ideas in a humble and respectful manner. Nobody ever seems to have explained this to Paul Krugman. There is a reason that his hero John Maynard Keynes did not go around calling his great rival Friedrich Hayek a “mendacious idiot” or a “dope”.
For too long, Paul Krugman has exploited his authority as an award-winning economist and his power as a New York Times columnist to heap opprobrium on anyone who ventures to disagree with him. Along the way, he has acquired a claque of like-minded American bloggers who play a sinister game of tag with him, endorsing his attacks and adding vitriol of their own. (I would like to name and shame in this context Dean Baker, Josh Barro, Brad DeLong, Matthew O’Brien, Noah Smith, Matthew Yglesias and Justin Wolfers.)
Krugman and his acolytes evidently relish the viciousness of their attacks, priding themselves on the crassness of their language. But I should like to know what qualifies a figure like Matt O’Brien to call anyone a “disingenuous idiot”? What exactly are his credentials? 35,650 tweets? How does he essentially differ from the cranks who, before the Internet, had to vent their spleen by writing letters in green ink?
And there is this:
I am not an economist. I am an economic historian. The economist seeks to simplify the world into mathematical models – in Krugman’s case models erected upon the intellectual foundations laid by John Maynard Keynes. But to the historian, who is trained to study the world “as it actually is”, the economist’s model, with its smooth curves on two axes, looks like an oversimplification. The historian’s world is a complex system, full of non-linear relationships, feedback loops and tipping points. There is more chaos than simple causation. There is more uncertainty than calculable risk. For that reason, there is simply no way that anyone – even Paul Krugman – can consistently make accurate predictions about the future. There is, indeed, no such thing as the future, just plausible futures, to which we can only attach rough probabilities. This is a caveat I would like ideally to attach to all forward-looking conjectural statements that I make. It is the reason I do not expect always to be right. Indeed, I expect often to be wrong. Success is about having the judgment and luck to be right more often than you are wrong.
Ferguson goes to painstaking detail to list the various wrong predictions that Krugman has made, and then points out the absurdity of how the professor seems willing and able to claim that his predictions have been more or less correct and his opponents are morons.
The general conclusion to draw from all this is that just because a person gets a Nobel or whatnot for economics is no infallible guide to the usefulness of that person’s predictions, or policy prescriptions. Another is that civility and courtesy towards those who disagree with you is, in general, expected of those who want to use their academic credentials in support of a controversial point of view. Of course, people get heated. When debating about the life and work of, say, a Marxist historian who continued to sing the praises of the Soviet Union long after its crimes were manifest, for example, a bit of harshness is to be expected. Another justification for anger is where there are signs of plagiarism, say, or when a person uses bullying tactics to silence opponents or misrepresent them and try and wreck careers.
When debating those who are unconvinced of, say, Keynesian economics, the sort of bullying that Krugman engages in is ultimately self-destructive. It makes the person who is doing the bullying look, well, insecure. The problem is that Krugman no seems to know, or care, how bad his sort of behaviour is for his own legacy and impact. The contrast with the late Milton Friedman, for example, is instructive.
“When it comes to development programs, what we are really talking about is creating an environment within which gifted players have the best opportunity to flourish. When identifying these environments, the evidence consistently points to a committed, passionate coach teaching, guiding and mentoring a gifted player to a successful pro career. How, then, do we best ensure that such relationships are given the best opportunity to thrive in the future? First, it’s imperative to understand that tennis is a highly individualistic sport. Aside from a shared ability to win, the only thing that many of the great champions had in common was that they had virtually nothing in common. Nothing better illustrates this fact than the contrasting styles and personalities of some of the game’s great rivalries, like McEnroe and Borg, Evert and Navratilova, Sampras and Agassi, and Federer and Nadal. Incidentally, it’s a useful exercise to look at who the primary coaching influences were in the development of these players (John McEnroe – Tony Palafox and Harry Hopman, Chris Evert – her father, Martina Navratilova – Billie Jean King and I also understand that Tony Roche had an influence, Pete Sampras – Peter Fischer, Andre Agassi – his father and Nick Bollettieri, Roger Federer – Peter Carter, Rafael Nadal – Toni Nadal). Second, like players, coaches also have their own unique methods and personalities. The best ones are independent thinkers who wouldn’t survive for a second in a regimented environment, where they would be expected to ignore their own knowledge and conform to the dictates of a “one size fits all” approach. Can you imagine Wayne Bryan, Nick Bollettieri and Toni Nadal working within the confines of a stifling bureaucracy? With such a diverse range of players and coaches out there, it’s essential that players and their parents are free to determine for themselves who is the best coach. Any wider program or system must take this into account.”
Chris Lewis, who, by the way, is a big Ayn Rand fan. (Thanks to the SOLO Passion website for the pointer to the article).
Allison thinks the [bank risk] models are doomed from the get-go because they are based on fundamentally incorrect notions. “They always assume normal curves, and they try to manage things to a 99 percent probability. That means there’s only a 1 percent probability that certain bad things can happen. Well, there’s an interesting thing with a 1 percent probability: Give it long enough, and it becomes certain.”
- Former BB&T chief executive officer John Allison, quoted on page 84 of I Am John Galt, by Donald L Luskin and Andrew Greta. (The chapter on Paul Krugman is gruesome reading.)
I heard Allison speak in London about a year ago, and he’s very good.
The idea that we are living in a period that in retrospect we might call “The Crazy Years” gets an airing in this long, essay by John C. Wright. He takes the term from Robert A Heinlein’s “Future History” series of stories, written decades ago when the Grand Master of Science Fiction was not yet fully famous. (Thanks to Charles N Steele’s excellent blog for the pointer).
Steele, in his own ruminations on this, says:
Robert A. Heinlein explored a possible future history for homo sapiens. One of things he foresaw was a period at the end of the 20th Century and beginning of the 21st that he called “the Crazy Years,” in which cultural fragmentation and decay in advanced countries generates political and economic decline and social disruption. He was prescient in recognizing what happens when commonly accepted principles such as an individual’s responsibility for self are forgotten and political correctness and multiculturalism run amok. As advancing technology places increasing power in human hands, human ethics fail to keep pace. In Heinlein’s world, humans do manage to navigate these shoals without destroying themselves and eventually do settle on a MYOB sort of libertarian ethic…but only narrowly averting nuclear self-destruction and environmental self-destruction, and not without going through periods of dictatorship as well as societal chaos.
Steele then lays out a number of areas where signs of our descent into the Crazy Years might be evident:
Iranian or Al Qaeda religious fanatics obtaining nuclear weapons…
An American federal government — especially the executive branch — working to acquire unlimited power, and already apparently having the power to spy on essentially all communications, everywhere…
A growing segment of the population — some poor and some very rich (think Goldman Sachs) – who live as parasites on the productivity of others while creating nothing of values themselves…
An intelligentsia that cannot bring itself to condemn Islamism for fear of being seen as insensitive or racist or ethnocentric, but which regularly denounces, in the most hateful terms, anyone who opposes the continued expansion of state power…
An intelligentsia that praises socialism, hunter-gatherer economies, massive interventionism, anything but the one system that actually works, free market capitalism, a system they bitterly condemn…
A “press,” our mainstream media, that sees its job as promoting political positions and readily lies when lies serve this goal better than truth, and spouts nonsense the remainder of the time, apparently because reasoned analysis is too hard.
He then goes on to argue – and I hope he is right – that reasons for pessimism are perhaps overdone. For instance, who would have predicted that, after 1945, the continent of Europe (albeit apart from the Balkans in the early 90s) was free of any serious armed conflict of the sort that has routinely ravaged the region for centuries, and that the Cold War came to an end without the Soviets or NATO firing hardly a shot at one another on the continent?
I would add that in the confines of the UK, signs of craziness are evident, for example, from the political classes. Take the recent UK Labour Party conference. Labour leader Ed Milliband wants to impose a freeze on the prices that electricity companies charge their customers, while simultaneously demanding that they invest more in things such as renewable energy; his reversion to the idea of draconian price controls is pure demagoguery. Remember, dear Samizdata readers, that the Millibands of this world are quite popular with large chunks of the electorate. Labour is leading – just – the other main party – the Tories – in the opinion polls. This is what happens when, in such a crazy period as ours, that people are encouraged to think blatantly contradictory things: electricity firms must charge less but do more and invest more; banks must hold more capital in reserve but lend more; we must intervene in foreign lands but only with “surgical strikes” and nothing else; that everyone must be given access to health insurance but that the cost mustn’t rise; that we must ban opinions and notions because someone might be offended, and so on and so on.
Of course, thinking nonsense such as this is hardly new. Big business, for example, has been demonised as long as big business has existed, and political targeting of this has been almost the norm, rather than the exception. But what makes me want to think of this issue within the broader “crazy years” context is that I doubt that Milliband and his fellow socialists would be so confident of pushing these notions were it not for the rather batty political climate in which we now operate. Part of the cause for this may be a temporary reaction to the credit crunch, and the false narrative that quickly took root. But then the willingness of people to believe this narrative (which leaves out the role of central banks and government and blames it on “bankers”) is itself a sign that something is very wrong and cannot be quickly put right.
Robert Heinlein’s “future history” stories certainly do pay a re-visit. Come to that, so do pretty much all of his writings right now.
(Addendum: in case anyone brings this up, Steele could have mentioned any of the big banks as “parasites” in his list of examples. He chose Goldman Sachs, but he’s not picking on it specifically.)
I haven’t read anything by the Guardian columnist Sir Simon Jenkins for a while. He’s one of those infuriating grandees of the media who can be relied upon to say a mix of sensible things along with some jaw-dropping pieces of rubbish. Case in point in the rubbish department, regarding the mass murders by Islamists in a Kenya shopping mall (H/T, Douglas Murray in the Spectator) :
The modern urban obsession with celebrity buildings and high-profile events offers too many publicity-rich targets. A World Trade Centre, a Mumbai hotel, a Boston marathon, a Nairobi shopping mall are all enticing to extremists. Defending them is near impossible. Better at least not to create them. A shopping mall not only wipes out shopping streets, it makes a perfect terrorist fortress, near impossible to assault.
“Celebrity building”. Note the sneer. So what is Sir Simon’s suggestion: that Kenyans go back to living in all those cute little mud huts and not frequent markets where more than a handful of folk are in the vicinity, is that it? And that Westerners, or indeed anyone else, should stop going to large buildings, such as theatres, football stadiums, rock concerts, large rail stations, underground stations, skyscrapers….? We stop running marathons, or gathering for other peaceful reasons, lest nutters go on the rampage? Of course, people can choose to avoid such events and places as much as they want, but Sir Simon, a fan of planning legislation, no doubt would not draw the line at just letting people associate where they want.
It is not as if he is even consistent about this issue of density of people in certain places anyway. Jenkins and those of like minds often also decry suburbia, and wish we all went back to living in denser cities and used public transport (which tends to be more vulnerable to terrorist attacks). It is obscene in my view, as people were still dying as a result of the shootings in Kenya, that this fuckwit writes about “the modern obsession with celebrity buildings”, as if there was something almost shameful or foolish about erecting them and enjoying visits to them.
What this man is proposing is, to put it simply, a form of surrender. I remember when George Bush responded initially to 9/11 by urging people to continue shopping and enjoying life as a way to defeat the Islamists. He got criticised for this, but he was right. According to the logic of what Jenkins says, we should stop being Western, stop making big things, or glossy, flash buildings that people enjoy visiting, and revert to a smaller set of gathering places instead, at least for however long it takes before the death-cultists of Islam decide to turn their attentions elsewhere. Great. Let’s hide under our beds. (So long as the beds are not too large or ostentatious, of course.)
Of course, Jenkins is an opponent of large, modern buildings and has been banging the drum in opposition to such things as long as I can remember. But I did not think he would resort to this line of argument. What is this man going to say if a bomb is set off in one of his favourite classical pieces of architecture, I wonder?
(I have updated my item a bit to remove some clunky expressions. Insufficient coffee and anger do not make for great writing.)
Phrenologists were once considered scientists for disseminating the hogwash that a person’s character may be determined by the shape of his head. The fad passed, but in a top-down, Government-controlled economy, where the citizenry gave to the Government the opportunity to rule its actions upon an inchoate and subjective determination (fairness), our tax dollars might still be paying phrenologists. For a government will not and cannot admit mistakes. Its members thrive through taxation and by ever widening their spheres of influence, selling influence to the highest bidder. We are still paying oil and wheat subsidies, and it is mere luck that the phrenologists of that day did not have sufficiently skilled lobbyists to ensure their own eternal subvention. You might say it is absurd to claim to determine a person’s deserts on the basis of the shape of his head. It is equally absurd to make the claim on the basis of the color of his skin.
- The Secret Knowledge, by David Mamet, page 180.
Anyway, no drug, not even alcohol, causes the fundamental ills of society. If we’re looking for the source of our troubles, we shouldn’t test people for drugs, we should test them for stupidity, ignorance, greed and love of power.”
- P J O’Rourke.
There has been a 60 per cent increase in the amount of ocean covered with ice compared to this time last year, they equivalent of almost a million square miles. In a rebound from 2012′s record low an unbroken ice sheet more than half the size of Europe already stretches from the Canadian islands to Russia’s northern shores, days before the annual re-freeze is even set to begin.
From today’s Daily Telegraph. The article goes on to explain how we might now be in a cooling period for the Earth, rather than, as the CAGW alarminsts say, a warming one.
The changing predictions have led to the UN’s climate change’s body holding a crisis meeting, and the the IPCC is due to report on the situation in October. A pre-summit meeting will be held later this month.
I bet that meeting will be a barrel of laughs.
“I’d be seriously dubious about any “special relationship” with someone who habitually read all my emails, to be honest.”
- A quote I saw via Facebook.
Quite rightly, Ronald H Coase, the Nobel Prize winner in economics, who died a few days ago at the remarkable age of 102, is being remembered as an exceptional thinker in economics. He is probably best known for this analysis – which seems obvious to us now – about why firms exist in the first place.
The University of Chicago Law School, with which he was associated for many years, has this nice appreciation of him. And here is the final paragraph:
Coase said in 2012 that his main scholarly talent was to identify solutions that were in plain sight. “I’ve never done anything that wasn’t obvious, and I didn’t know why other people didn’t do it,” he said. “I’ve never thought the things I did were so extraordinary.”
As is now a familiar theme, many people oppose immigration into the UK because they fear the social and cultural effects (eg, from Muslim parts of the world) more than they do for the economic impact (supposed negative/positive effects on low-skilled wage rates, effects on productivity, and so on). In general, the classical liberal “open borders” approach states that the issue, in as much as it is an issue at all, is immigration+state welfare. The problem is the state welfare.
An argument that has got an airing today in the Daily Telegraph, via Jeremy Warner, is that immigration, of the “low-skilled” sort, hits productivity. The argument goes something like this: firms have less of an incentive to invest in improved methods of producing goods and services if they can hire cheap labour instead. This is a simple issue of factors of production (labour/capital) being substituted for one another depending on the relative costs of each. Now of course we want higher productivity in the medium to long run so that the whole pie expands; but that is not just a function of increasing output per hour by some restriction on the number of people in a workforce – there is also the increase in the division of labour that one can get with a larger number of people, at least potentially. And even if people are seeing wages for low-skilled labour hold steady rather than rise, it is better that people are in work rather than sitting idle. (Again, one has to consider the welfare impact here in shaping the incentives to take or not to take certain types of job.)
In any event, the supply of people able/willing to perform types of labour is not infinite (let’s not forget that a large number of people have also emigrated from the UK). History also does not seem to back up Warner’s fears: In the 19th Century, there was a population explosion in the industrialising West, for all sorts of reasons (lower infant mortality, better nutrition, health care, and so on), and yet by the turn of the century, real wages, when adjusted for inflation were higher than it was in 1800. (That is hardly a controversial statement. Data by the likes of Jeffrey Williamson and Peter Lindert, in “English Workers’ Living Standards During the Industrial Revolution: A New Look, The Economic History Review, 1978, clearly backs up this point.)
But what Warner seems to overlook is that if an influx of immigrants can be blamed for holding down productivity, cannot the same be said if, say, a significant number of British citizens move from one part of the country to another, as indeed happened in the early parts of the Industrial Revolution when people moved from farm-based jobs to factories and offices? Warner says he favours a sort of levy on employers who use “cheap labour”:
“No free market liberal would argue the case for preventing employers from hiring foreign labour but there are other forms of state intervention that might indeed be appropriate were it not for the fact that the European Union makes them unlawful – for instance, imposing levies on use of cheap foreign labour. By making low skill employment more expensive, the levy system would provide a powerful incentive for productivity gain in construction, retail, social care and other largely domestically bound industries. These levies could then be channelled back into tax incentives for training and other forms of business investment.”
Warner is damn right that no free market liberal would touch such regulation with a bargepole. The levy idea is also foolish, in my view, since how does Warner know how high/low to set it? What is the supposed ideal rate of productivity growth that he thinks should be the target, and in any event, should there be any target at all?
Ultimately, Warner’s analysis involves an unconscious assumption that there is a “UK plc” where we are all working towards a single, or fixed, set of ends, rather than an open society in which people transact and enter voluntary exchanges with others for things/services they wish to buy and sell. Of course, that leaves open other issues surrounding the proper role, if any, of a state, of welfare, of the need to protect borders against those who would enter this territory to do its inhabitants harm. But on the economic point of view, Warner’s argument makes no sense to me. He also ignores the rather basic fact that with a larger population entering an already advanced economy, that increases the potential division of labour, which increases overall productivity. If a person can now afford to hire a cleaner for his home, a child-minder to care for the children, or a gardener, or any other “low-skilled” job, that frees up that person to do something else, and possibly, increase the whole economic pie. And of course these “low-skilled” people can get more skills, develop a track record of reliability and diligence, and become more valuable and productive themselves than they would have been had they been forced to stay in presumably less favourable places where they moved from – since why did they move in the first place?
As a response to Warner’s kind of thinking, I can recommend this article from Daniel Kuehn.