In a Reuters article titled British EU exit debate scaring off investment – Hermes funds I hit a line that made me go: say what?
Political rhetoric raising the possibility that Britain may leave the European Union could already be deterring foreign investment and harming London’s financial services industry, a top UK investor said (…) Another effect could be to weaken the allure of the City of London as a base for international financial systems with rival banking and investment hubs New York, Singapore and Zurich likely to benefit.
I was particularly struck by “and Zurich”. So Zurich, also in Europe but not in the EU, will benefit if London is not in the EU? Really?
I love the idea that prosperity can be decreed by a G20 communiqué. World leaders in Brisbane have airily committed themselves to two per cent growth. (Why only two per cent? Why not 20 per cent? Or 200 per cent? Who knew it was so easy?) Meanwhile, in the real world, the divergence between Continental Europe and the rest of the planet accelerates.
– Daniel Hannan
It impresses me in a grim sort of way how people who like to think of themselves as free market can justify some pretty big infringements of freedom of contract. Here is an argument I came across the other day (I won’t mention the author, as it was in private conversation): Minimum wage laws where the minimum is set at a high level are economically sensible because people earn enough to live on which means they don’t have to claim welfare and hence this keeps taxes down.
Feel free to debunk.
Now, tax evaders aren’t necessarily a commendable category of people: surely there are a lot of criminals among them (if I don’t obey the law when it prohibits killing people, am I really expected to comply with its fiscal provisions?). But I find rather convincing the idea that all those activities that run the gamut between fiscal arbitrage and outright tax evasion have had somehow the effect of lowering overall fiscal burden. The mere possibility of an ever greater erosion of their tax basis may have slightly slowed down that incredible increase in taxation which we have experienced almost everywhere in the West.
From the Econlog blog.
I have written a fair bit on this site and elsewhere (I work in the financial/media world) about this subject, and there is no doubt in my mind that the idea that tax competition is harmful is almost always held by politicians and collectivist-minded commentators who want to create a sort of global tax cartel. Cartels are, we learn in our textbooks, harmful although they tend to fracture with time. (The OPEC cartel had a problem in the 80s and 90 sustaining high oil prices, which at one stage went below $10 a barrel). However futile the attempt, do not underestimate the harm that is being done in the process of trying to shut down offshore financial centres and the like. The possibility that people can and will take their money elsewhere is one of the few constraints that exist on otherwise rapacious governments. So naturally, governments try to stop this from happening – hence all this talk about shutting down tax “competition”.
When governments claim that tax dodgers are taking food from the mouths of poor babies, treat it with scorn. The money that goes offshore doesn’t disappear down some black hole, never to appear again: that money, if it is to earn a return and outpace inflation, is invested – ie, it is put to work, often far more effectively than would otherwise be the case.
On the ECB’s own website, they say that negative interest rates will “benefit savers in the end because they support growth and thus create a climate in which interest rates can gradually return to higher levels.”
I’m not sure a more intellectually dishonest statement could be made; they’re essentially telling people that the path to prosperity is paved in debt and consumption, as opposed to savings and production. These people either have no idea how economies grow and prosper, they’re outright liars, or they’re completely delusional.
– Simon Black
Dominic Frisby’s book Bitcoin: The Future of Money? is now available.
The first chapter describes what Bitcoin is and how it works. The achievement of this chapter is that Dominic has described Bitcoin in plain English without missing any important details and without simplifying to the point of error. Too often when I read writing intended for the general audience about something I know about, I notice how wrong it is and how ill informed the general audience must be about all things. Not here.
Technical description out of the way, the rest of the book deals with the culture of Bitcoin’s early adopters, the various scandals we may have heard about and what they mean, what Bitcoin means for the state and for you, and what the future might hold for Bitcoin and cryptocurrencies in general.
The longest chapter is about the mysterious Satoshi Nakamoto, who wrote the original paper and developed the first versions of the software, and who has successfully remained anonymous. It is not particularly relevant to understanding Bitcoin, but it is very intriguing, and I think there is a good chance Dominic has reached the right conclusion about Satoshi’s identity.
There is discussion of the problems of inflationary fiat currency: the author has read his Detlev Schlichter. There is discussion of how the decentralised nature of Bitcoin sidelines governments and opens up new markets with people who are otherwise difficult to trade with. And there is discussion of the problems, too: the volatility, the technical challenges, and the dangers of being defrauded in a new marketplace where we are still learning what are the best business practices and how to decide who to trust. Finally, there is some advice about where to buy Bitcoins. It is not out of date yet!
The book is concise, complete, correct, entertaining, and a very good introduction to what Bitcoin is all about.
Bank bail-outs have been a cultural catastrophe for those of us who support free markets, low taxes and enterprise. During the 1980s and 1990s, much of the British public came to accept and even embrace capitalism, in return for a simple deal: profits and losses would both have to be privatised. Clever entrepreneurs, savvy traders or brilliant footballers would be encouraged to make money; but companies and investors that placed the wrong bets would be allowed to fail, with no pity. Not only did this trigger an explosion in prosperity, it also helped shift the British mindset towards a much more pro-enterprise position. The rules of the game felt fair: risk and reward went hand in hand. The government would serve as an umpire, not a supporter of vested interests.But the crisis of 2007-09 put an end to this implicit bargain, at least in the eyes of vast swathes of the public.
– Allister Heath.
Bailouts are a disaster for pro-capitalists. It is almost as if it was deliberate. My only slight caveat here with what is a typically incisive article is that I am not sure how deep the greater support for capitalism really ever went. It certainly never penetrated academia, and parts of the policy maker world. But I am an optimist: the continued respect that seems to be shown among ordinary people for genuine entrepreneurs (not crony capitalists) shows that something has taken root.
Everyone is very, very cross. The welfare reform minister, Lord Freud, has caused outrage for saying that some disabled people are “not worth the minimum wage”.
Spoken without tact but with truth. Some of our fellow human beings are incapable of doing work that is worth anyone’s while to pay six pounds and fifty pence per hour to have done.
Freud had been responding to a question from David Scott, a Tory councillor from Tunbridge Wells. Scott had said: “The other area I’m really concerned about is obviously the disabled. I have a number of mentally damaged individuals, who to be quite frank aren’t worth the minimum wage, but want to work. And we have been trying to support them in work, but you can’t find people who are willing to pay the minimum wage.
While it is certainly true that many people with a disability also have abilities or dispositions that allow them equal or surpass as workers their able-bodied and able-minded colleagues – it is also certainly true that many others, sadly, don’t. This is particularly often the case for the mentally disabled. Long ago, I was a teacher. I saw some sad sights, few sadder than the dawning awareness in a child’s eyes that he or she would never be able to do all that “the others” could.
Still, people are resilient. Such a child might very well grow up to be quite capable of sharing and rejoicing in the dignity of work – real work for real employers, not charity – were it not illegal. Only those whose labour is worth more than £6.50 an hour are allowed to sell it. Those less able are compelled by law to be unemployed.
We have these spasms every few years. Allow me to recycle my post from the last one, in which the speaker of inconvenient truth was Philip Davies MP who said,
“Given that some of those people with a learning disability clearly, by definition, can’t be as productive in their work as somebody who hasn’t got a disability of that nature, then it was inevitable that given that the employer was going to have to pay them both the same they were going to take on the person who was going to be more productive, less of a risk, and that was doing those people a huge disservice.”
And I said then and repeat now:
Within hours so much outraged commentary flowed out of newspaper columnists, charity representatives and politicians of all parties, including Mr Davies’ own, that you’d think there’d been an outbreak of indignation dysentery.
Not one response of all the many I read even tried to argue that Mr Davies was factually wrong. They were outraged, disgusted. They asserted what no one denies: that mentally disabled people are equal citizens and often prove to be hardworking employees, valued by their employers. But I could not find one article that argued that Davies’ description of the way things go when a person with an IQ of 60 or a history of insanity seeks a job was inaccurate, or gave reasons to believe his proposal would not increase their chances of landing one.
A quote from Charles Murray: “It seems that those who legislate and administer and write about social policy can tolerate any increase in actual suffering so long as the system does not explicitly permit it.”
I really hope this article is tongue in cheek. If not (or even if so) then I have a better idea… just replace money with bananas and release several million monkeys into every major city. It will stop people and companies getting into debt because they have to be spent quickly before they go off or marauding monkeys steal them (what with monkeys being vastly more likely to act in a consistent manner than any government that has ever existed since the beginning of human history).
If science ever finds a away to expunge people from history and un-invent their ideas from people’s minds, making all books on the subject vanish into some dimensional tesseract, I would nominate John Maynard Keynes as the most pressing candidate for expungement.
Bishop Hill has a posting up today about the gigantic folly that is the D(epartment) of E(nergy) and C(limate) C(hange).
Says the Bishop:
As we look at UK energy policy now, DECC has had the country make a massive financial gamble on the back of a prediction that was wholly unfounded and which has been obviously so for many years. We now learn that DECC has also distributed this astonishing wave of public money in a manner that can only be described as monstrously incompetent, and which many will assume to be monstrously corrupt…
Comment (Oct 3 9.32am) from “fen tiger”:
I have a relative who works at DECC, and has done since getting his masters. He’s an environmental economist (one of many in DECC, I imagine), briefing the likes of Huhne, Davey, and Gummer. He appears to know nothing whatever about the climate question, but is fully invested in the warming scare (condition of employment, I guess).
Closing DECC would obviously benefit the country: but it would also benefit many of those who work there. My relative is not an untruthful man, but he has worked since leaving university in an environment where systematic untruthfulness and wishful thinking are the norm; an environment where the taxpayer would get better value if he were paid to stay at home and do nothing. He desperately needs to get out and find a real job (although his qualifications won’t help with that).
This comment is anonymous partly because I don’t want to foment a family rift, and partly because I am ashamed of having a family member employed in this way.
But how to close DECC?
“Roger Tallbloke” (Oct 3 9.08am) had already commented earlier, thus:
Strategic action on the part of the consumer could actually make a difference and help get rid of DECC. This action is quite simple, and won’t take long or cost the consumer anything. Here’s what they need to do.
Would that work? Is this a case where your vote might actually make a difference?
UKIP has turned into a me-too operation on most of the big items of state spending, as Ben Kelly writes in this Libertarian Home report of the recent UKIP conference. But on UKIP’s energy policies, Kelly writes this:
Energy – Ah, Roger Helmer; an intelligent and articulate man, an asset until you get him on the subject of gays or the finer details of rape. Then it’s hide behind your hands time. Luckily he was simply talking about energy policy today. He wants to scrap the Climate Change Act, cut all green taxes, end subsidies for wind farms and get fracking, creating a sovereign wealth fund with the tax income. It is the Guardian’s worst nightmare, and I like it.
Me too. It would be a worse Guardian nightmare if there wasn’t that bit there about “creating a sovereign wealth fund with the tax income”. But when it comes to voting, the question is not: What gets me everything? It is: Does anything get me anything?
“Google obviously has a monopoly in search. There are all sorts of questions about whether it is abusing that monopoly or not. But I distrust the power of the EU regulators to make things better. I think the technology industry is dynamic enough that the Google monopoly will not last for ever. In practice, anything [the EU does] to micromanage the Google product will produce a cure that’s worse than the disease.”
– Peter Thiel (quote is taken from the Financial Times, which is behind a registration wall).
Vladimir Putin has warned the Ukrainian government against getting closer to the EU, threatening their access to Russian markets.
So the Ukraine has to decide between losing their access to 142 million Russians with a total GDP of $2.1 trillion (official), or improving their access to 511 million people with a total GDP of $16.95 trillion (official).
Hmm, yes I can see how that might be a difficult decision