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Reflections on free trade

With the Brexit vote of last week continuing to send shockwaves through the corridors of power (does that mean those corridors are vibrating, door handles jiggling and lights flickering?), one argument I have seen break out is of how the UK will, without being in the mighty, efficient and effective mechanism of the EU, be able to work out a deal. (If you are detecting a touch of sarcasm, you are correct.) For example, on a social media exchange, a person earnestly exclaimed that the UK can’t possibly arrange a free trade agreement (FTA) with India because the Indians just won’t, just won’t agree on one with us, because, well, they won’t. A stock argument goes that if the UK leaves the EU, then depending on whether it does or does not retain Single Market access, like Switzerland, other countries will be reluctant to trade with the UK. Why? Because the only reason, it is said, that people want to engage with the UK is because it gives access to the rest of the EU. The UK is, on this argument, nothing more than a conduit, an entrepôt, for Europe. The fact that another country might want to deal with the world’s fifth-largest economy on its own right is scarcely entertained.

Funnily enough, last year I recall reporting on how Australia, which for some crazy nationalist reason isn’t in the EU, signed a trade deal with China, which much to its shame, isn’t in the EU either. China is the world’s second-largest economy; Australia is some way down the order but still relatively significant. These two nations signed a deal. It was done without all the structures of a transnational organisation. This is an event that, for quite a lot of people, is unthinkable, like a decent summer in England.

Another option for the UK is to simply declare unilateral free trade, rather than wait for some grand negotiation with the EU over access. There is a consideration of this approach at Econlog here:

But if the new British prime minister want to puzzle and indeed shock its European counterparts, this may well be the best option. Go ahead and zero tariffs on imports coming from the EU. It might well be one of those very few choices that could prove to be economically beneficially in the long run, not least because it will minimize the problem of capture by special interest groups when it comes to trade policy. But it may prove to be expedient from a political perspective too. As the government should run through the Houses its proposed “interpretation” of the vote (which was, after all, a consultative referendum), open support for free trade may help, in the short run, to restore peace and harmony among the Tories. On top of this, it might give the UK a strong card in negotiations with the EU, making retaliatory attempts hard to “sell” to the public.

And here is Tim Worstall on the same subject:

The entire point of trade is that we can get our hands on what they make: so why would we ever want to have anything other than unilateral free trade? Why would we impose tariffs on the very things we want and make them more expensive for ourselves?

Sure, other people might impose tariffs on our exports. But that means that they are making themselves poorer by not having tax free access to the lovely things that we can make cheaper or better than they can. As Joan Robinson was fond of pointing out, tariffs are like throwing rocks in the harbour to make imports more difficult. And just because you are throwing rocks in your harbour there’s no reason I should throw rocks in my own. To do so just makes me worse off and why should I do that?

As I have said recently, one of the excellent consequences of Brexit is that it rends apart many of the lazy assumptions that give rise to transnational organisations, as well as the assumptions of the sort of people who prosper in working for them. It makes us think again about what sort of rules and regulations, if any, are needed so that human beings can trade. And those of a classical liberal disposition need to take the lead in pointing out that ultimately, countries don’t trade, individuals do. Any attempt to interfere with such transactions is ultimately about Person A being prevented from transacting with Person B on terms to their liking.

Maybe it is also time to dust of the speeches and writings of Richard Cobden.

 

Should Britain adopt the EEA option?

My friend Preston pointed me at what the Adam Smith Institute calls the “EEA Option”, which would apparently provide many of the free trade and movement benefits of EU membership without being in the EU or beholden to most of its rules.

Certainly worth a read as people start contemplating what one would want the negotiated exit from the EU to look like.

Samizdata quote of the day

And they worry the pound might crash? Pay attention to the euro.

Zero Hedge

The risks we run

In all the talk and words about the UK Brexit vote last Thursday, a regular line is that the Leave side has been “misled”, and doesn’t know what it is doing, and it is going to have buyer’s remorse, etc, etc. Who knows, maybe that criticism is apt. However, it is a bit rich for those who, for example, favoured the creation of the European single currency, as many pro-Remainers did (they might hope we’d forget) to claim that those who wish to leave an entity with pretensions to be a superstate are not thinking of the risks. That is a bit rich.

The launch of the single currency is arguably one of the riskiest, most hubristic transnational projects of recent decades, and I still see very little sign of contrition for rolling out a new form of fiat money without creating the economic and political architecture to deal with life inside a one-size-fits-all interest rate.

One reason why remaining EU states are scared of what has happened is the fear that a eurozone member state, envious of how the UK has just voted, might have similar ideas.

Some more Brexit thoughts

Brexit. How about that then. Well, well, well. Many other writers here have been thinking aloud about this, and so, now, will I.

The London weather was very wet yesterday, and violently so in the late afternoon. But, it then calmed down. Did the violent rain disrupt travel and permanently muck people up, so they didn’t vote? Or, did the abatement of the rain enable Londoners to get out and vote without too much discomfort. I have just got up and look forward to finding out. I took an umbrella to my (very) local polling station, around 7pm, but I didn’t use it. Someone said last night that it would be just typical if Britain left the EU because of the weather, but it looks like it wasn’t that close.

Re the Jo Cox murder. Many Remainers used this horror to imply that voting Leave was like voting in favour of MPs being murdered. (The Remainers who refrained from using this argument were not so audible.) I surmise that (a) some potential Leavers were persuaded, (b) some potential Leavers were angered and caused to vote Leave having only previously been thinking about it, and (c) quite a few continued to move towards Leave for reasons unrelated to the Jo Cox murder, but in silence. When the Cox murder happened, there was a shift towards Leave taking place. I surmise that this continued to flow, but underground, so to speak. Minds continued to move, but people stopped telling the pollsters. But, they’ve told them now.

The above two points were already made by me here last night, in comments on by Natalie Solent postings. Here are a few more Brexit thoughts.

→ Continue reading: Some more Brexit thoughts

An odd argument for Remain

In order not to miss Record Review, essential Saturday morning listening for me, I have BBC Radio Three on as soon as I wake up on Saturday morning. BBC Radio Three interrupts itself from time to time with news bulletins, and on the most recent of these, at 8 am, I just heard a very strange argument from the Remainders.

Sir James Dyson, the vacuum cleaner maker, has just announced that he favours Brexit, the BBC news revealed. (The above link from another source confirms this announcement.) Brexit, Dyson says, would mean more jobs for Brits, or something along those lines. The “Remain Campaign”, I think that was the phrase, by which was meant the “Official” Remainder campaign, responded to Dyson’s announcement by saying that Dyson was wrong to back Brexit, and that he was wrong when, some years ago (I think the number was six but I don’t recall it exactly (LATER: sorry, SIXTEEN), he was … in favour of Britain joining the Euro. Which apparently Dyson was.

So, according to the logic of this particular Remainder argument, if you were once upon a time wrong in favouring Britain joining the Euro, you must now be wrong in your opinion about whether Britain should Leave or Remain in the EU as a whole, now.

But I am pretty sure that the overwhelming majority of those Brits who favoured the Euro in the past, are Remainders now. Dyson’s combination of positions is a very rare and anomalous one. He has changed his mind. He must have, because Britain can’t join the Euro and leave the EU. (Can it?) Much more common is the combination of views of having once upon a time favoured Britain joining the Euro (and perhaps still now favouring this), and of now favouring Britain remaining in the EU. The Euro is, after all, the core idea of the EU, around which all other EU policies circulate like mere planets around the sun.

So, if the Official Remainders now concede that Britain joining the Euro would have been a mistake, they must now concede that many of their now most prominent supporters were wrong about the Euro, and therefore wrong now, about Remaining.

LATER: Here is the BBC version of the story.

Britain Stronger in Europe said: “James Dyson wanted the UK to join the euro. He was wrong then and he is wrong now.”

This report goes into all the disappointments Dyson has had with EUro-law. See also some of the comments below.

Samizdata quote of the day

How important are trade deals? As a former trade minister it pains me to admit – their importance is grossly exaggerated. Countries succeed, with or without trade deals, if they produce goods and services other countries want. Thanks to the Uruguay Round, tariffs between developed countries now average low single figures – small beer compared with recent movements in exchange rates. So the most worthwhile trade agreements are with fast growing developing countries which still have high tariffs.

Peter Lilley

Samizdata quote of the day

There needs to be a cull of Malthusians every five years or so. In the interests of preventing overpopulation. And a pretty memorial to these heroes.

– Antoine Clarke

Dominic Frisby takes on the Edinburgh Fringe

Today, I am in my usual last Friday of the month tizz, because this evening I have an event in my home, and I am, as usual, behind in my preparations. This particular event is more than usually tizzual, on account of it being not a sit-down talk but a stand-up performance, by Dominic Frisby. Frisby is honouring my home with an early dry run of his forthcoming Edinburgh Festival show, Let’s Talk About Tax, which he will be performing in Edinburgh from Aug 3rd until August 28th.

DFrisbyEdinburghShow

I am not doing this blog posting because I need more people to come to my home this evening. I can fit in a few more, but I already have a decent number of acceptances. Nor am I doing this blog posting to tell you what a brilliant show this is. It is being done by the always entertaining and always thought-provoking Dominic Frisby, so I expect it to be entertaining and thought-provoking. But meanwhile, I haven’t yet seen it.

No, what I want to do here is simply to praise Frisby for the fact of this show. Even if – worst case – it flops in Edinburgh, which I don’t think it will, but even if it does, … well played sir! The fact that Frisby is sallying forth to the Edinburgh Fringe, one of the key facts of British showbiz life where would-be upwardly-mobile entertainers all vie with one another to make their mark as writers and performers, and that he will there proclaim the sort of pro-free-market notions and crack the sort of pro-free-market jokes that seldom get spread or cracked in this arena or similar arenas, is cause for praise in itself. The way to get anything started is to start, and this is a start. In the illustration above, Frisby is wearing a hat. Were I now wearing a hat, I would take it off to him.

I did an earlier posting here, praising Frisby’s excellent book Life After The State. Today is, see above, a busy day for me, so to save me the bother of making the same point in different words, please allow me to quote myself and make a point I made in that earlier posting, in the same words:

If we think that showbiz people typically proclaim bad political ideas, then our task is to persuade such people to think better and to proclaim better ideas, rather than us merely moaning that such people somehow have no right to be heard opining at all, about anything except showbiz. Maybe it is in some ways true that celebrity opinion-mongers shouldn’t be paid attention to, as much as they are. But they are, if only because being paid attention to by lots of people is the exact thing that these people specialise in being very good at. Maybe people are foolish to get their foolish political ideas from politically foolish showbiz people. But many do. Whether we like it or hate it, recruiting at least a decent trickle of showbiz people is a precondition for us achieving any widespread public acceptance of our ideas.

I rather think that this show marks a new moment in Frisby’s career. At his website, he describes himself as a Financial writer, comedian, actor of unrecognized genius and voice of many things. The “voice of many things” bit concerns his voice-over work, often to be heard on British TV. But note the “financial writer, comedian” bit. Hitherto, Frisby has tended to keep these two activities distinct from one another. As a speaker and writer on libertarian friendly matters he is always witty and entertaining, but he hasn’t, when doing that stuff, gone straight for laughs. He has basically been arguing and informing. Yes, with a smile on his face and plenty of reader and audience amusement as well as thought-provocation. But basically, he has done comedy for laughs and when being serious he has been serious. This Edinburgh show, on the other hand, looks like it may mark the moment in Frisby’s career when he seeks to combine his financial thinking and talking and writing with comedy.

I wish Dominic Frisby all possible success in this enterprise, and hope that others follow where he is leading.

Samizdata quote of the day

“Lootings are becoming a common occurrence in Venezuela, as the country’s food shortage resulted in yet another reported incident of violence in a supermarket—this time in the Luvebras Automarket located in the La Florida Province of Caracas. Videos posted to social media showed desperate people falling over each other trying to get bags of rice. One user claimed the looting occurred because it is difficult to get cereal, and so people ‘broke down the doors and damaged infrastructure.”

Robert Tracinski

Thoughts on the altered economic and ideological incentives faced by the rich and famous

Almost a month ago now, I attended an event, organised by Christian Michel, at which another friend, Professor Tim Evans, spoke about the public and private supply of public goods. You attend such events in the hope that they will make you think things that might not otherwise have occurred to you, and Tim’s talk had this effect on me. What follows is based on what I mostly wrote the day after that talk. I had intended to finish writing this and then post it here before going on a recent expedition to stay with friends in the South of France, but travel preparations got in the way of this. However, nothing in what I wrote then had to be said then or never, if you get my meaning, so here is what I put, suitably polished and amended, now.

Tim Evans’s theme was how, over the centuries, institutions for the supply of such things as healthcare, roads, lighthouses (mention was made in that connection of Ronald Coase), education, and suchlike seem to have oscillated, rather slowly and in timespans often long enough for most of those involved not to be aware of them, between private or charitable supply on the one hand, and government control and government provision on the other.

Tim’s other big point (assuming my recollection is about right – I took no notes) is that the perpetual game of political ping-pong that now rages with statists on one side and anti-statists like me (and like Tim) on the other sometimes does scant justice to the complexity of the institutional arrangements involved. So, for instance, arguments about healthcare are routinely presented, on both sides, as an argument between a total free market and total state control, when in reality medicine has long been a very mixed sort of economy. In the USA, typically held up by anti-free-marketeers as an example of what happens when there is no government control at all, the government is heavily involved with (the phrase “in bed with” also springs to mind) those quasi-political entities which determine what a qualified doctor is and who may or may not practise as one.

I like to think that I may have planted the seed of that last notion about governments and medical monopolies in Tim’s head, with a Libertarian Alliance effort of mine from a quarter of a century ago now, entitled How And How Not To Demonopolise Medicine, about which Tim has often said admiring things to me. I just re-read this, and many of the themes in Tim’s talk were alluded to in that also. At around the same time I wrote that piece, I recall expressing, in another Libertarian Alliance piece, a rather jaundiced view about charity, something Tim also mentioned quite a bit but rather more admiringly, particularly in the matter of healthcare.

Which got me thinking about the incentives faced by very rich people, and how these incentives are not the same as they are for regular people. For the super-rich, a charitable donation which is huge by anyone else’s reckoning is liable to be small change, for a start. But just as significantly, I surmise that the super-rich actually think differently from the rest of us, not just because thinking differently is probably what made them super-rich but because being super-rich then induces them some more to think differently.

→ Continue reading: Thoughts on the altered economic and ideological incentives faced by the rich and famous

Samizdata quote of the day

Indeed, one of the advantages of tax havens is that they help hold governments to account. They make it possible for businesses to avoid the worst excesses of government largesse and crazy tax systems – including the 39 per cent US corporation tax rate. They have other functions too: it is simply wrong to say that they have no useful purpose. It is also wrong to argue that, if only corrupt governments had more tax revenue, their people would be better served.

Philip Booth