In Africa there is a humanitarian emergency unfolding that has largely escaped the world’s attention. It is a prodigious drought and it holds much of the continent in an unforgiving grip. Here in Ethiopia it is reckoned to be the worst for 50 years. The culprit is long-term climate change coinciding with a hot and unwelcome blast of El Nino. The result? Successive rains have failed. And when the rains fail, so do the harvests. In a nation where three quarters of the population relies on farming, that’s a disaster. And so a great hunger has arrived which will render as many as 15 million people in need of urgent aid.
The ruling party in Ethiopia is the Ethiopian People’s Revolutionary Democratic Front. The name says a lot. Wikipedia details concisely their ideology.
The front views liberal democracy and free market capitalism as decadent, and has a “romantic attachment” to the beliefs of Vladimir Lenin…
That would be the kind of decadence that lets us feed ourselves when the weather is bad.
The Wikipedia article cites an article in the Addis Ababa university paper.
Not forgetting ‘revolutionary democracy’ as a pervasive and effective yet out-dated alternative to the ‘‘ill-fit and unsustainable liberal democracy’’, it is undeniable that EPRDF’s economic results owe their little success to the liberal economic reforms pushed into results by a powerful state.
They fucking know what they have done, and what they should do to fix it.
What most of us would like is for the Government to spend less and leave us with more of our own money. If Messrs Cameron and Osborne now get caught up in a tidal wave of popular resentment against the avariciousness of the rich they will only have themselves to blame for playing footsie with the Left’s analysis that wealth creation is to be despised, inheritance is evil and judicious tax planning is immoral. Rather than mount a robust Tory defence of the virtues of material success backed by lower or flatter taxes and affordable public spending, they have burnished their so-called One Nation credentials to avoid being portrayed as out of touch, privileged and posh. There may well be activities exposed by the Panama Papers that will warrant criminal investigation. But this story has been hijacked by anti-capitalist campaigners who think all our earnings should be handed over to the state to be redistributed by Jeremy Corbyn and his followers. They simply cannot understand the aspirational instincts that drive most people, and they never will.
– Philip Johnston, one of the many who are writing about the Panama Papers affair.
As an aside, one issue that hasn’t been directly faced in the commentaries is this: if it is appalling for journalists to hack phones and steal private, confidential data in pursuit of politicians, celebs, etc, why is it noble and good to do so when this involves leaking millions of account details, many of which are about people who haven’t committed any crimes? Ok, it is in the public interest, will be the retort. But who gets to decide this?
Well I heard a terrible April Fool’s trick today on BBC Radio 4, some economist chap talking about a hike in the UK’s minimum wage, saying that raising the minimum wage boosts the economy as there will be more money to spend in retail etc.
– Mr. Ed
There is a steelworks at Port Talbot in south Wales owned by the Indian Tata group, which is losing money hand-over-fist. The owners appear to have thrown in the towel after 9 years, and are looking for a buyer, for a works losing a reported £300,000,000 a year. So poor old Tata is consuming its capital to the detriment of its investors, and the benefit, for now, of its staff and contractors.
The reaction to this disappointing news about the works, which will doubtless be devastating for those who work there and rely on it for their own livelihoods, seems to be that ‘something must be done’, but once again the Broken Window Fallacy should be borne in mind.
At present, the UK government appears to be tempering calls for nationalisation of steel works, although one Conservative MP, Mr Tom Pursglove, has come out to call for nationalisation, pointing out that Brexit would make it easier for the UK government to grant state aid to industry.
Conservative MP Tom Pursglove is delivering a letter to the prime minister this afternoon calling on the government to ignore EU rules on state aid and consider nationalising the steel industry. As a prominent campaigner for Britain to leave the EU, it is no surprise that he believes Britain would be in a better position to protect the steel industry if we were not bound by EU rules. Those on the other side of the referendum debate point out that the EU is our most important market for steel, with more than half of our steel exports going to the EU and more than two thirds of our imports coming from it.
As my maths teachers used to say ‘Show your working!‘. Funny how EU rules on State Aid don’t seem to apply to farming.
What is truly depressing is that almost no one, apart from a valiant chap from the IEA I heard on Radio 4 news this afternoon, is suggesting that a steel plant should be profitable, the Zeitgeist seems to be that the plant should simply exist. However, there are reports that the Chinese government is subsidising steel exports by selling it below cost price. The IEA chap on Radio 4 said that China has, in the past 2 years, produced more steel than the UK has produced in its entire history (but there are many different kinds of steel, and they are not fungible).
Is anyone scared that China will up the price of steel once it has caused much capacity in the rest of the world to shut down?
The whole notion that culture can be “appropriated” in any negative sense is one of the most absurd notions being bandied about (and that is really saying something given the carnival of absurdities that passes for critical thinking these days).
Such ideas about culture are profoundly fascist in origin, a collectivist notion that somehow culture and identity must be preserved in a “pure” state from outside influences and somehow “belongs” to an ethno-national grouping. It is very much akin intellectually to abominating miscegenation. Yet strangely the same people who spout such arrant nonsense tend not to picket performances featuring oriental ballet dancers or black opera singers (as well they shouldn’t). Sorry (not really) but the future is cosmopolitan and voluntary. I will take whatever aspects of any culture I think are worth incorporating and there is not a damn thing anyone can do to stop me. And if some collectivist jackanapes is offended by my “appropriation”, well take a guess how many fucks I give because that just makes it all the more delicious
It cannot be said too often and it is especially pertinent right now, given the state of the world’s economy now, and in particular given how America’s Presidential candidates are talking now: The Great Depression was both caused by and then horribly prolonged by bad governmental and political decisions. The Great Depression was not caused by unfettered capitalism. Throughout this unfolding disaster, capitalism was very fettered indeed, and it was these ever-tightening fetters which proved to be so disastrous:
The genesis of the Great Depression lay in the inflationary monetary policies of the U.S. government in the 1920s. It was prolonged and exacerbated by a litany of political missteps: trade-crushing tariffs, incentive-sapping taxes, mind-numbing controls on production and competition, senseless destruction of crops and cattle, and coercive labor laws, to recount just a few. It was not the free market that produced twelve years of agony; rather, it was political bungling on a scale as grand as there ever was.
That is the final paragraph of Lawrence W. Reed’s demolition of Cliché of Progressivism #33 (that it was all the fault of “Unfettered Capitalism”) for FEE (the Foundation for Economic Education). I was steered towards this piece because of its Quotulatiousness. That blog quotulates a few of the early paragraphs of Reed’s piece. I say: read the whole thing.
Almost as important as how the Great Depression began and was prolonged is how it ended, just after World War 2, as Reed also explains very well.
If you want a bit more detail about that recovery, and in particular of its politics, try reading the chapter on mid-twentieth century America in JP Floru’s book Heavens on Earth (SQotD-ed here), which is about eight such happy episodes around the world in recent times. The world now knows, in the words of Floru’s final chapter heading (also the sub-title of his book), “How To Create Mass Prosperity”. Or rather, the sensible parts of it do. The only uncertainly about the free-market, non-interventionist policies that Reed and Floru recommend is in whether such policies will be applied in the first place, and whether they will then be persisted with.
See also this earlier posting here, which reports on, among other things, a ding-dong I had with Lord Skidelsky concerning this exact same point.
In the charged atmosphere in US and other countries’ politics at the moment, immigration, legal and illegal, is a hot topic, to put it mildly. As regulars here know, a key point is that immigration/emigration cannot be divorced from issues such as whether the chosen destination of a migrant has a welfare state, or not. It is worth, with all that in mind, to remind ourselves that on the whole, migrants tend to be highly motivated people, not the malevolent “snakes” that Donald Trump (whose ancestors were immigrants, and we don’t know how fully documented they might have been) might put it. Here is an item from the Wall Street Journal:
A new non-partisan study on entrepreneurship gives some credence to the tech industry’s stance that American innovation benefits from robust immigration.
The study from the National Foundation for American Policy, a non-partisan think tank based in Arlington, Va., shows that immigrants started more than half of the current crop of U.S.-based startups valued at $1 billion or more.
These 44 companies, the study says, are collectively valued at $168 billion and create an average of roughly 760 jobs per company in the U.S. The study also estimates that immigrants make up over 70% of key management or product development positions at these companies.
The foundation examined 87 U.S. companies valued at $1 billion or more as of Jan. 1, as tracked by the Journal’s Billion Dollar Startup Club. The authors of the study used public data and information from the companies to create biographies of the founders.
Of course, as I anticipate some commenters might say, these immigrants are, one assumes, legals, and they haven’t overstayed their visa terms or they did not jump over any fence. But for what it is worth, these achievements would be no less notable even if they had not been entirely legit as stands under existing law.
There is a lot of fear in Western politics at the moment, and it is all too easy to forget the many positives out there. Remember, politicians who want to expand the State usually thrive when people are scared, or made more scared.
NASA, via The Guardian (and other old media) is trumpeting catastrophe again. “February breaks global temperature records by ‘shocking’ amount” says the headline. “We are in a kind of climate emergency now,” says Stefan Rahmstorf, from Germany’s Potsdam Institute of Climate Impact Research.
On the other hand, towards the end of that article, they mention the El Niño. At Watts Up With That, Bob Tisdale provides some analysis and graphs. I think figure 6 provides the most useful overview, showing up to 0.17 degrees C per decade warming depending on who measures it. I suppose this might just be warming since the little ice age, or man-made but not terribly frightening.
A Guardian commenter wrote: “We spend so much time debating and arguing over things like benefits and the economy. Stories like this end up disregarded. The truth seems terrifying – this is the single biggest crisis facing all of humanity.”
I replied: “It’s either the single biggest crisis facing all of humanity, or an el Nino that fits in nicely with the between 0.12 and 0.17 degrees C per decade warming we’ve seen since satellite measurements began (which is what all this turned out to be back in 1998). Personally I hope the economy does well, because people with the wealth of middle-class westerners can cope better with a bit of bad weather than can subsistence farmers in the kinds of places that don’t have economic freedom.”
I found this article vastly entertaining.
Cole also treats us to an extra lesson in economics. Impossible.com is saving civilisation, if not the planet itself. Literally.
“[Earth] can’t accommodate us all if we all consume resources like the Americans or British of today. We would need three planet Earths to support us… Jointly using what we have, sharing, is one of our best chances for survival.”
This isn’t actually true. Technological advances mean we now use less stuff to make more. We no longer need to chop down trees or kill whales for their blubber (once a vital fuel in Victorian times). GDP has risen, while the amount of stuff needed to make it has remained static or even fallen as Diane Coyle explained here (£). You could try and argue we’ve exported dirty work to emerging economies … until you see the figures for manufacturing-heavy Germany, where as GDP grew, the amount of stuff consumed to make it fell too. Opening access to underutilised resources via platforms like Uber may well, Coyle writes, create greater efficiencies. But Cole’s objection appears to be that money changes hands, and money is the incentive that makes the platforms work.
Money and ownership both seem toxic to Lily Cole, but if our ancestors hadn’t invented credit, and property rights, then today we’d still be standing in fields pointing slack-jawed at aeroplanes. We’re the survivors of a “gift economy” that, fortunately, was abandoned centuries ago.
Money doesn’t change hands (much) at Impossible.com, which may account for its failure. The Mail on Sunday reported that Impossible.com despite your generous taxpayer’s contribution is now £400,000 in debt.
Debit? Pah, Champagne lefties require only hugs as payment and presumably offer the same in return if the hapless taxpayers wants their £200,000 back.
Someone I know on Facebook, who turns out to be a fan of Bernie Sanders, the socialist running for the Democrat nomination in the US, defended this man’s idea of jacking up capital gains taxes (on all those evil capitalist exploiters). I contested the wisdom of this, and got this response. I haven’t edited for typos:
Top-down economics don’t work at all. Give a rich person $1,000 they don’t need to spend it. Give $1,000 to a middle class or a poor person and they will spend it because they have to.
So, the argument is that the State is entitled to use the violence-backed power it has to seize the wealth of supposedly less “needy” people and give it to persons presumed more likely to spend it. The presumption that the State is entitled to loot the wealth of persons who don’t “need” it is taken as self-evident, so deep have collectivist assumptions soaked in. An appallingly large number of people subscribe to this assumption and often don’t encounter a contrary view.
This nonsense also inverts the insight that to consume a service/product first entails producing it, which requires saving for that purpose by forgoing immediate consumption (resources have time value, which is why interest rates exist). The richer person’s wealth doesn’t simply vanish if he/she does not immediately spend it – that money is invested, and added to other factors of production (labour, mainly), which increases living standards in the longer term.
On a final note, it is worth pointing out that under the current tax system in countries such as the US (in my view, far too complicated), the rich pay a disproportionately high share of the total, which rather buggers the point made by people like Sanders.
Lord Mandelson sneered at Brexit supporters this week for failing to understand the complexities of modern trade and how leaving the EU would trigger years of renegotiations that would leave us with a far worse deal than we have inside the EU. Alas Lord Mandelson is a victim of the mandarin-centric fallacy that trade only happens after governments have arranged it in the best interests of their citizens.
– Patrick Minford. Sadly the article is behind the Times pay wall but I am sure you get where this is going.
“It turns out Lenin was wrong. Debauching the currency is actually the best way to destroy the socialist, not the capitalist, system.”
– Matt O’Brien, from the Washington Post. (The fact that such a comment can be made in a liberal-leaning publication such as the Post is interesting in itself.) Via Business Insider. He is talking about the disaster that is Venezuela.