Likewise, in terms of domestic European politics, giving in to far-left Syriza would certainly strengthen economic illiterates in popular anti-euro parties like Italy’s Five-Star Movement, and Spain’s Podemos, the last thing Merkel desires. The euro itself hasn’t been particularly troubled by the crisis, with Italian and French bond yields holding steady. Surely, as some have reported, Merkel is right to think that now is the time to sever the weakest link.
– John Hulsman
“Greece versus Europe: who will blink first?” asks the Telegraph. I care not who blinks, or who wins this contest of braggarts. All that matters is that for Greece to be ejected from the Euro would be good for Greece, good for Germany, and a good example for all the peoples of Europe yoked together in this vainglorious folly. Go on Germany, give that Marxist fool Alexis Tsipras a demonstration that your gullibility is not endless. Go on Greece, plough your own furrow and while you are at it give the Eurocrats a demonstration that their most public and cherished commitments can fail. Remember “Black Wednesday”? Far from being a disaster for Britain, that was the day its fortunes began to recover.
Big Bang transformed the City for the better, as I hoped at the time. It broke up the cosy cartel of the old stockbrokers and jobbers, introduced competition into commissions which made share buying and selling so much cheaper, allowed in many foreign banks and brokers with extra capital, new business and job opportunities, and allowed UK institutions to raise serious amounts of new money to operate on a world scale.
It built one of the dominant financial service and banking sectors of the world. The City expanded from the narrow Square Mile around the Bank of England, to encompass Aldgate, Liverpool Street, the Finsbury area , parts of Mayfair, St Paul’s and parts of docklands. Today we earn £60 billion from our financial and business service exports, and have a group of companies and service industries that the world envies. Without Big Bang none of that would have happened, and the UK would be a lot poorer. Instead of blaming Big Bang for financial scandals, people should remember there were scandals before Big Bang, and remember above all that it was Mr Brown’s regulators who helped bring on the crash they were meant to prevent.
– John Redwood
I think Big Bang did bad things (speeding up the mess of fiat money) as well as good (doing lots of business in London). The more Austrianist you are, the earlier you will think the rot set in. Nixon takes Dollar off Gold Standard in 1971? Founding of the Fed? Founding of the Bank of England? But Redwood is right that Gordon Brown certainly didn’t help avert the crisis we are now stuck in, even if him keeping Britain out of the Euro may prove to be his most significant decision in the long run.
Remember, just because one of us here selects something as an SQotD doesn’t mean we necessarily agree. We are merely noticing that something significant, and usually true-ish, has been forcefully put.
Browsing one of those coffee-table sort of magazines you get in the flashier reception rooms in City offices, I flicked through the magazine called Monocle, which has lots of travel articles and advertisements for things I cannot afford, such as IWC watches, Maserati sports cars and holidays to “eco-resorts” in the Indian Ocean, etc. Laced with all this are earnest, remorselessly trendy essays on politics and culture. The undertone is progressive-lefty globalist, with a bit of concession, to be fair, to entrepreneurial vigour and technology. (Some of its items are excellent.) There is a sort of default setting on issues such as Man-made global warming, but the level of preaching is soft. It is a magazine, I imagine, that is pitched at affluent people who want the good things of life but want to feel they are still being “cool”.
I sometimes think that those on the libertarian/classical liberal/conservative end of the spectrum are missing a bit of a trick here by not producing things such as this. Ideas often spread not simply through big books full of Important Ideas (crucial though they are) or from having lots of university professors who espouse such notions (these are crucial of course) but also through aspects of popular and more rarified culture. I mean things such as art galleries, travel magazines and novels. It appears to me – though I have no scientific way of measuring this – that travel mags and books, for example (think National Geographic, Rough Guide books) seem to be edited by people who just trot out the bromides of the progressive, Tranzi mindset without really thinking about their premises. Here is a classic example from the Monocle issue 49 that came out in the end of 2011, on page 43. It is an article about so-called “soft power” and what countries must do to project it. Needless to say, its assumptions are that governments (ie, the taxpayer) should do it:
“The term for soft power may have been coined in America, but Washington has always seemed more focused on demonstrating heavy-handed military power or confrontational commercial tactics than investing in soft power symbols such as an official tourist board.”
America needs a tourist board, otherwise who knows? People might not be aware that the world’s largest economy exists. What an oversight.
Or this nugget:
“Despite the absence of a national tourism board – or a modern, well-run national airline – the US still attracts millions of visitors every year.”
Let’s think about this for a bit. The Monocle author says it is a bit odd that so many people go on vacation to the US despite that country not having a bunch of bureaucrats and marketing folk (paid for by taxes) saying what a terrific place the US is. (Surely states and cities do promote themselves, though. California puts up adverts in the UK.)
People just seem to be able to figure out that visiting the US can be done and is a nice idea without a national cheerleader organisation. Further, it appears to be a surprise to the author of that piece that this can happen when the US does not appear to have a major, national airline that has some sort of official status. Wow.
The author does recognise that given the sheer size of the country in geographic terms, and the size of its economy, that may be it can get by without such things. But does it not cross the mind of the author that the reason why some nations (it mentions a whole cluster of them) have a positive image for travellers has nothing to do with state-financed marketing moves or state-backed broadcasters such as the BBC, but because of the bottom-up, free market nature of activity in some of these places that creates things people want to have and which therefore are good for a country’s image? Ironically, Monocle is stuffed with glossy adverts for all manner of brands that speak of the triumph of capitalism, and an admiration for the people who make it work.
I think that if governments really do want to influence opinions in the wider world about what, say, the UK or US is about, the best way to do this is to get out of the way and let the actions and words of people, uninfluenced by government, do the job. Cultural outreach works best when governments have nothing to do with it, since otherwise it reeks of propaganda. Whether you like or dislie these effusions of the market, I’d say that the manufacturers of Rolex watches, BMW cars or pop music do more for the respective images of their countries than anything likely to come out of a government-backed broadcaster or tourism board.
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.