We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
|
Jesse Walker at Reason magazine points out something very inconvenient for Naomi Klein, whom I discussed recently at this blog:
Let’s just zero in on the contrast Klein draws between utopian theories and real-world practice. It’s a fair argument if you apply it properly: that is, if you look at the consequences of Friedman’s policy prescriptions where they are put in place. It makes sense, for example, to look at how Friedman’s ideas about denationalization and free trade fared in Chile after they were put into effect. It doesn’t make much sense to look at Blackwater’s contracts in occupied Iraq, because — try as Klein might to pretend otherwise — they don’t have anything to do with Friedman. (And of course, it’s important to examine the ways Pinochet’s Chile deviated from Friedman’s economic ideas as well as the ways it embraced them.)
Exactly.
At the same time, you have to consider how Friedmanism fared everywhere some portion of it was applied, not just cherry-pick the most unappealing regimes that experimented with it. If the only place that adopted any of Friedman’s economic ideas was Chile, then Klein might be onto something when she suggests there’s a connection between libertarian economic policies and deeply un-libertarian ideas about torture, censorship, surveillance, and state-sanctioned murder. But the most sweeping free-market reforms of the last 40 years were not adopted in Pinochet’s Chile, Thatcher’s UK, or anyplace else addressed in Klein’s book. They were enacted by the New Zealand Labour Party in the 1980s. Far from fusing economic liberalization with political repression, the Labour government expanded civil liberties: It adopted a bill of rights, decriminalized homosexuality, improved the treatment of the native Maori. And while Pinochet signed on to the CIA’s war against the Latin American left, New Zealand strained its relations with Washington by making itself a nuclear-free zone, a policy that effectively barred the U.S. Navy from New Zealand ports. By Klein’s logic, these are all effects of Friedmanomics.
One would not expect Ms Klein to respond to this other than with smears. It turns out that she more or less ignored the devastating review of her book by Johan Norberg at CATO recently, did not address his very serious accusations of widespread inaccuracy or misrepesentation. To repeat: it is not just her views that are a problem – I am sure some leftists argue in good faith – but her actual, repeated lying, fabrications and errors that are so easily corrected and yet she cannot be bothered to do so. That is one reason why I loathe so much of this sort of writer. It is a sort of contemptuous attitude towards simple fact-checking that I cannot abide. So Friedman did not support the Iraq war after all? Well, whatever, he might as well have done, seems to be her attitude.
The point that Jesse Walker makes about the varied effects of free market ideas is important. Yes, some repressive regimes around the world may have found it convenient, for whatever reason, to claim they had signed on to the package, as Chile did. But then remember that even former London mayor Ken “friend of Hugo Chavez” Livingstone once argued that he had borrowed the idea of road-charging from the great Chicago professor. In different times, very different types of political leader, such as Richard Nixon, claimed to be Keynesians, just as, right now, a lot of people are scurrying to claim to be in favour of tougher regulations (see Guy Herbert’s comment immediately below this one).
Klein tries to draw an equivalence, in a muddied way, between those leftists who deny that Marx can be blamed for the horrors done in his name and those of us who point out it is absurd to try to blame free market thinkers from what is happening now. Well the reason, Ms Klein, why Friedman et al cannot be so blamed is that what is happening now is not an example of laissez faire capitalism. Re-read that slowly, Ms Klein: what is happening now is not a case of laissez faire. Just to spell it out for those who have not been following this debate: the central banks responsible for setting interest rates are state bodies; the US home loan agencies such as Freddie Mac that underwrote risky mortages are ultimately state bodies; the legislation forcing banks to lend to risky groups is state activity; the Basel and other bank capital rules that have arguably encouraged the irresponsible use of credit derivatives are state rules, and so on. With the exception of Lehman Brothers and some of the Icelandic banks, not a single large financial institution has been allowed to go bust, as a private company would in a free market. Not one.
Corporate industrialists are frequently not keen on free markets. They are fond of order, safety, and “fairness” or “a level playing-field” – which means everybody doing things the same way they do. They like a managed world, because management is what they do. So no good comes of appointing them as regulators. Technocracy joins with bureaucracy.
Here is Adair Turner interviewed by The Guardian (perhaps in itself a significant choice of forum):
There will be more people asking more questions and getting more information than we were getting before… . There is no doubt the touch will be heavier. We have to make sure it is intelligent and focused on where the risks really are.
Translation: “We have to destroy The City in order to save it.” This is ‘risk’ as understood by a safety fanatic – one-sided, and totally unrelated to choice or to return.
We will have more people than before looking at the high-impact, systemically important firms with major knock-on effects than we did before. We will pay more than necessary to attract the correct quality of people from outside.
More than necessary? And who will pay for such artificial premiums? Whoever the FSA decides to tax or fine. It is a predatory organisation: a Self-Financing Regulatory Agency. So it wil have to find more occasions to punish and to license in order to fund more intervention, licensing and punishment.
There is no chance of a 1929-33 Depression. We know the lessons and we know how to stop it happening again.
A prime lesson of the Great Depression for most commentators has been that shutting down free trade in goods in order to protect industrial markets made the depression deeper and longer than anyone could have imagined. It stopped trade and industry recovering from the shock. That our Government is looking to blame foreign investors for our problems and is taking measures to frighten them off, and that Lord Adair is advocating, as the cure for a financial market crash, tight supervision of the surviving free markets in finance and commercial instruments, suggests the lessons have been rather badly understood. They risk stopping the financial markets recovering from the shock.
Through the miracles of modern technology, Bob Barr will be delivering live replies to the questions put to those ‘other parties’ candidates tonight. You can read more here and get the link for the live broadcast. As it will be at 9pm US eastern time, I will probably not be watching it from here!
Thanks to the eagle-eyed Samizdata commentariat (Ian B), I read this article by Dominic Lawson, son of the former Chancellor of the Exchequer, Nigel Lawson. Lawson Jnr argues that the much-mocked notion of gold-backed currencies, which finally fell out of favour in the early 1970s during the Presidency of that economic ignoramus, Richard Nixon, is due for a comeback. He gives a rather quaint example of what is happening in Lewes, Sussex.
As an admirer of the writings of the Austrian economics school, I have a great deal of sympathy with this argument, although I do not think that gold per se needs to be the anchor of a currency. Given the vast gyrations in the price of gold in recent years, I do not see it as a very practical option for many, if not some, countries. What I do think, however, is that the idea that we can go on regarding money as a sort of metaphysical abstraction to be manipulated at will by Godlike central bankers needs serious reappraisal.
But remember that in times of massive stress – and inflation – gold, like silver and other relatively scarce substances of universally-recognised value, can win new friends. I will be keeping an eye out for stories of such “parallel currencies” in the next few weeks and months. If readers have examples, let me know. Surely this is an area for an enterprising economics PhD student to work on. Why not?
In the meantime, I see that Gordon Brown is now regarded as “statesmanlike” by spending gigantic sums of other folks’ money. I’d be more impressed if he came out and urged a big reduction in UK public spending. He’s also probably got some beachfront property in Arizona he wants to sell………..
I am going to be in Hong Kong, Shenzhen, Macau and thereabouts from Friday evening until October 26. If we have any readers there who feel like meeting up for a meal/drink, please let me know. I have been to these places on multiple occasions before and so do know my way round, but if anyone can think of anything particularly idiosyncratic (or even particularly new) that I may want to do or see, also please let me know.
A government that is big enough to give you all you want is big enough to take everything you have
– Barry Goldwater
I stumbled across this evergreen Goldwater remark on Gmail, where it is also quote of the day. A somewhat surprising choice for them, considering Google’s rather obvious political biases.
The inquest into the death of Jean Charles de Menezes today heard there were “chaotic” scenes in the police control room coordinating the pursuit that ended with him being shot dead.
A detective superintendent from special branch, identified only as Brian, said he was not even aware the Brazilian electrician had been identified as the failed suicide bomber Hussain Osman.
The officer, who was in control of administrative tasks in the control room, said: “I was certainly aware that a male had been shot. The fact that he was unidentified, from what I could gather from the room, was how it felt at the moment.”
(Guardian)
Gordon Brown claims that the expropriation was necessary because Iceland planned to default on British Icesave accounts. […]
Brown’s response? To seize the UK assets, not of the bank that ran Icesave, but of a wholly unrelated bank, Kaupthing, thereby collapsing it. Icelanders, who had been expecting to negotiate a guarantee to British depositors – eventually agreed on Monday – were stunned. They couldn’t bring themselves to believe that the leader of a country they admired would destroy their last solvent bank simply to give himself what Labour MPs have since called “his Falklands moment”.
(Daniel Hannan, Times)
At least they shot de Menezes in the head. For a business whose bank has been terminated on executive orders, the experience is rather like how I imagine it feels to drown in your own blood.
Of course if you have done nothing wrong you have nothing to fear. The government is benevolent, and always acts in the best interests of everyone. Foreigners are a threat. We must remember that. The government says so. So it must be true.
I am sure most of our readers are not amongst those who can write checks for $200,000 to fly Virgin Galactic a few years from now. The first will be ‘high flyers’ of the sort who always subsidize new market frontiers. They will pay the high price to be early adopters and by doing so they will generate the capital required to lower costs as companies begin to fight for market share. That is capitalism at work and it is just the way we like it.
Markets have a certain ponderous inevitability. They take time. If you have neither the money nor the desire to wait twenty years, there is another option.
At this point I must stop a moment and note that I am on the Board of Directors of the National Space Society (NSS) and have been part of the space activist cadre since Adam first looked up and dreamed of giant space colonies at Lagrange 5. So I really want lots of folk to look at this competition and join in.
This is not a lottery of any kind. The NSS and Virgin Galactic have worked together to make it possible for one person to earn their way onto a SpaceShipTwo flight near the end of the decade. All you have to do is join NSS and work your butt off in the community promoting the future of humans in space. The person who is judged to have done this most successfully will be selected as our Space Ambassador. They will be expected to work even harder at this task upon their return to terra firma.
I will not be signing up myself as I am hoping I will find other ways to earn my way off planet. The point of this initiative is to let folk like you believe you can turn your dreams into reality.
Ad Astra… and next year in L5!
The ‘Paul Marks Plan’ to save the world economy is inspired by President Bush and Tim Congdon. I can save the world economy on my own, all I need is the cooperation of the public authorities!
First interest rates must be reduced to a negative level (quite a moderate level, say -0.5% although I would settle for -0.1%) then I will borrow huge sums of money and use some of it to “buy cars” as President Bush has suggested. I will also “buy up every decent security in sight” every time the banks get into trouble – as Tim Congdon has pointed out must be done. But it is the “buy cars” suggestion that has really inspired me, and for a special reason. You see I can not drive – and so I would smash up the cars I bought in car crashes, thus meaning not only would I buy more cars, but the drivers of the cars I smashed into would buy more as well.
It would be a wonderful example of stimulating the economy via consumption. A point that the school of thought led by the late Lord Keynes and the school of thought led by the “monetarist” Tim Congdon are in full agreement upon. And whilst such Chicago School people as the late Milton Friedman might not be wildly happy with the direction of ever greater subsidies for the banks that Tim Congdon has taken “monetarism”, the great Tim would be quick to point out that Milton Friedman would not be able to present clear economic principles showing any error in his conception of money and banking – so it must be okay then.
In case anyone think the above is, er, insane… I would point out that it is more moderate than what the British government has already announced, such as one third of the entire British economy (not the government budget – the entire economy) being pledged to back up the banks.
This goes beyond even what President Bush and Congress have done in the United States. Surely we are moving towards the glorious day, worked for so hard by Tim Congdon, when the entire economy (not just the government budget, but everything) is devoted to subsidising the financial services industry. Let us reject such reactionary nonsense as the principle that every Pound of lending must be from a Pound of real savings. And let us also reject the reactionary principle that if a business goes bust it goes bust – and that a bank is no more entitled to protection from “bankruptcy” than a coal mine is. And, most important of all, let us reject the rigid dogma that once money is lent out the lender does not have it any more – till when, and if, it is paid back.
With ‘advanced banking methods’, backed by government of course, one hundred Pounds of physical savings can be multiplied to vastly more than that in loans. One plus one need not equal two – it can equal any number clever people want it to. And with credit money expansion by the public authorities any problem can be overcome. Credit money expansion, under the control of wise and well paid ‘experts’ of course, can achieve anything and no petty thing like either logic or physical reality can stand in its way.
We can achieve a perpetual motion machine – accept that it will speed up.
Of course scientists might claim both that such a thing was ‘impossible’, and that even if it was not that it would destroy the universe. But so what? If we destroy the universe we can create other universes – by an act of will. After all the physical distance between Chicago and Cambridge already seems to have collapsed.
As President Bush and Tim Congdon have explained – prosperity will return, as long as we pump out enough credit money!
“In addition, one should not minimize the great economic achievements of the past 25 years in the form of rapid growth in world GDP, low world inflation, and low unemployment in most countries. Perhaps these achievements will be overshadowed by a deep world recession, but that remains to be seen. If the impact of this financial crisis on the real economy is not both very severe and very prolonged, and time will answer that question, the combination of the past 21/2 decades of remarkable achievement, and the economic turbulence that followed, may still look good when placed in full historical perspective.”
– Gary Becker.
Like Professor Becker, I think fears of a repeat of a 1930s-style depression are unwarranted. What is a serious concern in my mind is the likely explosion of poorly thought-out regulation by politicians who seem to have forgotten how it was often such regulations, as well as lax monetary policy, that is at the crux of the current turmoil.
This, by Charles Spencer in the latest Spectator, made me smile:
“This is a time for making the most of small mercies. One of the greatest of these, as the financial system collapses around us, is the splendid joke that is Robert Peston of the BBC. His extraordinarily camp, over-emphatic delivery would be perfect for reporting glitzy Broadway first nights but seems hilariously at odds with worldwide economic catastrophe. Peston has all the glee of the callow cub reporter rejoicing in the size of his scoop while lacking the imagination to understand the anxiety his excitable tales of doom-and-gloom might be causing others.”
I admire the scoop-getting skills of Mr Peston, if not always his analytical skills. Anyway, as Mr Spencer continues:
“Like poor Mr and Mrs Spencer of Claygate, Surrey, for instance, who somehow managed to commit themselves to £40,000 worth of home improvements (double glazing and a new kitchen) just before the current crisis went big time. As I do my lengths at the swimming pool, I sometimes experience a knot of fear forming in my guts. Mercifully, thinking of Peston, an egregious character both Jane Austen and P.G. Wodehouse would have been proud to have invented, makes me laugh and my panic disperses.”
On a nicer note to Robert Peston, however, he has put economics at the top of the BBC news agenda in a way that would have been unthinkable a decade ago. Part of this is down to simple events, but part of it is due to Peston’s skills in ferreting out the news, not to mention his status as a friendly journalist to NuLab. Whether this continues if the current bunch get kicked out of Westminster is a moot point.
|
Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
|
