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Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
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Samizdata quote of the day From Don Boudreaux on his blog Cafe Hayek:
A protectionist is someone who believes that we humans reside in near-paradise.
As the protectionist views reality – and assuming that he believes all that he says and understands its implications – the only thing that is scarce in this near-paradise of ours are opportunities to toil and struggle. Everything else – each and every good and service that is and could ever possibly be desired by humans – is so abundant that our only challenge is to find work.
For the protectionist, complete and unalloyed paradise is Robinson Crusoe being stranded alone on a desert island with virtually no material possessions. If the protectionist were consistent, he would voluntarily strand himself in such utter isolation not only from his fellow human beings but from any goods and services other than those that he himself produces with his own hands.
The protectionist cannot understand why Robinson Crusoe might have wanted to be rescued from his desert island.
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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.
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Very nice way to look at it. Normally I’d think of the protectionist as a pessimist: they are afraid of what they might lose rather than looking forward to what they might gain. Protectionism is probably something we’re wired for. Protectionism is probably a variant of hoarding, which we and many other animals are wired for. But thinking of protectionism as a sort of optimism strikes me as a useful tool for debate. “Do you really think this is the best things will ever be?”
I always feel it is doubtful wisdom – and a little too much in the style of the left – to treat the errors of our adversaries as completely imbecile in their immediate stupidity (except when they actually are so, which usually only occurs after a prolonged anti-self-correcting case of “you can’t say that” and “stick to the narrative if you know what’s good for you”).
Imagine the argument were about nationality and borders. Imagine a lefty saying to you that someone who agrees with Trump about the Honduran caravan must be baffled that Crusoe welcomed Man Friday instead of forbidding this unauthorised immigrant (from a – very! – different culture) entry to his own socially-ultra-homogenous island.
Back when Robinson Crusoe was written, readers understood perfectly why Crusoe wished to return to England, while not thinking it then necessarily followed that England had to adopt free trade with the entire world, something we only did a century later. The general advantages of free trade, and the limitations of many a protectionist argument, seem clear to me, but not quite as clear as the quoted argument suggests. I don’t see it making many converts among the unbelievers.
Just my 0.02p FWIW.
I do not see this argument as converting the unbelievers.
That said, I do not see much that will convert the unbelievers. The majority of people find systematic thinking about the world dull and do not seem to think it’s very important. People who would never dream of (say) opining on the thermodynamics of black holes without any background in physics happily spout very detailed opinions on economic questions without even the least knowledge of economics. De facto, they seem to think that their opinion, no matter how facile, is as good as anyone else’s, and indeed, is probably better than anyone else’s. If you attempt to walk them through careful reasoning on the topic, they usually tune out at best or more likely get very angry with you.
So no, I don’t hope that such things will convince anyone who isn’t already convinced by David Ricardo’s argument and the like. The purpose of posting such things (at least for me) is catharsis.
That’s the “theory of scarcity” from chapter 1 of Bastiat’s ‘Sophisms of the Protectionists’.
One can concede the economic argument and still see a basis to refuse to trade with select other people.
One can also tire of believers who react to the above statement by saying “you apparently don’t understand the economic argument and so shouldn’t opine about this.”
What Niall said; what bobby said.
All talk of black holes is just conjecture- we haven’t seen one, nor would we want to meet one!
That said, I point out sometimes, just to muddy the waters, that a black hole is both an immoveable object AND an irresistable force! So you’d just get a bigger black hole- that resolves that supposedly impossible riddle.
All right, you guys, this is spectacularly O/T — but — I just watched it and there’s something here for lotsa Samizdatistas. It helps if you’re a IT geek or a animal-lover, but this is especially dedicated to:
Our UNLICENSED JOKER, from DEFCON 22 in lovely seaside Las Vegas:
https://www.youtube.com/watch?v=DMNSvHswljM
Watch and learn.
Luff,
Julian A. and Ed S.
Thanks, Julie! More things you can do with cats! Something to do on the weekend. Our neighbours can always get more cats!
Or as a certain Perry Metzger quoted on twitter recently:
“In olden times, armies would lay siege to cities to cut them off from outside trade. The strategy forced the city to “buy local” until it was so prosperous that everyone was too rich and lazy to fight.”
– Rocco Stanzione
It’s a lovely theory but it rests on the idea of ruining the bottom rungs of the socio-economic ladder so that those above are statistically better off. Averages don’t mean a lot to the man who is put out of work and enriching economic and military competitors via trade and industrial relocation is a colossal mistake.
I don’t think that many people who oppose the import of cheap goods and labour which might threaten their livelihoods regard humans as living in a near paradise.
That attitude is more common in people who love such freedom of movement, mainly because they are unaffected by it themselves or benefit from it.
Nonsense on stilts, Mr. Black. Protectionism increases prices, and the people who suffer most from increased prices are those at the bottom of the ladder.
Very few people do not benefit from lower prices.
“It’s a lovely theory but it rests on the idea of ruining the bottom rungs of the socio-economic ladder so that those above are statistically better off.”
The people on the bottom rungs of society are generally the ones who benefit the most from free trade. The problem is that much of the benefit is indirect or out of the scope of people’s awareness, so people tend not to recognise what the cause of it is.
It’s the same principle as the labour union closed shop. To protect workers wages, workers form a union, and require that their employer only employ union members. (Replace ‘union’ by ‘nation’ and you’ve got nationalism.) By getting a monopoly on the supply of labour, they can raise the price of labour (i.e. wages), and (so they believe) make the union workers rich.
The problems with it are two-fold. First, it relies on excluding competition from non-union workers, who are the real “bottom rungs of the socio-economic ladder”, but who the protectionist is not including in their moral equation. They’re out of scope, invisible, not “one of us”, somebody else’s problem. With every £1000, you can employ 50 people on £20 each, or 100 people on £10 each. If you employ 50 people on £20 each, the other 50 people get £0, but we normally don’t notice those.
And second, the cost of the higher wages gets passed on into the price of goods, which of course all the workers need to buy. Each industry gains by protecting its own wages, but loses more due to every other industry protecting theirs. Prices go up, so wage demands go up again, so prices go up again. Ultimately, less goods and services are produced overall, there’s less to go around, and in any shortage situation it’s the poorest who are most vulnerable, most dependent, and who are pushed to the edge first.
The problem is that people seem to be wired to think society getting richer means rising wages. But a free market makes society richer by making goods and services cheaper. Wages fall, but prices fall faster.
For another example, consider the industrial revolution. Automation – as with powered looms – could be thought of as the import of ‘cheap labour’ out of nowhere, replacing huge numbers of jobs in the textile industry. The Luddites saw it as a threat to their livelihood, and tried to keep them out; protectionist thinking precisely. But the result of reducing the cost of production was that high-quality textiles went from something only the rich could afford to something anyone could have. The customer base expanded, and the factories would up employing thousands more unskilled workers to produce cloth for all the millions of the poor than the weavers ever did. Society got richer by goods getting cheaper, and the poor benefited from that the most.
We’ve gone from an age where most people in Western societies lived as subsistence farmers in wattle-and-daub huts at the edge of starvation to one where many even of the poorest can afford mobile phones and foreign holidays in less than 500 years! Comparatively speaking, the poor today live in a near paradise! And yet, despite this history, low-skilled workers still fear competition from automation.
Protectionist thinking is deeply ingrained, and the education system makes no effort to correct that.
I know that what Perry and Nullius in Verba said above is correct. I know that we should, for example, welcome the Chinese dumping their subsidised steel on us with open arms because it is a direct transfer of wealth from the Chinese taxpayers to us. I not only know all that but I believe it.
The thing is, though – I haven’t yet figured how to tell a guy in Pittsburgh that it’s a shame his job is going, but that’s a necessary sacrifice on the road to greater national prosperity. It’s all terribly sad, but so long and thanks for all your years of service. No, I have no idea how you’re going to support your family for the next thirty years either, but I wish you all the best.
How do you do that?
Catharsis is very reasonable wish, and the cathartic text you quoted falls well short of those lefties who posted relief to their feelings about Trump’s election in self-revealing tirades that helped him, not them, but I liked better your ‘besieged town’ argument that PerryDeH quoted above. However I enjoyed reading your post because it forced me to ask myself why my hypothetical lefty’s argument was simply wrong, whereas the guy you quoted was simply exaggerating. Here are my thoughts FWIW.
One side is what Milton Friedman noted, discussing the thousands of workers who could be involved in making a pencil: “These people may live in different countries, practice different religions and politics, even hate each other” – yet the tiny separate bits of localised cooperation that go along with their tiny individual contributions to making the pencil are possible because they freely choose to do them and are not thereby committed to doing much more.
The other side is that the rescued Man Friday did not acquire any vote, let alone one equal with Crusoe’s, in the running of the island. On the contrary, it is superabundantly clear, if not (that I recall) spelt out in words, that both Crusoe and the author regard Friday as Crusoe’s slave (this de-facto slave state is technically ended by the pair’s eventual return to English soil, but the book leaves it moot whether anyone bothers to explain that to Friday before Lord Mansfield’s declaration). Were it otherwise, Crusoe would certainly have had to think hard about allowing this (at first, not very!) ex-cannibal an equal share in the running of the island.
“How do you do that?”
It’s not that he doesn’t have a genuine problem that society really ought to do something about, but that it’s a different problem to the one he thinks it is. And the first step to a solution is correctly identifying the problem.
The idea of technological progress is that as the bottom rungs are replaced by automation (or imports), that everybody climbs the ladder. Automation creates new jobs by enabling the most skilled to do things that nobody could have done before, and brings jobs that previously only the skilled could do within reach of the unskilled. The jobs the unskilled previously did drop off the bottom, as automation replaces them.
His problem is not that the world keeps moving, it’s that he’s unable to move and keep up with it. His skills and experience are too inflexible, it’s hard and expensive to learn new skills, there are barriers in the way.
Society does have a problem here – even from the free market viewpoint. Inequality is the result of a major skills shortage. Every job that pays more than minimum wage is evidence of not enough people with the requisite skills to do the work people want doing. It represents unfilled, available jobs – millions of them! But we’re struggling to get people into them because of a variety of barriers. Training/education, tools/technology, and because of protectionists elsewhere in the system keeping them out.
Government misdiagnosis of the problem often doesn’t help, either, as with minimum wage laws, meant to help the poor but actually hurting them.
Inequality is how the market tries to fix it. Some people are paid more than others to motivate and reward people to move into those areas where we need more workers, to fill those unfilled jobs, and to pay for the investment of time/training/technology needed. But persistent inequality is a bad thing in a free market – it’s a sign of stubborn structural barriers in the labour market preventing workers moving into the areas society most needs them; barriers we’ve not been able to get rid of.
I think it is perfectly reasonable to ask society to do more to get rid of those barriers, and enable your Pittsburgh worker to get another, better job. He has every right to complain! He just needs to complain about the right thing.
Perry, people do not benefit if the price of their labour is lowered.
“Perry, people do not benefit if the price of their labour is lowered.”
Sometimes they do. But how and why they do is often not obvious, and so the misconception that lowering prices can never increase profit persists. The maths isn’t complicated, but it’s not how people are used to thinking about the world, it doesn’t fit their intuition, so explanations tend to bounce off.
I’ve often thought that basic economics ought to be taught as a compulsory subject in schools – it’s one of the essentials for understanding the world and making your way in life. (Far more so than trigonometry, say.) But misunderstandings about economics are at the root of a lot of political conflict, and schools are (supposedly) barred from openly taking sides in political controversy, so I suspect there’s very little chance that a basic universal economics curriculum could ever get implemented.
Mr. in Verba –
Thank you. That is a considered and thoughtful reply.
There is one thing, though. In your first sentence you reified ‘society’. ‘Society’, in the sense I think you’re meaning (and I may very well have missed your point), simply doesn’t exist.
Once upon a time, Newcastle had 17 miles worth of ship-building and related industries along the Tyne. That’s on both sides of the river. We supplied not only the British navy, but also the Japanese and the Russians. That made the Russo-Japanese War a talking point in our local pubs because it came down to a competition between our shipyards. (FWIW, my personal hero, Lord Armstrong, was on the side of the Japanese.)
All of that collapsed in only a half-decade in the 1970s. Dust in the wind. Thousands of men were neither employed or employable. It’s taken us nearly forty years to recover.
How does ‘society’ fix that?
What the Classical Economists meant by Free Trade was “we sell them some things and they, in return, sell us other things”. People specialising in what they were best in producing – and (basically) exchanging goods.
The great Classical Liberal economists did NOT mean “borrow hundreds of billion of Dollars a year to buy consumption goods”. Especially not from sworn enemies such as the People’s Republic of China – which has its own reasons to gain control of strategic industries vital for the military.
This, borrow hundreds of billions of Dollars a year to buy consumption goods, is about as far as “we sell them some things, and they sell us things in return” as it is possible to be.
Don B. knows all this – he has been told multiple times, by multiple people. Yet he carries on his Straw Man attacks about “Protectionists” and their supposed desire to prevent Free Trade – the freedom of people to buy some goods in return for selling other goods.
Don Boudreaux, with his endless Straw Man attacks, is guilty of BAD FAITH. President Trump and co are not proposing “Robinson Crusoe” and certainly do NOT want to reduce (let alone get rid of) international trade. And Don B. knows this – he knows that his attacks are Straw Man attacks, yet he carries on with them anyway. That is Bad Faith.
By chance “if chance you call it” – the Economist magazine has stopped giving industrial production figures this week (the absurd “GDP” stuff is still being published – GDP even includes GOVERNMENT SPENDING, indeed any SPENDING).
Name me one great Free Trade economist (one Classical Liberal thinker) who thought that production (actually growing and making things) did not matter, and one could just carry on BORROWING endlessly to “finance” the import of consumption goods.
You can not name one such figure – because none of the great real Free Trade thinkers believed this. To pretend that the current situation (of borrowing hundreds of billions of Dollars a year to finance consumption) is what they wanted, is (I repeat) BAD FAITH. It is NOT what they wanted – and Don B. knows they did not want this.
“Thank you. That is a considered and thoughtful reply.”
Thank you. And thank you likewise for the stimulating questions.
“‘Society’, in the sense I think you’re meaning (and I may very well have missed your point), simply doesn’t exist.”
Is that a reference to the Maggie Thatcher quote? Yes, it needs individual people to care, and to do something about it, not assign it to government as “Somebody Else’s Problem” and forget about it. That’s why I suggest everyone needs to be taught the economics, not just legislators.
“Once upon a time, Newcastle had 17 miles worth of ship-building and related industries along the Tyne.”
Industries come and industries go. When we have so many other problems that need solving, it would be wrong to keep resources locked up in what’s no longer a problem.
“Thousands of men were neither employed or employable. It’s taken us nearly forty years to recover.”
And that’s the question that needs answering. Why were they not employable? Why did it take 40 years to redeploy them?
Hundreds of thousands of eighteen year olds all across the country with minimal skills and no experience whatsoever can walk straight into a job, and starting from scratch, acquire the skills and experience and resources to make a living. What stopped the Newcastle dock workers doing the same?
Note, I’m not saying that it was somehow their own fault for not “getting on their bikes and going to look for work”. (It may be, but I don’t know.) I don’t fully understand why it happened, and I suspect it was complicated. But it’s the right question to be asking. It’s not about how we can keep the docks going after we no longer need them, but how we can redeploy the resources once we no longer need them doing what they once did. There are lots of jobs elsewhere that need doing. What was it that stopped these people doing them?
“The great Classical Liberal economists did NOT mean “borrow hundreds of billion of Dollars a year to buy consumption goods”.”
There’s no problem with borrowing to pay for goods, so long as you intend and expect to repay. Floating a company on the stock exchange is essentially taking out a permanent loan – and we can legitimately spend it on consumables and raw materials needed to start the business. We take out a loan to buy a house (a consumption good) so we have somewhere to live while we earn the money to pay for it. We take out a loan to buy a car (a consumption good) so we can get to work and so earn the money to repay it. We still have to earn what we spend, but we don’t necessarily have to do it in that sequence.
In the future, we will all likely be richer than we were when we started. Society likewise. And it sometimes makes more sense to borrow when we most need the resources and repay it when we can most easily afford it.
Money itself is a debt. It represents the good we have done for the rest of society that society has not yet repaid. And where would the economy be without money?!
That’s not to say that I think our current governments are being sensible with the deficit – but used properly, debt is a perfectly legitimate tool for economies.
“Especially not from sworn enemies such as the People’s Republic of China – which has its own reasons to gain control of strategic industries vital for the military.”
Of course, and we do have to keep an eye on what they’re doing.
But the only way to ‘defeat’ them is to convert them to the benefits of our way of thinking. (If you can’t beat them, get them to join your side!) We want to make them rich and prosperous, and for them to understand that their prosperity is both thanks to and dependent on us and our economic system.
It’s a cultural war – our cultures make close contact, and in the friction we each modify the other. The stronger, most effective, most powerful, most beneficial, most popular culture tends to slowly take over, as the interacting participants decide the new rules based on their own best interests. It’s a survival of the fittest. And every Chinese businessman is well aware of what horrors Maoism leads to, and the sort of prosperity that Western ways lead to, and will choose accordingly if they get the opportunity. They’re perfectly willing to cheat to come out on top, but they do at least want to play the same game with us.
The Chinese leadership I’m sure are well aware of where all this is going and the need for reform. Their fear is that their society will fragment and collapse into violence if it gets freedom before prosperity, so they are trying to make the process gradual. (I’m not saying they’re right, but it’s what they think.) There is also, of course, a lot of self-interest in that, too. They are not nice people. But they’re not stupid, either. A war with the West is not in their interests.
I recall reading back in the ’80s an account of one north-easterner who did ‘get on his bike’. He found it easy to get a job down south but less easy to find a place to stay because of the difference in property prices. I’ve both experienced enough and observed enough of long-distance by-the-week-not-the-day commuting to think this is hardly an insurmountable obstacle, but I can see how a middle-years guy with a family, having to start all over again in an entry-level job, might find the UK’s peculiar-seeming housing state a complicating factor.
An issue I suspect is relevant is that these communities were accustomed to hard work but were used to the organising of work being done by small minorities. If you expect just to ‘find a job’ (that someone else is offering) and ‘be shown what to do’, then you may be capable of much hard work in the literal sense yet be poor at replacing work when it disappears. The official culture of north-east England was politically-left in the Thatcher years, if not so much so as in Scotland. If something in that culture made it easier for the small minority of entrepreneurs to move elsewhere to start new businesses, that could contribute to the slow replacement of the vanished shipyards – as, I believe, it did to their rapid demise in the 70s. That was certainly the case on the Clyde, where the way the hard-left union culture killed the shipyards was very obvious. I do not know about North-East England.
Niall,
I’ve heard all sorts of theories. One is that many were on the unionised hard left and used their endless victimhood to make a political point. A related one that it was a matter of pride for them. Another theory is that it was negative equity – they had houses with mortgages in the Northern industrial towns that dropped precipitately in value and which they couldn’t sell, so they couldn’t move to where the jobs were. Another is that many of them were functionally illiterate and innumerate. They had grown up expecting to do manual labour and so had not paid much attention at school, and then spent 20 years working with virtually no practice at academic sorts of things. (Although at practical construction and engineering problem solving they were often brilliant. Not all intelligence is academic.) They were far behind even an average starter 18 year old. Another is that they had a rough-and-ready character, culture, and appearance that didn’t fit in smoothly with office jobs, and got turned down everywhere.
For what it’s worth, I did recently come across a former dockyard metal welder who was trying to make a new start as a cashier in the staff canteen. He was dreadful at it; he was extremely slow, frequently got confused over the till buttons for the different options, and was constantly asking for help. Nice fellow, very friendly with customers, but he disappeared after a few months. And I expect that a lot of men went for those heavy manual jobs precisely because they were “not academic”.
But I don’t know how often that was the reason.
I have certainly seen it argued that in the past we had lots of “manual labour” jobs for boys like that, which have since disappeared, and that it’s not reasonable to expect them to transfer to office jobs. Not only do they not have the basic skills, it is claimed they can’t be taught them, either. And that gets us into a separate debate about the state education system and teaching methods and cultural attitudes to education and whatnot. While I’m sure that there are things that could be done to improve education considerably, I don’t have any easy answers.
However, I do think that a debate about how to better teach people new skills, hard as it is, is more constructive than one about how we can block economic progress so that people with obsolete skills are not left behind.