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.
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Every so often a big news story develops, or at any rate a story that a lot of people are saying is a big story, and I miss the bus, so to speak. At first I ignore it, in this case because it seemed a small, local American matter of no great interest to me, and then, when I keep on being told, by people whom I respect, how significant the story is, the stories I do read don’t make much sense to me, and often hardly any. Having failed to grasp the fundamentals of the matter at a time when that was what everyone who cared was talking about, I never from then on got told about them. In more recent reports, the fundamentals of the story are assumed, rather than spelt out again and again. Consequently, as far as this story is concerned, I lack any sense of the big picture, and each further burst of paintwork that someone adds to the big picture only adds to my confusion.
So it has been with “Gunwalker” (aka “Fast and Furious” which I assume is the name given to the operation in question by those responsible for setting it in motion), which is a story about American government officials selling guns to bad Mexicans, and other Mexicans (Good ones? Other bad ones?) being killed with these guns. I think. Instapundit seems to have linked to stories about this story on an almost daily basis, ever since it became a story, most recently here and here.
Rather than meander on at greater length about what (this being my entire point here) I do not understand, let me state my request simply. Could our ever industrious and informative commentariat take it in turns to try to explain this story to me, and why it matters, as if explaining it to someone who knows nothing about it. Because that, pretty much, is what I am.
I am particularly interested in what the possible motivations of the accused government officials might have been. What nefarious, illegally money-making motives might they have had? But also: What honourable but undiscussable motives might they have had? What greater good might they have been pursuing with the apparent evil that they seem to have been presiding over?
Instapundit is fond of comparing Gunwalker with Watergate, on account of nobody having been killed by Watergate, but on account of it having mortally wounded the Presidency concerned. He presents Gunwalker as a story involving, among other things, blatant mainstream media bias.
But I am also reminded a little bit of that Arms For The Nicaraguan Contras thing that Reagan got accused of. That never bothered me too much, because however illegally Reagan may have acted in obtaining the arms in question, arms for the Contras sounded good to me, given the people that the Contras were said to be fighting against, and who was supporting the people that the Contras were said to be fighting against. And it never bothered Reagan too much because Reagan was not only a genius in general but also a genius in particular at appearing to be the opposite of a genius, with no clue as to what his underlings got up to and therefore who couldn’t be blamed for anything they did that was considered bad.
But, although apparently a fairly typical affair of state, this Contragate (?) matter was used by the then left-dominated media to badmouth Reagan. Could this be what the right-leaning alternative media are doing now with this Gunwalker thing? Using it as a stick to beat Obama with, when actually there are quite good reasons for what has been going on? Or are there extremely good reasons to bang on about this thing? These are not statements disguised as questions, they are actual questions. I do not know. But, I now find that I would like to.
I’ve said it here before and I am sure I will say it here again. Steve Baker MP is a remarkable man.
Last week, Steve Baker published, in a new Spectator venture, this list of books that he admires, with very brief notes saying why. The list contains several books by authors of the sort that no normal MP would admit to admiring, whatever he might privately claim. Nozick, Jesus Huerta de Soto, Schlichter (Schlichter’s Paper Money Collapse being Baker’s answer to the question: “What book best describes now?”), Nigel Ashford (an excellent populariser and clarifier of libertarian ideas), Bastiat, von Mises (the books of those two authors, along with the King James Bible, being the ones that Baker would snatch from a British library fire). Amazing.
I thought I would die before I witnessed a British Member of Parliament publishing a list of books like that, as opposed to merely chatting about such things between ourselves, dear boy. Baker is out and proud about it. He knows what are the big ideas that matter the most just now, and he doesn’t care who knows that he knows.
Johnathan Pearce regularly mentions here the Rational Optimist himself, Matt Ridley, very admiringly, most recently in this posting. For those who share JP’s admiration, there’s a video of his recent Hayek Lecture, which everyone who wins the Manhattan Institute’s Hayek Prize, for the year’s best book promoting the ideas of individual liberty, gets to give.
Videos are also very handy for people like me, who only learn things half decently if told them several times, in different media, in different voices, so to speak.
I’m now watching this video at Bishop Hill, to whom thanks because this is where I learned of it.
Here’s a quote from the lecture (of the SQotD sort that we like here) that has already stood out, as I concoct this little posting:
Self-sufficiency is another word for poverty.
Maybe that’s two words. But: indeed.
As the man introducing him said, one of the things that makes Ridley particularly special as a writer is the enormous range of evidence that he brings to bear on the matter of why trade and trade networks work so fabulously well, compared to isolated individuals or isolated local communities.
The lecture lasts nearly an hour, but shows every sign so far of being very well worth it.
Community and collectivism are opposites.
– Eric S. Raymond (via David Thompson)
It would (will?) be interesting to hear what our own Paul Marks has to say to in answer to this, from Ambrose Evans-Pritchard:
Judging by the commentary, there has been a colossal misunderstanding around the world of what has just has happened in Germany. The significance of yesterday’s vote by the Bundestag to make the EU’s €440bn rescue fund (EFSF) more flexible is not that the outcome was a “Yes”.
This assent was a foregone conclusion, given the backing of the opposition Social Democrats and Greens. In any case, the vote merely ratifies the EU deal reached more than two months ago – itself too little, too late, rendered largely worthless by very fast-moving events.
The significance is entirely the opposite. The furious debate over the erosion of German fiscal sovereignty and democracy – as well as the escalating costs of the EU rescue machinery – has made it absolutely clear that the Bundestag will not prop up the ruins of monetary union for much longer.
Clearly, Evans-Pritchard had in mind commentary like this (Paul Marks yesterday):
It is the end – not just the end of any prospect that people will really face up to their problems (rather than scream for endless bailouts), but also the end for any pretence that modern government is in any real sense “democratic”. It is not a sudden emotional whim of the people that has been ignored – it is the settled opinion (conviction) of the people, which has been held (in spite of intense propaganda against it) for a long period of time, that has been spat upon.
Evans-Pritchard, however, says this:
Something profound has changed. Germans have begun to sense that the preservation of their own democracy and rule of law is in conflict with demands from Europe. They must choose one or the other.
Yet Europe and the world are so used to German self-abnegation for the EU Project – so used to the teleological destiny of ever-closer Union – that they cannot seem to grasp the fact. It reminds me of 1989 and the establishment failure to understand the Soviet game was up.
So, have things changed, or have they not?
I agree about the USSR parallels in all this. But Evans-Pritchard’s reportage also reminds me rather of that vote of confidence that they had in the House of Commons, which Neville Chamberlain “won” in 1940, but actually lost.
I remember once speculating, here, there or somewhere, that one of the many things that could reasonably be said to have caused Word War 2 was the failure of any sort of German Parliament to meet – circa 1939, and say, in the manner of a British Parliament: No! No more of this! That time, the idea was for Germany to conquer Europe (and much else besides) with armies. Now the plan is and has long been for Germany to buy Europe, and give it to … EUrope. But the price is again proving ruinous and the object being purchased is a crock.
This time, the means are surely still in place, as they were not in 1939, for Germany to say: No! But, did they? And if not, will they? Over to you, Paul Marks.
LATER: Detlev Schlichter agrees with Paul, using the word Götterdämmerung. Germany, he says, is finished.
He also says this:
And one final word to my English friends. No gloating please about the clever decision to stay out of the euro-mess. You have the same thing coming your way without the euro. The coalition’s consolidation course is apparently so ruthless that every month the state has to borrow MORE, not less. Even official inflation is already 5% but pressure is growing on the Bank of England to print more money. See the comical Vince Cable yesterday, or Martin Wolf, the man with the bazooka, in the FT today. Since 1971 the paper money system has been global. Its endgame will be global, too.
Indeed.
Europe on the Brink, a Policy Brief published by the Petersen Institute for International Economics, makes for grim reading. My favourite quote from it is this subheading:
This potential break-up of the euro area is exactly what happened in the ruble zone when the Soviet Union broke apart.
“Potential”? Also, I think, for “euro area” read state-backed but not gold-backed currencies everywhere.
But the USSR comparison is spot on. When the USSR disintegrated, this was rightly hailed as a triumph for capitalism, but not rightly hailed as the triumph of capitalism. There were other walls yet to fall, other statist follies yet to be destroyed. The commanding heights of the economy used to be thought of as big companies that did physical stuff to physical stuff. 1991 was the date when the idea that governments should micro-manage such enterprises got its comeuppance, and the torrent of high quality stuff that has gushed forth ever since continues, as yet, unabated. But the real commanding heights, the loftiest and most commanding of all, the politically (mis-)managed currencies of the world, are only now collapsing.
Think of our current travails as the unfinished business of the twentieth century.
The UK Labour party’s conference is underway in Liverpool, and party bigwigs are presenting their proposals for reinvigorating Labour after its crushing defeat in the last election. The stupidest of these proposals to date will be presented today, when Ivan Lewis, the shadow culture secretary, will propose a licensing scheme for journalists through a professional body that will have the power to forbid people who breach its code of conduct from doing journalism in the future.
Given that “journalism” presently encompasses “publishing accounts of things you’ve seen using the Internet” and “taking pictures of stuff and tweeting them” and “blogging” and “commenting on news stories,” this proposal is even more insane than the tradition “journalist licenses” practiced in totalitarian nations.
I’m all for hanging up Murdoch and his phone hackers by their thumbs, but you don’t need to license journalists to get that done: all you need to do is prosecute them under existing criminal statutes. In other words, the only “journalism code of conduct” the UK needs to avert another phone hacking scandal is “don’t break the law.” Of course, it would help if government didn’t court favour with the likes of Murdoch, as was the case under Labour (and is the case with today’s Tories).
For a party eager to shed its reputation as sinister, spying authoritarians, Labour’s really got its head up its arse.
– Cory Doctorow
This is so mad it is being noticed everywhere, not just in Britain. Instapundit says they should have a read of Areopagitica. Well, we can hope. Not that they will read Areopagitica, merely that they might not like making themselves look like sinister, spying authoritarians, all over the world.
LATER: Lewis’s Loony Licensing Plan Disowned By Miliband. The derision was not confined to the internet. The Labour Conference was derisive too. Good on them. Someone tell Instapundit.
Recently a friend told me something about kibbutzes (kibbutzim?) in Israel, which got me into speculation mode. My friend had, he told me, met quite a few people in the course of his various globetrottings who, attracted by the aura of idealism and general world-savingness that kibbutzes radiate, had spent time in a kibbutz. Such pilgrims, said my friend, had quite soon left, all of them disgusted by the experience. Far from being havens of a higher form of humanity, kibbutzes are incubators of nastiness and personal backbiting and unpleasantness of all kinds. Kibbutz life, said these people, had cured them of socialism for ever. Which makes me speculate that kibbutzes are, for this reason, a spectacularly good thing, for the people thus inoculated, and for the world, in more ways than I can count in a short blog posting.
The only kind of people said my friend, who live well in kibbutzes are, well, the kind of people who live well in kibbutzes. People who thrive under totalitarian socialism, basically. Good at politics, good at screwing people without appearing too obviously to screw them, in accordance with the rules of rigid egalitarianism. There are lots of rules, to suppress individualism, getting ahead, getting richer, and so on, and the individuals who understand these rules use them ruthlessly to get ahead, and even, if you are flexible about how you measure wealth, to get wealthy.
These “alpha personalities”, as my friend described them, stick around, ruling the kibbutz with a rod of egalitarian iron. Many of the people lower down the Greek alphabet, without whom these alphas would presumably be rather helpless, are the transients, some of whom my friend had talked with. Young idealists, for whom life on a kibbutz is some kind of rite of Jewish passage. They arrive, serve their time until they can stand it no longer, and leave, taking with them an education in the realities of egalitarian collectivism that is given to few others in what is basically, still, a moderately free world. They experience such a regime good and hard, in a form that they can contrast with a life outside that kibbutz that is still massively freer, and then leave, taking that knowledge with them.
So, in addition to being one of the great new hubs of technological innovation in the world, the state of Israel, by permitting with its laws (including, presumably, a law which says that kibbutzes may not imprison those who no longer consent to being there), and encouraging with its ideological traditions, master classes in the realities of collectivism, is doing the world another huge favour. Kibbutzes are, you might say, re-education camps for precisely the sort of people who most require such re-education, and at a time in their lives soon enough to make a huge difference, to them and to the world.
I am a huge admirer of that human semi-collectivity called Jews, and pretty much an uncritical supporter of the state of Israel in its ongoing struggle to stay in existence and to flourish. But, and please do not misunderstand this next bit, I sort of agree with some of the more admiring bits in the ravings of the world’s many anti-semites, present and past. Jews are rather special. A century ago or so, Jews did have an influence on the world that was far greater than their mere numbers would seem to have allowed. (I am a classical music fan, and the sheer scale of the Jewish presence in that world has been and remains extraordinary.) It did not follow from the super-achievements of Jews that therefore the Jews were evil and should all be murdered, and it does not follow now. But, they were a group of people very much to be reckoned with, and they surely still are, again way beyond their mere numbers in the world.
I therefore now surmise that an ongoing education programme, which turns energetic, adventurous and idealistic young Jews from devotees of collectivism in devotees of something more like the opposite, has got to be one of the very best things now going on in the world.
But, this is pretty much all speculation on my part. The question mark at the end of my heading is no mere afterthought. I admire Israel from afar, but have never been there, nor have I travelled very much in the world. (Maybe if I spent more time in Isreal, I would admire it less.) So I end with all the usual questions which thinking-aloud, but-what-do-I-know?, guess postings of this kind generally do and always should end with. Does any of the above make sense to any of our commentariat? In particular, how do the above speculations strike any readers of this who have pertinent knowledge of the matters I speculate about, of the sort which I do not have, beyond that small item of chat from a friend?
I can well imagine that kibbutzes might indeed do a bit of the good I describe, but be doing a lot more harm in other ways. Also, my friend, being of a strongly anti-collectivist inclination himself, could have been suffering from severe selection error. Maybe the world is full of Jews who have lived in a kibbutz and would like nothing less than to kibbutzise the entire world. But, I like to think not.
Corporatism in finance has brought ruin onto the world. Letting banks fail is messy, disruptive and ugly (though not as much as people think). But bailing them out creates moral hazard – it gives a blank cheque to reckless banks. Unless bad banks are allowed to fail, good ones cannot take their place. Preventing failure is good for established banks, but bad for everybody else.
Cheap credit created by central banks inflated the housing bubble that burst in 2008. The combination of artificially cheap credit and banks expecting a bailout led to the crisis. Money should emerge from markets, not be imposed by governments. Without radical changes to money and banking policy, we will sleepwalk into the next crisis, and it may be even bigger.
Somebody needs to speak up for the freedoms of the many against the protections of the few. Corporatism – not capitalism – was at the root of the last crisis and it will be at the root of the next one. Britain needs to reject protections for businesses. It needs a free market revolution.
– Sam Bowman
I have just posted the following review on Amazon.com of Paper Money Collapse. I only learned last night that the review embargo date had now arrived and that the time to be talking this book up is now, so this review was somewhat hastily written, although it is the result of quite a lot of thought. This was my very first review of any book on Amazon, and it shows, I’m afraid, particularly in my blundering attempts to italicise, which work here by those methods, but not there. Also, although I said I liked it, I didn’t tick the box saying that I liked it. Can I do anything about any of that? Probably not. (LATER: actually, I now learn that you can edit these reviews. The italics thing now makes no sense!) Oh well, blog and learn, review on Amazon and learn. I will be amazed if I don’t find myself wanting to say lots more about this book, but what follows is my first best shot.
An effort but definitely worth the effort – could be huge
I agree with the bit on the cover of this book where it says that this is not an easy read. For me, it has not been, and not just because the truths Schlichter spells out and explains are so not-easy to take. I am a huge fan of his, and have been ever since I first heard him talk about the analysis in this book in London about a year ago, but he makes me work hard. This book is heavy on logical exposition, much lighter on diverting anecdote. For the latter sort of Schlichter stuff, you must read his blog.
One way to describe Paper Money Collapse might be to say that it is the sort of book that the great Austrian School economist and economic historian Murray Rothbard might have written, had he lived a bit longer. Last year I read Rothbard’s Man, Economy and State. While doing this, I kept hoping that I would read a theoretical analysis of our current financial woes, as opposed merely to Rothbard’s general take on Austrian Economics as a whole. I realise that this was a lot to ask of a book published several decades ago, and not surprisingly I was, although in general much educated, largely disappointed on that particular count. Well, what I was only hoping to read in that Rothbard book was what I did read in Detlev Schlichter’s much shorter book, which I heartily recommend to anyone willing to really get stuck into it. Here is a conceptual analysis, in very much the painstaking Rothbard manner, of how non-commodity-backed currencies behave when they collapse, and why they do collapse, always, inevitably. In other words it is about the times we now live in.
I learned a lot from reading Paper Money Collapse. In particular, Schlichter has convinced me of the wrongness of the argument that since we want economic activity in the world to increase indefinitely, but gold is, barring a few trivial further discoveries, fixed in quantity, gold won’t work as the basis of currency. But non-elasticity is exactly why gold is such a good basis for currency. Totally elastic money, on the other hand, inevitably collapses, always and everywhere. Why should our elastic money be any different?
Schlichter is not pointing the finger at individuals. This is not a detective story, where in the final chapter all the suspects are rounded up and Herr Schlichter points the finger at the guilty man. President Nixon’s decision to break the final link between the dollar and gold is deplored, and Ben Bernanke’s recent pronouncements are likewise disapproved of, but many of the decisions that lead to our current mess were made many, many decades ago, and by their nature they are the kind of decisions which are far easier to make than they are to reverse and clean up after.
Nor does Schlichter believe that hyper-inflation now threatens us all because central bankers are unaware of the badness of hyper-inflation. They know that hyper-inflation is bad. Unfortunately, they also know that if the collapse that Schlichter describes occurs while they are in office, then that, for them, will be even worse than a bit more inflation or even quite a lot more inflation. So, they carry on printing money and postponing the resolution of the problem, which means that when nemesis does finally arrive, it will be all the worse. But, says Schlichter, they know what they are doing; they just don’t know how to stop. Schlichter telling them to stop will accomplish nothing.
I suspect that Schlichter may be being rather kind about just how plain stupid some even quite high ranking central bankers now are, but clever or stupid, these people are now thoroughly boxed in by their previous decisions and by the decisions of their predecessors of earlier years and decades.
I have been using the phrase “paper money”, as Schlichter himself does in his title. But as we all know, when central bankers now create yet more money, they are mostly putting numbers in electronically managed bank accounts. It is not the printing of bank notes that is the problem; it is the lack of a commodity base to control the process. By the same token, paper bank notes that refer to a currency that is solidly based on something like gold would be fine. But I am sure that Schlichter has thought long and hard about this phrase, and I gladly defer to his decision to call it “paper currency” in his title. I certainly don’t know a better way of putting it. “Fiat” money? “Elastic” money? (That’s the phrase that Schlichter switches to in the subtitle, also prominently displayed on the front cover.) Both are a bit more accurate than “paper” money, but are also a bit less attention-grabbing for the kind of intelligent and educated everyman whom Schlichter is trying to reach. “Paper” gets over the gist of the problem pretty well, I think. And you start learning what that means as soon as you read the sub-title.
When it comes to Schlichter’s pessimism about him personally having any influence on the conduct of public policy, I agree with him, in the short run. But I think he may be proved wrong, in the longer run. I agree with him that there is nothing much he can say to the people now in charge of financial policy that will persuade them to do the right thing now, which basically means getting the collapse over and done with as soon as possible. But when this collapse starts seriously happening anyway, in just the manner and for precisely the reasons that Schlichter says, he could then become a very Big Cheese, as we say in my native England. In fact, if this book does half as well as I suspect it may, Schlichter will probably be accused, by various paper (fiat, elastic) money idiots who know only the title of this book but nothing of what it says, of having precipitated the catastrophe he describes. But other people, including politicians and central bankers, could also then be asking him: So, Schlichter, what the hell do we do now? I urge Schlichter to be ready for this moment. Suggested title for his next book: Now What? (Presumed answer: Let non-state controlled and non-state backed bankers supply currency, which they will back with gold. Get out of their way and let them get on with it.)
Meanwhile, I urge anyone who thinks that he might find this book enlightening, and helpful for personally navigating through the mess, to go ahead and be enlightened. I think this book may become very big. It certainly deserves to.
Yes, Kevin Dowd’s Monday night tour de force for the Adam Smith Institute, which I wrote about here (and then some more here) has now been released into society in video form. Having attended the event itself I have not yet watched much of the video so I cannot vouch for its sound quality (what with all the extraneous mechanical noises on the night), but I hope and presume that it suffices.
The ASI’s Sam Bowman says that Dowd’s speech is …:
… essential viewing to anybody who thinks the worst is behind us.
Indeed. Looking back on it, the weirdest thing about that BBC Radio 4 Keynes v Hayek debate, which I attended and which Jonathan Pearce also wrote about here, is that the Keynesians at that debate were all assuming exactly this, that the worst was behind us, and that the argument was merely about which team would manage the recovery, assumed to be under way either now or Real Soon Now, in the nicest way. I don’t recall the Hayek team ever explicitly challenging this assumption. If that’s right, I think the reason was that the assumption was just there, but never spelled out. It was just being assumed that the worst was behind us.
I think that, literally within the last few weeks, in other words since that debate happened, that assumption has collapsed. I don’t think it’s just Kevin Dowd, Sam Bowman and I (and Paul Marks of course) who are now thinking this way.
Earlier this evening I attended a talk given by Kevin Dowd, organised by the Adam Smith Institute. It was being videoed, and although it may be of rather dubious technical quality (an air conditioning machine was making very strange noises), a video will, I was assured, be appearing on line. [LATER: Now available, here.]
In the past I have suspected Dowd of failing to do justice to the gravity of the world’s financial circumstances, by being a little too precise in his reform proposals, but there was not even that sort of optimism in Dowd’s speech this evening, which spelt out in some detail the truly horrible scale of the catastrophe. There was a bit at the end about rejigging the banks, but there was no suggestion that this on its own would suffice. Dowd’s central message was that the economic life of the West is now well and truly eff you sea kayed. Currencies tanking, banks bust, governments bust, current policies hastening the stampede towards the abyss. (Our own Johnathan Pearce was also present, so maybe he will tell us a bit more of the details of the doom we are all staring at.)
The odd thing was that Dowd’s speech made me strangely happy, and judging by the mood of the gratifyingly considerable throng that had gathered to hear Dowd’s prophecies of doom, I wasn’t the only one who was cheered up. Dowd himself understands this link between facing the truth in all its ghastliness and the strange elation that this can provoke. He even quoted a Noel Coward song which immortalises this sentiment: “There are bad times just around the corner. … Hurray! Hurray! Hurray!”
The thing is, when your world is staring catastrophe in the face, the people you want to listen to, because you want them to exist, are people who seem to have a serious and really quite detailed understanding of the nature of the catastrophe in question, all of it. You don’t want to be told that things are fine and will sort themselves out with only a little bit of grief, because you know that’s nonsense and who wants to waste time listening to an idiot saying things like that?
It is also necessary, if their audiences are to be made truly happy, for prophets of doom of the Dowd variety not to be total nutters, in the sense of being entirely disconnected from anything resembling polite society. Prophets of doom need at least some influence on events. Someone who is someone needs to be listening.
Steve Baker MP has already been chosen by the fickle finger of fate, by history, or by whatever else you want to call it, as one of the tiny handful of British public figures who are going to tell Britain what the true nature of the problem now is, and what Britain must do about it, rather in the way that Winston Churchill warned Britain about Hitler in the 1930s. And guess what, Steve Baker MP was present in Dowd’s audience this evening. He even asked a couple of questions.
After Dowd’s talk had finished I asked Dowd: Are you in fairly regular personal contact with Steve Baker MP? Is he getting his head around all this stuff, in the way that you already have? Yes, Dowd replied. We have had several meetings, Cobden Centre, de dum de dum. This made me even happier.
LATER (Tuesday morning): More from me, with a photo, about Dowd and his performance last night here.
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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.
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